/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/230629.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 Thursday, June 29, 2023, Vol. 24, No. 130 Headlines A R G E N T I N A ARGENTINA: Latin America Leaders Seek Biden Support in IMF Talks B A H A M A S FTX GROUP: News Organizations Challenge Court Decision on Privacy B A R B A D O S BARBADOS: Forms Bank Group to Drive Capital Investments B R A Z I L BRAZIL: Bank Under Increased Pressure for Interest Rate Cut MINERVA SA: Moody's Affirms 'Ba3' CFR & Alters Outlook to Stable PETROBRAS: Moody's Rates New Senior Unsecured Notes 'Ba1' PETROBRAS: S&P Rates New Unsecured Notes Due 2023 'BB-' C H I L E ENJOY SA: S&P Lowers ICR to 'CCC-' on Weak Liquidity J A M A I C A [*] JAMAICA: Looking to Strengthen Ties With Kenya P E R U UNACEM CORP: S&P Affirms 'BB' Issuer Credit Rating, Outlook Pos. P U E R T O R I C O CHALLENGER BRASS: Case Summary & 20 Largest Unsecured Creditors GUR-MEAT INC: Case Summary & 20 Largest Unsecured Creditors S U R I N A M E [*] SURINAME: EU, IDB Support Protecting Historic Paramaribo Center - - - - - ================= A R G E N T I N A ================= ARGENTINA: Latin America Leaders Seek Biden Support in IMF Talks ---------------------------------------------------------------- Carolina Gonzalez at Bloomberg News reports that a group of Latin American presidents urged US President Joe Biden to support Argentina in ongoing negotiations over its US$44-billion program with the International Monetary Fund. The leaders from Brazil, Bolivia, Chile, Colombia, Mexico and Paraguay made their plea in a letter addressed to Biden, according to a tweet from Argentina's President Alberto Fernandez, who said "I deeply appreciate the support," Bloomberg News discloses. "We ask with respect and affection that you support Argentina in the negotiations that it is carrying out with," the IMF, the letter said. "We seek a solution that permits Argentina's growth, job creation and the increase in its exports. All of those conditions are necessary for the country, in return, to be able face the deadlines of said loan," he added. Bloomberg News previously reported the Biden administration would support speeding up disbursements from Argentina's US$44-billion programme with the International Monetary Fund, if the nation's authorities can successfully negotiate a new schedule with the lender, according to US officials familiar with the matter, according to Bloomberg News. The Argentine government plans to make the case to the IMF that the severe drought the nation is suffering is beyond its control, and it needs the funds as soon as possible to tame the crisis, Bloomberg News relays. Economy Minister Sergio Massa is expected to travel to Washington once an agreement to modify targets in the programme is drafted, Bloomberg News notes. Argentina had two upcoming payments to the IMF totalling US$2.7 billion, but Massa's team elected to bundle them together and pay at the end of June, according to an IMF official who requested not to be named to discuss ongoing talks, Bloomberg News adds. 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. S&P Global Ratings, on March 29, 2023, 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+'. 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. Fitch Ratings, on the other hand, 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-' on March 24, 2023. 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. 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, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer Rating at CCC and downgraded its Long-Term Local Currency Issuer Rating to CCC from CCC (high) on March 3, 2023. ============= B A H A M A S ============= FTX GROUP: News Organizations Challenge Court Decision on Privacy ----------------------------------------------------------------- Dietrich Knauth at Reuters reports that a group of media organizations appealed a court decision that allows collapsed crypto exchange FTX to keep customer names secret during its bankruptcy case. U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware, ruled earlier this month that FTX did not have to reveal its customers' names because doing so could expose them to identity theft and other scams, according to Reuters. Bankrupt companies are typically required to reveal the names of their creditors and the amounts of debt they hold, including those of individual customers, but U.S. bankruptcy law contains an exception for information that would create undue risk of identity theft or other injury, the report notes. Bloomberg, Dow Jones & Company, The New York Times Company and the Financial Times appealed Dorsey's ruling. Their attorneys have argued that FTX is not entitled to a "novel and sweeping exception" to bankruptcy's typical disclosure requirements simply because its customers used cryptocurrency, the report relays. FTX has argued that cryptocurrency users face heightened risk of scams and identity theft and pointed to the recent bankruptcy of crypto lender Celsius Network to show what kinds of scams can result when customers' names are revealed, the report says. After the judge in the Celsius case ordered customers' names be revealed, Celsius users saw an increase in phishing attacks from scammers who posed as bankruptcy attorneys and Celsius employees, according to FTX's court filings, the report notes. FTX said it had approximately 9 million users who might be targeted by scams if their names were revealed. FTX did not immediately respond to a request for comment. Attorneys for the media organizations did not immediately respond to a request for comment on their appeal. FTX Trading and more than 100 affiliates in November filed for bankruptcy protection in Delaware to address claims that the company misused and lost billions in customers' crypto deposits, the report discloses. FTX founder Sam Bankman-Fried has pleaded not guilty to criminal charges accusing him of stealing billions of dollars from customers to plug losses at his hedge fund, the report adds. 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 A R B A D O S =============== BARBADOS: Forms Bank Group to Drive Capital Investments ------------------------------------------------------- The Government of Barbados announced at the Summit for a New Global Financing Pact in Paris an integrated package of innovative initiatives to accelerate its transition to net zero, boost resilience, enfranchise workers, and draw in private sector investment while prudently managing public debt levels. These initiatives build on the ongoing climate policy reforms, supported by the Resilience and Sustainability Facility with the International Monetary Fund, which are expected to play a catalytic role in mobilizing private and public sector financing for climate projects. This package of initiatives reflects unprecedented cooperation and a new "system approach" between the Government, its Resilience and Sustainability Facility (RSF) at the International Monetary Fund (IMF) and Barbados' long-standing financing partners; Inter-American Development Bank (IDB), World Bank Group (WBG), Development Bank of Latin America and the Caribbean (CAF), European Investment Bank (EIB), and Green Climate Fund (GCF). Barbados is highly vulnerable to the impacts of climate change, and it needs to invest heavily to protect its citizens from hurricanes, flooding and droughts, and to preserve its natural capital. It is committed to achieving sustainable public debt levels, meaning that the government has limited borrowing capacity for public investments. To meet these challenges, it has identified four complementary approaches together with its financing partners. A New Blue Green Bank In a first of its kind, the Government of Barbados has decided to use US$10 million from the fiscal space created by the RSF as capital for a new Blue Green Bank. This capital will support five times that lending amount. It will pave the way for other partners, including GCF, CAF and IDB, to support the Blue Green Bank through technical support or capitalization, with GCF proposing to its Board in July to become a co-founding partner in the bank. Once established, The Blue Green Bank will help finance over US$250 million of green investments in affordable homes, hurricane-resilient roofs, the electrification of public and private transport, and other Paris-aligned investments. More Resilient Infrastructure Through New Low-Cost, Long-Term Loan Instruments from Development Finance Institutions Low-cost and long-term financing instruments from the EIB, CAF, IDB, GCF and RSF will support Government investment in resilient water and waste treatment infrastructure, flood and coastal protection and support its efforts to transform state owned enterprises and enfranchise workers. The EIB has made available US$18 million of grants from the European Union (EU) to support climate-resilient water, sanitation, and clean ocean projects across the Caribbean to back a US$165 million loan facility. The GCF will offer up to US$1.5 million in grants per project for end-to-end project preparations, innovation, and transformational impact, and to prepare investment proposals for further GCF funding. Better and More Affordable PPPs Barbados' multilateral financing partners will strengthen project preparation support to attract private investment in Private Public Partnerships (PPP) to build more resilient infrastructure. The IDB will support and help develop the Government's capacity and expertise in PPPs. The World Bank Group's Multilateral Investment Guarantee Agency has made available investment guarantees to help reduce the cost of private sector financing. The World Bank Group's International Finance Corporation will support Barbados in developing the first large-scale onshore wind project in the country and enhance the resilience of the grid. Developing New Non-Debt Investments in Nature and Social Capital The Government of Barbados is working with its development partners to build on the success of the 2022 Blue Bond with IDB and The Nature Conservancy, which released approximately US$50 million of new financial resources for marine conservation. Particular focus is on a new generation of instruments to support investments in nature and social capital. Together, these initiatives will help Barbados meet its resilience objectives and protect its citizens, whilst helping transform the economy and protect its pristine natural environment. Quotes Prime Minister Mia Mottley of Barbados commented, "Alongside new capital, innovative instruments, partnerships and new ways of working together are critical if we are to overcome the challenges posed by climate, pandemics and debt. These new, integrated, initiatives announced today are embodiment of what can come out of new cooperative ways of working together." Kristalina Georgieva, Managing Director of the International Monetary Fund, said, "We welcome Barbados' initiatives to catalyze private climate finance, and the related push to bring together multiple partners in pursuit of a common goal. The Fund is fully committed to supporting our members' efforts to meet their climate goals—including through the Resilience and Sustainability Facility - and we look forward to our continued partnership with Barbados as the government takes steps to green the economy." Ilan Goldfajn, President, Inter-American Development Bank Group, said, "The IDB has long been one of Barbados' closest and most committed development partners. We are delighted to take advantage of this opportunity to collaborate with the IMF and other partners to build on our successful recent blue bond issuance, and promising experiences across the region with project preparation and structuring to help catalyze new and larger volumes of private financing for resilient climate smart investment. These and other innovative financing and support mechanisms will be crucial to help Barbados meet the challenges of a rapidly changing climate. Sergio Diaz-Granados, Executive President of CAF asserted that as a home-grown development bank owned by the countries Latin America and the Caribbean, CAF understands the myriad challenges faced by small islands, like Barbados, as a result of the effects of climate change."CAF is committed to doing its part in channelling increased resources and is very pleased to join forces with other development partners to mobilize dedicated financing that will help to strengthen the resilience of our member countries." Werner Hoyer, President of the European Investment Bank, commented, "We have no time to lose to support countries like Barbados that are already facing the devastating consequences of climate change. Following Prime Minister Mia Amor Mottley's call to action, we are delivering swift and targeted support. We will start offering extended loan tenors to lower and middle-income countries, and are seeking to provide natural disaster risk clauses in our loans to ensure the most vulnerable communities can recover and rebuild following a crisis. As the EU Climate Bank, alongside our Team Europe partners, the EIB is constantly working to increase the impact of its climate lending and support for vulnerable countries like Barbados." Henry Gonzalez, Executive Director ad interim of the Green Climate Fund stated, "The Blue Green Bank will transform the financing landscape in Barbados and catalyse new finance for sustainable climate investments. GCF has provided technical and financial support in developing the concept, and our Board will consider making a substantial investment in the new Bank at its meeting next month." Makhtar Diop, IFC Managing Director, said, "Barbados is redoubling efforts to bolster its climate resilience and become a low-carbon leader. IFC will continue to work closely with the country and collaborate with other multilateral institutions to accelerate the flow of private capital in support of Barbados' ambitions." =========== B R A Z I L =========== BRAZIL: Bank Under Increased Pressure for Interest Rate Cut ----------------------------------------------------------- Richard Mann at Rio Times Online reports that in Brazil, the Central Bank is weighing its monetary policy options in the face of growing calls for interest rate reductions from the administration of President Luiz Inacio Lula da Silva, and senators who safeguard the bank's independence. Fears have been escalating among Lula's economic team members, believing that the bank might resist a rate reduction in August, according to Rio Times Online. This apprehension has been intensified by statements from the Central Bank board members, such as Financial System Director Renato Dias Gomes, who warned against hasty easing of monetary policy, 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). MINERVA SA: Moody's Affirms 'Ba3' CFR & Alters Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service affirmed Minerva S.A.'s Ba3 corporate family rating and changed the outlook to stable from positive. Affirmations: Issuer: Minerva S.A. Corporate Family Rating, Affirmed Ba3 Outlook Actions: Issuer: Minerva S.A. Outlook, Changed To Stable From Positive RATINGS RATIONALE The change in Minerva's outlook to stable from positive reflects Moody's expectation that credit metrics will remain relatively stable in the next 12-18 months, supported by favorable fundamentals in beef markets in Latin America - with higher cattle supply, particularly in Brazil - but with no major reduction in gross leverage. Minerva's gross leverage has been historically above 4.5x (measured as Moody's-adjusted debt/EBITDA), and although Moody's do expect leverage to gradually decline, Moody's expect it to remain between 4x-4.5x in the next 12 to 18 months, a level not commensurate to a higher rating level. Minerva's Ba3 rating continues to reflect the company's good liquidity, track record of positive free cash flow generation, experienced management, significant share as a major exporter in the Latin American beef industry and history of stable operating margins. Offsetting some of these positive attributes is Minerva's sales focus on beef and beef-related products, which increases its exposure to the volatility in these markets. The company's persistently high leverage has been a major constraint on its rating over the past few years. In the next 12 to 18 months, Minerva is well positioned to continue to take advantage of favorable fundamentals in export markets given its diversification in different Latin America countries - Minerva's presence in Brazil, Argentina, Uruguay, Paraguay, and Colombia provides it with access to a wider range of export markets and the option to redirect production in case of restrictions on beef exports from any of these countries. Moreover, Minerva has additional trade opportunities, such as Indonesia and Mexico, markets which have opened for Brazilian beef or for which Minerva obtained additional approvals to export to. Moreover, Minerva has pursued small acquisitions to further expand geographic diversification. Accordingly, it acquired ALC in Australia (65% Minerva Foods Australia and 35% SALIC) for a total of USD260 million in 2022 (about $170 million paid by Minerva), which also brings protein diversification (lamb and sheep). In early 2023, Minerva acquired BPU meat (beef) in Uruguay for USD 40 million. Minerva has a comfortable amortization schedule, with most relevant debt maturity concentration in 2024, 2028 and 2031. In 2024, about 45% of the BRL2.8 billion in maturities correspond to debentures, followed by trade finance and rural credit lines. Minerva had BRL6.4 billion in cash at the end of 1Q 2023, which covers all debt maturing through 2025. Minerva has done a number of liability management initiatives aiming at extending maturities, reducing the exposure to FX and reducing interest expenses. Even though the company plans to continue with this strategy during 2023, Moody's does not expect a material reduction in debt levels. The stable outlook reflects Moody's expectation that Minerva will be able to continue to generate positive free cash flow and gradually reduce leverage, while maintaining good liquidity for its operations and debt-service requirements in the next 12 to 18 months. The outlook also reflects Moody's view that company will remain financially disciplined with respect to M&A and shareholder returns and preserve its liquidity to mitigate the inherent price volatility of the beef industry. ENVIRONMENTAL, SOCIAL & GOVERNANCE CONSIDERATIONS Minerva's credit impact score (CIS-3) reflects Moody's assessment that ESG considerations have a limited impact on the current rating, with a potential for negative impact over time. Minerva environmental risk exposure reflects mostly the reliance on natural resources, while exposure to social risks incorporates risks associated with responsible production and scrutiny from major stakeholders related to cattle raising linked to the deforestation of the Amazon and other biomes. Exposure to governance risks, in turn, reflects a concentrated ownership and financial strategy that tolerates high leverage, partially offset by management's track record of strong execution. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING An upgrade of Minerva's rating would require the company to reduce absolute debt and show a significant reduction in its gross leverage while maintaining a good cash balance to cover its cattle purchase needs and debt-service requirements, while generating positive FCF. Quantitatively, an upgrade of the company's rating would depend on its ability to reduce its Moody's-adjusted total debt/EBITDA closer to 3.5x; improve its interest coverage, measured as EBITA/interest expense, to levels at or above 4x; and maintain good operating performance, with cash flow from operations/debt remaining at or above 20%. The rating could be downgraded if Minerva's liquidity risk increases or its operational performance deteriorates, with leverage remaining persistently high. Quantitatively, Minerva's rating could be downgraded if its gross leverage, measured as total adjusted debt/EBITDA, remains above 4.0x on a consistent basis; EBITDA/interest expense remains below 3x; cash flow from operations/debt drops to levels below 15% and FCF becomes negative on a consistent basis. All metrics are calculated considering Moody's-adjusted metrics. The principal methodology used in this rating was Protein and Agriculture published in November 2021. Headquartered in Barretos, Sao Paulo, Minerva S.A. (Minerva) is one of Brazil's leading companies in the production and sale of fresh beef, industrialized products and live cattle. With 26 industrial units in South America and a slaughtering capacity of 30,550 heads per day (including the newly acquired company, Breeders and Packers Uruguay, in January 2023), Minerva is the largest beef exporter in South America, with a significant presence in South America and plants in Brazil, Paraguay, Argentina, Uruguay and Colombia, with distribution centers in Brazil, Paraguay, Argentina and Chile. Furthermore, Minerva has four industrial units in Australia, with a slaughtering capacity of 19,216 ovine heads per day. Minerva reported net revenue of BRL30.1 billion ($5.9 billion) for the 12 months that ended March 2023. PETROBRAS: Moody's Rates New Senior Unsecured Notes 'Ba1' --------------------------------------------------------- Moody's Investors Service has assigned a Ba1 rating to the proposed senior unsecured notes due in up to 10 years to be issued by Petrobras Global Finance B.V.'s and fully and unconditionally guaranteed by Petroleo Brasileiro S.A. - PETROBRAS (Petrobras, Ba1 stable). Petrobras' existing ratings including its Ba1 corporate family rating remain unchanged. The outlook is stable. The proposed issuance is part of Petrobras's liability management strategy and proceeds will be used for general corporate purposes which may include the repayment of outstanding indebtedness, thus not affecting the company's debt protection metrics. The rating of the proposed notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and assume that these agreements are legally valid, binding and enforceable. Assignments: Issuer: Petrobras Global Finance B.V. Backed Senior Unsecured Regular Bond/Debenture, Assigned Ba1 RATINGS RATIONALE Petrobras' Ba1 corporate family rating (CFR) and ba1 Baseline Credit Assessment (BCA), a measure of a company's standalone credit risk without government support, reflect the company's strong credit metrics for its rating category, and its positive track record of operational and financial improvement. In addition, Moody's expects Petrobras' operating and financial discipline to continue to support cash generation, which will help sustain its current capital structure. Petrobras' Ba1 ratings are one notch above the Government of Brazil 's Ba2 rating based on the company's considerably stronger fundamental credit profile than that of the sovereign, and its ability to withstand adverse economic and business conditions, as observed during the coronavirus pandemic in 2020. In addition, Petrobras' corporate governance somewhat protects it from government interference. There is a low likelihood that the company will default as a result of sovereign credit distress given Petrobras' solid financial metrics and capital structure; its low reliance on domestic funding sources; its limited exposure to foreign-currency risk, given the relatively low share of the refining business for consolidated results; and the fact that around 30% of its sales are related to exports. Petrobras has been reducing leverage over the past few years, with a gross debt target (including leases but not pension liabilities) of $67 billion for 2021 and the company managed to reduce it to $54 billion as of year-end 2022, and plans to maintain it close to $60 billion beyond 2022. Petrobras reached its target ahead of its deadline by increasing operational efficiencies through cost-reduction initiatives, and by lowering and postponing capital investment plans during the pandemic in 2020, and was aided by higher crude oil prices in 2021 and asset sales. Petrobras' Moody's-adjusted gross leverage was 1x in the first quarter of this year, flat versus Q1 2022 and down from 1.4x year-end 2021 and 4x in 2017. Moody's expects leverage to remain relatively stable in 2023, assuming an average Brent price of $70 per barrel (bbl) for 2023 and $65/bbl for 2024. In May 2023, Petrobras announced a change to its diesel and gasoline pricing policy that will use market reference for prices, including customers' cost for suppliers other than Petrobras, and Petrobras' opportunity cost to produce, import and export products used in the refining process. The new policy is credit negative for Petrobras because it adds uncertainty to the continuity of import parity practices, which could lead to losses if Petrobras does not pass through international oil price volatility to domestic fuel prices. Still, Moody's does not expect the new pricing policy to create a material deviation in gasoline and diesel prices from import parity in the short term because it would create asymmetries in the domestic market. However, if macroeconomic variables such as the exchange rate or oil prices are stressed, Moody's believes that Petrobras could halt price increases, incurring losses. LIQUIDITY Petrobras' liquidity is good. At the end of March 2023, Petrobras had $13.2 billion in cash and short-term investments and $9 billion of committed revolving credit facilities, fully available and maturing in 2025-26. Moody's expects the company's cash generation of around $40 billion in 2023 to be more than enough to cover its annual debt maturities of around $3.6 billion plus annual capital spending of about $16 billion through the period, allowing it to maintain reported debt below $55 billion. The proposed transaction is part of Petrobras' liability management strategy and proceeds will be used for general corporate purposes which may include the repayment of outstanding indebtedness, thus improving liquidity while lengthening the company's debt amortization schedule further. RATING OUTLOOK The stable outlook on Petrobras' ratings reflects Moody's view that its credit profile will remain mostly unchanged over the next 12-18 months. The stable outlook also reflects the stable outlook on Brazil's sovereign rating. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING An upgrade of Petrobras' Ba1 rating is unlikely over the next 12-18 months because Moody's expects the company's credit metrics to remain relatively stable and it is unlikely that the company would be rated more than one notch above the sovereign. However, the ratings could be upgraded if credit metrics are at least stable and there is evidence of significant lower exposure to adverse government influence; or if Brazil's sovereign rating is upgraded. Petrobras' ratings could be downgraded if its operating performance deteriorates or there are external factors that increase liquidity risk or debt leverage from the current levels on a sustained basis; if the quality of the company's corporate governance declines, increasing its vulnerability to adverse government interference; or if Brazil's sovereign rating is downgraded. Petrobras is an integrated energy company, with total assets of $193 billion and annual revenue of $124 billion as of March 2023. Petrobras dominates Brazil's oil and natural gas production, and refining and fuel marketing sectors. The company also holds a stake in petrochemicals and power plant business segments. The Brazilian government directly and indirectly owns about 36.6% of Petrobras' outstanding capital stock and 50.3% of its voting shares. The principal methodology used in this rating was Integrated Oil and Gas published in September 2022. PETROBRAS: S&P Rates New Unsecured Notes Due 2023 'BB-' ------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue-level rating on Petrobras Global Finance B.V.'s (PGF's) proposed senior unsecured notes due 2033. PGF is a wholly-owned finance subsidiary of Brazilian oil and gas company, Petroleo Brasileiro S.A. - Petrobras (Petrobras; BB-/Positive/--). Petrobras will unconditionally and irrevocably guarantee the notes. The proceeds of the new notes will be for general corporate purposes, including potential prepayment of outstanding debt. S&P said, "We continue to forecast solid cash flow for Petrobras, at least in the short term, considering our assumption of Brent prices of $85 per barrel (bbl) for the remainder of 2023 and next year, and if the company's fuel prices remain relatively in line with international prices. In the short term, we expect limited risks to the company's credit metrics that could pressure its stand-alone credit profile (SACP), given an ample cushion in Petrobras' leverage metric, which is currently about 1.0x." S&P rates PGF's senior unsecured debt at the same level as its issuer credit rating on Petrobras, based on the guarantee of this debt and because the latter has limited secured debt collateralized by real assets. Even if the senior unsecured debt ranked behind the subsidiaries' debt in the capital structure, S&P believes the risk of subordination is mitigated by a priority debt ratio that's far less than 50% and the significant earnings generated at the parent level. ========= C H I L E ========= ENJOY SA: S&P Lowers ICR to 'CCC-' on Weak Liquidity ---------------------------------------------------- S&P Global Ratings lowered its global scale issuer credit and issue-level ratings on Chilean casino operator Enjoy S.A. to 'CCC-' from 'CCC+'. The negative outlook reflects that although S&P expects the operating performance to continue recovering, Enjoy faces the increased risk of a liquidity crisis that could push the company to pursue some type of debt renegotiation in the next six months. S&P said, "As of March 31, 2023, Enjoy had approximately CLP27 billion in cash, and we expect it to continue posting negative free operating cash flow during 2023. We estimate that this, along with about CLP31.1 billion in debt maturities (mostly banking debt), interest payments of about CLP10.6 billion until the end of this year, working capital needs and capital expenditure (capex) for license renewals, will result in a cash flow deficit of about CLP16 billion that Enjoy will need to finance. "Despite the recovery in gaming revenues due to the resumption of operations and higher traffic in the casinos, we forecast Enjoy's EBITDA to remain at about CLP26 billion in 2023 due to higher operating fees under the renewed municipal licenses, which together with high inflation in Chile and greater expenses associated with the reactivation of the business, will keep margins at about 8%, below pre-pandemic levels of 14%. "We expect operations to continue recovering in 2024 amid the ongoing rebound in hospitality revenues and ramping up operations under the renewed licenses. The latter, coupled with better HOLD results in Uruguay, moderation in inflation, and some efficiencies from a recently implemented restructuring of operations, could improve EBITDA. Yet high operating fees under the municipal licenses will continue taking a toll on margins, which we believe will remain relatively low at about 10%, resulting in EBITDA of about CLP34 billion in 2024. Despite stronger performance, gross debt of about CLP263 billion will result in an unsustainable leverage metric of more than 10x in 2023 and 7x-8x in 2024." ESG credit indicators: E-2, S-5, G-3. ============= J A M A I C A ============= [*] JAMAICA: Looking to Strengthen Ties With Kenya -------------------------------------------------- RJR News reports that Jamaica is looking to strengthen bilateral relations with Kenya. Minister of Foreign Affairs and Foreign Trade Kamina Johnson Smith held high-level talks with Cabinet Secretary for Foreign and Diaspora Affairs of the Republic of Kenya Dr. Alfred Mutua on his first visit to Jamaica, according to RJR News. Mrs. Johnson Smith said some strategic areas have been identified, including trade, financial services, climate resilience and tourism, the report notes. The discussions also looked at opportunities in logistics and the possibility for Jamaica to partner with Kenya on trade, the report relays. The ministers also acknowledged opportunities for exchanges, particularly in training and development in areas such as tourism, the report adds. As reported in the Troubled Company Reporter-Latin America in March 2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. ======= P E R U ======= UNACEM CORP: S&P Affirms 'BB' Issuer Credit Rating, Outlook Pos. ---------------------------------------------------------------- S&P Global Ratings affirmed its 'BB' issuer credit rating on Peru-based building materials producer UNACEM Corp. S.A.A. (UNACEM). The positive outlook on UNACEM reflects a potential upgrade in the next six to 12 months if the company's liquidity cushion over debt maturities increases, while it keeps its net debt to EBITDA below 3.0x, consistently. S&P said, "We expect the company to consistently improve its liquidity position in the next 12-24 months by maintaining adequate liquidity sources, including its cash reserves and funds from operations (FFO, defined as EBITDA minus cash interest and tax payments), and by proactively refinancing or extending upcoming debt maturities in 2023 and 2024. Currently, about PEN2.2 billion of UNACEM's debt, broken into different bank credit lines, matures within this timeframe. We estimate that the company's cash reserves and FFO for the next 12-24 months is sufficient to cover these debt maturities and minimum maintenance capex of close to $40 million. Nonetheless, we note that the higher use of short-term financing in the past few quarters has reduced the company's liquidity cushion. "We note UNACEM's capacity to postpone expansionary capex and dividend distributions, if needed. A more robust liquidity cushion of sources over uses, considering intra-year working capital needs and full capex, would prompt us to upgrade the company. In addition, we think UNACEM has solid relationships with a diversified pool of creditors, which could enable some medium- to long-term refinancing, depending on the company's management's strategy to keep financing costs low. "We anticipate a slowdown in cement demand in Peru and Ecuador (64% and 11% of UNACEM's consolidated revenues in 2022, respectively) due to record-high demand between 2021 and 2022, as well as social unrest and weaker economic activity. However, UNACEM's operations have proven resilient and maintained top-line growth. We expect the company's cement volumes in Peru to stabilize in the next few quarters, resulting in a contraction in volumes of 7%-8% for the fiscal year ending Dec. 31, 2023. Countrywide cement dispatches have contracted close to 12% year-to-date as of May 31, 2023. Moreover, concrete volumes have picked up in Peru, and we expect operations in the U.S. and Chile to remain fairly resilient in the next 12 months, although we have less certainty about Ecuador's performance. Overall, we estimate UNACEM's revenue will grow about 4% in the next 12 months, with concrete and energy revenues (including Termochilca's operations) and cement pricing offsetting a contraction in cement volumes, which remains UNACEM's key product. "On the other hand, profitability took a hit last year due to higher input costs, such as raw materials, fuel, and electricity. However, we now anticipate that inflationary pressures will ease in the next 12 months, which along with the company's pricing strategy, should gradually improve margins. Thus, we estimate that UNACEM's EBITDA margins will be close to 28% in the next 12 months, similar to its first-quarter 2023 result." The company's latest acquisition of Termochilca S.A. (Termochilca; not rated) was completed earlier this year for about $140 million, of which $40 million will be paid in 2028. The acquisition includes a 300 megawatt (MW) combined-cycle gas plant. In our view, the assets acquired fit into UNACEM's energy division, which is consolidated under its subsidiary, Compania Electrica El Platanal S.A. (CELEPSA; not rated). The division currently has 248 MW of capacity and modestly diversifies the company's business lines away from building materials. S&P expects UNACEM to keep pursuing small and midsize opportunistic acquisitions in the next couple of years, mostly targeting building materials or energy assets, while maintaining its net debt to EBITDA below 3.0x. ESG credit indicators: E-3, S-2, G-2 S&P said, "Environmental factors are a moderately negative consideration in our credit rating analysis of UNACEM. Although environmental-related regulatory scrutiny is progressing slower in Peru and Latin America than in developed markets, we consider that the company's U.S. operations could be exposed to tighter regulations, potentially requiring greater investments in the medium term, although its assets are relatively new." The bulk of UNACEM's operations are in Peru--accounting for 64% of sales--while 16% are in the U.S. and 19% in other Latin American countries. Therefore, we expect potential regulatory requirements to be relatively mild for UNACEM and its cash generation to provide sufficient cushion. On average, the company has deployed about PEN30 million annually for environmental investments; about 6% of its total capex. In 2022, it emitted 650 kg of carbon dioxide equivalent (CO2e) per ton of cement produced, similar to those of regional peers. Moreover, the company has a commitment to decrease its CO2e emissions per ton of cement produced to 500 kg by 2030 and to reach carbon neutrality by 2050. ===================== P U E R T O R I C O ===================== CHALLENGER BRASS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Challenger Brass & Copper Co Inc. Bo. Candelaria Road 866 KM 0.8 Toa Baja, PR 00949 Business Description: The Debtor is engaged in the manufacturing and commercialization of copper, brass, bronze, stainless steels, and aluminum. Chapter 11 Petition Date: June 23, 2023 Court: United States Bankruptcy Court District of Puerto Rico Case No.: 23-01917 Judge: Hon. Edward A. Godoy Debtor's Counsel: Jesus Enrique Batista Sanchez, Esq. THE BATISTA LAW GROUP, PSC 239 Ave Arterail Hostos Ste 206 San Juan PR 00918-1475 Tel: (787) 620-2856 Email: jeb@batistasanchez.com Total Assets: $1,031,500 Total Liabilities: $2,540,722 The petition was signed by Abimael Padilla Negron as authorized representative of the Debtor. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/EH6GBJI/CHALLENGER_BRASS__COPPER_CO_INC__prbke-23-01917__0001.0.pdf?mcid=tGE4TAMA GUR-MEAT INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Gur-Meat Inc. LMR Food Services PO Box 534 Garrochales, PR 00652-0534 Chapter 11 Petition Date: June 23, 2023 Court: United States Bankruptcy Court District of Puerto Rico Case No.: 23-01914 Judge: Hon. Maria De Los Angeles Gonzalez Debtor's Counsel: Javier Vilarino, Esq. VILARINO & ASSOCIATES PO Box 9022515 San Juan, PR 00902-2515 Tel: (787) 565-9894 Email: jvilarino@vilarinolaw.com Total Assets: $292,906 Total Liabilities: $3,598,904 The petition was signed by Mariely Ramos Rojas as president. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/HXWNHEY/GUR-MEAT_INC__prbke-23-01914__0001.0.pdf?mcid=tGE4TAMA =============== S U R I N A M E =============== [*] SURINAME: EU, IDB Support Protecting Historic Paramaribo Center ------------------------------------------------------------------- The European Union (EU) and the Inter-American Development Bank (IDB) have partnered to protect the historic center of Paramaribo, Suriname's capital, from the impacts of climate change. The $3 million adaptation program will rehabilitate a deteriorating 220-meter flood wall, construct a pedestrian pathway, enhance mangrove growth, and provide climate adaptation training. Paramaribo's historic center, a UNESCO World Heritage Site, is a unique blend of European and South American cultures, architecture, and construction techniques. It is a vital economic and cultural hub for the city, but it is also vulnerable to flooding due to climate change. Sea-level rise and other climate impacts are expected to increase in the coming years, posing a serious threat to the site. The expected outcomes of the adaptation program include not only increased protection for the site, but also the preservation of cultural and historical buildings that are considered invaluable assets by UNESCO. The program is also expected to promote tourism development and private sector participation in the economic growth potential of the World Heritage Site. In 2017, Suriname launched the Paramaribo Urban Rehabilitation Program with a $20 million loan from the IDB to contribute to the socio-economic revitalization of Paramaribo's historic center by attracting new residents and commercial activities, restoring and valuing its cultural heritage, reducing traffic congestion, and strengthening the institutional framework for managing its sustainable development. The new program is an example of the strong partnership between the IDB and the EU. The IDB has been the EU's partner of choice in Latin America and the Caribbean since the first co-financing agreement in 2011, and together they have executed 47 projects worth $2.5 billion. This partnership is further strengthened by the upcoming EU-CELAC Summit in July 2023, which is an opportunity for a relaunched strategic relationship between EU member states and Latin America and the Caribbean. The summit will be pivotal for rolling out the EU's Global Gateway Investment Agenda in the region to seek solutions to global challenges. ********* 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. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2023. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *