/raid1/www/Hosts/bankrupt/TCRLA_Public/230912.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
Tuesday, September 12, 2023, Vol. 24, No. 183
Headlines
A R G E N T I N A
ARGENTINA: Mendoza Narrows Search for US$1B Potash Investor
B R A Z I L
BRAZIL: States Boast Unemployment Rates on Par w/ Wealthy Countries
UNIGEL PARTICIPACOES: S&P Cuts ICR to 'CCC-', Outlook Negative
C A Y M A N I S L A N D S
AUB SUKUK: Fitch Affirms 'BB+' Rating on Sr. Unsec. Cert.
C H I L E
CHILE: Economy Stagnant in Most Optimistic Scenario for 2023
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Economy Has Grown Less Than 6 Other Countries
E C U A D O R
ECUADOR: IDB OKs $45M Loan Reducing the Digital Gap in Education
P E R U
VOLCAN COMPANIA: Moody's Cuts CFR & Sr. Unsec. Bond Rating to Caa1
P U E R T O R I C O
NEW MEDICAL: Hires Gloria Justiniano Irizarry as Counsel
T R I N I D A D A N D T O B A G O
JMMB GROUP: To Restructure Trinidad and Tobago Entities
- - - - -
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A R G E N T I N A
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ARGENTINA: Mendoza Narrows Search for US$1B Potash Investor
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James Attwood at Bloomberg News reports that Argentina's Mendoza
Province has narrowed down its search for a company to resume
development of the Rio Colorado potash mine, a decade after Vale SA
withdrew from the project.
"We have completed the bid selection process," Mendoza Governor
Rodolfo Suarez posted on X, the social media platform formerly
known as Twitter, according to Bloomberg News. "Now, we will move
quickly in the final negotiation of the contract with the best
qualified bidder," the report relays.
Under the advice of UBS Group AG, provincial authorities sought
offers in a competitive process that initially drew the interest of
more than 30 firms, the report notes. The winner will invest US$1
billion over five years, the report discloses. Bidding is taking
place at a time when Russia's invasion of Ukraine is reshaping the
global fertilizer trade, the report says.
Mendoza - better known for its exports of Malbec wine than its vast
mineral wealth - took over Rio Colorado after years of wrangling
with Vale, the report relays. The Brazilian company pulled the
plug in 2013 after spending US$2.2 billion to build almost half the
mine, 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.
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.
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B R A Z I L
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BRAZIL: States Boast Unemployment Rates on Par w/ Wealthy Countries
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Richard Mann at Rio Times Online reports that in the latest Brazil
news, some Brazilian states boast unemployment rates on par with
wealthy countries. Brazil's stats agency IBGE says 25 out of 27
states saw lower jobless rates this quarter, according to Rio Times
Online.
However, much like Europe, where countries like Sweden and Croatia
differ significantly in development and wealth, unemployment rates
also vary greatly across Brazilian states, 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 Inc., on August 15, 2023, upgraded Brazil's Long-Term
Foreign and Local Currency - Issuer Ratings to BB from BB (low).
At the same time, DBRS Morningstar confirmed Brazil's
Short-term Foreign and Local Currency - Issuer Ratings at R-4.
The trend on all ratings is Stable.(March 2018).
UNIGEL PARTICIPACOES: S&P Cuts ICR to 'CCC-', Outlook Negative
--------------------------------------------------------------
On Sept. 6, 2023, S&P Global Ratings lowered its global scale
issuer credit and issue-level ratings on Brazilian chemical
producer Unigel Participacoes S.A. to 'CCC-' from 'CCC+', and its
national scale ratings to 'brCCC-' from 'brBB-'. S&P also removed
the ratings from CreditWatch with negative implications and
assigned a negative outlook. The recovery rating on the company's
senior notes and debentures remains at '3'.
The negative outlook reflects the high likelihood of a distressed
debt restructuring or payment default in the next six months.
Over the past few quarters, petrochemical spreads have narrowed
because of the global economic slowdown and China's
weaker-than-anticipated recovery and its greater focus on the
services sector rather than on the industrial sector. At the same
time, Unigel's fertilizer segment continued to suffer from low
prices for urea and ammonia, combined with an expensive contract
with Petroleo Brasileiro S.A. - Petrobras for natural gas (the main
input), the price of which is pegged to Brent price that remained
relatively flat over the past few months.
As a result, Unigel has reduced sharply its operations over the
past few months across its fertilizer and petrochemical segments to
limit cash burn. With lower volumes for the year and S&P's
expectation for subpar spreads, it now believes the company's
EBITDA will be much weaker this year than our last forecast of
about R$400 million.
Unigel has a total of about R$155 million of interest payments for
its senior notes (about $23 million) and debentures (close to R$40
million) coming due in early October 2023, apart from a bilateral
bank line of about R$75 million due at the end of September. S&P
said, "We think that the company would try to roll over the bank
line for the next six months, but it would probably need new funds
to cover its upcoming interest payments to avoid consuming a
significant portion of its cash position. We believe Unigel's cash
position is now lower than R$686 million that it reported as of
March 31, 2023, because of persistently weak industry conditions
and the company's plant stoppages."
The debenture holders granted a 90-day extension to the company in
order to hold discussions and revise debentures' terms. These might
include the addition of a negative pledge clause in the debenture
instrument and potential guarantees, so that debenture holders are
not primed by the bondholders. Debenture holders also provided a
waiver for the breach of the company's financial covenant in the
second quarter of 2023. With this waiver, S&P believes Unigel might
disclose its second-quarter results in the next few weeks.
Petrobras mentions that the fertilizer segment is now strategic for
the company, but there's still uncertainty over timing and
conditions for a potential adjustment of the natural gas contract
that could enable the two fertilizer plants generate adequate
profitability for Unigel again. S&P also understands that Unigel
has been advancing in discussions for potential asset sales, but
there's no visibility over the timing, values, and conditions.
===========================
C A Y M A N I S L A N D S
===========================
AUB SUKUK: Fitch Affirms 'BB+' Rating on Sr. Unsec. Cert.
----------------------------------------------------------
Fitch Ratings has placed Ahli United Bank B.S.C.'s (AUB) and Ahli
United Bank (K.S.C.P.)'s (AUBK) Viability Ratings (VR) on Rating
Watch Negative (RWN). The banks' Long-Term and Short-Term IDRs were
affirmed. The Outlook on the Long-Term IDRs is Stable.
The rating actions follow the announcement on 30 July 2023 by
Kuwait Finance House (KFH; A/Stable/bb+), AUBK's 95.1% shareholder
(excluding treasury shares), that it has reached an initial
agreement to merge AUBK with KFH, with the latter being the
surviving entity. KFH currently owns directly 20.3% stake in AUBK
while the remainder is held through AUB. KFH's ratings are not
affected by the announcement.
Regulatory approvals from the Central Bank of Kuwait and the
Capital Market Authority as well as the internal approvals from the
general assemblies of both banks are necessary to complete the full
acquisition of AUBK and merger with KFH. Fitch believes the
completion of the merger may take more than six months.
KEY RATING DRIVERS
AUB
Fitch has placed AUB's VR on RWN to reflect its expectation that on
the completion of the direct acquisition of AUBK by KFH, as part of
the merger AUB's VR is likely to be downgraded. This is primarily
because the divestment of AUBK will likely result in the share of
credit exposure to the weaker Bahraini domestic operating
environment (scored 'b+') to increase significantly for AUB. This
is likely to result in downward revision of the assessment of
operating environment for AUB.
Apart from the operating environment assessment, divestment of AUBK
would also likely negatively affect AUB's business and risk
profiles, asset quality and funding and liquidity. Therefore, the
outlooks for these Key Rating Drivers have been revised to negative
from stable.
AUB's VR is currently constrained at two notches above the Bahraini
sovereign rating of 'B+'. This is because AUB's sensitivity to a
sovereign default, albeit low, is not nil, considering AUB's
already material exposure to the domestic market and market
sentiment towards a country undergoing stress and the banks
headquartered there. As AUBK exits the AUB group, the increase of
AUB's credit exposure to the Bahraini operating environment will
likely constrain the VR at one notch above the sovereign rating.
AUB's Long-Term IDR reflects potential support from its
shareholder, KFH. It is above the Bahraini sovereign rating
(B+/Stable) but capped by Bahrain's Country Ceiling of 'BB+'. The
Stable Outlook on AUB's Long-Term IDR therefore reflects that on
Bahrain's sovereign rating.
The 'B' Short-Term IDR is the only option mapping to a 'BB+'
Long-Term IDR.
Fitch has placed AUB's Long-Term IDR (xgs) on RWN because it is at
the level of AUB's VR. Fitch has also affirmed AUB's Short-Term IDR
(xgs) because it is assigned in accordance with the Long-Term IDR
(xgs) and Fitch's Short-Term rating mapping, and a downgrade of the
Long-Term IDR (xgs) would not result in a downgrade of the
Short-Term IDR (xgs).
AUBK
AUBK will cease to exist following the completion of the merger of
KFH with AUBK.
Fitch has placed AUBK's VR on RWN to reflect its expectation that
on completion of the legal merger, AUBK's VR will likely be
equalised with that of KFH ('bb+', which already incorporates its
assessment of the short-term impact of KFH's acquisition of AUB in
2022), before it is withdrawn. The RWN on AUBK's VR could also be
resolved and AUBK's VR downgraded prior to the legal merger if its
franchise deteriorates considerably.
Fitch believes that the intrinsic creditworthiness of the entity
from the merger will directly reflect that of KFH. For the same
reasons, Fitch has also revised the outlooks on AUBK's operating
environment and asset quality to negative from stable, business
profile to stable from negative and funding liquidity to positive
from stable.
AUBK's IDRs reflect potential support from the Kuwaiti authorities,
as reflected in its Government Support Rating (GSR) of 'a'. Fitch's
assessment of potential government support to Kuwaiti banks factors
in the sovereign's strong ability to provide support, as reflected
in the sovereign rating (AA-/Stable), underpinned by Kuwait's
exceptionally strong external balance sheet and vast net foreign
assets. The Kuwaiti authorities have a high willingness to provide
support to domestic banks, irrespective of the banks' size,
franchise, funding and level of government ownership. This view
considers the state's record of supporting domestic banks and its
willingness to maintain market confidence and stability given high
contagion risk among domestic banks. The merger does not change
Fitch's view on government support to AUBK. The Stable Outlook on
AUBK's Long-Term IDR reflects that on the Kuwaiti sovereign
rating.
The 'F1' Short-Term IDR is the lower of two options mapping to an
'A' Long-Term IDR because a significant part of Kuwaiti banks'
funding is related to the government and stress for AUBK would
likely come when the sovereign itself is experiencing some form of
stress.
Fitch has placed AUBK's Long-Term IDR (xgs) on RWN because it is at
the level of the VR. Fitch has also placed AUBK's Short-Term IDR
(xgs) on RWN because it is assigned in accordance with the
Long-Term IDR (xgs) and Fitch's Short-Term rating mapping,
taking-into account funding and liquidity factor scores.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
AUB
AUB's VR will likely be downgraded on the acquisition of AUB's
stake in AUBK by KFH.
A downgrade of the Bahraini sovereign rating would result in a
downgrade of AUB's VR. A downgrade of the VR could also arise from
a material deterioration of the bank's operating environments. A
substantial deterioration in the bank's asset quality, manifested
in a non-performing loans ratio rising to at least 5%, combined
with an operating profit/risk-weighted assets of below 1.25% on a
sustained basis, could lead to a VR downgrade.
A downgrade of AUB's IDRs could result from a downgrade of
Bahrain's sovereign ratings or Bahrain's Country Ceiling.
AUBK
AUBK's VR will likely be downgraded and subsequently withdrawn on
the completion of the legal merger with KFH, or earlier if the
bank's business profile and franchise in particular weaken as part
of the acquisition by KFH.
A downgrade of AUBK's Long-Term IDR would require a downgrade of
the GSR. The latter would likely stem from a weaker ability to
support, reflected in a Kuwaiti sovereign downgrade, which is not
its base case considering the Stable Outlook on the sovereign
rating. Weaker propensity of the Kuwaiti authorities to support
AUBK would also lead to negative rating action, but this is
unlikely in Fitch's view, given their strong record of supporting
domestic banks.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
AUB
An upgrade of AUB's IDRs would require an upgrade of Bahrain's
Country Ceiling. An upgrade of AUB's VR is unlikely given the RWN.
AUBK
An upgrade of AUBK's Long-Term IDR could come from an upgrade of
its GSR. The latter would likely stem from a stronger ability to
support, reflected in a Kuwaiti sovereign upgrade. However, this is
unlikely in the near term given the high GSR level.
An upgrade of AUBK's VR is unlikely given the RWN.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
AUB
AUB's senior unsecured debt ratings are aligned with the bank's
IDRs because Fitch views the likelihood of default on any senior
unsecured obligation the same as that of the bank.
AUB Sukuk Limited (AUBSL) is a special-purpose vehicle incorporated
in the Cayman Islands and established solely to issue certificates
(sukuk). The certificates' long-term rating is in line with AUB's
'BB+' Long-Term IDR, which reflects Fitch's view that default of
these senior unsecured obligations would equal a default of AUB in
accordance with Fitch's rating definitions.
AUB's Long-Term IDR (xgs) is at the level of the VR. Its Short-Term
IDR (xgs) is in accordance with the Long-Term IDR (xgs) and Fitch's
short-term rating mapping.
AUBK
AUBK's Long-Term IDR (xgs) is at the level of the VR. Its
Short-Term IDR (xgs) is in accordance with the Long-Term IDR (xgs)
and Fitch's short-term rating mapping.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
AUB
The senior unsecured debt and sukuk ratings are sensitive to a
change in AUB's IDRs.
AUB's Long-Term IDR (xgs) is sensitive to a change in its VR.
A downgrade of AUB's Short-Term IDR (xgs) is unlikely given its low
level. An upgrade of AUB's Short-Term IDR (xgs) could come from an
upgrade of its Long-Term IDR (xgs) by at least two notches,
although this in unlikely given the RWN.
AUBK
AUBK's Long-Term IDR (xgs) is sensitive to a change in its VR.
AUBK's Short-Term IDR (xgs) is sensitive to a change in the
Long-Term IDR (xgs).
VR ADJUSTMENTS
AUB
The operating environment score of 'bb+' is below the 'bbb'
category implied score due to the following adjustment reasons:
sovereign rating (negative) and international operations
(positive).
AUBK
The operating environment score of 'bbb' is below the 'a' category
implied score due to the following adjustment reasons: size and
structure of the economy (negative) and financial market
development (negative).
The business profile score of 'bbb-' is above the 'bb' category
implied score due to the following adjustment reason: group
benefits and risks (positive).
The asset quality score of 'bb+' is below the 'bbb' category
implied score due to the following adjustment reason:
concentrations (negative).
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The IDRs of AUB are linked to KFH's.
AUBK's IDRs are linked to the Kuwaiti sovereign ratings.
ESG CONSIDERATIONS
AUBK has an ESG Relevance Score of '4' for Governance. Islamic
banks need to ensure compliance of their entire operations and
activities with sharia principles and rules. This entails
additional costs, processes, disclosures, regulations, reporting
and sharia audit. This results in a Governance Structure relevance
score of '4' (in contrast to a typical ESG relevance score of '3'
for comparable conventional banks), which has a negative impact on
the bank's credit profile and is relevant to the rating in
combination with other factors.
AUBK has an ESG Relevance Score of '3' for Exposure to Social
Impact, in contrast to a typical ESG relevance score of '2' for
comparable conventional banks. This reflects that Islamic banks
have certain sharia limitations imbedded in their operations and
obligations, although this only has a minimal credit impact on the
entity.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity. Fitch's ESG Relevance Scores are not inputs
in the rating process; they are an observation of the materiality
and relevance of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Ahli United
Bank K.S.C.P. LT IDR A Affirmed A
ST IDR F1 Affirmed F1
Viability bbb- Rating Watch On bbb-
Govn't Support a Affirmed a
ST IDR (xgs) F3(xgs) Rating Watch On F3(xgs)
LT IDR (xgs) BBB-(xgs)Rating Watch On BBB-(xgs)
Ahli United
Bank B.S.C. LT IDR BB+ Affirmed BB+
ST IDR B Affirmed B
Viability bb Rating Watch On bb
LT IDR (xgs) BB(xgs) Rating Watch On BB(xgs)
Shareholder Support bb+ Affirmed bb+
ST IDR (xgs) B(xgs) Affirmed B(xgs)
senior
unsecured LT BB+ Affirmed BB+
senior
unsecured ST B Affirmed B
senior
unsecured ST (xgs) B(xgs) Affirmed B(xgs)
senior
unsecured LT (xgs) BB(xgs) Rating Watch On BB(xgs)
AUB Sukuk
Limited
senior
unsecured LT BB+ Affirmed BB+
senior
unsecured LT (xgs) BB(xgs) Rating Watch On BB(xgs)
=========
C H I L E
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CHILE: Economy Stagnant in Most Optimistic Scenario for 2023
------------------------------------------------------------
Reuters reports that Chile's central bank lowered on September 6
the top end of its estimate for the country's economic performance
in 2023, saying it now forecasts gross domestic product (GDP) to
show no growth in the most optimistic scenario.
The monetary authority previously expected an economic expansion of
as much as 0.25% this year, according to the report.
It maintained the lower end of its GDP forecast at a contraction of
0.5%, the report notes. The lowered estimate accounts for the
impact of operational issues that have hit mining production in
Chile, the world's largest copper producer, in recent months, the
central bank said, the report relays.
Non-mining activity is expected to show growth by the end of the
year, the monetary authority added, the report discloses.
The South American country's economy should rebound by next year
however, the central bank said, with GDP growth expected between
1.25% and 2.25%, the report relays. Chile's central bank has
fought to contain inflation, and cut its benchmark interest rate by
75 basis points to 9.5% as price pressures have eased more quickly
than expected, Reuters discloses.
The central bank expects cuts to continue, it said, closing the
year with a benchmark interest rate between 7.75% and 8%, the
report adds.
According to the report, annual inflation in Chile slowed to 6.5%
in July and is expected to fall to 4.3% by the end of the year, the
bank said.
It is forecast to come down to the target of 3% in the second half
of 2024, it added, taking into account the slowdown in recent
months, the peso's depreciation and high fuel prices
internationally, the report relays.
However, "the external scenario continues to be marked by high
uncertainty," the monetary authority warned, Reuters relates.
Investment defined as gross fixed capital formation (GFCF) remains
poor in Chile, particularly in the construction sector, said the
central bank, which forecasts GFCF to contract 1.2% this year and
0.6% next year, say the report.
By 2025, GFCF is expected to resume growth as domestic financial
conditions ease, the central bank said, Reuters notes.
The bank also maintained its price estimates for copper, which is
projected to close out the year at $3.85/lb and drop to $3.70/lb in
2024, adds the report.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Economy Has Grown Less Than 6 Other Countries
-----------------------------------------------------------------
Dominican Today reports that in 2023, the Dominican Republic finds
itself at the bottom of the economic growth ladder among the seven
member countries of the Central American Monetary Council and
Panama. This marks a stark contrast from the previous year when
it occupied one of the top three positions, according to Dominican
Today.
According to data published in the monthly report by the Central
American Monetary Council, Panama takes the lead in economic growth
with an impressive cumulative rate of 9% as of May. Following
closely behind are Costa Rica, Guatemala, Nicaragua, and El
Salvador. Unfortunately, the Dominican Republic lags behind with a
growth rate of just 1.5% up to July, the report relays.
Economist Odalis Marte, the executive secretary of the Central
American Monetary Council, expressed optimism about the Dominican
economy, even in the face of international uncertainties, the
report discloses. He emphasized that despite the recent slowdown,
the Dominican Republic is still considered a high-growth economy.
Marte explained that the economic performance in 2023 can be
attributed to several factors. Firstly, there is a statistical
effect resulting from the normalization of economic expansion rates
following a robust post-pandemic recovery, the report says. The
economy surged by 11.1% in 2021 but gradually stabilized to 4.9% in
2022, a level consistent with the country's potential growth. Such
normalization is expected as long as there are no significant
disruptions to the growth trajectory, the report notes.
Secondly, monetary measures were necessary to curb inflationary
pressures, impacting the growth rate, the report discloses.
Thirdly, there was a reduction in public spending on economic
activity after a substantial increase in expenditure during the
COVID-19 pandemic to address public health requirements, the report
relays.
A crucial fourth factor contributing to the slowdown is the
deceleration of the United States economy, the Dominican Republic's
primary trading partner, the report notes. This has had adverse
effects on trade and financial transfers between the two nations,
the report relays.
Jose Manuel Salazar, executive secretary of the Economic Commission
for Latin America and the Caribbean (Cepal), echoed the impact of
the U.S. slowdown, particularly on Dominican exports, the report
says. He noted that private consumption also slowed due to rising
interest rates, notes the report.
Data from Customs reports a decline in total exports from the
Dominican Republic between January and June 2023, amounting to
$6,228.72 million -- a 1.33% decrease compared to the same period
in 2022, the report relays. Within this period, the national
regime's exports experienced a sharp drop of 9.03%, with exports to
the United States declining by 5.59% in the first half of the year,
the report notes.
Looking ahead, Marte highlighted that the measures implemented to
stimulate the Dominican economy are starting to yield positive
results. In July, the Monthly Indicator of Economic Activity (IMAE)
showed a year-on-year growth of 2.9%, the report discloses.
However, both ECLAC and the Dominican Government have revised their
growth projections downward for the local economy in 2023,
forecasting 3.7% and 3%, respectively, the report notes. Marte
believes that these adjustments reflect the performance in the
initial months of the year and anticipates that growth will
approach the economy's potential in the coming months, the report
relays. He recommends continued efforts to stimulate economic
activity, 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.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'.The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative.S&P also
affirmed its 'BB-' long-term foreign and local currency sovereign
credit ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said.A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
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E C U A D O R
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ECUADOR: IDB OKs $45M Loan Reducing the Digital Gap in Education
-------------------------------------------------------------------
The Inter-American Development Bank (IDB) approved a loan of $45
million to reduce the digital divide between schools and thus
promote successful educational trajectories among students in
Ecuador.
During the last decades, the country experienced a notable growth
in educational coverage. However, many Ecuadorian boys, girls, and
young people do not manage to complete successful school
trajectories; low enrollment rates in rural areas, low levels of
learning, and low high school completion rates persist.
The digital educational transformation has a crucial role in
promoting better educational trajectories. Technology can make
instructional materials more appealing and personalized, increasing
student engagement. Additionally, the strategic use of technology
can improve the quality of teachers, increasing their access to and
participation in professional development programs.
The IDB loan will provide connectivity and technological kits to
2,400 rural schools, of which 20% will be intercultural bilingual
and 27% belong to Amazonian provinces. In this way, the initiative
expects to benefit approximately 48,000 students. In addition,
laptops will be purchased for 7,272 teachers from urban and rural
schools, benefiting nearly 175,500 students. The program will
prioritize teachers from vulnerable schools who participate in
academic reinforcement programs to enhance the impact on students'
educational trajectories.
The initiative will also benefit 632 urban schools by acquiring
technological equipment for computer laboratories. These efforts
will positively impact more than 641,000 students.
The IDB loan of $45 million has a disbursement period of 4 years, a
grace period of 7.5 years, and an interest rate based on SOFR.
=======
P E R U
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VOLCAN COMPANIA: Moody's Cuts CFR & Sr. Unsec. Bond Rating to Caa1
------------------------------------------------------------------
Moody's Investors Service has downgraded Volcan Compania Minera
S.A.A. y Subsidiarias's Corporate Family Rating and Senior
Unsecured rating to Caa1 from B2. The outlook remains negative.
Downgrades:
Issuer: Volcan Compania Minera S.A.A. y Subsidiarias
Corporate Family Rating, Downgraded to Caa1 from B2
Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 from
B2
Outlook Actions:
Issuer: Volcan Compania Minera S.A.A. y Subsidiarias
Outlook, Remains Negative
RATINGS RATIONALE
The downgrade of Volcan's ratings reflects increasing refinancing
risk heightened by weak operating prospects that raise concerns
over the company's cash flow generation capacity to meet upcoming
debt maturities.
Moody's estimates that the company will generate USD203 million of
negative free cash flow (FCF) through 2024 (USD46 million during
the second half of 2023 and USD157 million for the full year 2024)
amid USD105 million in upcoming debt maturities through the end of
2024 (three USD35 million quarterly amortizations starting in
2Q23). This liquidity shortfall negatively compares to the
company's USD50 million in cash as of June 2023 and USD50 million
in a committed revolving credit facility (RCF) available only until
November 2023.
Other sources of liquidity include potential assets sales, advance
payments of future production and the renewal of the company's RCF.
However, it remains unclear when these potential transactions would
be concluded and what amount the company could obtain out of these
alternative funding sources.
While the company stated that it already engaged with market
participants for asset sale and refinancing alternatives, Moody's
believes that the announcement of Glencore plc ("Glencore", Baa1
positive), its controlling shareholder, that it commenced in
February 2023 a process exploring the possible disposal of its
23.3% economic interest in Volcan, adds uncertainty to the already
challenging operating and financial market environment.
The negative outlook reflects the limited financial flexibility to
meet short-term debt maturities amid weakening cash flow generation
capacity in the current global and domestic environment in Peru.
The downgrade also reflects governance considerations as key
drivers of the rating action including the lack of visibility over
a comprehensive plan to refinance upcoming maturities. The
aggressive approach towards liquidity management in tight credit
conditions is reflected now in the company's Financial Strategy and
Risk Management assessment that was changed to 5 from 4, the
overall exposure to governance risks (Issuer Profile Score or
"IPS") to 5 (G-5) and Volcan's Credit Impact Score to 5 (CIS-5),
from 4. The ESG Credit Impact Score is CIS-5, revised from CIS-4,
since ESG considerations are a major constraint for the rating.
The G-5 IPS also reflects Glencore's announcement that it commenced
a process exploring the possible disposal of its economic interest
in Volcan, which creates additional uncertainty around Volcan's
financially strategy and ability to improve its liquidity profile.
Based on Moody's price sensitivity ranges of USD1.00 - USD1.30 per
pound in medium term, Volcan is expected to generate negative free
cash flow of USD46 million in 2023 and USD157 million in 2024.
Negative free cash flow is a combination of: i) capex related to
the expansion of Romina, a polymetallic project with an estimated
investment of USD 145 million through 2024, ii) lower medium-term
sensitivity ranges for zinc prices at USD1.0 – USD1.30 per pound
from previous expectations of USD1.10 – USD1.40 per pound, and
iii) persistent cost pressure, which will maintain the company's
unitary cost of production at USD52 – USD53/MT, a decrease versus
USD55/MT in 2022, but still high when compared to the 2017-2020
average of USD47/MT. While the growth capex is discretionary, it is
unlikely that the company will delay this investment as it is
needed to support cash flow generation from 2025 onwards.
In August 16, 2023 Moody's lowered its price assumptions for
certain metals and mining commodities, including zinc, to reflect
softening economic growth, rising supplies on suspended production
coming back on line, and mine expansions. Demand depends largely on
the construction and automotive industries, which use zinc to
galvanize steel. Low inventories point to potential higher prices
later in 2023 and 2024 if demand recovers, but not to their 2022
highs.
Volcan's Caa1 ratings incorporate the company's high earnings
volatility because of its exposure to commodity prices coupled with
high cost structure, historically tight liquidity and aggressive
financial policies, as well as its modest scale compared with that
of its global peers and its concentration of operations in one
country. At the same time, Volcan's Caa1 reflects the company's
operational diversification in terms of metals produced and assets,
with seven mines; and status as a leading producer of zinc and
silver globally, with some of the largest zinc reserves.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade is unlikely at this point given the negative outlook.
However, Moody´s could stabilize the outlook if there is evidence
of liquidity improvements and the company manages to secure
alterative liquidity sources to address its negative FCF gap and
debt maturities through 2024 at least 12 months in advance.
In addition, Volcan's ratings could be upgraded if it restores its
cost position to levels that would enable the company to better
weather significant declines in metal prices, and continues to
invest for growth, achieving higher scale, while maintaining
adequate liquidity. Quantitatively, an upgrade would also require
an EBIT margin above 7% and EBIT/interest expenses above 1.5x on a
sustained basis.
Volcan's ratings could be downgraded if the company's liquidity
worsens further or the company is unable to refinance the debt
maturing in 2024, increasing the risk of a distressed exchange or
debt restructuring.
The ratings could also suffer negative pressure if Moody's-adjusted
EBIT margin remains persistently below 6% and interest coverage,
measured as EBIT/interest expenses remains below 1.5x.
The principal methodology used in these ratings was Mining
published in October 2021.
Volcan Compania Minera S.A.A. y Subsidiarias (Volcan) is a Peruvian
mining company that primarily produces zinc and lead concentrate
and some copper concentrate, all with high silver content. The
company operates through five operating units including seven
operating mines, five concentrator plants and one leaching plant
for silver oxide production. All of Volcan's operations are located
in Peru, and it reported revenue of USD754 million for the 12
months that ended June 2023. Volcan is a holding company listed on
the stock exchanges of Lima, Santiago and Madrid (Latibex). Since
November 2017, Glencore has held a controlling stake of 55% in
Volcan's Class A voting shares, which is equivalent to a 23.3%
economic interest in Volcan.
=====================
P U E R T O R I C O
=====================
NEW MEDICAL: Hires Gloria Justiniano Irizarry as Counsel
--------------------------------------------------------
New Medical and Education Services Inc. C.S.P. seeks approval from
the U.S. Bankruptcy Court for the District of Puerto Rico to hire
the Law Office of Gloria Justiniano Irizarry as its legal counsel.
The firm will provide these services:
a. examine documents of the Debtor and other necessary
information to prepare its schedules of assets and liabilities and
statements of financial affairs;
b. prepare the Debtor's disclosure statement and plan of
reorganization;
c. identify and prosecute claims and causes of action on
behalf of the Debtor;
d. examine proofs of claim filed and to be filed in the
Debtor's bankruptcy case;
e. advise the Debtor and prepare documents in connection with
the ongoing operation of its business; and
g. advise the Debtor and prepare documents in connection with
the liquidation of assets of the bankruptcy estate, including
analysis and collection of outstanding receivables.
The firm will be paid at these hourly rates:
Partner $275
Paralegal $50
Justiniano Irizarry was paid a retainer in the amount of $6,000
and
will receive reimbursement for work-related expenses.
The firm is a "disinterested person" as defined in Section 101(14)
of the Bankruptcy Code and does not represent any interest adverse
to the Debtor and its estate, according to court filings.
Justiniano Irizarry can be reached at:
Gloria Justiniano Irizarry, Esq.
LAW OFFICE OF GLORIA JUSTINIANO IRIZARRY
Calle A. Ramirez Silva, Suite 8
Mayaguez, PR 00680-4714
Tel: (787) 831-3577
Email: justiniano@gmail.com
About New Medical and Education Services Inc. C.S.P.
New Medical and Education Services Inc. C.S.P. filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D.P.R. Case No. 23-02588). The petition was signed by Orvil Edgardo
Ramos Diaz as president. At the time of filing, the Debtor
estimated $1 million to $10 million in both assets and liabilities.
The Debtor is represented by Gloria Justiniano Irizarry, Esq.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
JMMB GROUP: To Restructure Trinidad and Tobago Entities
-------------------------------------------------------
Joel Julien at Trinidad Express reports that following an exercise
involving several of its Jamaican member companies, the JMMB Group
Ltd has revealed its intention to restructure its entities in
Trinidad and Tobago, among other countries, with the aim of
"bolstering operational controls".
This move, according to JMMB, is pending regulatory approval,
according to Trinidad Express.
In April, in accordance with Section 64(1)(b) of the Securities Act
2012, the T&T Stock Exchange posted a notice advising that, as of
March 31, JMMB Group Ltd had conducted a restructuring exercise
involving some of its Jamaican member companies, the report notes.
According to the recently published JMMB annual report, this
restructuring was undertaken following receipt of the non-objection
from the Bank of Jamaica and is part of a wider restructuring
exercise being undertaken by the Group, the report discloses.
"The restructuring exercise is aimed at harmonising the Group's
overall corporate structure for its local and overseas holdings
with the structure required for financial groups under the Banking
Services Act, 2014 by separating financial services companies in
the Group from the non-financial companies," it stated, the report
relays.
As such, JMMB Financial Holdings Ltd (JMMBFH) was incorporated as a
new direct wholly-owned subsidiary of JMMBGL to hold, directly and
indirectly, the shares of all of the financial services companies
within the Group, it stated, the report discloses.
The report relays that the Jamaican entities now held within the
financial group headed by JMMBFH as a result of the restructuring
are:
(i) Jamaica Money Market Brokers
Ltd, together with its wholly-owned subsidiaries:
a. JMMB Insurance Brokers Ltd
b. JMMB Securities Ltd, and
c. JMMB Fund Managers Ltd
(ii) JMMB Bank (Jamaica) Ltd
(iii) JMMB Money Transfer Ltd
"As a result of the restructuring, the non-financial Jamaican
companies formerly owned by Jamaica Money Market Brokers Limited,
i.e., JMMB Real Estate Holdings Ltd and Capital and Credit
Securities Ltd, are now all held outside of the financial group
under the direct ownership of JMMBGL," it stated, the report
notes.
JMMB stated that the entities in Trinidad and Tobago, the Dominican
Republic and Barbados will also be restructured subject to received
regulatory approval in line with the mandate of the Banking
Services Act (2014), the report recalls.
The annual report described the restrucutring as a "bolstering of
operational controls," the report says.
"The JMMB Group remains strong, healthy and well poised for growth
in the medium and long term. This is due to the strategic efforts
that have been made to bolster the Group's risk and governance
framework," it stated, the report relays.
JMMB in T&T
The annual report stated that recognising that strong client
partnership distinguishes the JMMB Group in the financial space,
the Trinidadian team continued to strengthen it during the year,
the report discloses.
"Client contact and engagement strategy—Even though global
recovery continued following the pandemic, generally, there is a
higher level of apprehension among clients. Thus, it was important
that the team had frequent contact with its clients, providing
accurate and timely information. The team remained alert to
clients' needs and was able to nimbly provide solutions as
necessary. During the year, this was evident in its loan solutions
as, in some instances, solutions were customised to suit clients'
needs," it stated, the report relays.
"Client access strategy - The Port of Spain branch was relocated.
This was more convenient for clients, with greater parking
facilities and a better layout. Given increased economic activity,
the country posted record operating revenue of J$5.9B, which was 27
per cent higher than the prior period. This was due to robust
growth in most revenue lines, especially NII and foreign exchange
trading, up by J$898M and J$333M, respectively," it stated, the
report discloses.
Asset Management Outlook
JMMB said given the continued rebound that is expected in the
economy, the Trinidad team will employ a defensive posture to
capitalize on opportunities that arise, the report relays.
"The team will continue to deepen client engagement and seek to
widen its client base. There will be an increased focus on client
segmentation to ensure they remain proactive in identifying and
addressing the client's needs. They will continue to provide
innovative solutions and services to drive enhanced long term
returns for clients. The team will also focus on client
communication and engagement initiatives and leverage social media
and other electronic touchpoints to deliver its value proposition
seamlessly," it stated, the report notes.
Treasury Management Outlook
The report discloses that JMMB said global interest rates are
expected to remain elevated going into 2024, and this would likely
continue to adversely impact appetite for emerging market assets.
"Thus, trading gains could be constrained. Nevertheless, the
Trinidad team will continue to nimbly identify and successfully
execute market opportunities to ensure the portfolio is agilely
positioned to achieve the optimal risk/reward profile and create
shareholder value. Further, the team will continue to position its
local and international equity brokerages so that clients can have
more diversified portfolios and realise their financial life
goals," it stated, the report relays.
Banking Outlook
JMMB said in the upcoming financial year, the Bank will continue to
offer customised banking solutions to meet clients' specific needs
and nurture an ongoing financial partnership to assist clients and
businesses achieve their goals, the report discloses.
"The team will also continue to focus on its client contact
strategy to maintain frequent communication and improve
accessibility to all its clients. The team's work on improving
accessibility will continue in the upcoming year with further
updates to the newly implemented online banking platform,
Moneyline. The team expects clients to benefit from additional
functionalities and an improved user experience," it stated, the
report relays.
T&T Strategic Outlook
JMMB said Trinidad and Tobago is expected to continue its growth
trajectory in the upcoming financial year, albeit at a slower pace,
the report says.
"This is on the back of a rebound in oil and gas production and
prices as well as increased domestic demand. However, there remains
a significant downside risk including the possibility that energy
prices and demand could fall again," it stated, the report notes.
JMMB said nevertheless, they will continue to seek opportunities
for growth, and this will be underpinned by a focus in client
partnership and client access, the report relays.
"Integrated Financial Solutions-Work will continue in earnest on
streamlining the client base to ensure clients across all segments
are appropriately partnered with advisors, have the right solution
sets, and have access to the channels and services which best
support them in achieving their goals. To support the sales teams,
the team will ramp up initiatives around improving productivity and
increasing training on the Group's proprietary financial
partnership conversation model," it stated, the report says.
"Digital Transformation—The digital transformation agenda has
been paced and, with the onset of the pandemic, the team has ramped
up its activities, initiatives and projects to support the build
out of a digital footprint across business line segments. In the
coming year, the focus to this end will be on the implementation of
new core banking and online banking platforms. This undertaking is
expected to lay critical ground for efficiency for the banking
business line, position it for further growth and expansion and
integrate needed functionalities to support client's management of
goals online," it stated, the report adds.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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