/raid1/www/Hosts/bankrupt/TCRLA_Public/230803.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, August 3, 2023, Vol. 24, No. 155
Headlines
A R G E N T I N A
ARGENTINA: Reaches Last-Minute Deal With IMF to Avoid Default
ARGENTINA: Strikes Deal with China to Secure US$1.7BB for IMF Debt
B R A Z I L
BRASKEM SA: Settles with City Where Mining Destroyed Neighborhoods
BRAZIL: External Accounts With Deficit of US$843 Million in June
BRAZIL: Lula Meets Paraguay's President-Elect
SAO PAULO MUNICIPALITY: Fitch Ups LT IDRs to 'BB', Outlook Stable
C O L O M B I A
BANCO GNB: Moody's Affirms 'Ba2' Deposit Ratings, Outlook Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Lack of Jobs Drives Emigration of Young Locals
P U E R T O R I C O
BED BATH & BEYOND: Seeks Conditional Approval of Plan Disclosures
T R I N I D A D A N D T O B A G O
CARIBBEAN AIRLINES: PM Drew Hails Inaugural Flight as 'Milestone'
X X X X X X X X
[*] LATAM: Caribbean Economies Improve Since April
[*] LATAM: IMF Foresees Economic Upswing in Brazil and Mexico
- - - - -
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A R G E N T I N A
=================
ARGENTINA: Reaches Last-Minute Deal With IMF to Avoid Default
-------------------------------------------------------------
Ciara Nugent at The Financial Times reports that Argentina and the
IMF have agreed a last-minute deal to prevent the troubled South
American economy entering into arrears with the fund, offering some
stability ahead of October's crucial presidential elections.
After three months of intense negotiations, slowed by the Peronist
government's reluctance to implement unpopular policies in the
run-up to the polls, the IMF's technical team agreed to disburse an
additional $7.5 billion of its loan program, according to The
Financial Times.
The fund will release $4 billion it had withheld at a June program
review and almost $3.5 billion that was previously subject to a
September assessment, the report notes.
The IMF decided to combine the two reviews because the first was so
delayed that data for the later one is already available, notes the
report.
However, the fund appears to have rejected Argentina's calls to
bring forward all remaining disbursements for this year, which
total $10.6 billion, the report discloses.
"The fund's task was to avoid pushing Argentina into the abyss,
while also holding firm to stop the government from doing things
that will deteriorate the situation further," said Santiago
Manoukian, head of research at Buenos Aires-based consultancy
Ecolatina, the report relays. "The IMF knows it will be negotiating
with a new administration in a few months," he notes.
Argentina needs the money from the IMF to make loan repayments to
the fund itself, the report discloses. The country's current IMF
package, agreed in 2022, is a restructuring of a failed 2018 loan
that was meant to lift Argentina out of a debt crisis but quickly
went off the rails, the report says. Roughly $8.7 billion of
payments are due by the end of the year, the report notes.
But with the IMF disbursement set to take at least two weeks to
arrive, as the fund awaits approval by its board, cash-strapped
Argentina is seeking possible bridge loans to make $3.4 billion
worth of repayments due by August 1, the report relays.
Argentina may be forced to use yuan from its swapline with China to
make the payment, the report notes. It has already resorted to the
swapline, which gives it free access to about $10 billion worth of
renminbi, to pay $1.1 billion to the IMF in June, the report
discloses. The swapline is also regularly being tapped to pay for
imports and intervene in currency markets, with Argentina paying
China an undisclosed interest rate that economists estimate is
about 6 per cent, the report relays.
Argentina has fallen short of most of the IMF's targets, including
on accumulating foreign exchange reserves and cutting the country's
fiscal deficit, the report notes.
Economy minister Sergio Massa, who is also presidential candidate
for the ruling Peronist coalition, United for the Homeland, has
blamed the failure to meet the targets on a severe drought, which
wiped out more than $18 billion of expected export earnings this
year, the report says.
In its statement, the IMF recognised that the
"larger-than-anticipated impact of the drought" had contributed to
Argentina's failure to meet the targets, but said there had also
been "policy slippages and delays," the report says.
The deal should allow the fund to avoid being accused of
destabilising Argentina before October's vote, the report
discloses.
The country's economy is the most fragile it has been in two
decades, with net foreign exchange reserves about $8billion in the
red, annual inflation running above 115 per cent and the peso
plunging by a third against the dollar so far this year, the report
notes.
Remaining at odds with the IMF or entering into arrears could have
triggered a market backlash and a disruptive collapse, the report
says.
But some of the measures Argentina will implement as part of the
deal run counter to the IMF's long-term hope for more orthodox
economic policy in the country, the report relays.
Massa successfully resisted calls for a sharp devaluation of the
peso's official exchange rate - which prices the currency at almost
twice its value on parallel exchange markets - out of fear of
turbocharging inflation, the report notes.
Instead, Argentina has unveiled a set of creative policies designed
to weaken the peso for trade purposes, which are controversial
among businesses and resemble other multiple-currency policies
previously criticized by the IMF, the report discloses.
The IMF also agreed to relax targets for foreign exchange reserve
accumulation, the report notes. Originally, Argentina was expected
to increase net reserves - a figure that excludes swaplines, IMF
funds and other liabilities - to $8 billion by the end of 2023. Now
it will only need to reach $1 billion, the report relays.
The country will face tough cuts on the fiscal front, however. The
IMF said the target for the fiscal deficit would remain at the
original 1.9 per cent, the report notes.
As Argentina is not on track to meet that goal, it will require
cuts faster than originally planned in the second half of the year
to social programs and energy subsidies, as well as deferring
inflation-linked increases to public sector wages, the report
says.
The fund is also expecting a reduction in Argentina's interventions
in parallel currency markets to prop up the peso, which should only
be used in exceptional "disorderly market conditions", sources
familiar with the matter said, the report 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.
In 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 June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None
of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions
within the government coalition, and infighting among the
opposition,
constrain the sovereign's ability to implement timely changes in
economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's
Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to
'CC' from 'C' and affirmed the Long-Term Local Currency (LC) IDR
at 'CCC-'. Fitch typically does not assign Outlooks to sovereigns
with a rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
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.
ARGENTINA: Strikes Deal with China to Secure US$1.7BB for IMF Debt
------------------------------------------------------------------
Igor Patrick at scmp.com reports that the Argentine government has
reached an agreement with the People's Bank of China to secure
US$1.7 billion in yuan through currency swaps to meet its US$2.7
billion payment obligations to the International Monetary Fund, its
economy minister said.
The remaining balance of the payment will be covered by US$1
billion loaned by the Development Bank of Latin America, also known
as CAF, based in Caracas, Venezuela, according to scmp.com.
Under the arrangement, Argentina had deposited pesos with the PBOC,
which granted renminbi in return, the report notes. Buenos Aires
was then able to make its payment to the IMF without having to draw
upon dollar reserves, now estimated by the Central Bank of
Argentina to be worth minus US$8 billion, the report relays.
Sergio Massa, the Argentine economy minister, thanked the PBOC and
Chinese government "for making the decision to authorize the
disbursement", saying it would "ensure that Argentina can continue
its exports while meeting its payment obligations" to the IMF, the
report discloses.
The agreement would allow Argentina to meet its IMF obligations
"without using a single dollar of its reserves," Massa added.
The deal represents another step in the South American country's
wider usage of China's currency following its decision in June to
allow commercial banks to open customer accounts in yuan, the
report notes. Also this year, Argentina's securities regulator
approved the issuance of yuan-denominated securities in the local
market.
A government source familiar with the matter told the Post that the
swap was expected to be a short-term debt repaid with reserves,
with China's involvement possibly serving as "a temporary bridge"
until the funds committed by the IMF arrive, the report relays.
Neither the duration of the loan nor the interest rate Argentina
would have to pay on the new debt were disclosed by either the CAF
or the economy ministry, the report says. Buenos Aires said the
terms of the swap with the PBOC were part of a confidential
agreement and could not be made public, the report notes.
The IMF debt in question dates back to 2018, when then-president
Mauricio Macri secured a US$44 billion loan, the largest in IMF
history at the time, the report discloses.
The debt was later renegotiated by the government of Alberto
Fernandez, Argentina's current leader, the report notes.
Buenos Aires committed to the IMF to adjust its level of public
spending, boost reserves and maintain competitive interest rates in
exchange for new disbursements to pay off the debt it took on five
years prior, the report says.
The report discloses that the agreement with the Chinese government
averted "a dramatic situation" as Buenos Aires would have lacked
the dollars needed to pay the debt, said Ariel Gonzalez Levaggi of
the Pontifical Catholic University of Argentina.
Levaggi believed the move would expand Chinese influence in the
Argentine economy, as more than half of the country's international
reserves are already in renminbi, the report notes.
He voiced concern that the strategy could prove "unsustainable", as
"the renegotiated terms for the debt to the IMF do not provide a
viable way out for Argentina," the report relays.
"Argentina is trying to buy time, and the Chinese are undoubtedly
helping in this endeavour. However, the question now is what
concessions Beijing will demand in return," Levaggi said, the
report notes.
China has been pressuring the Argentine government to buy Chinese
JF-17 aircraft and 8x8 armored fighting vehicles manufactured by
China North Industries Group Corporation, also known as Norinco, he
added, adds the report.
Beijing is meanwhile awaiting approval for the state-owned China
National Nuclear Corporation to start building a new US$8.3 billion
nuclear power plant in the country, the report notes.
As Fernandez was unable to cut a deal with Washington for possible
debt relief with the IMF, the Argentine president turned to Beijing
for help, Levaggi explained, the report relays.
Eventually Buenos Aires would "be forced to pick a side and it will
be very, very complicated," he said. "US-China relations are facing
a turbulent moment. This dual game played here is likely to end,
sooner or later," the report says.
The agreement might not bring immediate economic advantages to
Beijing, but it "certainly helps to expand the use of the renminbi
as an international currency, a long-standing plan of the Chinese,"
according to Alexandre Coelho of the International Political
Science Association, the report notes.
"Although the renminbi has been part of the IMF currency basket
since 2016, its use for debt settlement is not common. The path
chosen by Argentina sets a precedent and may, in the future, be
adopted by other emerging countries in a similar situation," said
Coelho, who formerly served as a legal adviser to the Bank of
China, the report notes.
"This agreement is also perhaps indicative of how much US influence
has declined in the IMF, used so many times in the past by
Washington to guide Latin American policy," he added, the report
relays. "China is advancing while Americans just watch."
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.
In 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 June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None
of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions
within the government coalition, and infighting among the
opposition,
constrain the sovereign's ability to implement timely changes in
economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's
Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to
'CC' from 'C' and affirmed the Long-Term Local Currency (LC) IDR
at 'CCC-'. Fitch typically does not assign Outlooks to sovereigns
with a rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
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 R A Z I L
===========
BRASKEM SA: Settles with City Where Mining Destroyed Neighborhoods
------------------------------------------------------------------
The Associated Press reports that Brazil's petrochemical giant
Braskem said on July 21, 2023, it had reached a $356 million
settlement with a coastal city where four decades of the company's
rock salt mining destroyed five urban neighborhoods and displaced
tens of thousands of people.
Around 200,000 people in the Alagoas state's capital of Maceio were
affected by the excessive extraction of rock salt, according to the
Brazil Senate's website. In recent years, several Maceio
communities became ghost towns as residents accepted Braskem's
payouts to relocate, the report notes.
The settlement - about 1.7 billion Brazilian reais - between
Braskem and Maceio will be used for structural works in the city
and for a residents' support fund, the municipality said in a
statement, according to globalinsolvency.com.
The agreement does not invalidate negotiations between Braskem and
the residents of the affected areas, it added.
The company has so far paid over 3.7 billion reais ($775 million)
in various compensations, including financial aid, Braskem said
earlier this month, the report notes.
It said that the settlement "represents yet another important
advance" in the issue of Alagoas. According to Braskem, over 17,000
residents - or over 90% of all residents that the company plans to
compensate - and over 5,000 businesses had received compensation by
the end of June, the report adds.
Braskem is a Brazilian petrochemical company headquartered in Sao
Paulo. As reported in the Troubled Company Reporter-Latin America
on Sept. 6, 2021, S&P Global Ratings raised its issuer credit
rating and unsecured issue-level ratings on Braskem S.A. to 'BBB-'
from 'BB+'. S&P also raised its ratings on the company's
subordinated notes to 'BB' from 'B+'. At the same time, S&P
affirmed its 'brAAA' national scale rating on the company.
BRAZIL: External Accounts With Deficit of US$843 Million in June
----------------------------------------------------------------
Richard Mann at Rio Times Online reports that in June 2023,
Brazil's external accounts experienced a deficit of US$843 million,
a stark contrast from the surplus of US$ 266 million in the same
month the previous year.
However, a total of US$1.9 billion in direct investment in the
country was reported, counteracting the deficit, according to Rio
Times Online.
The Central Bank unveiled this data on July 26.
The Bank's monthly calculation of Brazil's current transactions
takes into account the trade balance, services bought by Brazilians
abroad, and incoming funds such as remittances of interest,
profits, and dividends, 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.
Fitch Ratings upgraded on July 26, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'BB', from 'BB-',
with a Stable Outlook. The upgrade reflects better-than-expected
macroeconomic and fiscal performance amid successive shocks in
recent years, proactive policies and reforms that have supported
this, and Fitch's expectation that the new government will work
toward further improvements.
In mid-June 2023, S&P Global Ratings, revised the outlook on its
long-term global scale ratings on Brazil to positive from stable.
S&P affirmed its 'BB-/B' long- and short-term foreign and local
currency sovereign credit ratings on Brazil. S&P also affirmed its
'brAAA' national scale rating, and the outlook remains stable. The
transfer and convertibility assessment remains 'BB+'. The positive
outlook reflects signs of greater certainty about stable fiscal and
monetary policy that could benefit Brazil's still-low GDP growth
prospects. Continued GDP growth plus the emerging framework for
fiscal policy could result in a smaller government debt burden than
expected, which could support monetary flexibility and sustain the
country's net external position.
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: Lula Meets Paraguay's President-Elect
---------------------------------------------
Iolanda Fonseca at Rio Times Online reports that Brazil's President
Luiz Inacio Lula da Silva is set to meet Paraguay's President-elect
Santiago Peaa at the Alvorada Palace.
This encounter marks their second bilateral meeting this year,
following Pena's electoral victory in his home country, according
to Rio Times Online.
The primary agenda is the discussion of the Itaipu Binational
Hydroelectric Plant treaty revision, the report notes.
After 50 years, both countries are revising the agreement that sets
the project's financial framework and electricity services, the
report notes.
Paraguay seeks permission to sell its surplus power to other
countries, 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.
Fitch Ratings upgraded on July 26, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'BB', from 'BB-',
with a Stable Outlook. The upgrade reflects better-than-expected
macroeconomic and fiscal performance amid successive shocks in
recent years, proactive policies and reforms that have supported
this, and Fitch's expectation that the new government will work
toward further improvements.
In mid-June 2023, S&P Global Ratings, revised the outlook on its
long-term global scale ratings on Brazil to positive from stable.
S&P affirmed its 'BB-/B' long- and short-term foreign and local
currency sovereign credit ratings on Brazil. S&P also affirmed its
'brAAA' national scale rating, and the outlook remains stable. The
transfer and convertibility assessment remains 'BB+'. The positive
outlook reflects signs of greater certainty about stable fiscal and
monetary policy that could benefit Brazil's still-low GDP growth
prospects. Continued GDP growth plus the emerging framework for
fiscal policy could result in a smaller government debt burden than
expected, which could support monetary flexibility and sustain the
country's net external position.
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).
SAO PAULO MUNICIPALITY: Fitch Ups LT IDRs to 'BB', Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has upgraded the Long-Term Foreign and Local Currency
Issuer Default Ratings (IDRs) of six Local and Regional Governments
(LRGs) in Brazil to 'BB' from 'BB-'. The Rating Outlook is Stable.
The issuers include:
-- The Municipality of Sao Paulo
-- The Municipality of Niteroi
-- The State of Parana
-- The State of Sao Paulo
-- The State of Alagoas
-- The State of Rio de Janeiro
KEY RATING DRIVERS
The revisions are due to Fitch's upgrade of Brazil's Long-Term
Foreign Currency IDR to 'BB' from 'BB-'; Stable Outlook, as of July
26, 2023.
Fitch did not review the National Ratings and Short-Term Ratings
for these issuers. Risk profiles, Key Risk Factors, debt
sustainability metrics, and standalone credit profiles (SCPs) were
not revised under this review.
The Municipality of Sao Paulo 'BB'/Stable IDRs are capped by the
sovereign. Fitch maintains the Municipality of Sao Paulo's SCP at
'a-'. This reflects the combination of a 'Low Midrange' risk
profile, debt sustainability metrics at 'aaa' and the national and
international peer comparison. Per Fitch's criteria, no subnational
in Brazil qualifies to be rated above the sovereign. The federal
government has strong influence over LRGs, such as by assigning
expenditure responsibilities, limiting revenue raising capacity,
and closely supervising and structuring their ability to take new
debt.
The Municipality of Niteroi's 'BB'/Stable IDRs are capped by the
sovereign. Fitch maintains the Municipality of Niteroi's SCP at
'bbb'. This reflects the combination of a 'Weaker' risk profile,
debt sustainability metrics at the 'aaa' category and the national
and international peer comparison. Per Fitch's criteria, no
subnational in Brazil qualifies to be rated above the sovereign.
The federal government has strong influence over LRGs, such as by
assigning expenditure responsibilities, limiting revenue raising
capacity, and closely supervising and structuring their ability to
take new debt.
The State of Parana's 'BB'/Stable IDRs are capped by the sovereign.
Fitch maintains the State of Parana's SCP at 'bbb-'. This reflects
the combination of a Weaker' risk profile, debt sustainability
metrics at 'aaa' category and the national and international peer
comparison. Per Fitch's criteria, no subnational in Brazil
qualifies to be rated above the sovereign. The federal government
has strong influence over LRGs, such as by assigning expenditure
responsibilities, limiting revenue raising capacity, and closely
supervising and structuring their ability to take new debt.
The State of Sao Paulo's 'BB'/Stable IDRs benefit from a one-notch
uplift from their 'bb-' SCP, as Brazil's federal government is
their most significant creditor.
Fitch distinguishes the debt owed to the federal government as it
offers greater flexibility in its terms compared with traditional
debt. All debt types are included in the debt sustainability
metrics that produce the SCP. However, Fitch calculates a
supplementary ratio excluding intergovernmental debt, known as the
enhanced debt sustainability ratio. This is used to estimate the
uplift between the SCP and IDR, which results in the equalization
of Sao Paulo IDRs to the sovereign IDRs.
Until recently, Sao Paulo's IDRs were not notched upward to reflect
intergovernmental finance support as its SCP was already at the
same level as the sovereign and, per Fitch criteria, the uplift
could not lead beyond the lending government's rating. With the
sovereign upgrade, Fitch now reflects intergovernmental finance
support into the state's IDRs. The state of Sao Paulo's SCP
reflects a combination of a 'Low Midrange' Risk Profile, debt
sustainability at 'a' and the national and international peer
comparison.
The State of Alagoas's 'BB'/Stable IDRs benefit from a two-notch
uplift from their 'b+' SCP because of Brazil's federal government
is their most significant creditor. Fitch distinguishes the debt
owed to the federal government as it offers greater flexibility in
its terms compared with traditional debt. All debt types are
included in the debt sustainability metrics that produce the SCP.
However, Fitch calculates a supplementary ratio excluding
intergovernmental debt, known as the enhanced debt sustainability
ratio. This is used to estimate the uplift between the SCP and IDR,
which results in the equalization of Alagoas's IDR to the sovereign
IDR. The State of Alagoas' SCP reflects a combination of a 'Weaker'
Risk Profile, debt sustainability at 'a' and the national and
international peer comparison.
The State of Rio de Janeiro's 'BB'/Stable IDRs benefit from a
six-notch uplift from its 'ccc' SCP and considers the support
derived from the ratification of the New Fiscal Recovery Regime and
its impact over the state's enhanced debt sustainability. The New
Fiscal Recovery Regime is a tool through which the state
restructures its debt service profile. Throughout the duration of
the program, Rio de Janeiro will benefit from debt service relief
through a step-up debt service schedule and the federal government
will service all contracts included under the program.
The State of Rio de Janeiro's SCP is derived through ratings
definitions and reflect adequate coverage ratios for the following
12-months. The state's Risk Profile is maintained at 'Weaker' and
its debt sustainability maintained at the 'bb' category.
ESG Governance -- Creditor Rights: State of Rio de Janeiro's track
record in the breach of legal documentation stating full debt
service payments, reflects the very low willingness to pay. The SCP
will be reassessed once State of Rio recovers and it is able to
honor its committed financial obligations in due time with no
federal government aid.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action on Brazil's IDR would lead to a
positive rating action on the Municipality of Niteroi, Municipality
of Sao Paulo and on the State of Parana given that the ratings of
these entities are currently capped by the sovereign.
-- A positive rating action on Brazil's IDR could lead to a
corresponding rating action on the States of Alagoas, Sao Paulo and
Rio de Janeiro given that these ratings are equalized to the
sovereign through intergovernmental support.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A downgrade of the sovereign rating would result in a downgrade
of the IDRs of the six issuers, either through the ratings cap or
through the equalization approach.
-- The Municipality of Sao Paulo's IDRs would be downgraded if its
payback ratio is projected above 9x and its actual debt service
coverage ratio is projected below 1.5x.
-- Municipality of Niteroi's IDRs would be downgraded if its
payback ratio is projected above 5x and its actual debt service
coverage ratio is projected below 2x.
-- The State of Parana's IDRs would be downgraded if its payback
ratio is projected above 5x and its actual debt service coverage
ratio is projected below 2x.
-- The State of Sao Paulo's IDRs would be downgraded if its
enhanced payback ratio is projected above 9x and its enhanced
actual debt service coverage ratio is projected below 1.5x.
-- The State Alagoas's IDRs would be downgraded if its enhanced
payback ratio is projected above 5x and its actual debt service
coverage ratio is projected below 2x.
-- The State of Rio de Janeiro's IDRs would be downgraded under
the perception of weakened federal support to the state´s debt
service through the Fiscal Recovery Regime and deteriorating
enhanced metrics.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The ratings of the State of Parana, the Municipality of Niteroi and
the Municipality of Sao Paulo are capped by the sovereign. The
ratings of the State of Alagoas, State of Rio de Janeiro and State
of Sao Paulo are equalized to the sovereign through
intergovernmental finance support.
ESG CONSIDERATIONS
State of Alagoas has an ESG Relevance Score for Population
Demographics of '4'. The score reflects the negative weight the
municipality's poverty rate has on its revenue raising ability,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
State of Alagoas has an ESG Relevance Score of '4' for Human
Development, Health and Education due to its Human Development
Index (calculated as a geometric average of health, education and
income) at the bottom of the ranking among Brazilian states, which
has a negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Municipality of Niteroi has an ESG Relevance Score of '4' for
Biodiversity and Natural Resource Management due to Niteroi´s
economic and financial dependency on the hydrocarbon sector, which
has a negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Rio de Janeiro. State of has an ESG Relevance Score of '5' for
Creditor Rights due to its track record in the breach of legal
documentation stating the full debt service payments, reflecting
the very low willingness to pay, which has a negative credit
impact, and is highly relevant to the rating, resulting in an
implicitly lower rating.
Rio de Janeiro. State of has an ESG Relevance Score of '4' for Rule
of Law, Institutional & Regulatory Quality, Control of Corruption
due to the fact that government effectiveness and institutional &
regulatory quality was not sufficient to prevent the state from
resorting to external financial support (namely the federal
government) to pursue fiscal balance, which has a negative credit
impact, and is relevant to the rating[s] in conjunction with other
factors.
Rio de Janeiro. State of has an ESG Relevance Score of '4' for
Biodiversity and Natural Resource Management in recognition of
Rio's economic and financial dependency on the hydrocarbon sector,
which has a negative impact on the credit profile, and is relevant
to the rating[s] in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
===============
C O L O M B I A
===============
BANCO GNB: Moody's Affirms 'Ba2' Deposit Ratings, Outlook Stable
----------------------------------------------------------------
Moody's Investors Service has affirmed Banco GNB Sudameris S.A.'s
(GNB Sudameris) long- and short-term local and foreign currency
deposit ratings at Ba2 and Not Prime, respectively, following the
affirmation of the bank's Baseline Credit Assessment (BCA) and
Adjusted BCA at ba3. Moody's also affirmed GNB Sudameris'
subordinated debt ratings of B1 and B2(hyb), assigned to its
outstanding Tier 2 securities, the long- and short-term local and
foreign currency counterparty risk ratings of Ba1 and Not Prime,
respectively, as well as the counterparty risk assessments of
Ba1(cr) and NP(cr), for long and short-term, respectively. The
outlook on the long-term deposit ratings remains stable.
RATINGS RATIONALE
The affirmation of GNB Sudameris' BCA at ba3 reflects asset quality
metrics that have remained below the system's and Colombian peer
banks' loan delinquency ratios in the past five years, as well as
the bank's steady access to low-cost core deposits, with low
reliance on market funding instruments, and consistent track record
of high liquidity. Conversely, GNB Sudameris' BCA is challenged by
capital metrics, measured under Moody's Banks Methodology, that are
lower than the bank's historic levels.
In March 2023, GNB Sudameris' problem loan ratio, measured as Stage
3 loans under IFRS to gross loans, stood at 2.28%, below the system
average of 4.23% in the same period. However, the bank had reported
a deterioration in loan delinquency since 2022 that was in line
with the strong deceleration of economic activity in Colombia,
along with weak macroeconomic conditions, and the consolidation of
Banco GNB Paraguay S.A., following the acquisition of Banco Bilbao
Vizcaya Argentaria Paraguay S.A., concluded in July 2022. The
bank's subsidiaries in Paraguay and in Peru, Banco GNB Peru S.A.,
accounted together for 50.6% of the bank's consolidated loan book
in March 2023. The Peruvian operation is largely focused on
consumer lending and the Paraguayan subsidiary has a large share of
agribusiness loans, both segments that have been hit by high
interest rates and inflation, as well as climate-related events
that have particularly affected the agribusiness portfolio in
Paraguay.
The ba3 BCA also reflects asset risk pressures arising from Banco
GNB Sudameris' track record of having a loan book with high
concentration in specific economic sectors, such as agribusiness
(20% of the portfolio in March 2023) and the construction segment
(13%). These risks are relatively offset by the bank's focus on
low-risk payroll lending in Colombia that represented 28% of gross
loans in March 2023 and the bank's historically adequate reserves
for loan losses, that covered 160.3% of its problem loans and 3.66%
of gross loans in March 2023.
The affirmation of GNB Sudameris' BCA also acknowledges the bank's
consistent access to granular and low cost demand and saving
deposits, which comprised 45.85% of the bank's funding structure in
March 2023, and its sizable position of liquid assets, with a ratio
of liquid banking assets to tangible banking assets of 45.87%.
Conversely, the negative drivers of the ba3 BCA stem from GNB
Sudameris' low capitalization measured by tangible common equity to
risk-weighted assets (TCE/RWA), Moody's preferred capital metric,
and the modest profitability the bank reported in 2022, which was
affected primarily by higher cost of funding and slowdown in loan
origination.
In March 2023, GNB Sudameris' capitalization stood at 6.35% under
Moody's TCE ratio, showing a small increase from 6.0% in the
previous year. The bank's common equity tier 1 (CET1) capital ratio
according to the Colombian bank regulator was 6.53% at the same
date. Both metrics were below the average ratios by the other banks
rated by Moody's in Colombia (10.05% and 9.47%, respectively). The
TCE/RWA ratio for GNB Sudameris incorporates Moody's adjustment for
the deduction of noncontrolling interests of minority shareholders
(NIMS), which includes the sale of 12% of GNB Paraguay S.A.'s
shares to Grupo Vierci in April 2023, increasing the equity stake
of the latter to 44%. Moody's deducts NIMS from TCE as they do not
provide loss absorption for creditors at the parent company level.
In March 2023, GNB Sudameris had a net income to tangible assets
ratio of 0.65%, just slightly above 0.58% in March 2022 and still
below the 0.73% as of December 2019, a few months prior to the
coronavirus pandemic. Moody's expect GNB Sudameris to maintain a
fairly steady profitability in 2023 as new loan origination slows
down amid weakened economic activity in the period and the bank
remains more conservative in building up provisions for loan losses
while management focuses on lowering funding costs by incrementing
core deposits in Colombia, Peru and Paraguay.
The stable outlook on GNB Sudameris' deposit ratings incorporates
Moody's view that the bank will be less exposed to negative
pressure in asset quality and profitability in the next 12 to 18
months than it had been in the past two years. In Colombia, the
large participation of payroll loans in the GNB Sudameris' local
loan book helps to protect it from further pressure in delinquency
from consumer loans in the system, particularly stemming from high
interest rates for longer and inflationary pressures. In Paraguay,
Moody's also expect an increase in the bank's new loan origination
as the economy gradually recovers from the drought in 2022-2023.
This will have a positive effect on asset quality in the
agribusiness portfolio at GNB Sudameris' subsidiary.
GNB Sudameris' deposit ratings incorporate Moody's assessment of a
moderate probability of support from the Government of Colombia
(Baa2 stable) to the bank, in case of stress. This results in one
notch of uplift from the bank's ba3 BCA. The support assumption
reflects the bank's modest deposit market share of about 3.3% in
Colombia as of March 2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
GNB Sudameris' ratings could be upgraded if the bank reports
sustainable and material improvement in capitalization and
profitability. A possible upgrade of the bank's BCA would also
depend on asset quality metrics that remain in line with levels
observed recently.
Moody's could downgrade GNB Sudameris' ratings in case
capitalization declines from current levels, and asset risk and
profitability metrics deteriorate substantially and consistently
over the next outlook horizon. The ratings would not be affected by
a downgrade of the Government of Colombia's sovereign bond rating
of Baa2, which is unlikely at this time given the stable outlook on
the rating.
METHODOLOGY USED
The principal methodology used in these ratings was Banks
Methodology published in July 2021.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Lack of Jobs Drives Emigration of Young Locals
------------------------------------------------------------------
Dominican Today reports that the study conducted by the Association
of Young Entrepreneurs (ANJE) reveals that the main reasons why
citizens from the Dominican Republic consider emigrating are the
lack of job opportunities, low salaries, and inadequate educational
improvements.
The study found that there is a higher proportion of young people
interested in emigrating, with 66.1% of those aged 18 to 21, 61% of
those aged 22 to 25, and 59.4% of those aged 26 to 30 having
considered living outside the country, according to Dominican
Today.
The study emphasizes that addressing these structural problems is
essential to reduce the demand for emigration and create a country
of opportunities, the report notes. The president of ANJE, Jaime
Senior, stressed the importance of offering more opportunities and
creating a country that provides better prospects for young people,
the report relays.
The survey was conducted through telephone and online surveys among
young people aged 18 to 35 residing in Santo Domingo, Santiago, and
the National District, the report discloses. It also involved
focus groups with representatives from various sectors, including
business associations, organizations, and journalists, the report
says. The study also interviewed a member of the Central Electoral
Board.
Regarding the income levels of young Dominican voters, the findings
show that 47.8% earn a salary of less than 30,000 pesos, followed
by 33% earning between 30,001 and 135,000 pesos, and 8.5% earning
more than 135,001 pesos, the report relays. Additionally, 0.6% of
participants reported having no income, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican To related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
S&P Global Ratings, in December 2022, raised its long-term foreign
and local currency sovereign credit ratings on the Dominican
Republic to 'BB' from 'BB-'. The outlook on the long-term ratings
is stable. S&P affirmed its 'B' short-term sovereign credit
ratings. S&P also revised its transfer and convertibility (T&C)
assessment to 'BBB-' from 'BB+'. The stable outlook reflects S&P's
expectation of continued favorable GDP growth and policy continuity
over the next 12-18
months that will likely stabilize the government's debt burden.
In February 2023, S&P said its BB ratings reflect the country's
fast-growing and resilient economy. It also incorporates the
country's historical political and social challenges in passing
structural reforms to contain fiscal deficits, despite recent
improvements in the electricity sector. The ratings are constrained
by relatively high debt, a hefty interest burden, and limited
monetary policy flexibility.
Fitch Ratings, in December 2022, affirmed the Dominican Republic's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Rating Outlook.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
=====================
P U E R T O R I C O
=====================
BED BATH & BEYOND: Seeks Conditional Approval of Plan Disclosures
-----------------------------------------------------------------
Bed Bath & Beyond Inc., et al., filed a motion for an order (I) (A)
conditionally approving the adequacy of the Disclosure Statement,
and scheduling a combined Disclosure Statement approval and Plan
confirmation hearing.
After months of arm's-length, good faith negotiations with their
funded debtholders, Bed Bath & Beyond Inc. and its affiliated
Debtors commenced Chapter 11 cases with committed postpetition
financing in the form of the DIP Facility to facilitate an
expeditious and cost-efficient process to maximize the value of
their estates for the benefit of all stakeholders. That process had
been a dual track one: while immediately initiating an orderly
winddown of their business operations through a liquidation of
their inventory and brick-and-mortar stores, the Debtors
simultaneously pursued a sale or other disposition of their
remaining assets as a going-concern or otherwise. The Debtors'
progress in advancing the dual-track process throughout these cases
has been substantial and no small feat. That is largely due to the
flexibility and attention of this Court and the tireless efforts of
the Debtors' management team, the Debtors' secured lenders, the
Committee, the Debtors' landlord counterparties, and other key
stakeholders.
Following the U.S. Trustee's appointment of the official committee
of unsecured creditors on May 5, 2023, the Debtors promptly engaged
in a robust diligence sharing process with the Committee and its
advisors to educate them on the Debtors' businesses and bring them
up to speed on the developments in the cases. Not long thereafter,
the Debtors, the Committee, and the DIP Lenders reached a
comprehensive, negotiated settlement on various issues relating to,
among other things, the distribution of proceeds of the Debtors'
assets, which was memorialized in the Final DIP Order (the "DIP
Settlement"). The DIP Settlement critically coalesced stakeholder
consensus around the Debtors' expected path to confirmation and
provided an avenue for potential recovery for the Debtors' general
unsecured creditors.
On top of the DIP Settlement, the Debtors' sustained efforts to
monetize their assets and recover estate property has proceeded
rapidly and effectively. Following a robust marketing process that
began prepetition and continued postpetition, as well as an
auction, the Debtors obtained approval of a sale of certain
intellectual property assets of the Bed Bath & Beyond banner to
Overstock.com, Inc. for a purchase price of $21.5 million in cash
consideration. Additionally, the Debtors obtained approval of a
sale of the intellectual property assets of the buybuy BABY banner
to Dream On Me, Inc. for approximately $15.5 million. Monetization
of the valuable intellectual property assets of the Debtors' key
business banners provides hope for the continued use and
revitalization of the Debtors' storied brands. In addition to
these sales, the Debtors continue to successfully monetize their
inventory pursuant to the relief granted in the Store Closing Order
and their under-market leasehold interests, including through the
court-approved procedure to sell or dispose of their lease assets
and designation rights related thereto.
In conjunction with the foregoing efforts, the Debtors and their
advisors advanced the drafting and negotiation of the Plan and the
Disclosure Statement. And contemporaneously with the filing of
this Motion, the Debtors filed the Plan and Disclosure Statement.
At a high level, the Plan vests the Debtors' assets in the
Wind-Down Debtors, who, at the direction of the Plan Administrator
and oversight from the Oversight Committee, will be responsible for
monetizing and thereafter distributing such assets to Holders of
Allowed Claims in accordance with the waterfall terms of the Plan.
The Plan, which is the culmination of months of good-faith, hard
fought discussions between the Debtors, the DIP Lenders, and the
Committee, represents the best currently available path to maximize
recoveries for the Debtors' stakeholders. Critically, it is
supported by the Committee and the DIP Lenders.
The Debtors are mindful of the expedited timeline of these Chapter
11 Cases, as mandated by the milestones agreed to in the Final DIP
Order and the budget governing the funding of these cases. The
Debtors believe that this timeline, while expedited, provides the
Debtors the time required to facilitate a value-maximizing winddown
while providing parties in interest adequate notice and opportunity
to participate in the process.
As a result, the Debtors seek to obtain conditional approval of the
adequacy of the Disclosure Statement in order to commence
solicitation of votes on the Plan on the proposed schedule set
forth herein and to schedule a joint hearing to consider the
adequacy of the Disclosure Statement on a final basis and
confirmation of the Plan. The Combined Hearing will streamline and
expedite the confirmation process and save the Debtors from
additional administrative expenses that a two-stage process would
require.
The Debtors proposed this timeline:
* The Disclosure Statement Objection Deadline will be on July
27, 2023 at 4:00 p.m., prevailing Eastern Time.
* The Voting Record Date will be on July 28, 2023.
* The Publication Deadline is 5 business days following entry of
the Order (or as soon as reasonably practicable thereafter).
* The Conditional Disclosure Statement Hearing will be on August
1, 2023 at 2:30 p.m., prevailing Eastern Time.
* The Solicitation Deadline is 3 business days following entry
of the Order (or as soon as reasonably practicable thereafter).
* The Plan Supplement Filing Deadline is the date that is no
later than 14 days prior to the Voting Deadline.
* The Combined Objection Deadline will be on September 1, 2023
at 4:00 p.m., prevailing Eastern Time.
* The Voting Deadline will be on September 1, 2023 at 4:00 p.m.,
prevailing Eastern Time.
* The Deadline to File Certification of Balloting will be on
September 4, 2023.
* The Confirmation Brief Deadline will be on September 6, 2023.
* The Combined Reply Deadline will be on September 6, 2023.
* The Combined Hearing Date will be on September 7, 2023, at
2:30 p.m., prevailing Eastern Time.
Co-Counsel for the Debtors:
Joshua A. Sussberg, P.C., Esq.
Emily E. Geier, P.C., Esq.
Derek I. Hunter, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
E-mail: joshua.sussberg@kirkland.com
emily.geier@kirkland.com
derek.hunter@kirkland.com
- and -
Michael D. Sirota, Esq.
Warren A. Usatine, Esq.
Felice R. Yudkin, Esq.
COLE SCHOTZ P.C.
Court Plaza North, 25 Main Street
Hackensack, NJ 07601
Telephone: (201) 489-3000
E-mail: msirota@coleschotz.com
wusatine@coleschotz.com
fyudkin@coleschotz.com
About Bed Bath & Beyond
Bed Bath & Beyond Inc., together with its subsidiaries, is an
omnichannel retailer selling a wide assortment of merchandise in
the Home, Baby, Beauty & Wellness markets and operates under the
names Bed Bath & Beyond, buybuy BABY, and Harmon, Harmon Face
Values. The Company also operates Decorist, an online interior
design platform that provides personalized home design services.
At its peak, Bed Bath & Beyond operated the largest home furnishing
retailer in the United States with over 970 stores across all 50
states, consistently at the forefront of major home and bath
trends. Operating stores spanning the United States, Canada,
Mexico, and Puerto Rico, Bed Bath & Beyond offers everything from
bed linens to cookware to electric appliances, home organization,
baby care, and more.
Bed Bath & Beyond closed over 430 locations across the United
States and Canada before filing chapter 11 cases, implementing full
scale winddowns of their Canadian business and the Harmon branded
stores.
Left with 360 Bed Bath & Beyond and 120 buybuy BABY stores, Bed
Bath & Beyond Inc. and 73 affiliated debtors on April 23, 2023,
each filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code to pursue a wind down of operations.
The cases are pending before the Honorable Vincent F. Papalia and
have requested joint administration of the cases under Bankr.
D.N.J. Lead Case No. 23-13359.
Kirkland & Ellis LLP and Cole Schotz P.C. are serving as legal
counsel, Lazard Frares & Co. LLC is serving as investment banker,
and AlixPartners LLP is serving as financial advisor. Bed Bath &
Beyond Inc. has retained Hilco Merchant Resources LLC to assist
with inventory sales. Kroll LLC is the claims agent.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
CARIBBEAN AIRLINES: PM Drew Hails Inaugural Flight as 'Milestone'
-----------------------------------------------------------------
Trinidad Express reports that St. Kitts and Nevis welcomed the
inaugural flight of the Trinidad-based Caribbean Airlines (CAL)
with Prime Minister Dr Terrance Drew saying that "this significant
milestone further strengthens our connectivity to the rest of the
region and, by extension, the world."
"It also symbolizes our continued progress in boosting airlift and
its countless benefits to our nation," Drew said, as the airline
operates a total of five weekly flights providing travel options
between Port of Spain, Barbados, Antigua, and St Kitts, according
to Trinidad Express.
"The arrival of Caribbean Airlines to our Federation signifies a
new era of opportunities and possibilities. We recognize the
immense potential within our tourism industry and have spared no
effort in ensuring that our beautiful twin islands are easily
accessible to visitors from around the globe and, more importantly,
the Caribbean region," Drew told the welcoming ceremony, the report
notes.
He said he can only hope that one of the lessons learned from the
Covid-19 pandemic "is how dependent we are on tourism," the report
relays.
"But even greater of a lesson is the need for us to begin bridging
the gap between the region's islands. Intraregional travel is key
to the sustainable development of our nation. As Caribbean
brothers and sisters, we cannot and must not be solely dependent on
our international visitors, but I want to encourage us today, even
with the arrival of Caribbean Airlines to travel within the region
as well and help to build our own economies," he said, the report
relays.
Drew said that on assuming office late last year, his
administration had promised to establish strategic partnerships to
improve connectivity, the report notes.
"Furthermore, we have collaborated with regional and international
airlines, including Caribbean Airlines, to develop new routes and
increase flight frequencies, making St Kitts and Nevis more
accessible and competitive for both business and leisure travel.
"The benefits of an improved airlift cannot be overstated. It
stimulates economic growth by driving tourism, generating
employment opportunities, and boosting revenue streams.
"By attracting more visitors, we inadvertently activate the
multiplier effect, thus ensuring that the monies derived from
tourism have the potential to trickle down to our communities.
This, in turn, improves our citizens' overall standard of living,
enhances our cultural exchange, and fosters a greater sense of
pride in our nation," he said, the report relays.
Drew said that the arrival of Caribbean Airlines to the island "is
further evidence of the growing demand for the Federation, blessed
with natural beauty, vibrant culture, and warm hospitality.
"As we welcome visitors from near and far, we have the opportunity
to showcase the wonders of our islands, strengthen our diplomatic
ties, and forge lasting friendships that transcend borders," the
report relates.
He said further that the inaugural flight marks the beginning of a
new chapter in the nation's journey, "one that promises growth,
prosperity, and a bright future for all.
"As we continue to work tirelessly to boost airlift and enhance our
tourism industry, let us embrace this moment with gratitude and
enthusiasm, knowing that together, we are building a better St
Kitts and Nevis for generations to come", he told the ceremony, the
report relates.
CAL said that it views the network expansion as one of the core
elements of the airline's Welcome Home campaign and aligns with the
company's vision for seamless connectivity and increased
accessibility throughout the Caribbean, the report notes.
To support this expansion, Caribbean Airlines recently acquired new
ATR aircraft, the report discloses.
"The addition of St Kitts to the Caribbean Airlines route network
signifies the airline's commitment to providing comprehensive
travel options for both business and leisure travelers.
"With the new route, passengers can enjoy efficient connections
between key destinations, opening up exciting opportunities for
exploration and trade within the Eastern Caribbean," the airline
said in a statement, the report adds.
About Caribbean Airlines
Caribbean Airlines Limited -
http://www.caribbean-airlines.com/providespassenger airline
services in the Caribbean, South America, and North America. The
company also offers freighter services for perishables, fish and
seafood, live animals, human remains, and dangerous goods. In
addition, it operates a duty free store in Trinidad. Caribbean
Airlines Limited was founded in 2006 and is based in Piarco,
Trinidad and Tobago.
Caribbean Airlines is among many airlines whose business has been
greatly affected in 2020 by the slowdown of international travel
caused by the COVID-19 pandemic. The government of Trinidad &
Tobago guaranteed a US$65 million loan for the airline, and that
funding has helped with the airlines' cash flow shortfall since
May 2020. In September 2020, the airline related it will be
taking cost-cutting measures to help keep it afloat. The
measures, which was to affect some 1,700 employees, included
salary deductions, no-pay leaves and lay-offs.
===============
X X X X X X X X
===============
[*] LATAM: Caribbean Economies Improve Since April
--------------------------------------------------
Joel Julien at Trinidad Express reports that the Latin America and
Caribbean region is expected to see growth decline from 3.9 per
cent in 2022 to 1.9 per cent this year, the International Monetary
Fund (IMF) stated in the World Economic Outlook (WEO) update
published July 24.
The report stated that the latest projection reflects an upward
revision of 0.3 percentage point since April, according to Trinidad
Express.
The WEO for July has projected that Latin America and the Caribbean
will grow by 2.2 per cent in 2024, the report notes.
"The decline from 2022 to 2023 reflects the recent fading of rapid
growth during 2022 after pandemic reopening, as well as lower
commodity prices; the upward revision for 2023 reflects
stronger-than-expected growth in Brazil-marked up by 1.2 percentage
points to 2.1 per cent since the April WEO-given the surge in
agricultural production in the first quarter of 2023, with positive
spillovers to activity in services. It also reflects stronger
growth in Mexico, revised upward by 0.8 percentage point to 2.6 per
cent, with a delayed post-pandemic recovery in services taking hold
and spillovers from resilient US demand," it stated, the report
discloses.
Fighting Inflation
Overall, the WEO states that global growth is projected to fall
from an estimated 3.5 per cent in 2022 to three per cent in both
2023 and 2024, the report discloses.
"While the forecast for 2023 is modestly higher than predicted in
the April 2023 WEO, it remains weak by historical standards, the
report notes. The rise in central bank policy rates to fight
inflation continues to weigh on economic activity," it stated, the
report relays.
The WEO stated that global headline inflation is expected to fall
from 8.7 per cent in 2022 to 6.8 per cent in 2023 and 5.2 per cent
in 2024, the report says.
"The recent resolution of the US debt ceiling standoff and, earlier
this year, strong action by authorities to contain turbulence in US
and Swiss banking reduced the immediate risks of financial sector
turmoil," the report notes.
"This moderated adverse risks to the outlook. However, the balance
of risks to global growth remains tilted to the downside. Inflation
could remain high and even rise if further shocks occur, including
those from an intensification of the war in Ukraine and extreme
weather-related events, triggering more restrictive monetary
policy," it stated, the report says.
"Financial sector turbulence could resume as markets adjust to
further policy tightening by central banks. China's recovery could
slow, in part as a result of unresolved real estate problems, with
negative cross-border spillovers. Sovereign debt distress could
spread to a wider group of economies. On the upside, inflation
could fall faster than expected, reducing the need for tight
monetary policy, and domestic demand could again prove more
resilient," the WEO stated, the report notes.
The WEO stated that in most economies, the priority remains
achieving sustained disinflation while ensuring financial
stability, the report discloses.
"Therefore, central banks should remain focused on restoring price
stability and strengthen financial supervision and risk monitoring.
Should market strains materialize, countries should provide
liquidity promptly while mitigating the possibility of moral
hazard. They should also build fiscal buffers, with the composition
of fiscal adjustment ensuring targeted support for the most
vulnerable. Improvements to the supply side of the economy would
facilitate fiscal consolidation and a smoother decline of inflation
toward target levels," it stated, the report adds.
[*] LATAM: IMF Foresees Economic Upswing in Brazil and Mexico
-------------------------------------------------------------
Richard Mann at Rio Times Online reports that the International
Monetary Fund (IMF) has updated its economic outlook, offering
revised growth projections for Latin American economies.
The recent IMF report indicates anticipated GDP growth for Brazil
and Mexico, the region's dominant economies, according to Rio Times
Online.
In contrast, Argentina's economic outlook has experienced a
significant downgrade, the report notes.
The IMF's updated predictions indicate a 1.9% GDP growth for Latin
America in 2023, a slight improvement from the previous forecast of
1.6%, the report says.
The region is expected to see further growth in 2024, with a 2.2%
expansion, consistent with earlier projections, the report adds.
*********
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