/raid1/www/Hosts/bankrupt/TCRLA_Public/231031.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, October 31, 2023, Vol. 24, No. 218
Headlines
B A R B A D O S
BARBADOS: S&P Affirms 'B-/B' Sovereign Currency Ratings
B R A Z I L
BRAZIL: Inflation Rate Ticks Up Again Before Rate-Decision Meeting
UNIGEL PARTICIPACOES: To Propose 2-Yr Halt on Foreign Bond Payments
C O L O M B I A
COLOMBIA: IDB OKs $500MM Loan to Support Women & Populations
C O S T A R I C A
COSTA RICA: S&P Hikes LongTerm Sovereign Credit Ratings to 'BB-'
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Grew 3.1 % in Sept, Highest Recorded in 2023
DOMINICAN REPUBLIC: Poultry Producers Ask for Assistance
P U E R T O R I C O
GRUPO HIMA: Hires Morales Boscio Law Offices as Special Counsel
LANDMARK COMMERCIAL: Seeks to Hire Lugo Mender Group as Attorney
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B A R B A D O S
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BARBADOS: S&P Affirms 'B-/B' Sovereign Currency Ratings
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S&P Global Ratings, on Oct. 26, 2023, revised its outlook on
Barbados to positive from stable. S&P also affirmed its 'B-' long-
and 'B' short-term foreign and local currency sovereign credit
ratings. The transfer and convertibility assessment remains 'B-'.
Outlook
The positive outlook reflects S&P Global Ratings' view that
Barbados will continue its progress on institutional reforms
supporting sustainable public finances and balanced economic
growth. S&P said, "Although we expect institutional strengthening
will take time, we believe pension reforms will take place in the
next year, which could improve our fiscal assessment of Barbados.
The outlook also incorporates our expectations of slowing global
growth and higher interest rates."
Downside scenario
S&P could lower its ratings in the next year if the impact of
external conditions leads to larger fiscal deficits than it
expects, and S&P believes that the government would not have
sufficient funding to meet its fiscal or external financing needs.
Upside scenario
S&P said, "We could raise our ratings in the next year if pension
reforms and institutional strengthening lead to better
sustainability of the country's pension system, and our fiscal
assessment improves. We could also raise the ratings if continued
improvement in government policymaking contributes to improved GDP
growth prospects and stronger public finances."
Rationale
Institutional and economic profile: S&P expects continued expansion
in 2023, spurred by the recovery in tourism, although a slowdown in
source markets could dampen medium-term growth.
S&P said, "We expect strong growth in 2023 following exceptional
results in 2022. Our forecast GDP growth of 4.3% in 2023
incorporates continued recovery following events in 2020 and 2021,
notably the pandemic and physical events such as the ashfall from
the nearby volcanic eruption in St. Vincent and the effects of
Hurricane Elsa. Once Barbados' economy has recovered from these
shocks, we expect growth will trend toward historical levels of
1.9% in the next few years. There is uncertainty in the global
macroeconomy, which we believe raises the risks for Barbados'
economy over the next few years."
Tourism will remain one of the largest sectors in Barbados.
Although its direct contribution is estimated to be about 11% of
GDP, the sector indirectly accounts for approximately 40% of the
economy. Tourist arrivals for the first six months of 2023 reached
almost 87% of pre-pandemic levels, dominated by traditional source
markets, with the U.K. having the highest share.
The government expects a number of large investment projects that
were stalled during the pandemic to resume over the next few years,
supporting medium-term growth prospects. Notably, Sam Lord's Castle
is being redeveloped as a 422-room hotel managed by Wyndham Hotel
Group, and is expected to be completed in 2023. Although this
project and others will continue to support growth, they also
reinforce the dependence on the volatile tourism sector. S&P
expects higher tourism levels and related projects will propel real
GDP growth by 4.3% in 2023, bringing GDP per capita to US$21,940.
Despite economic pressures and external shocks, S&P believes that
Barbados will continue to demonstrate its commitment to reform.
Under the International Monetary Fund's (IMF) 2018-2022 extended
fund facility (EFF) program, the country implemented structural
reforms aimed at reinforcing fiscal sustainability, strengthening
oversight, building capacity to monitor the financial performance
of state-owned enterprises, and improving the business climate.
Reforms continued under a new three-year EFF arrangement with the
IMF that the government requested in 2022. As part of this program,
the government launched BERT 2022, a program that focuses on a
growth strategy to support the private sector and improve the
business environment. Consequently, the government created a new
public-private sector growth council. S&P expects these initiatives
will support improving growth in the long term, but that key
reforms and results could take time. Given the country's
vulnerability to external shocks, these reforms are unlikely to
unlock significant growth prospects in the near term.
Barbados has a stable, predictable, and mature political system,
which has traditionally benefited from consensus on economic and
social issues. Government has alternated between the Democratic
Labour Party and the Barbados Labour Party (BLP). The BLP has been
in office since 2018, and during the January 2022 elections, won
all 30 seats of the House of Assembly for the second consecutive
time. The BLP is led by Prime Minister Mia Mottley, who has
governed since 2018 with a strong mandate to make fiscal and
macroeconomic reform. Upon first taking office, the government
acted swiftly to restructure debt, agree with the IMF on an EFF,
and implement its BERT program. The government responded to the
pandemic by quickly imposing social distancing and testing
protocols, and then by introducing support programs for individuals
and businesses. Prior to these reforms, policymakers had
historically been slow to respond to fiscal and economic problems.
S&P believes that improving policymaking and political institutions
will be gradual, consistent with prepandemic policy reforms.
Although there are indications that the government aims to reverse
these trends, developing a strong track record will take time.
Flexibility and performance profile: Continued access to
multilateral financing combined with a relatively smooth debt
service profile, particularly following the debt exchanges, will
keep Barbados' near-term payment risk low.
S&P said, "We expect Barbados will gradually lower its deficit to
support fiscal consolidation following a deviation from its fiscal
targets to accommodate multiple exogenous shocks. In fiscal 2023,
it returned to a primary surplus and we expect the surplus will
increase to 3% of GDP in fiscal 2024. Nevertheless, given the
island's dependence on tourism and risks of slowing global growth,
we expect some pressures on government revenues and spending."
The IMF supported fiscal accommodation and the primary balance
target was reduced to a deficit of 1% of GDP in 2020 and 2021.
Under the new IMF program, the primary balance target is 3.5% in
fiscal 2023/2024, climbing to 5% in fiscal 2025/2026. In addition
to spending generated by support measures related to external
shocks over the past several years, pressure on age-related
expenditures also weighs on public finances, as the 60-and-over age
group is likely to increase faster than other cohorts. The
government is working on changes to the public sector pension plan
and the national one, which should, when fully implemented, improve
the sustainability of both plans.
Due to its strong performance under the EFF program, Barbados
continues to have good access to multilateral funding. S&P expects
it will receive, over fiscal 2023-2024, about US$270 million from
the IMF, the Inter-American Development Bank, and the World Bank,
with at least US$1 billion in multilateral institutions financing
under BERT 2022 for direct budgetary support and an additional US$1
billion for project-specific financing.
The government successfully accessed local capital markets via a
B$200 million issuance in fall 2022. A second series of these BOSS+
bonds was launched in summer 2023. S&P views this development
positively; it suggests that domestic capital markets are
recovering from the damage of the debt exchange, and it opens
another avenue for government financing in addition to multilateral
financing.
S&P said, "We estimate the increase in net general government debt
to GDP will average about 1.4% in the next three years. In our
forecasts, net general government debt will decline to 112% this
year, before falling to 98% by 2025. We expect the government to
maintain its goal of steady reduction of the public debt-to-GDP
ratio to 60% by 2035-2036."
Barbados' debt service profile became more manageable after the
completion of its domestic and external debt restructuring in 2018
and 2019, respectively. S&P expects the government's external debt
service will be almost US$260 million for fiscal 2024 while the
total interest burden will average 14.2% of general government
revenues over the forecast horizon. In its external debt exchange,
the government exchanged approximately US$531 million in new 2029
bonds and US$32 million in past-due interest bonds to holders of
about US$677 million in external debt. The first principal payment
on the new external 2029 bonds is due April 1, 2025, after which
equal principal payments will be made biannually until the final
maturity on Oct. 1, 2029.
S&P said, "We forecast the current account deficit will gradually
narrow after reaching a peak of 11.2% of GDP in 2021, supported by
the recovery in tourism receipts. We expect Barbados' gross
external financing needs will remain heightened, averaging 151% of
current account receipts plus usable reserves." At the same time,
international reserves are at historically high levels and will
continue to provide external liquidity even as current account
deficits persist over the forecast horizon. As of June 2023,
international reserves were about US$1.5 billion, supported by
multilateral funding and an increase in special drawing rights
allocation from the IMF.
Barbados' banking sector has remained stable, as banks hold large
cash balances with the central bank and their capital adequacy
ratios have been increasing. Although nonperforming loans increased
early in the pandemic, availability of moratoria and the slight
recovery in the tourism sector have led to some improvement in
reported numbers. At the same time, S&P believes Barbados' monetary
policy flexibility remains limited due to its fixed exchange rate
and weak transmission mechanism after the completion of its debt
restructuring program.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
RATINGS AFFIRMED
BARBADOS
Transfer & Convertibility Assessment
Local Currency B-
BARBADOS
Senior Unsecured B-
RATINGS AFFIRMED; CREDITWATCH/OUTLOOK ACTION
TO FROM
BARBADOS
Sovereign Credit Rating B-/Positive/B B-/Stable/B
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B R A Z I L
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BRAZIL: Inflation Rate Ticks Up Again Before Rate-Decision Meeting
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globalinsolvency.com, citing Bloomberg News, reports that Brazil's
annual inflation rate ticked up roughly in line with forecasts as
investors expect the central bank will keep its current pace of
borrowing-cost cuts at the next policy meeting.
Official data released showed consumer prices rose 5.05% in
mid-October from a year earlier, just above the 5.04% median
estimate of analysts surveyed by Bloomberg, according to
globalinsolvency.com.
Monthly inflation hit 0.21%, the report notes. Policymakers are
holding firm to their plans and are expected to follow through with
a third straight half-point cut at their Nov. 1 rate-decision
meeting as a series of shocks dash hopes of faster easing, the
report relays. The Israel-Hamas conflict is pushing up the cost of
oil, US Treasury yields are soaring and the Brazilian economy is
proving resilient to double-digit borrowing costs, the report
discloses. Seven of the nine groups of goods and services tracked
by statistics agency became more expensive in the first half of
October, the report says. Rising transportation costs, which
jumped 0.78% on higher air fares, and health care that climbed
0.28% drove the gains, the report notes.
Meanwhile, food costs fell 0.31%, 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 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: To Propose 2-Yr Halt on Foreign Bond Payments
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globalinsolvency.com, citing Bloomberg News, reports that
Brazil's troubled fertilizer maker Unigel Participacoes is
proposing a two-year halt to all principal and interest payments on
its international bonds as it seeks to avoid a looming default.
The company is in talks with global bondholders before the existing
30-day grace period on a $23.2 million missed interest payment
expires at the end of Nov. 1, according to globalinsolvency.com.
The company has $530 million in outstanding dollar notes due in
2026, the report notes. If an agreement isn't reached, Unigel
could ask for temporary court protection against creditors, the
person said, asking not to be named because the discussions are not
public, the report relays.
The company is also proposing a swap of global bonds for notes to
be paid in 10 years and in installments, the person said, the
report notes.
"Unigel continues to work to improve its capital structure, a
process that includes confidential negotiations with its main
creditors," the company said in a emailed statement to Bloomberg
News, the report discloses.
"The company believes that the best solution for all stakeholders
will be through these negotiations, which are evolving positively,"
the report relays.
In September, a group of local creditors agreed not to take any
action that could prompt the early maturity of bonds in Brazil for
a period of 90 days, or until the company concludes the
restructuring of its local notes, Bloomberg News reported at the
time. That period runs out in early December, the report adds.
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C O L O M B I A
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COLOMBIA: IDB OKs $500MM Loan to Support Women & Populations
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The Inter-American Development Bank (IDB) approved a $500 million
loan to strengthen equality and equity policies aimed at women and
diverse populations in Colombia. This is the first IDB loan to
Colombia that includes policies aimed at equality for women and the
LGBTIQ+ population and that contributes to closing gaps for
indigenous peoples, Afro-descendants, and migrants.
The program has been designed in coordination between the IDB and
the KfW Development Bank to articulate additional support for the
policy objectives of the initiative. This is the first of two
operations financed under the Programmatic Policy-based Loan (PBP)
modality.
In Colombia in 2021, every 50 minutes, a woman was a victim of
domestic violence, and every 28 minutes, a woman suffered sexual
violence. This loan supports the consolidation and implementation
of the National System for Registration, Attention, Follow-up, and
Monitoring of Gender-Based Violence to integrate the lines of
attention and reach the territories with the greatest social and
economic gaps. In addition, it will improve the quality of care and
reduce barriers to access to health and justice services, among
others.
The operation, which was approved by the IDB's Board of Executive
Directors, will also support policy measures to mainstream gender
and sexual diversity approaches for equity for women and the
LGBTIQ+ population. Among others, it seeks to support an
inter-institutional coordination mechanism between 25 entities for
the prevention and comprehensive care of violence and acts of
discrimination against the LGBTIQ+ population in coordination with
the National System for Monitoring Gender-Based Violence. In
addition, it will include policy measures that support
implementation to prevent, address, and monitor cases associated
with human trafficking and migrant smuggling in Colombia.
The unequal distribution of unpaid care work is another source of
inequality. Women assume the greatest responsibility for care, so
the lack of services is a barrier to their economic autonomy. This
project aims to support the National Care System, which will
benefit 4.7 million children and 625,000 older adults and people
with disabilities who require care support, and the 3.6 million
people, most women, who dedicate more than seven hours a day of
unpaid care activities. It will also benefit approximately 2.1
million paid care workers.
The IDB loan of $500 million has a disbursement period of one year,
a grace period of 6 years, a repayment period of 19 years, and an
interest rate based on SOFR.
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C O S T A R I C A
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COSTA RICA: S&P Hikes LongTerm Sovereign Credit Ratings to 'BB-'
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S&P Global Ratings, on Oct. 27, 2023, raised its long-term foreign
and local currency sovereign credit ratings on Costa Rica to 'BB-'
from 'B+'. The outlook is stable. S&P affirmed its 'B' short-term
foreign and local currency sovereign credit ratings. S&P also
raised the transfer and convertibility assessment to 'BB+' from
'BB'.
Outlook
S&P said, "The stable outlook incorporates our assumptions that
over the next year, fiscal execution will remain solid, though we
expect the deficit to increase somewhat and GDP growth to slow
given the global backdrop. We believe maintaining access to
official financing -- including disbursements under the IMF's
Extended Fund Facility (EFF) and Resilience and Sustainability
Facility (RSF) -- supports funding flexibility and confidence in
the local and global capital markets. Access to the RSF, designed
to bolster resilience to climate change, was recently approved by
the Legislative Assembly."
Downside scenario
S&P said, "We could lower the ratings over the next 12 months if
policy reversals or fiscal implementation setbacks threaten smooth
debt management. While the government's funding needs have declined
as deficits have come down, they remain high over the next several
years. Success in tapping global capital markets would likely
indicate continued fiscal commitment, compliance with IMF reviews,
and favorable growth prospects. If policy setbacks occur, recourse
to central bank or other unconventional financing could cause us to
view the country's institutional framework and ability to support
public finances less favorably and lead us to lower the ratings."
Upside scenario
Conversely, S&P could raise the ratings over the next 12 months if
the government and the Legislative Assembly continue to reduce the
deficit. So far, results reflect implementation of the 2018 reform.
Moving forward, they will also depend on implementation of the
public-sector employment reform and a modified fiscal rule. Given
the government's relatively high interest burden, additional
deficit reduction could sustain access to markets at favorable
interest rates amid higher-for-longer interest rates globally.
In the complex global climate, Costa Rica appears to be benefiting
from nearshoring and friendshoring. Strong inflows of foreign
direct investment (FDI) and growth in service exports could boost
trend GDP growth. That, along with solid fiscal performance, could
lead to an upgrade.
Rationale
The upgrade reflects continued improvement in Costa Rica's
financial performance. External debt, net of liquid assets, has
declined amid growth in the export base and accumulation of
liquidity. In addition, growth is led by export-oriented goods and
service sectors, including export zones with the potential to
attract more nearshoring and friendshoring, and tourism.
Net general government debt peaked in 2020-2021, and the turnaround
in fiscal performance that began in 2021 has extended into this
year. The government has posted solid primary surplus results
through the third quarter. Revenue enhancements from the 2018
fiscal reform are paying off, and spending remains contained, also
in line with the 2018 reform, since gross general government debt
surpasses 60% of GDP. Increased spending over the last decade was
the main factor underpinning the rise in Costa Rica's debt. S&P
assumes implementation of the modified fiscal rule and public
employment reform will contain deficits.
A high debt burden, including interest/revenues, highlights the
importance of solid primary surpluses, particularly amid likely
higher-for-longer interest rates globally. Legislative approval to
issue debt in global capital markets this year, and over the next
several years subject to conditionality, facilitates the
government's plans to improve the tenor of its debt profile.
Institutional and economic profile: A strong democratic tradition
has supported a prosperous economy, but the country has been less
timely in addressing fiscal weaknesses
-- Costa Rica's stable political system and social indicators
compare positively with those of peers.
-- Increased political fragmentation over the past decade has
contributed to slow progress in redressing long-standing fiscal
weaknesses.
-- S&P expects real GDP growth to average 3.4% in 2023-2026,
notwithstanding a global slowdown this year, on dynamism in exports
and investment in free-trade zones, and recovery in tourism.
In S&P's assessment, Costa Rica has a strong democratic tradition
of stable political institutions, high social indicators, and
overall predictable, albeit slow, policymaking. The country's low
poverty and low crime compare positively with its Central American
peers. The country's fragmented decision-making gives even small
numbers of representatives in the Legislative Assembly the ability
to stall approval of legislation. This dynamic has slowed, and at
times impeded, progress on fiscal measures that have been debated
under multiple administrations.
President Rodrigo Chaves' approval ratings of almost 60% provide
popular support for his negotiating across party lines in the
legislature. The president's Social Democratic Progress Party has
only nine seats and is one of five parties in the unicameral
57-seat Legislative Assembly.
Since assuming office in May 2022, the administration has continued
efforts to improve Costa Rica's fiscal execution and bring down
debt. Solid fiscal results and success in meeting EFF reviews
partly are due to the policies the prior administration put in
place.
But this administration has outperformed the quantitative fiscal
targets under EFF. It advanced changes in the inclusion of some
public-sector entities that are covered by the parameters of the
fiscal spending rule. The refinements negotiated with--and recently
approved by--the legislature appear to uphold the core of the
reform that generates solid fiscal results. Implementation of the
public employment reform bill continues to move forward as well.
Additional plans include making the tax code more progressive,
facilitating nonresidents holding locally issued government debt,
and strengthening the statutes of the central bank and the depth of
the foreign exchange market.
Costa Rica was the first nation to apply and qualify for an RSF,
worth $725 million. After a delay, the Legislative Assembly
recently approved it. Semiannual disbursements will coincide with
the remainder of the EFF, which ends in March 2024. The RSF
disbursements provide a cheaper source of financing the nation's
climate change agenda, including bolstering infrastructure
resilience, and spurring additional financing for related
infrastructure.
In the past, Costa Rica's Legislative Assembly has often withheld
approval for external financing, including for official borrowing,
forcing the government to rely on the small domestic market. The
country benefits from a captive local market, with state-owned
banks, institutional investors (with ties to the public sector),
and state-owned enterprises being key creditors to the government.
However, smooth and predictable access to global markets and MLI
financing would help the government to diversify its funding. At
the end of 2022, the legislature approved a $5 billion multiyear
global bond borrowing authority for 2023-2025, subject to some
conditionality. In March 2023, the government tapped global markets
for a $1.5 billion bond due 2034, and a planned second $1.5 billion
issuance is forthcoming. Continued execution under this borrowing
authority and beyond would signal an easing of some of the strains
on debt management and the government's financial flexibility, in
our view.
S&P said, "We expect real GDP growth to average 3.4% in 2024-2026,
following estimated growth of 3.5% this year. Growth in 2023 is
driven by manufacturing exports from free-trade zones, recovery in
services (including tourism), and strength in the local economy.
Growth this year shows greater resilience in non-export zones. But
there remains a dichotomy between the more subdued rate of growth
of the domestically oriented economy and the higher rate seen in
export zones concentrated in the center of the country. A key
challenge is to create linkages, such as with local suppliers,
between these two segments."
The country's overall good business climate and long-standing
commitment to decarbonization should continue to support steady FDI
flows--which S&P sees at about 4% of GDP in 2023-2026. Costa Rica's
special trade zones in life sciences, digital technology, and
services could benefit further from global nearshoring or
friend-shoring.
Intel's presence in Costa Rica began in 1997, but its facilities
evolved to research and development, and over time, it shifted
manufacturing to Asia. In 2020, however, it reestablished a
manufacturing facility in the country (with $1 billion investment
as of 2022). It also opened its only semiconductor assembly and
test unit in the Western Hemisphere last August. The government is
in dialogue with the U.S. on cooperation under the CHIPS and
Science Act.
Costa Rica's decarbonization model and credentials attract foreign
investment. The electricity matrix relies on 98% of clean energies,
well above the 59% of other Latin American countries.
Flexibility and performance profile: Fiscal indicators remain a key
rating weakness, while the external profile is improving
-- Net general government debt around 60% of GDP and a heavy
interest burden underscore the importance of persistent
deficit-reduction measures.
-- External indebtedness has declined amid solid exports, steady
FDI inflows that mostly finance the current account deficit, and
accumulation of liquidity.
-- The country's monetary policy credibility reflects inflation
targeting, flexibility in the colon exchange rate regime, and some
decline in dollarization.
With solid revenue performance continuing this year, and spending
restraint following the 2018 fiscal rule, Costa Rica continues to
generate a primary surplus. S&P said, "We forecast the general
government deficit--which includes the central bank and social
security besides the central government and decentralized
agencies--will average 3.2% of GDP in 2023-2026. Accordingly, we
project that the change in net general government debt will average
3.6% of GDP in 2023-2026. We assume spending will remain
restrained, in line with the 2018 fiscal reform given current debt
levels and the recent changes to coverage of public entities."
S&P projects net general government debt will remain around current
levels of about 61% through 2026. At the same time, it expects
interest payments of almost 19% of general government revenue (up
from 8% in 2010) to weigh on its fiscal performance. This
underscores the importance of maintaining a solid primary surplus.
About 40% of the general government's debt is denominated in
foreign currency, a vulnerability. However, three-quarters of total
debt is issued in the local market, a strength.
The country's constitution requires the Legislative Assembly to
approve all individual borrowings, and external debt with a
two-thirds majority in two voting rounds. This includes borrowings
from global capital markets and from multilateral and official
lenders. The approval process has often been slow, and political
resistance has stymied multiyear borrowing authorization -- making
effective debt management more difficult.
S&P said, "We expect the current account deficit to average 3.5% of
GDP in 2023-2026, reflecting income deficits driven by interest
payments on external debt and a surplus in services. FDI remains
solid. We expect the sovereign's gross external financing needs to
hover around 110% of current account receipts (CAR) and usable
reserves over the next three years, and we expect its narrow net
external debt to average 35% of CAR in 2023-2026."
Monetary policy credibility and execution benefit from an
inflation-targeting regime, exchange rate flexibility under a
managed float, and some decline and stabilization in the level of
dollarization in the financial system. Dollar deposits in banks
ticked up slightly above 40% of total deposits, while
dollar-denominated loans from Costa Rica's banks are also around
40% of total loans to the private sector.
On balance, dollarization has declined over the past decade and now
poses less of a constraint on the conduct of monetary policy. That
said, an unexpectedly sharp change in the exchange rate could
create asset quality problems in the financial system.
Dollarization also limits the central bank's ability to act as a
lender of last resort.
Declining inflation--with deflation in recent months--prompted the
central bank to start easing monetary policy earlier this year. The
policy rate stands at 6.25%, from a peak of 9% at the end of last
year. S&P expects inflation to return to the 3% plus/minus 1%
target and average 3.3% in 2024-2026.
S&P said, "Given that the banking system's assets-to-GDP ratio is
about 95% and that our Banking Industry Country Risk Assessment
(BICRA) for Costa Rica is '8', we consider Costa Rica's contingent
liabilities to be limited. (BICRAs are grouped on a scale from '1'
to '10', ranging from what we view as the lowest-risk banking
systems [group '1'] to the highest-risk [group '10'].)"
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
UPGRADED
TO FROM
COSTA RICA
Transfer & Convertibility Assessment
Local Currency BB+ BB
COSTA RICA
Senior Unsecured BB- B+
UPGRADED; RATINGS AFFIRMED
TO FROM
COSTA RICA
Sovereign Credit Rating BB-/Stable/B B+/Stable/B
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Grew 3.1 % in Sept, Highest Recorded in 2023
----------------------------------------------------------------
Dominican Today reports that governor of the Central Bank, Héctor
Valdez Albizu, said the accumulated growth in the first nine months
(January-September) 2023 was 1.7%.
The Governor announced that the Monetary Board authorized a new
liquidity facility for the construction, manufacturing, export, and
agricultural sectors for RD$40 billion this October, according to
Dominican Today.
"Of these resources, as of October 19, the financial system has
already channeled some RD$13,735 million," he said, the report
notes.
He noted that because of these liquidity-enhancing measures,
monetary aggregates have expanded, lending and deposit interest
rates have fallen, and private credit grew by 17% year-on-year in
September, the report relays.
SECTOR GROWTH
Growth 2023.
In announcing that the monthly indicator of economic activity
(IMAE) registered a year-on-year growth of 3.1 % in September 2023,
he said that "the most significant contribution in
January-September came from hotels, bars, and restaurants, which
grew 10.9 %, maintaining the great dynamism exhibited all year, the
report notes.
In September alone, the country received 478,792 tourists by air,
accumulating a record 6,023,573 non-resident visitors during the
first nine months of the year, with a hotel occupancy rate of 75%,
the report relays. If we add to this the more than 1,607,360
cruise passengers who visited the country in January-September, the
total number of visitors reached 7,630,933, another historic
milestone for tourism", he added.
In September, construction activity also grew, registering an
expansion of 9.5% after negative records in the first months of
this year. Agriculture and livestock rose 3.4 % year-on-year, an
increase of 3.8 % in January-September 2023, the report recalls.
"It is time to climb the rungs to development. As the famous author
of Les Miserables, Victor Hugo, once said, "The future has many
names. For the weak, it is the unattainable. For the fearful, it
is the unknown. For the brave, it is an opportunity," he added.
Measurement
Inflation.
Despite the highly complex situation, the Governor affirmed that
inflation is within the target range of 4 % ±1 %, the report
relays. Regarding the measures adopted, he recalled that the
Monetary Policy Rate has been lowered to 7.50 %, the report notes.
The monetary aggregates have expanded, lending and deposit interest
rates have fallen, and credit to the private sector registered a
year-on-year growth of 17 % in September, the report says.
Labor Market
Valdez Albizu announced that the total number of employed reached
its highest historical level of 4,855,631 workers in the
July-September 2023 quarter, reflecting a remarkable creation of
222,497 jobs in year-on-year terms, according to the latest data
from the Central Bank's Continuous National Labor Force Survey
(ENCFT), the report relays. He said that the percentage of
informality was reduced by 1.5 percentage points in the third
quarter of 2023, dropping from 58.1 % in July-September 2022 to
56.7 % in the same period of 2023, and the open unemployment rate
stood at 5.4 % for the third quarter of 2023, the report notes.
Acknowledgment
Rates.
The Governor of the BCRD highlighted that the international
community has recognized the Dominican economic performance as
meritorious this year despite the unfavorable environment, the
report discloses. In this regard, he noted that just a few days
ago, Katie Taylor, director of the Pan American Development
Foundation, an independent organization affiliated with the
Organization of American States (OAS), affirmed that the Dominican
Republic "is a light in the hemisphere, with democratic stability,
economic stability, and development," the report says.
Inflation is within the target range of 4 % ±1 %, the report
relays.
As a result of the increase in liquidity, the circulating medium
(M1) grew 11.2 % in September, M2, 17 %, and broad money, M3, 14.6
%, the report notes.
The free trade zone sector grew 0.7 %, and tourism revenues 19.3 %,
the report says.
Projections
FDI is expected to exceed US$4,300 MM, more than US$11,200 MM in
remittances, and GDP is expected to close at 3% and 5.2% in 2024,
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.
TCR-LA reported in April 2019 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.
On August 14, 2023, the TCR-LA reported that Moody's Investors
Service has changed the outlook on the Government of Dominican
Republic's ratings to positive from stable and affirmed the local
and foreign-currency long-term issuer and senior unsecured ratings
at Ba3. Moody's said the key drivers for the outlook change to
positive are: (i) sustained high growth rates have enhanced the
scale and wealth levels of the economy; and (ii) a material decline
in the government debt burden coupled with improved fiscal policy
effectiveness will support medium-term debt sustainability.
The affirmation of the Ba3 ratings balances the Dominican
Republic's strong economic growth dynamics and relatively contained
susceptibility to event risks, with a comparatively weaker fiscal
position, reflecting long-standing credit challenges which include:
(i) a shallow revenue base compared to peers, (ii) weak debt
affordability metrics, and (iii) high exposure to foreign currency
borrowing.
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.
DOMINICAN REPUBLIC: Poultry Producers Ask for Assistance
--------------------------------------------------------
Dominican Today reports that dozens of egg producers of Moca and
Licey al Medio protested with a march through some streets and
avenues of this municipality, demanding the central Government to
come to their aid after assuring that with the closure of the
border with Haiti, they have lost one billion pesos, while their
businesses are silently going bankrupt.
With banners alluding to the crisis affecting the poultry sector
due to the conflict with the neighboring country and with which
they also demand that the authorities pay attention to their
claims, the poultry farmers expressed their discomfort, according
to Dominican Today.
Before the tour that ended at the Plaza del Agricultor, egg
producers participated in a mass at the Sacred Heart of Jesus
Church, officiated by the priest Cristian Omar Canario, who also
called on the authorities to listen to the claims of egg producers,
the report notes.
Manuel Escano, president of the National Association of Egg
Producers (Asohuevos), and Ambiorix Cabrera of the Association of
Small and Medium Poultry Producers Moca-Licey (Approamoli)
expressed that the situation they are currently experiencing is the
mother of all crises that the sector has faced in recent times, the
report relays.
"As egg producers, we have not caused this unprecedented crisis
that is endangering the existence of hundreds of our small and
medium-sized producers organized in our institutions," said
Escaño, reading the document, the report discloses.
The poultry leaders explained that they have been selling eggs in
farms for around RD$2.00, with the cost of production over RD$5.00,
which aggravates their losses, which are around one billion pesos.
"So far, we have not felt the support of the authorities, being
marginalized, ignored, and mocked by a small group of producers who
have tried to manage the present crisis to their advantage," they
said, the report notes.
They maintained that the poultry sector is trying to sensitize the
authorities so that they also support the small and medium
producers through the purchase of the product through the
Government's social programs, 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.
TCR-LA reported in April 2019 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.
On August 14, 2023, the TCR-LA reported that Moody's Investors
Service has changed the outlook on the Government of Dominican
Republic's ratings to positive from stable and affirmed the local
and foreign-currency long-term issuer and senior unsecured ratings
at Ba3. Moody's said the key drivers for the outlook change to
positive are: (i) sustained high growth rates have enhanced the
scale and wealth levels of the economy; and (ii) a material decline
in the government debt burden coupled with improved fiscal policy
effectiveness will support medium-term debt sustainability.
The affirmation of the Ba3 ratings balances the Dominican
Republic's strong economic growth dynamics and relatively contained
susceptibility to event risks, with a comparatively weaker fiscal
position, reflecting long-standing credit challenges which include:
(i) a shallow revenue base compared to peers, (ii) weak debt
affordability metrics, and (iii) high exposure to foreign currency
borrowing.
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.
=====================
P U E R T O R I C O
=====================
GRUPO HIMA: Hires Morales Boscio Law Offices as Special Counsel
---------------------------------------------------------------
Grupo Hima San Pablo, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Puerto Rico to employ
Morales Boscio Law Offices, PSC, as their special counsel.
The counsel is retained to recover medical plans outstanding claims
due to the estate, including monies, property or any other owed by
insurance healthcare providers or agents, this as a result of
settlement agreement or a judgement.
The Debtor will pay the counsel a reduced hourly fee of $200, which
will be deducted from a 25 percent contingent fee from any amount
recovered in the litigation matters.
Additionally as to the cases (1) CMT v. UTICORP, MOLINA; 18-
BN-03-001/18-BN-09-067, before ASES, (2) CMT v. MOLINA et als,
21-V-06-734, before ASES, and (3) CMT v. MOLINA et als,
SJ2021CV03145, before the Court of First Instance, MBL will charge
a reduced hourly fee of $200.00, which will be deducted from a
contingency fee of 25% applied to any amount recovered in excess of
$6,000,000.
Also, following matters will be exclusively billed under a $250
hourly fee, since these actions do not seek payments of any account
receivables: CMT v. TSS, TSA; SJ2023CV04899 (Injunction seeking to
enjoin TSS and TSA from terminating provider's agreement); Molina
Healthcare of Puerto Rico, Inc. v. ASES, SJ2021CV05150
(Interventor).
As disclosed in the court filings, Morales Boscio Law Offices is a
"disinterested person" as that term is defined in 11 U.S.C. Sec.
101(14).
The firm can be reached through:
Jose A. Morales Boscio, Esq.
MORALES BOSCIO LAW OFFICES, PSC
1225 Ave. Ponce de Leon
San Juan, PR, 00907
Tel: (787) 473-7778
E-mail: jamb@mbprlaw.com
About Grupo Hima San Pablo, Inc.
Grupo HIMA San Pablo, Inc. serves as a diversified healthcare
services holding Debtors pursuant to a corporate reorganization of
several businesses related by common ownership. Through its
subsidiaries and affiliates, the Debtors primarily owns and
operates hospital facilities and other healthcare related
businesses. As of August 2023, the HIMA GROUP operates four
hospitals, with over 1,200 licensed beds, including an Oncological
Hospital, a multi-specialty physician practice management Debtors,
Home Care Service (including infusion therapies and wound care), a
free-standing Ambulatory Center and a 16-Ambulance Service
Debtors.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. P.R. Case No. 23-02510-EAG11) on August
15, 2023. In the petition signed by Armando J. Rodriguez-Benitez,
chief executive officer, the Debtor disclosed up to $1 billion in
assets and up to $500,000 in liabilities.
Judge Enrique S. Lamoutte Inclan oversees the case.
Wigberto Lugo Mender, Esq., at Lugo Mender Group, LLC, represents
the Debtor as legal counsel. Pietrantoni Mendez & Alvarez LLC as
special counsel.
LANDMARK COMMERCIAL: Seeks to Hire Lugo Mender Group as Attorney
----------------------------------------------------------------
Landmark Commercial Centers Development Inc. seeks approval from
the U.S. Bankruptcy Court for the District of Puerto Rico to hire
Lugo Mender Group, LLC as its attorneys.
The firm will render these legal services:
(a) advise the Debtor regarding its duties, powers and
responsibilities in the continued management of its
business operations;
(b) advise the Debtor in connection with its reorganization
endeavors;
(c) assist the Debtor with respect to negotiations with
creditors for the purpose of arranging a feasible Plan
of Reorganization;
(d) prepare legal papers;
(e) appear before the bankruptcy court, or any other court in
which the Debtor asserts a claim or defense directly or
indirectly related to this bankruptcy case; and
(f) perform such other legal services for the Debtor as may
be required in these proceedings.
The hourly rates of the firm's counsel and staff are as follows:
Wigberto Lugo Mender, Esq. $325
Senior Attorney $250
Associate Staff Attorney $175
Legal and Financial Assistants $125
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the petition date, the firm received a retainer in the
amount of $6,937 for the legal services to be rendered in
connection with this case.
Wigberto Lugo Mender, Esq., an attorney at Lugo Mender Group,
disclosed in a court filing that the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Wigberto Lugo Mender, Esq.
LUGO MENDER GROUP, LLC
100 Carr. 165, Suite 501
Guaynabo, PR 00968-8052
Telephone: (787) 707-0404
Facsimile: (787) 707-0412
Email: a_betancourt@lugomender.com
About Landmark Commercial Centers Development Inc.
Landmark is primarily engaged in renting and leasing real estate
properties.
Landmark Commercial Centers Development Inc. filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D.P.R. Case No. 23-03338) on Oct. 16, 2023. The petition was signed
by Jose A. Feliciano-Ruiz as president. At the time of filing, the
Debtor estimated $6,555,072 in assets and $8,609,063 in
liabilities.
Judge Edward A Godoy presides over the case.
Wigberto Lugo Mender, Esq. at Lugo Mender Group, LLC represents the
Debtor as counsel.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
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Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2023. All rights reserved. ISSN 1529-2746.
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