/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/230331.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, March 31, 2023, Vol. 24, No. 66 Headlines A R G E N T I N A ARGENTINA: IDB OKs $235M to Develop Agriculture & Wine Sectors ARGENTINA: S&P Lowers LT SCR to 'CCC-' on Heightened Vulnerability BLOCKFI INC: Will Move $236M Out of Silicon Valley Bridge Bank PROVINCE OF CHACO: Fitch Lowers LongTerm Foreign Curr. IDR to CC B A H A M A S FTX GROUP: Reaches $404-Mil. Clawback Deal With Investment Company B R A Z I L BRAZIL: Central Bank Expected to Leave Interest Rate at 13.75% BRAZIL: Jobless Rate Edges Up in Quarter Through January C O L O M B I A COLOMBIA: IMF Says Account Deficit Widened 6.2% of GDP in 2022 C O S T A R I C A COSTA RICA: Fitch Gives 'BB-' Rating to $1.5B Bond due April 2034 M E X I C O EMPEREON MARKETING: Call Center Starts Subchapter V Case P U E R T O R I C O PUERTO RICO: Bondholders Denied Lien on PREPA Revenue - - - - - ================= A R G E N T I N A ================= ARGENTINA: IDB OKs $235M to Develop Agriculture & Wine Sectors -------------------------------------------------------------- The Inter-American Development Bank (IDB) says Argentina has signed on to three programmes to help develop its agriculture and wine sectors. The new programme will also provide support for the country's solid waste management. IDB President Ilan Goldfajn and Argentina's Economy Minister Sergio Massa signed the loan agreements totaling US$235 million. Some US$125 million is earmarked for strengthening agricultural health services and enhancing the sustainability of marine resources. The funds will go toward the control and prevention of pests and diseases that affect the country's animal and plant health assets. The loan will benefit more than one million private stakeholders in the agricultural sector. The social, economic, and environmental sustainability facility, geared to Argentina's wine sector is valued at US$40 million and is expected to promote the use of technologies and marketing capacity among small and midsize producers. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Alberto Angel Fernandez is the current president of Argentina after winning the October 2019 general election. He succeeded Mauricio Macri in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. Last March 25, 2022, Argentina finalized agreement with the IMF for a new USD44 billion Extended Funding Facility (EFF) intended to fund USD40 billion in looming repayments of the defunct Stand-By Arrangement (SBA), with an extra USD4 billion in up-front net financing. This has averted the risk of a default to the IMF and is facilitating a parallel rescheduling of Paris Club debt. Fitch Ratings, on March 24, 2023, downgraded Argentina's Long-Term Foreign Currency Issuer Default Rating (IDR) to 'C' from 'CCC-', and has affirmed the Long-Term Local Currency IDR at 'CCC-'. Fitch's downgrade of Argentina's rating to 'C' from 'CCC-' follows an executive decree that forces domestic public-sector entities into operations involving their holdings of sovereign debt securities, which would involve unilateral exchanges and forced currency conversion that constitute default events under Fitch's criteria. The 'C' rating reflects Fitch's view that default is thus imminent. Fitch said the rating would be downgraded to 'Restricted Default' (RD) upon execution of the exchanges. S&P Global Ratings, on the other hand, affirmed its 'CCC+/C' foreign currency and 'CCC-/C' local currency sovereign credit ratings on Argentina on Jan. 20, 2023. The outlook on the long-term ratings remains negative. S&P's 'CCC+' transfer and convertibility assessment is unchanged. The negative outlook on the long-term ratings reflects risks surrounding pronounced economic imbalances and policy uncertainties before and after the 2023 national elections. Global capital markets are closed to Argentina. Moreover, disagreement within the government coalition and infighting among the opposition constrains the sovereign's ability to implement timely changes in economic policy. Moody's Investors Service, in September 2022, affirmed Argentina's Ca foreign-currency and local-currency long-term issuer and senior unsecured ratings. The outlook remains stable. The decision to affirm the Ca ratings balances Argentina's limited market access, weak governance, and history of recurrent debt restructurings with recent efforts to marshal fiscal and monetary measures to start addressing underlying macroeconomic imbalances in the context of the IMF program that was approved in 2022, according to Moody's. DBRS confirmed Argentina's Long-Term Foreign Currency Issuer Rating at CCC and Long-Term Local Currency Issuer Rating at CCC (high) on July 21, 2022. ARGENTINA: S&P Lowers LT SCR to 'CCC-' on Heightened Vulnerability ------------------------------------------------------------------ On March 29, 2023, S&P Global Ratings lowered its long-term foreign currency sovereign credit rating on Argentina to 'CCC-' from 'CCC+'. S&P also affirmed its 'C' short-term foreign currency sovereign credit rating and its 'CCC-/C' local currency ratings on Argentina. The outlook on the long-term ratings is negative. S&P also lowered the transfer and convertibility assessment to 'CCC-' from 'CCC+'. Outlook The negative outlook on the long-term ratings reflects risks surrounding pronounced economic imbalances and policy uncertainties before and after the 2023 national elections. Divisions across the political spectrum constrain the sovereign's ability to implement timely changes in economic policy. Global capital markets are closed to Argentina. In the local market, swaps are being deployed to manage large maturities before placing debt through traditional auctions. The central bank continues to play a key role as a backstop for local debt management in the secondary market. The ongoing severe drought has exacerbated pressures in the already disrupted foreign exchange (FX) market. Downside scenario S&P could lower the ratings over the next six to 12 months on negative policy or political developments that undermine already limited access to financing. Meaningful setbacks in execution under the IMF's Extended Fund Facility (EFF) would complicate access to financing from the IMF and potentially other multilateral lending institutions. This scenario would likely further damage local investor confidence and hamper access to peso-denominated debt markets--exacerbating the need for recourse to central bank financing amid high inflation--and lead to a downgrade. Heightened pressure in local financial markets, including the banking system's deposit base, or difficulties in managing central bank debt (LELIQs), could also lead to a downgrade. Finally, at such low rating levels, S&P generally considers debt exchanges as distressed and tantamount to a default. Upside scenario S&P could raise the ratings over the next six to 12 months following: -- A track record of successful execution under the EFF, and -- Clarity on how policy will ease financing challenges in the local market and address Argentina's major structural macroeconomic imbalances. S&P could also raise the ratings if there is a more pronounced economic recovery that supports stronger fiscal outcomes, taking pressure off the government's financing needs. Rationale S&P said, "We lowered our foreign currency ratings on Argentina to 'CCC-/C' following announced plans that, if implemented, would oblige some nonfinancial public-sector entities to exchange or sell their holdings of global- and local-law dollar-denominated bonds issued during the 2020 restructuring for other locally issued peso debt, likely dollar- and/or inflation-linked bonds. The specific terms and timing of the potential transaction(s) remain unknown. But, since the decree applies only to holdings of intra-government debt, we do not consider it a distressed exchange or tantamount to default under our methodology--which speaks to payment of commercially held debt. "However, in our view, the lack of clarity and the apparent motivation for the potential transaction underscore heightened credit vulnerabilities, in particular given the increasing pressures from the severe drought that Argentina is facing, which further constrains the already disrupted FX market. Hence, we lowered the foreign currency issuer credit rating applicable to commercially held debt. A 'CCC-' rating reflects that a default, distressed exchange, or redemption appears to be inevitable within six months, absent unanticipated significantly favorable changes in the issuer's circumstances. This expected greater pressure on the FX markets also explains our lowering the transfer and convertibility assessment to 'CCC-'." With primary and national elections in August and October 2023, political uncertainty is rising in Argentina amid persistent macroeconomic imbalances. Potential goals of the announced debt transaction include facilitating U.S. dollar liquidity in the domestic foreign exchange market, limiting central bank intervention, and giving greater capacity to these public sector entities to finance the government deficit this year. The global and local law bonds subject to the decree have final maturities of 2029 and beyond, though with step-up amortization starting at US$1.2 billion in 2024. S&P said, "We expect only marginal relief on the US$2.0 billion in interest payments due in 2023 on this debt, only a portion of which is held by the relevant public-sector entities. "We estimated some US$85 billion in peso-denominated debt due in total at the beginning of this year." The government has undertaken local debt exchanges to manage the majority of its peso maturities, and conducted auctions to refinance smaller amounts of debt coming due. The central bank is acting as a key backstop in the local market by buying debt in the secondary market, including offering put options for government debt due 2023-2025. The government's foreign currency debt due this year totals US$30 billion, of which about US$19 billion is to the IMF and other official creditors. Private-sector external debt is about US$20 billion according to Argentina's national statistics agency INDEC. The severe drought has taken a toll on agricultural exports during the first quarter and exacerbated the low level of international reserves. This has put additional pressure on the gap between official and parallel exchange rates, which the government is trying to contain ahead of the October elections. The government has postponed payments to the IMF due early March pending the next EFF disbursement from the Fund under its fourth review. S&P said, "We will continue to analyze all debt exchanges at this low rating level on a case-by-case basis, incorporating the macroeconomic and political context. We classify exchanges as a distressed exchange when, in our view, absent participation, a conventional default would likely ensue." BLOCKFI INC: Will Move $236M Out of Silicon Valley Bridge Bank -------------------------------------------------------------- Vince Sullivan of Law360 reports that Bankrupt cryptocurrency platform BlockFi Inc. told a New Jersey judge Thursday, March 23, 2023, that it intends to transfer $236 million of cash out of accounts at the Silicon Valley bridge bank at the insistence of the Office of the United States Trustee so the money can be protected in an approved depository institution. About BlockFi Inc. BlockFi is building a bridge between digital assets and traditional financial and wealth management products to advance the overall digital asset ecosystem for individual and institutional investors. BlockFi was founded in 2017 by Zac Prince and Flori Marquez and in its early days had backing from influential Wall Street investors like Mike Novogratz and, later on, Valar Ventures, a Peter Thiel-backed venture fund as well as Winklevoss Capital, among others. BlockFi made waves in 2019 when it began providing interest-bearing accounts with returns paid in Bitcoin and Ether, with its program attracting millions of dollars in deposits right away. BlockFi grew during the pandemic years and had offices in New York, New Jersey, Singapore, Poland and Argentina. BlockFi worked with FTX US after it took an $80 million hit from the bad debt of crypto hedge fund Three Arrows Capital, which imploded after the TerraUSD stablecoin wipeout in May 2022. BlockFi had significant exposure to the companies founded by former FTX Chief Executive Officer Sam Bankman-Fried. BlockFi received a $400 million credit line from FTX US in an agreement that also gave FTX the option to acquire BlockFi through a bailout orchestrated by Bankman-Fried over the summer. BlockFi also had collateralized loans to Alameda Research, the trading firm co-founded by Bankman-Fried. BlockFi is the latest crypto firm to seek bankruptcy amid a prolonged slump in digital asset prices. Lenders Celsius Network LLC and Voyager Digital Holdings Inc. also filed for court protection this year. Kirkland & Ellis is also advising Celsius and Voyager in their separate Chapter 11 cases. BlockFi Inc. and eight affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Lead Case No. 22-19361) on Nov. 28, 2022. In the petitions signed by their chief executive officer, Zachary Prince, the Debtors reported $1 billion to $10 billion in both assets and liabilities. Judge Michael B. Kaplan oversees the cases. The Debtors taped Kirkland & Ellis and Haynes and Boone, LLP as general bankruptcy counsels; Walkers (Bermuda) Limited as special Bermuda counsel; Cole Schotz, P.C., as local counsel; Berkeley Research Group, LLC as financial advisor; Moelis & Company as investment banker; and Street Advisory Group, LLC as strategic and communications advisor. Kroll Restructuring Administration, LLC is the notice and claims agent. About Silicon Valley Bank Silicon Valley Bank was the nation's 16th largest bank and the biggest to fail since the 2008 financial meltdown. During the week of March 6, 2023, Silicon Valley Bank, Santa Clara, CA, experienced a severe "run-on-the-bank." On the morning of March 10, 2023, the California Department of Financial Protection and Innovation seized SVB and placed it under the receivership of the Federal Deposit Insurance Corporation (FDIC). The FDIC on March 13, 2023, disclosed that it transferred all deposits -- both insured and uninsured -- and substantially all assets of the former Silicon Valley Bank of Santa Clara, California, to a newly created, full-service FDIC-operated "bridge bank" in an action designed to protect all depositors of Silicon Valley Bank. SVB Financial Group is a financial services company focusing on the innovation economy, offering financial products and services to clients across the United States and in key international markets. Prior to March 10, 2023, SVB Financial Group owned and operated Silicon Valley Bank, a state-chartered bank. On March 17, 2023, SVB Financial Group sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 23-10367). The Hon. Martin Glenn is the bankruptcy judge. The Debtor had assets of $19,679,000,000 and liabilities of $3,675,000,000 as of Dec. 31, 2022. Centerview Partners LLC is proposed financial advisor, Sullivan & Cromwell LLP proposed legal counsel and Alvarez & Marsal proposed restructuring advisor to SVB Financial Group as debtor-in-possession. Kroll is the claims agent. PROVINCE OF CHACO: Fitch Lowers LongTerm Foreign Curr. IDR to CC ---------------------------------------------------------------- Fitch Ratings has downgraded the Long-Term (LT) Foreign Currency (FC) Issuer Default Ratings (IDRs) of the Provinces of Chaco, Salta, Entre Rios and La Rioja as well as the Municipality of Cordoba to 'CC' from 'CCC-'. The Standalone Credit Profiles (SCPs) remain at 'ccc' for Chaco and Salta, and at 'ccc-' for Entre Rios, La Rioja and Municipality of Cordoba. The downgrades follow Fitch's recent rating action on Argentina's LT FC IDR on March 24, 2023. Additionally, Fitch has downgraded to 'CC' from 'CCC-' La Rioja's USD318.4 million senior unsecured step-up notes due 2028, Chaco's USD262.6 million senior unsecured step-up notes due 2028, and Salta's USD357.4 million senior unsecured step-up notes due 2027. The bonds are rated at the same level as the provinces' FC IDRs. KEY RATING DRIVERS The downgrades follow Fitch's recent rating action on Argentina's LT FC IDR on March 24, 2023. For further information, please see Fitch's press release "Fitch Downgrades Argentina's Foreign Currency Rating to 'C'" at www.fitchratings.com. Fitch also affirmed Argentina LT Local Currency (LC) IDR at 'CCC-'. Therefore, the local and regional governments' (LRG) LC IDR remain unchanged. The issuers' SCPs, risk profile and debt sustainability assessments also remain as published in their latest rating action commentary (RAC). For individual key rating drivers see the latest published RAC on each issuer at www.fitchratings.com. These five Argentine LRGs do not meet the conditions stipulated in Fitch's LRG criteria that would allow them to be rated above the sovereign. On the other hand, these LRGs are not in a near default situation and remain current on all their obligations. Furthermore, Fitch does not expect them to default or face a DDE in the next 12 months, but they are affected by the recent downgrade of the sovereign LT FC IDR to 'C'. Therefore, Fitch relied on its rating definitions to position these IDRs. ESG - Creditor Rights: In comparison to other argentine LRGs, La Rioja's DDE, concluded in September 2021, was a protracted process and involved a default event that took one year to be solved. The agreement granted the province a debt service relief, both through reduced interests and postponement of capital repayments; however, this affected bondholders. Therefore, creditor rights remain a key rating driver. DERIVATION SUMMARY La Rioja's, Entre Rios' and Municipality of Cordoba's SCPs are assessed at 'ccc-', reflecting a combination of 'vulnerable' risk profile and debt sustainability score of 'aa' for La Rioja and Entre Rios and 'a' for Cordoba. Chaco's and Salta's SCPs are assessed at 'ccc', reflecting a combination of 'vulnerable' risk profile and debt sustainability score of 'aa'. Additionally, in line with Fitch's methodology for SCP of 'ccc' or below, Fitch weighs quantitative and qualitative nuances against national and international peers. Fitch does not apply any asymmetric risk or ad-hoc support from the central government and assesses intergovernmental financing as neutral to the LRG's ratings. Nevertheless, the LRG's IDRs reflect the exposure to macroeconomic vulnerabilities and unpredictable regulatory framework that prevail in Argentina. KEY ASSUMPTIONS KEY ASSUMPTIONS Qualitative Assumptions Qualitative assumptions and assessments since the last review on 01 March 2023 for Chaco, Entre Rios and Salta, Oct. 20, 2022 for Municipality of Cordoba, and Sept. 29, 2022 for La Rioja in the rating decision: - Risk Profile: 'Vulnerable'; - Revenue Robustness: 'Weaker'; - Revenue Adjustability: 'Weaker'; - Expenditure Sustainability: 'Weaker'; - Expenditure Adjustability: 'Weaker'; - Liabilities and Liquidity Robustness: 'Weaker'; - Liabilities and Liquidity Flexibility: 'Weaker'. - Debt sustainability: 'aa' category for La Rioja, Chaco, Entre Rios and Salta. - Debt sustainability: 'a' category for Municipality of Cordoba. - Budget Loans or Ad-Hoc Support: n/a - Asymmetric Risk: n/a - Sovereign Cap: n/a Quantitative Assumptions -- Issuer Specific. Fitch's rating case is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. In line with its LRG criteria, for an entity with base case financial profile indicating an SCP of 'b' or below, the base case analysis alone may be sufficient to evaluate the risk of default and transition for the debt. Fitch's rating case is based on the 2017-2021 figures and 2022-2025 projected ratios. For individual, issuer-specific quantitative assumptions see the latest published RAC for each issuer at www.fitchratings.com. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - IDRs are affected by the current sovereign FC IDR of 'C'. An upgrade to Argentina's FC IDR to 'CCC-' would lead to a corresponding rating action on the entities, provided that their SCPs remain unchanged. Factors that could, individually or collectively, lead to negative rating action/downgrade: - The FC IDRs of Provinces of Chaco, Entre Rios, La Rioja and Salta and the Municipality of Cordoba would be downgraded to 'C' if there are indications of any credit event that reflects a near default situation. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS Argentina ESG CONSIDERATIONS The ESG Relevance Scores for Rule of Law, Institutional & Regulatory Quality, Control of Corruption for all five Argentine LRGs are '4' reflecting the negative impact the weak regulatory framework and national policies of the sovereign have over these LRGs in conjunction with other factors. Province of Chaco, Province of Salta, Province of Entre Rios and Municipality of Cordoba The ESG Relevance Scores for Creditor Rights for these LRGs are '4' reflecting that despite the entities' improved willingness to service and repay its debt obligations, their latest DDEs continue to weigh on their credit profile and debt coverage is expected to remain pressured, therefore, the issue of Creditor Rights remains relevant to the rating in conjunction with other factors. Province of La Rioja La Rioja has an ESG Relevance Score of '5' for Creditor Rights due to the province's protracted DDE and Fitch's expectation that fiscal challenges at the national and local level will continue to hinder the province's future ability to repay its debt obligations, and therefore has a negative impact on the credit profile. This expectation still weighs in the rating assignment; therefore, creditor rights remains a key rating driver. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Salta, Province of LT IDR CC Downgrade CCC- senior unsecured LT CC Downgrade CCC- Cordoba, Municipality of LT IDR CC Downgrade CCC- Chaco, Province of LT IDR CC Downgrade CCC- senior unsecured LT CC Downgrade CCC- Entre Rios, Province of LT IDR CC Downgrade CCC- La Rioja, Province of LT IDR CC Downgrade CCC- senior unsecured LT CC Downgrade CCC- ============= B A H A M A S ============= FTX GROUP: Reaches $404-Mil. Clawback Deal With Investment Company ------------------------------------------------------------------ FTX is asking a Delaware bankruptcy judge to approve a settlement that would see the defunct crypto exchange claw back more than $404 million that its affiliated trading shop transferred to an investment firm prior to the exchange's collapse. FTX Trading Ltd. and its affiliated debtors seek approval to enter into a Settlement Agreement with (i) Modulo Capital, Inc., (ii) Modulo Capital Alpha Fund LP, (iii) Xiaoyun "Lily" Zhang, and (iv) Duncan Rheingans-Yoo. On Feb. 2, 2022, Debtor Alameda Ventures Ltd. (n/k/a Maclaurin Investments Ltd.), Ms. Zhang, and Mr. Rheingans-Yoo executed a non-binding term sheet whereby Alameda Ventures Ltd. or its affiliates would invest $25 million in one or more general partnership entities to be formed and managed by Ms. Zhang and Mr. Rheingans-Yoo. Alameda Research Ltd. transferred $25 million to Modulo on May 19, 2022, as contemplated by the term sheet (the "GP Transfer"). Modulo is an international business company organized under the laws of The Bahamas. Debtor Alameda Research Investments Ltd. (n/k/a Goodman Investments Ltd.) and Modulo entered into a shareholders agreement dated June 16, 2022, whereby Alameda Research Investments Ltd. would hold 20% of Modulo's non-voting Class A shares. On June 16, 2022, Modulo and Alameda Research Ltd. also executed a limited partnership agreement governing the Modulo Fund, a limited partnership organized under the laws of the Cayman Islands. Modulo became the general partner of the Modulo Fund, and Alameda Research Ltd. became a limited partner of the Modulo Fund. Following the execution of the Limited Partnership Agreement, Alameda Research Ltd. and certain other Alameda Debtors made several transfers to the Modulo Fund, totaling $450 million (the "LP Transfers" and together with the GP Transfer, the "Alameda Transfers"). As a result, Debtor Alameda Research Investments Ltd. owns 20% of the Class A shares of Modulo, and Debtor Alameda Research Ltd. is a limited partner of the Modulo Fund. The Debtors, including without limitation each of the Alameda Debtors, believe they have meritorious claims to avoid and recover the Alameda Transfers, and related claims arising out of the Alameda Transfers (the "Claims"). The Modulo Entities, Ms. Zhang, and Mr. Rheingans-Yoo dispute and have raised certain defenses to the Claims. Pursuant to the Settlement, the Debtors have the opportunity to promptly recover approximately $460 million in value for stakeholders -- including more than $404 million in cash – without needing to commence litigation following constructive negotiations with the Modulo Entities and their principals. This settlement relates to the transfer of $475 million by the Alameda Debtors, as directed by Samuel Bankman-Fried, to the Modulo Entities between May 2022 and the Petition Date for investments and to support the Modulo Entities' operations. Modulo is an investment advisor to and general partner of the Modulo Fund. Ms. Zhang and Mr. Rheingans-Yoo are the principals of the Modulo Entities. The Debtors' entry into the Agreement is in the best interests of their estates, creditors and stakeholders, and should be swiftly consummated. The Agreement's terms will provide the Debtors' estates significant value representing 99% of the Modulo Entities' remaining assets and 97% of the original transfers from the Alameda Debtors to the Modulo Entities (after considering expenses and trading losses). Approval of the Agreement will resolve the Debtors' Claims against the Modulo Entities and deliver this significant recovery while avoiding the expense and burden of litigation. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 million in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. =========== B R A Z I L =========== BRAZIL: Central Bank Expected to Leave Interest Rate at 13.75% -------------------------------------------------------------- Richard Mann at Rio Times Online reports that the Central Bank's Monetary Policy Committee (Copom) is expected to maintain the introductory interest rate, the Selic, at 13.75% per year at its second meeting of the Lula 3 administration. The decision is taken for granted, but the market is focusing on the Copom minutes, which give signals for the future of the country's economy, as economist Ricardo Aragon explains, according to Rio Times Online. "An important point is the Copom minutes; what will be the tone of the Central Bank from now on," he said, the report notes. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. As recently reported in the Troubled Company Reporter-Latin America, Fitch Ratings, in December 2022, affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. The ratings are constrained by high government indebtedness, a rigid fiscal structure, weak economic growth potential, and a record of governability challenges that have hampered efforts to address these fiscal and economic issues and clouded policy predictability. The Stable Outlook reflects Fitch's expectation that growth will slow in the coming year and that recent fiscal improvement will erode under a new government, but within a margin consistent with the current rating, and from a better starting point than previously expected. Uncertainty is elevated regarding the plans of the incoming government and the extent to which these could ease or aggravate fiscal and economic challenges. However, Fitch does not expect policies that jeopardize broad economic stability. Standard & Poor's affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil, and the outlook remains stable (June 2022). The stable outlook reflects S&P's base-case assumption that Brazil will maintain its fiscal anchors over the next two years despite an increasing interest burden, preventing significant fiscal slippage and limiting the rise in its already high debt burden. Moody's credit rating for Brazil was last set at Ba2 in 2018 with stable outlook. Moody's affirmed the Ba2 issuer ratings and senior unsecured bond ratings in April 2022. DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). BRAZIL: Jobless Rate Edges Up in Quarter Through January -------------------------------------------------------- Reuters reports that Brazil's jobless rate rose to 8.4% in the three months through January, statistics agency IBGE said, slightly above market expectations. The median forecast in a Reuters poll projected an unemployment rate of 8.3%. In the previous three months, the rate was also at 8.3%, according to the report. "This stability still would be a repercussion of the reduction in the demand for work in the months of November and December 2022 over the beginning of 2023," said research manager, Adriana Beringuy, Reuters notes. The figure was the lowest for the three-month period since 2015, IBGE said, adding that the number of employed people was 98.6 million, or one million below the previous three months, the report adds. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. As recently reported in the Troubled Company Reporter-Latin America, Fitch Ratings, in December 2022, affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. The ratings are constrained by high government indebtedness, a rigid fiscal structure, weak economic growth potential, and a record of governability challenges that have hampered efforts to address these fiscal and economic issues and clouded policy predictability. The Stable Outlook reflects Fitch's expectation that growth will slow in the coming year and that recent fiscal improvement will erode under a new government, but within a margin consistent with the current rating, and from a better starting point than previously expected. Uncertainty is elevated regarding the plans of the incoming government and the extent to which these could ease or aggravate fiscal and economic challenges. However, Fitch does not expect policies that jeopardize broad economic stability. Standard & Poor's affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil, and the outlook remains stable (June 2022). The stable outlook reflects S&P's base-case assumption that Brazil will maintain its fiscal anchors over the next two years despite an increasing interest burden, preventing significant fiscal slippage and limiting the rise in its already high debt burden. Moody's credit rating for Brazil was last set at Ba2 in 2018 with stable outlook. Moody's affirmed the Ba2 issuer ratings and senior unsecured bond ratings in April 2022. DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). =============== C O L O M B I A =============== COLOMBIA: IMF Says Account Deficit Widened 6.2% of GDP in 2022 -------------------------------------------------------------- The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Colombia on March 22, 2023. Benefiting from an effective policy response to the pandemic and highly favorable terms of trade, Colombia's economy grew at 7.5 percent year-on-year in 2022; one of the fastest rates among emerging economies. Against this robust recovery, high commodity prices, and weather-related shocks, headline inflation reached 13.3 percent year-on-year in February 2023 and the current account deficit widened from 5.6 in 2021 to 6.2 percent of GDP in 2022. The Colombian economy is now undergoing a necessary transition towards a more sustainable growth path. Macroeconomic policies that had been tightened last year and are expected to carry on this year, are facilitating this transition, along with a slowing global growth and higher global borrowing costs. This necessary cooling of the economy would in turn bring inflation towards the central bank's target by end-2024 and narrow the current account deficit gradually to its historical average (about 4 percent of GDP), the bulk of which will financed through foreign direct investment. While downside risks persist and remain elevated, Colombia's very strong economic fundamentals, policies, and policy frameworks support its resilience. On the external front, global financial conditions could tighten more sharply than anticipated with negative knock-on effects on commodity prices, capital outflows and domestic demand. Domestic risks cannot be discarded; special care will be needed to prudently manage and keep communicating the sequence of reforms and ensure that macroeconomic policies are sufficiently tight to reduce internal and external imbalances. The two-year Flexible Credit Line (FCL) arrangement, with access amount equivalent to SDR7.1557 billion (about US$9.8 billion) that was approved in April 2022, provides additional external buffers against tail risk scenarios on a precautionary basis, enhancing Colombia's already strong resilience. Executive Board Assessment Executive Directors agreed with the thrust of the staff appraisal. Following a robust recovery from the COVID-19 pandemic, the Colombian economy is undergoing a necessary transition toward sustainable growth. Directors noted, however, that downside risks—including related to tighter global financial conditions and high inflation—are elevated. They commended the authorities' very strong policies and institutional policy frameworks, which support the country's resilience and are helping correct macroeconomic imbalances, while improving equity and social inclusion. Directors welcomed the strong fiscal adjustment in 2022 and the planned adjustment in 2023, which go beyond the consolidation required by the fiscal rule. They observed that the planned adjustment strikes a balance between improving the deficit while using the progressive tax reform to increase social spending. Directors welcomed the authorities' commitment to implement the fiscal rules going forward. They generally agreed that improving fiscal balances slightly beyond the fiscal rule path in the coming years would help reduce financing needs, strengthen the convergence of public debt to its medium-term anchor, build buffers, and durably reduce external imbalances, though a few Directors did not see a need for tightening beyond the fiscal rule in the medium term. Continued efforts to gradually remove distortive fuel subsidies remain important. Directors commended the central bank's decisive monetary policy tightening consistent with its inflation targeting framework. They welcomed the commitment to maintain a tight monetary stance until price pressures and inflation expectations are on a firm downward trend, and emphasized the importance of effective central bank communication in this regard. Directors noted that the external position is sustainable, and that the flexible exchange rate should continue to play its role in facilitating external adjustment, as long as financial stability is not compromised. They noted that the Flexible Credit Line continues to provide additional external buffers against tail-risks and enhances market confidence. While the financial sector remains resilient, Directors emphasized the need to closely monitor risks and emerging vulnerabilities. They encouraged continued progress in implementing the 2022 FSAP recommendations supported by Fund technical assistance. Directors were encouraged by the objectives of the healthcare, pensions, and labor markets reforms, and emphasized that reforms should be prudently implemented, while preserving fiscal and financial stability. They commended the authorities' objective of reducing Colombia's reliance on oil and coal, and noted that a successful transition would require developing a well-communicated and gradual plan that balances the energy needs of the domestic economy and its foreign exchange generation capacity with the transition of the global economy to a low-carbon one. Directors also encouraged the authorities to continue advancing on the governance and anti-corruption agenda. [1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. [2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm. =================== C O S T A R I C A =================== COSTA RICA: Fitch Gives 'BB-' Rating to $1.5B Bond due April 2034 ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to Costa Rica's USD1.5 billion bond maturing April 2034 with a coupon of 6.55%. Proceeds from the issuance will be used for general budgetary purposes including to refinance public debt. KEY RATING DRIVERS The bond ratings are in line with Costa Rica's Long-Term Foreign Currency Issuer Default Rating (LT FC IDR) of 'BB-'. On March 2, 2023, Fitch upgraded Costa Rica's LT FC IDR to 'BB-' with a Stable Rating Outlook. ESG Governance: Costa Rica has an ESG Relevance Score of '5'/'5' [+] for Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in its proprietary Sovereign Rating Model. Costa Rica has a high WBGI ranking at 73, reflecting its long track record of stable and peaceful political transitions, well established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: - The bonds' ratings would be sensitive to any negative changes in Costa Rica's LT FC IDR. Factors that could, individually or collectively, lead to positive rating action/upgrade: - The bonds' ratings would be sensitive to any positive changes in Costa Rica's LT FC IDR. ESG CONSIDERATIONS Costa Rica has an ESG Relevance Score of '5'[+] for Political Stability and Rights, as WBGI have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As Costa Rica has a percentile rank above 50 for the respective governance indicator, this has a positive impact on the credit profile. Costa Rica has an ESG Relevance Score of '5' [+] for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as WBGI have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Costa Rica has a percentile rank above 50 for the respective governance indicators, this has a positive impact on the credit profile. Costa Rica has an ESG Relevance Score of '4' [+] for Human Rights and Political Freedoms as the Voice and Accountability pillar of the WBGI is relevant to the rating and a rating driver. As Costa Rica has a percentile rank above 50 for the respective governance indicator, this has a positive impact on the credit profile. Costa Rica has an ESG Relevance Score of '4' [+] for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Costa Rica, as for all sovereigns. As Costa Rica has record of 20+ years without a restructuring of public debt, which is captured in its SRM variable, this has a positive impact on the credit profile. Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. Entity/Debt Rating ----------- ------ Costa Rica senior unsecured LT BB- New Rating =========== M E X I C O =========== EMPEREON MARKETING: Call Center Starts Subchapter V Case -------------------------------------------------------- Empereon Marketing LLC filed for chapter 11 protection in the District of Arizona. The Debtor elected on its voluntary petition to proceed under Subchapter V of chapter 11 of the Bankruptcy Code. The Debtor owns and operates call centers throughout Arizona and Mexico. The Debtor's revenues dropped on account of the Covid-19 pandemic. The Debtor's liabilities increased at the same time from unused leased space in Houston and Waco, Texas, and Phoenix, Arizona. Empereon seeks to restructure under Subchapter V due to unanticipated leasehold liabilities caused by the Covid-19 pandemic along with concurrent revenue reduction related to same effects on the economy. According to court filings, Empereon Marketing has $1,777,954 in debt owed to 1 to 49 creditors. The petition states that funds will be available to unsecured creditors. A telephonic meeting of creditors under 11 U.S.C. Section 341(a) is slated for April 18, 2023 at 9:00 a.m. About Empereon Marketing Empereon Marketing LLC -- https://www.empereon/ -- is a business process outsourcing company providing end-to-end customer engagement and customer management solutions through two distinct, but affiliated, privately held entities. Empereon Marketing LLC filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 23-01592) on March 15, 2023. In the petition filed by Travis Bowley, as C.E.O., the Debtor reported total assets as of Dec. 31, 2022 amounting to $6,385,218 and total liabilities as of Dec. 31, 2022 of $1,777,954. The case is overseen by Honorable Bankruptcy Judge Madeleine C Wanslee. The Debtor is represented by: Gerald L. Shelley, Esq. FENNEMORE CRAIG, P.C. 10400 N. 25th Avenue Suite 100 Phoenix, AZ 85021 Tel: 602-916-5000 Email: gshelley@fclaw.com ===================== P U E R T O R I C O ===================== PUERTO RICO: Bondholders Denied Lien on PREPA Revenue ----------------------------------------------------- Rick Archer of Law360 reports that a New York federal judge on Wednesday, March 22, 2023, ruled that holders of $8 billion in Puerto Rico Electric Power Authority bonds do not have a secured claim on its future revenues as the government-owned utility undergoes debt restructuring. In a statement, the Financial Oversight and Management Board for Puerto Rico said it welcomes the decision by the U.S. District Court for the District of Puerto Rico on the Oversight Board's challenge to the security interest and recourse claim by holders of bonds issued by the PREPA. The litigation focused on whether the bondholders' claims are limited to the money PREPA deposits in accounts established pursuant to the trust agreement governing the issuance of the bonds. The Court's ruling upholds the Oversight Board's position that the bondholders' collateral security is limited to those funds. The Oversight Board is also pleased the Court rejected the bondholders' contention that they have a general unsecured claim for the full amount of their principal and interest. The Court limited their unsecured claim to future net revenues for the remainder of the terms of the bonds. In all, the Court's decision is a significant win for Puerto Rico and its path to reliable electricity and economic growth. The Oversight Board is still analyzing the decision in detail to determine the implications of bondholder's remaining claim but will continue to work on resolving the remaining issues of PREPA's debt restructuring consensually. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States. The chief of state is the President of the United States of America. The head of government is an elected Governor. There are two legislative chambers: the House of Representatives, 51 seats, and the Senate, 27 seats. The governor-elect is Ricardo Antonio "Ricky" Rossello Nevares, the son of former governor Pedro Rossello. In 2016, the U.S. Congress passed PROMESA, which, among other things, created the Financial Oversight and Management Board and imposed an automatic stay on creditor lawsuits against the government, which expired May 1, 2017. The members of the oversight board are: (i) Andrew G. Biggs, (ii) Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J. Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii) David A. Skeel Jr. On May 3, 2017, the Commonwealth of Puerto Rico filed a petition for relief under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). The case is pending in the United States District Court for the District of Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico's PROMESA petition is available at http://bankrupt.com/misc/17-01578-00001.pdf On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation (COFINA) commenced a case under Title III of PROMESA (D.P.R. Case No. 17-01599). Joint administration has been sought for the Title III cases. On May 21, 2017, two more agencies -- Employees Retirement System of the Government of the Commonwealth of Puerto Rico and Puerto Rico Highways and Transportation Authority (Case Nos. 17-01685 and 17-01686) -- commenced Title III cases. U.S. Chief Justice John Roberts named U.S. District Judge Laura Taylor Swain to preside over the Title III cases. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose LLP; and Hermann D. Bauer, Esq., at O'Neill & Borges LLC are onboard as attorneys. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains the case web site https://cases.primeclerk.com/puertorico Jones Day is serving as counsel to certain ERS bondholders. Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General Obligation Bondholders. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. 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