/raid1/www/Hosts/bankrupt/TCRLA_Public/231221.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, December 21, 2023, Vol. 24, No. 255
Headlines
A R G E N T I N A
ARGENTINA: Monthly Inflation Set to Spike to 12%
ARGENTINA: Prepares Urgent Decrees to 'De-regulate' the Economy
B R A Z I L
BRAZIL: Fitch Affirms 'BB' Foreign Currency IDR, Outlook Stable
BRAZIL: Nears Inflation Target, Eyes Rate Cuts
GAM EMPREENDIMENTOS: Chapter 15 Case Summary
C O L O M B I A
COLOMBIA TELECOMUNICACIONES: S&P Lowers ICR to 'B', On Watch Neg.
P E R U
PERU: Inflation May Hit Target Sooner Than Expected, Bank Says
P U E R T O R I C O
CEDIPROF INC: Court Approves Disclosure Statement
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Monthly Inflation Set to Spike to 12%
------------------------------------------------
Reuters reports that Argentina's consumer prices likely spiked
around 12% in November alone, a Reuters poll of analysts showed on
Dec. 11, which will be the first monthly inflation data under the
government of new libertarian President Javier Milei.
The South American country, which recently swore in its new
government, is battling triple-digit annual inflation already at
143% and climbing fast, according to the report.
Milei has said he will fight "tooth and nail" to bring inflation
down, the report notes. The Reuters poll of 22 analysts gave a
median estimate of the CPI rising 11.9% in November, up from 8.3%
in October, the report relays.
The analysts forecast even sharper price rises in the months ahead,
with an expected devaluation likely to stoke inflation, the report
says. Milei, who gave a bleak maiden speech warning the country to
buckle up tough times ahead, suggested that monthly inflation could
be between 20% and 40% over the next few months, the report notes.
"The outgoing government has left us on course for hyperinflation.
We are going to do everything possible to avoid such a
catastrophe," he said, warning that annual inflation could climb as
high as 15,000% if not controlled, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez 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.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
0its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions within the government coalition, and infighting among the
opposition, constrain the sovereign's ability to implement timely
changes in economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
ARGENTINA: Prepares Urgent Decrees to 'De-regulate' the Economy
---------------------------------------------------------------
Buenos Aires Times reports that President Javier Milei's government
is drawing up a series of urgent decrees and a sweeping omnibus
bill to reform and "de-regulate" Argentina's stuttering economy.
A government source, who said the moves will also address
healthcare, said that Milei's morning Cabinet meeting was dominated
by the issue, according to Buenos Aires Times. The president and
his team plan to introduce the decree though "no date is for sure,"
the source added, the report notes.
Within the government, there is a school of thought that believes
that, "given Argentina's current context, the natural thing would
be for Congress to assign powers" to the Executive Branch, as was
the case during the Alberto Fernandez administration during the
Covid-19 pandemic, the report relays.
Among the measures being discussed (it remains unclear which will
be altered by decree, and which will go to Congress) is a rise in
the 'Ganancias' income tax floor, modifications to IVA value-added
text and increases in the prices of petrol and diesel, the report
discloses. Modifications to pension payment schemes for retired
and pensioners, the repeal of the PASO primaries and the use of a
single ballot in elections are also being debated by Milei and his
team, the report relays.
The Cabinet meeting featured nine ministers, various secretaries
and collaborators, and two non-officials: Mario Lugones, the
president of the Güemes Clinic foundation, and Federico
Sturzenegger, former head of the Central Bank during the 2015-2019
Cambiemos government, the report discloses.
Government sources said Cabinet Chief Nicolas Posse and Economy
Minister Luis Caputo provided a detailed report about recent
meetings with US officials, the report says. US Ambassador to
Argentina Marc Stanley has visited the Casa Rosada in recent days,
as have top officials in US President Joe Biden's administration,
including presidential advisor Mike Pyle, who holds sway at the
International Monetary Fund, the report relays.
Vice-President Victoria Villarruel also shared areas of concern and
revealed to journalists that healthcare and security had been
discussed ahead of Security Minister Patricia Bullrich's later
press conference detailing measures to clamp down on picketers and
street blockades and ensure "the free circulation of Argentines,"
the report discloses.
Milei was the first one to arrive at the Casa Rosada at 7.48 am in
his 4x4 Hilux Toyota SUV, wearing his usual leather jacket despite
the high temperatures, the report says. The Vice President and
Foreign minister Diana Mondino, in turn, were the last to complete
the delegation, the report notes.
In attendance were the Cabinet chief and deputy chief, Nicolás
Posse and Jose Rolandi and ministers Guillermo Francos (Interior);
Diana Mondino (Foreign Affairs); Luis Petri (Defence); Luis Caputo
(Economy); Guillermo Ferraro (Infrastructure); Mariano Cúneo
Libarona (Justice); Mario Russo (Health); Patricia Bullrich
(Security); and Sandra Pettovello (Human Capital), the report
relays.
The meeting was also attended by the head of the Chamber of
Deputies, Martin Menem; secretaries Karina Milei (General Secretary
to the President), Javier Herrera Bravo (Legal and Technical
Affairs) and Belén Stettler (Communication and Press), advisor
Santiago Caputo, and presidential spokesman, Manuel Adorni, the
report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez 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.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
0its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions within the government coalition, and infighting among the
opposition, constrain the sovereign's ability to implement timely
changes in economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
===========
B R A Z I L
===========
BRAZIL: Fitch Affirms 'BB' Foreign Currency IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency
Issuer Default Rating (IDR) at 'BB' with a Stable Outlook.
KEY RATING DRIVERS
Stable Outlook: Brazil's ratings are supported by its large and
diverse economy, high per-capita income, and deep domestic markets
and a large cash cushion that support the sovereign's financing
flexibility and its high local-currency debt share. Strong external
finances support resilience to shocks, underpinned by a flexible
exchange rate, robust international reserves and a sovereign net
external creditor position. The ratings are constrained by weak
economic growth potential, relatively low governance scores, high
and rising government debt/GDP, and budgetary rigidities. A new
fiscal framework introduced this year aims to anchor a gradual
consolidation process and address these fiscal weaknesses, but its
effectiveness is increasingly unclear.
Broad Policy Pragmatism: The administration of Luiz Inacio "Lula"
da Silva has shown broad policy pragmatism in its first year,
refraining from big changes to the monetary framework, advancing
revenue-enhancing measures, and advocating for greater investment
by state-run entities but not a return to the aggressive
quasi-fiscal policy of the past. Its microeconomic focus has not
involved disruptive changes and incudes a major tax reform to boost
competitiveness. Policy discipline has been tested by demands from
factions within the ruling Workers Party and a difficult
relationship with a conservative congress that has slowed progress
on some initiatives. It could face an even greater test in the
event of a greater-than-expected growth slowdown.
Fiscal Deterioration In 2023: Brazil's fiscal position is on track
for a substantial deterioration in 2023, driven by sluggish
revenues, large spending increases mostly related to expansion of
Bolsa Familia social benefits, and settlement of the remaining
stock of court-ordered "precatorio" payments. Fitch projects the
central government (CG) primary balance to deteriorate to a
2.2%-of-GDP deficit in 2023 from a 0.5% surplus in 2022, although
0.9pp of this is one-off and related to precatorios. Fitch projects
an even larger deterioration in the broader general government
primary balance to a 2.0% deficit in 2023 from a 1.2% surplus in
2022, given a shrinking primary surplus among subnational
governments. This, along with a somewhat larger interest bill, will
lift the overall deficit to 8.0%, well above the 'BB' median of
3.3%.
Uncertain Consolidation Prospects: The 2024 budget targets a
federal primary balance of 0% of GDP (with a +/- 0.25pp tolerance
range), but achieving this appears increasingly doubtful in light
of revenues and spending uncertainties. The authorities have
identified a series of tax measures they expect to boost revenues
by 1.5%-of-GDP, but the potential yield from measures already
enacted is uncertain (e.g. a reform of the CARF tax court expected
to facilitate settlement of tax debt), while several measures still
require congressional approval. Should revenues fall short of
budget expectations and jeopardize the fiscal target, this will
trigger discretionary spending cuts under Brazil's new fiscal rule,
but the required amount of these cuts is subject to dispute given
conflicting interpretations of different provisions of the rule.
Fitch projects the CG primary deficit will improve to 0.75% of GDP
in 2023, assuming partial progress on this revenue effort, but with
additional risk should even this fail to materialize. The
authorities have so far resisted pressures to change the fiscal
target, but this remains a possibility in 2024 when the revenue
picture becomes clearer. In Fitch's view, the apparent ambiguities
in the new framework and possible changes in its targets could
undermine its efficacy as an anchor for fiscal consolidation.
High and Rising Debt: Government debt/GDP has resumed an upward
path in 2023, albeit from a starting point that is much better than
previously expected both during and before the pandemic. Fitch
projects general government debt/GDP to rise to 74.6% in 2023 from
71.7% and remain on an upward path approaching 80% by 2025, well
above the current 'BB' median of 53%. Interest/revenue is projected
to decline to around 15% in the coming years, still high relative
to peers but below the peaks around 20% during Brazil's 2015-2017
crisis. The federal treasury's sizeable cash buffer (currently 8%
of GDP) supports its financing flexibility and capacity to weather
choppy market conditions.
Cooler but Steady Growth: Fitch projects real GDP growth of 3.0% in
2023, up from 2.3% at the time of the last review in July, given
strong economic momentum early in the year. Quarterly growth prints
have slowed markedly over 2023, albeit in large part due to
conclusion of a strong agricultural harvest, whereas activity net
of this effect has been steadier. Consumption remains buoyant,
supported by a strong labor market, but investment has been
falling, reflecting greater sensitivity to the high interest-rate
environment. Fitch expects growth to moderate to 1.5% in 2024,
reflecting a continuation of these trends and less favorable base
effects, before returning to an around-trend pace of 2.1% in 2025.
Upside to Low Trend Growth: Low and declining investment of 17% of
GDP bodes poorly for a substantial improvement in potential growth,
which is around 1.5%-2.0% by most estimates (including those of the
IMF, and Fitch's own). However, progress on reforms and
opportunities from the green energy transition could offer some
upside. The Lula administration appears uninclined to overturn
reforms enacted in past years (labor, sanitation, privatizations)
that have helped the business climate, or unable to do so with the
opposition-controlled congress. Its ambitious tax reform (still
awaiting final approval) seeks to reduce complexity and distortions
in the system, and thus improve one of Brazil's biggest and most
longstanding competitiveness bottlenecks. However, any benefits may
take time to materialize given a long transition period.
Well-Behaved Inflation: Fitch projects inflation will end 2023 at
4.5%, within the target range of 3.25%+/-1.5pp (which will fall by
0.25pp next year). While inflation is up from a low in June, this
mainly reflects adverse base effect from last year's fuel tax cuts,
while recent monthly prints have been benign, and core and services
inflation have continued to recede. This has enabled the central
bank (BCB) to cut its Selic policy rate from 13.75% in August to
11.75% as of yearend, and signal further 50-basis-point cuts in
upcoming meetings. Inflation expectations remain somewhat above the
target midpoint, likely in light of fiscal uncertainties given the
inflation-targeting framework was left largely unaltered. This has
reinforced a cautious bias on the part of the BCB, and Fitch
believes it could adopt slower pace of easing should external or
domestic policy developments result in any further drift in
inflation expectations.
Record Trade Surplus: Brazil's trade surplus is on track to rise
from USD44 billion in 2022 to around a record USD80 billion in
2023. Fitch projects this will reduce the current account deficit
to 1.4% of GDP in 2023 from 2.7% in 2022. This improvement reflects
gains in agricultural output that, along with oil production that
will increase in the coming years, could portend a structural
improvement in the external position. Strong trade flows and an
attractive interest-rate differential has supported an appreciation
in the Brazilian real this year. The BCB continues to refrain from
FX intervention, but its reserves have grown this year given
interest income and reversion of past FX credit lines. At USD350
billion currently, they cover around nine months of current
external payments, the second-highest in the 'BB' category.
ESG - Governance: Brazil has an ESG Relevance Score (RS) of '5' for
both Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption.
These scores reflect the high weight that the World Bank Governance
Indicators (WBGI) have in its proprietary Sovereign Rating Model.
Brazil has a medium WBGI ranking at the 40th percentile, reflecting
a record of political tension, but peaceful political transitions,
a moderate level of rights for participation in the political
process, moderate institutional capacity, moderate rule of law and
a relatively high level of corruption.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Public Finances: Material policy shifts that undermine fiscal
policy credibility, financing flexibility, and medium-term public
debt sustainability;
- Macro: Policies that undermine macroeconomic stability and/or
medium-term growth prospects.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Public Finances: Progress on fiscal consolidation that durably
stabilizes government debt/GDP at around current levels;
- Macro: Evidence of an improvement in investment and economic
growth prospects in the context of macroeconomic stability and
improved governance.
SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Brazil a score equivalent to a
rating of 'BBB-' on the Long-Term Foreign-Currency (LT FC) IDR
scale.
Fitch's sovereign rating committee adjusted the output from the SRM
score to arrive at the final LT FC IDR by applying its QO, relative
to SRM data and output, as follows:
- Macro: -1 notch, to reflect weak potential growth, largely held
back by a low investment rate and structural impediments, such as a
difficult business environment, which make it more challenging to
consolidate public finances and address social pressures.
- Public Finances: -1 notch, to reflect fiscal flexibility that is
hampered by the highly rigid spending profile and heavy tax burden,
which complicates adjustment to economic shocks, and a high debt
that Fitch projects to rise further over the medium term.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
COUNTRY CEILING
The Country Ceiling for Brazil is one notch above the LT FC IDR.
This reflects moderate constraints and incentives, relative to the
IDR, against capital or exchange controls being imposed that would
prevent or significantly impede the private sector from converting
local currency into foreign currency and transferring the proceeds
to non-resident creditors to service debt payments.
Fitch's Country Ceiling Model produced a starting point uplift of
+0 notches above the IDR. Fitch's rating committee applied a +1
notch qualitative adjustment to this, under the Balance of Payments
Restrictions pillar to reflect Brazil's relatively open capital
account, and ongoing efforts to make the currency fully
convertible, that are not reflected by the high number of
capital-account restrictions recorded in the IMF's AREAER report
that feed into the model score.
ESG CONSIDERATIONS
Brazil has an ESG Relevance Score of '5' for Political Stability
and Rights as WBGIs have the highest weight in Fitch's SRM and are
therefore highly relevant to the rating and a key rating driver
with a high weight. As Brazil has a percentile rank below 50 for
the respective Governance Indicator, this has a negative impact on
the credit profile.
Brazil has an ESG Relevance Score of '5' for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption as
WBGIs have the highest weight in Fitch's SRM and are therefore
highly relevant to the rating and a key rating driver with a high
weight. As Brazil has a percentile rank below 50 for the respective
Governance Indicators, this has a negative impact on the credit
profile.
Brazil has an ESG Relevance Score of '4' [+] for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
WBGIs is relevant to the rating and a rating driver. As Brazil has
a percentile rank above 50 for the respective Governance Indicator,
this has a positive impact on the credit profile.
Brazil has an ESG Relevance Score of '4' [+] for Creditor Rights as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Brazil, as for all sovereigns. As Brazil has
track record of 20+ years without a restructuring of public debt
and captured in Fitch's SRM variable, this has a positive impact on
the credit profile.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Brazil LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Country Ceiling BB+ Affirmed BB+
senior
unsecured LT BB Affirmed BB
BRAZIL: Nears Inflation Target, Eyes Rate Cuts
----------------------------------------------
Lachlan Williams at Rio Times Online reports that with Brazil's
annual inflation rate hitting the central bank's target, this
achievement paves the way for potential future rate cuts.
Monetary policymakers are likely to apply a fourth consecutive
reduction in financing costs, according to Rio Times Online.
Official data released showed consumer prices in November rose
4.68% from the previous year, the report notes.
This figure slightly undercuts analysts' expectations of a 4.7%
increase, the report relays. Monthly inflation was at 0.28%, the
report discloses.
The central bank's inflation target for the year stands at 3.25%,
the report notes. This target includes a tolerance range of ±1.5
percentage points, 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).
GAM EMPREENDIMENTOS: Chapter 15 Case Summary
--------------------------------------------
Chapter 15 Debtor: GAM Empreendimentos E Participacoes
S.A.;
Florida Paulista Acucar e Etanol S.A.
Rua do Paraiso, n. 45, Conjunto 71
Paraiso, Sao Paulo, SP 04103
Foreign Proceeding: Judicial District of Florida Paulista,
SP, Case No. 1064319-92.2016.8.26.0100
Chapter 15 Petition Date: December 15, 2023
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 23-20364
Judge: Hon. Scott M. Grossman
Foreign Representative: Expertisemais Servicos Contabeis e
Administrativos Ltda., as Judicial
Administrator
Rua do Paraiso, n. 45, Conjunto 71
Paraiso, Sao Paulo, SP 04103
Brazil
Foreign
Representative's
Counsel: Nyana Abreu Miller, Esq.
SEQUOR LAW P.A.
1111 Brickell Ave, Suite 1250
Miami, FL 33131
Tel: (305) 372-8282
Email: nmiller@sequorlaw.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of the Chapter 15 petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/UPWPMZQ/GAM_EMPREENDIMENTOS_E_PARTICIPAES__flsbke-23-20364__0001.0.pdf?mcid=tGE4TAMA
===============
C O L O M B I A
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COLOMBIA TELECOMUNICACIONES: S&P Lowers ICR to 'B', On Watch Neg.
-----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit and issue ratings on
telecom services provider Colombia Telecomunicaciones S.A. E.S.P.
(Coltel) to 'B' from 'BB' and placed the ratings on CreditWatch
with negative implications.
S&P aims to resolve the CreditWatch placement and revise the
ratings in the next 30-60 days when it has more visibility on the
company's ability to secure sufficient funds for refinancing.
Coltel's lower cash balance, weaker cash generation, and higher
short-term maturities increase liquidity risk for the next year,
while the company looks for refinancing opportunities through
uncommitted credit lines. Lower cash flow generation because of a
competitive market and an elastic industry, as well as
higher-than-expected capital expenditure (capex) requirements, are
straining Coltel's cash balance. Its cash balance reached a
historical low of COP50 billion as of Sept. 30, 2023, compared with
COP482 billion at the beginning of the year.
In addition, during 2023, the company's share of short-term debt
due in the next 12 months has increased, pressuring the maturity
schedule. The main maturities include about COP1.2 trillion,
including COP350 billion from its local bond due May 2024, and the
remaining from bank loans, lease obligations, interests, spectrum
license, and mark to market derivatives for the next 12 months.
The cash balance is currently COP283 billion in our estimation, and
S&P expects about COP650 billion in cash generation through
operations for the next 12 months. Compared with the reported
COP800 billion in short-term debt maturities, as well as COP400
billion in short-term lease obligations for the next 12 months,
this suggests potential liquidity risk. However, Coltel has
historically maintained ample access to bank lending through
uncommitted credit lines. Also, the company expects to renew its
current financings, as well as renew others, which would give it
greater flexibility to meet its current maturities.
Coltel's profitability has not improved as S&P expected, weakening
its financial leverage metrics, and we do not expect metrics to
improve next year. Given a competitive pricing environment, Coltel
has shown less flexibility to transfer connection costs, inflation,
and Colombian peso depreciation to subscribers, resulting in lower
EBITDA generation and deteriorating leverage ratios.
S&P said, "In 2022, Coltel sold its infrastructure assets to ONNET,
so we expected connectivity costs to increase and the company to
reduce its investments related to such infrastructure. However,
costs increased as we expected, but investments remained high due
to the company's catch-up on copper transition to fiber optic, to
align with 4G deployment.
"Coltel's leverage worsened, with debt to EBITDA above 4x and
negative free operating cash flow (FOCF) to debt. If Coltel is a 5G
spectrum winner, we expect that the financing of this license could
also negatively affect its leverage metrics because it will be
considered as long-term debt, like what we saw in 2022 with the
renewal of its 1,900 mhz spectrum. However, we note that the
investments will be split in half between Coltel and Millicom via
its joint agreement. Hence, we do not expect full effect on the
company, and the conditions seem to be more favorable than the
previous spectrum valuations, in our view.
"High price competition and inability to make significant
investments will continue to impair Coltel's credit profile. The
competitive environment continues to affect Coltel's financial
results while cash outflows continue. Most telecom operators have
entered a vicious cycle of competition. To maintain their market
share, they have limited price increases in recent years, unable to
compensate for rising inflation, interest rates, operating costs,
and investments. Carriers end up compensating for losses by
tightening their liquidity positions or taking on more debt. We
expect intense competition to continue over the next year.
"We now view the comparable ratings analysis as negative, from
neutral previously. We add a one-notch negative adjustment in our
analysis of Coltel given that its business and financial profiles,
as well as its liquidity management, are relatively weaker within
their respective categories."
CreditWatch
S&P said, "The CreditWatch negative placement reflects the
significant cash outflows, low cash balances, and the COP1.20
trillion in short-term debt and financial lease maturities.
Furthermore, we forecast weaker cash flow generation through 2024.
Coltel has been stretching the timing of its refinancings, which in
our opinion represents aggressive liquidity management. We aim to
resolve the CreditWatch in the next 30-60 days when we have more
visibility on the company's ability to secure sufficient funds for
refinancing."
S&P could lower the ratings on Coltel within the next three months
by one or more notches for the following reasons:
-- S&P perceives there is higher refinancing risk and/or continued
pressure on cash generation.
-- The company fails to strengthen operating cash flows for
license renewals and capex, incurring additional debt, and/or the
company's liquidity erodes further.
-- Despite the refinancing, S&P expects the company will have
considerable liquidity deficits in 2024.
S&P said, "We could remove the ratings from CreditWatch negative
and raise the ratings if we have high certainty that Coltel's cash
generation and/or future refinancings will allow liquidity to
strengthen and if capex commitments do not put further pressure on
leverage metrics. In particular, we would look for liquidity
sources to meet expected uses for the next year by at least one
time (1x). We would also look for a significant decline in
leverage, to debt to EBITDA below 4.0x and FOCF to debt toward 10%,
on a consistent basis, through enhancements on its pricing power, a
larger subscriber base, and stronger cash generation."
=======
P E R U
=======
PERU: Inflation May Hit Target Sooner Than Expected, Bank Says
--------------------------------------------------------------
Reuters reports that Peru's inflation rate could converge to the
central bank's target sooner than expected, the head of the bank
said, arguing that the rate of rising prices in the Andean nation
is now under control.
"We expect it to return to the (target) range, if not in December,
in the first quarter or in April next year," central bank head
Julio Velarde said, hinting at an earlier-than expected easing of
inflation, according to the report.
The central bank had previously said inflation would converge to
target in April, the report notes.
Peru's annual inflation rate slowed to 3.64% in November, bringing
the rate or rising consumer prices closer to the central bank's
target range of between 1% to 3%, the report relays.
The bank will announce any changes to its benchmark interest rate
after cutting it to 7% last month, the report relays.
"The important thing is that we have raised the interest rate much
less than the rest of the region and we are getting inflation to
return faster (to the target) than the other countries," said
Velarde, the report adds.
=====================
P U E R T O R I C O
=====================
CEDIPROF INC: Court Approves Disclosure Statement
-------------------------------------------------
Judge Mara de Los Angeles Gonzalez has entered an order approving
the Disclosure statement of Cediprof Inc.
Objections to claims must be filed prior to the hearing on
confirmation.
Acceptances or rejections of the Plan may be filed in writing by
the holders of all claims on/or before 14 days prior to the date of
the hearing on confirmation of the Plan.
Any objection to confirmation of the plan will be filed on/or
before 14 days prior to the date of the hearing on confirmation of
the Plan.
A hearing for the consideration of confirmation of the Plan and of
such objections as may be made to the confirmation of the Plan will
be held on March 14, 2024 at 10:00 a.m. at the U.S. Bankruptcy
Court, Jose V. Toledo Fed Bldg & Us Courthouse, 300 Recinto Sur,
3rd Floor, Courtroom #3, Old San Juan, Puerto Rico.
About Cediprof Inc.
Cediprof, Inc., is a company in Caguas, P.R., which develops,
manufactures, supplies and distributes finished dosage forms of
pharmaceutical products.
Cediprof filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. D.P.R. Case No. 22-03198) on Nov. 4,
2022, with $10 million to $50 million in both assets and
liabilities.
The Debtor tapped Carmen D. Conde Torres, Esq., at the Law Offices
of C. Conde & Assoc. as bankruptcy counsel; RSM Puerto Rico as
accountant; and Colon Conde & Mirandes, LLC as tax credit
consultant.
*********
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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