/raid1/www/Hosts/bankrupt/TCRLA_Public/240402.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, April 2, 2024, Vol. 25, No. 67
Headlines
A R G E N T I N A
ARGENTINA: President Milei to Cut 70,000 State Jobs
B A H A M A S
FTX GROUP: Fee Examiner Seeks to Give Sullivan $31-Mil. in Fees
B R A Z I L
BANCO DA AMAZONIA: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
BANCO DO NORDESTE: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
BANCO NACIONAL: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
BRAZIL: Unveils Proposal to Reduce Debt Service on States' Debt
CAIXA ECONOMICA: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
GOL LINHAS: Court OKs Interim Cash Collateral Access
GOL LINHAS: Slips to 4Q Loss as it Works Through Bankruptcy
J A M A I C A
JAMAICA: Gov't Must Partner w/ Private Sector for Water Investment
NCB: Board Cleared of Jamaicans, Replaced by Canadians
M E X I C O
KUO SAB DE CV: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Amendment to Beekeeping Act Sours Honey Industry
- - - - -
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A R G E N T I N A
=================
ARGENTINA: President Milei to Cut 70,000 State Jobs
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Buenos Aires Times reports President Javier Milei plans to fire
70,000 government workers in the coming months in one of the
clearest signs yet of how the libertarian's chainsaw-style approach
intends to slash the swollen state.
Beyond the job cuts, Milei boasted at an event that he's frozen
public works, cut off some funding to provincial governments and
terminated more than 200,000 social welfare plans, which he
labelled as corrupt, according to Buenos Aires Times. It's all
part of his strategy to reach a fiscal balance at any cost this
year, the report notes.
"There's a lot of blender," Milei said in an hour-long speech at
the IEFA Latam Forum in Buenos Aires, referring to the erosion of
wages and pensions by 276 percent annual inflation, notes the
report. "There's a lot more chainsaw," he added.
While just a small fraction of Argentina's 3.5 million
public-sector workers, Milei's job cuts are bound to face more
pushback from the country's powerful labour unions and could
jeopardise his high approval ratings, the report notes. One union
representing some government workers went on strike, while a
government report detailed that private sector workers suffered the
worst one-month wage loss in at least three decades once he took
office in December, the report discloses.
The leader of the state workers union ATE quickly shot back on X,
announcing a national strike without providing further details, the
report says.
Milei cited polls showing Argentines are more optimistic about the
economy's future, while a recent indicator of the public confidence
in the government rose despite his austerity measures, the report
notes.
"People have hope, they're seeing the light at the end of the
tunnel," Milei concluded, the report adds.
The report relays that other key points from Milei's speech:
-- Milei said peso futures contracts are aligned with the Central
Bank's two-percent monthly crawling peg scheme, labelling calls to
sharply devalue the currency again "ridiculous"
-- Argentina's Central Bank on the path to achieving net neutral
reserves after starting with debt liabilities that surpassed cash
on hand by US$11.5 billion in December
-- Milei says he'll double down on his attempts to reform the
Argentine economy after 2025 congressional elections, with more
than 3,000 reforms in the pipeline
-- He described the Senate rejecting his emergency decree as
"marvellous" because "it left all the dirty fingers" of exposed of
politicians he calls "delinquents"
-- Milei expects V-shaped economic recovery
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 March 15, 2024, raised its local currency
sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and
its national scale rating to 'raB+' from 'SD'. S&P also raised its
long-term foreign currency sovereign credit rating to 'CCC' from
'CCC-' and affirmed its 'C' short-term foreign currency rating. The
outlook on the long-term ratings is stable. In addition, S&P
revised its transfer and convertibility assessment to 'CCC' from
'CCC-'.
S&P said the stable outlook on the long-term ratings balances the
risks posed by pronounced economic imbalances and policy
uncertainties with the favorable change in near-term debt service
obligations. S&P also expect no further debt exchanges that it
would likely consider to be distressed.
Fitch Ratings upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
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B A H A M A S
=============
FTX GROUP: Fee Examiner Seeks to Give Sullivan $31-Mil. in Fees
---------------------------------------------------------------
Emlyn Cameron of Law360 reports that a Delaware bankruptcy judge
should give Sullivan & Cromwell LLP about $31 million in fees for
its work in FTX Trading Ltd.'s case from August through October
2023, the Chapter 11 fee examiner said.
On Dec. 15, 2023, Sullivan & Cromwell filed its Fourth Interim Fee
Application for the period from Aug. 1, 2023 through Oct. 31, 2023,
seeking $31,759,526 in fees and $64,897 in expenses.
During the Fourth Interim Fee Period, S&C advised the Debtors on a
wide variety of complex matters, including investigating customer
claims; work on tax matters and asset security; global regulatory
matters; continued work on Joint Provisional Liquidator matters in
Australia and The Bahamas; continued development of a document
depository to centralize responses to and requests from government
and regulatory authorities; continued work on asset recovery;
pursuit of claims in other cryptocurrency Chapter 11 cases; and
continuing to pursue asset sales, among other things.
The Fee Examiner again identified a number of areas of concern,
including possible overstaffing, apparently excessive meeting and
hearing attendance, and various technical and procedural
deficiencies with respect to some time entries (including vague
and lumped entries). The Fee Examiner also identified arguably
unnecessary time spent monitoring and attending the Sam
Bankman-Fried criminal proceedings and time spent reading the book
Going Infinite. After an extensive exchange of information and
discussion, the stipulated adjustments to fees and expenses are
sufficient to address the Fee Examiner’s concerns, with two
continuing Reserved Issues: (1) fees incurred to prepare interim
reports and (2) fees devoted to the investigation and prosecution
of avoidance actions that may not have been described with
sufficient detail to allow for a determination of which avoidance
matters they relate to. With those express reservations, the Fee
Examiner now recommends Court approval of the S&C Fourth Fee
Application.
About FTX Group
FTX was the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offered
various products, including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
billion in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year.
According to Reuters, SBF shared a document with investors on Nov.
10, 2022, showing FTX had $13.86 billion in liabilities and $14.6
billion in assets. However, only $900 million of those assets were
liquid, leading to the cash crunch that ended with the company
filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
===========
B R A Z I L
===========
BANCO DA AMAZONIA: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Banco da Amazonia SA's (BASA) Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'.
The Rating Outlook is Stable. Fitch has also affirmed BASA's
Long-Term National Rating at 'AAA(bra)'/Stable.
KEY RATING DRIVERS
Government Support Drives Ratings: BASA's IDRs are driven by its
Government Support Rating (GSR), are equalized with those of
Brazil, reflecting a moderate probability of support from the
Brazilian government. This considers Brazil's high propensity to
support BASA, but its moderate ability to do so. The Brazilian
government's high propensity to support the bank is based on BASA's
important regional policy role and majority state ownership. The
sovereign's ability to provide support is moderate as reflected in
its 'BB' Long-Term IDRs.
BASA's 'AAA(bra)' Long-Term National Rating is based on potential
support and reflects the bank's creditworthiness relative to other
issuers in Brazil.
No Viability Rating: As is the case for development banks, Fitch
does not assign BASA a Viability Rating (VR). By the agency's
criteria, VRs are not assigned to policy banks whose operations are
largely determined by their policy roles. BASA's business model is
strongly influenced by its regional policy role.
Key Regional Policy Bank: BASA's is one of Brazil government's main
regional policy banks that implements its development plans and
countercyclical policies in the Northern Region of Brazil. BASA's
purpose is to support and foster economic activities that
contribute to the economic growth of the nine federal states of the
Brazilian legal amazon region and promote economic and social
development. As a result, the Brazilian government exerts influence
over BASA's lending activity and operations.
The importance of the bank's policy role has not changed over
political cycles, and Fitch expects this to continue. Although
there has not been any material change in the bank's corporate
governance so far, Fitch will continue to monitor the potential for
political interference from the federal government that could
materially affect BASA's financial metrics.
Funds from Government Underpins Role: BASA's policy role is further
reinforced by its status as the exclusive agent to manage several
funds established by the federal government, including the
Constitutional Fund of the North (FNO), the main financial
instrument for the economic development of the northern region. FNO
funds are BASA's bank's largest source funding and a major source
of income for the entity.
As fund administrator, BASA receives a monthly fee based on the
fund's equity in addition to a del-credere fee for assuming partial
or full risks on operations carried-out with FNO resources. At
end-2023, BASA gross extended loans were BRL50.9 billion, of which
BRL24.1 billion were related to the risk sharing agreement with the
fund, where BASA is remunerated for guaranteeing 50% of the credit
risk. Management and del-credere fees amount to roughly half of the
bank's operating income.
Strengthened business, financial profile: BASA is not
profit-driven, but Fitch highlights the proactive strategic course
taken in recent years to improve risk management, digital
transformation and governance standards. These initiatives have led
to tangible improvements in profitability, facilitating credit
expansion and reinforcing the bank's key role in driving economic
progress in Brazil's northern region. As part of its business
transformation, BASA has also been seeking to establish long-term
funding agreements with multilateral institutions and diversify its
funding sources beyond FNO funds.
Strong Performance: The bank's operating profit/risk-weighted
assets ratio reached 3.9% in 9M23 and materially improved relative
to pre-pandemic years, reflecting primarily increased business
volumes, high yields on government bonds and well-controlled
expenses stemming from the implementation of cost efficiency
measures.
Risk profile sensitive to policy role: Given its policy role,
BASA's risk profile is more sensitive to economic downturns than
that of local commercial banks. This is a consequence of the bank's
role in financing emerging sectors and industries, as well as
customer segments underserved by commercial banks, and the
long-term nature of its lending. However, the bank's impaired loan
ratio (DH loans) continues to decline from 11% at end-2021 and 7.6%
at end-2022 to 6.0% in 2023, reflecting limited impaired loan
formation, loan growth and write-offs.
Adequate capital buffers: BASA's regulatory capital ratios remain
adequate, as evidenced by a common equity Tier 1 (CET1) ratio of
13% at end-2023 and despite strong balance sheet expansion,
reflecting resilient internal capital generation and prudent
dividend payouts. BASA's regulatory capital ratios remain adequate,
as evidenced by a CET1 ratio of 13% at end-2023 and despite strong
balance sheet expansion, reflecting resilient internal capital
generation and prudent dividend pay-outs.
Stable Funding Profile: BASA's funding profile benefits from the
ample and longer-term sources of federal constitutional funds with
64% of total funding at YE 2023 (the main one being FNO),
underpinned by a fairly resilient and granular customer deposit
base, in addition to BNDES on-lending funding.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
BASA's Long-Term IDRs and GSR would be downgraded if Brazil's
sovereign rating is downgraded, though this is not Fitch's base
case given the Stable Outlook on Brazil's Long-Term IDRs.
BASA's ratings are also sensitive to a reduced propensity of the
authorities to support the bank. This could be indicated by an
adverse change in BASA's policy role or a material reduction in
government ownership, which Fitch views as unlikely;
BASA's National Long-Term Rating is sensitive to a negative change
in Fitch's opinion of the bank's creditworthiness relative to other
Brazilian issuers.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of the Long-Term IDRs would require a sovereign
upgrade.
BASA's National Long-Term Rating is at the highest level on Fitch's
Brazilian national rating scale and therefore cannot be upgraded.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
BASA's ratings are equalized with Brazil's sovereign rating.
ESG CONSIDERATIONS
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
----------- ------ -----
Banco da
Amazonia S.A. LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Natl LT AAA(bra)Affirmed AAA(bra)
Natl ST F1+(bra)Affirmed F1+(bra)
Government Support bb Affirmed bb
BANCO DO NORDESTE: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Banco do Nordeste do Brasil S.A.'s (BNB)
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
at 'BB'. The Rating Outlook is Stable. In addition, Fitch has
affirmed BNB's Long-Term National Rating at 'AAA(bra)'/Stable.
KEY RATING DRIVERS
Ratings Equalized with Sovereign: BNB's 'BB' Long-Term IDR and 'bb'
Government Support Rating is equalized with Brazil's Long-term IDR,
reflecting a moderate probability of support from the Brazilian
sovereign. The rating considers Brazil's high propensity to support
BNB but moderate ability to do so. BNB's 'AAA(bra)' Long-Term
National Rating also reflects Brazil's potential support, as well
as the bank's creditworthiness relative to that of other Brazilian
issuers. BNB's Stable Outlook reflects the sovereign's Outlook.
No VR Assigned: As is the case for development banks, Fitch does
not assign a Viability Rating to BNB. By the agency's criteria, VRs
are not assigned to policy banks whose operations are largely
determined by their policy roles. BNB's business model is strongly
influenced by its role as one of the government's main regional
policy banks that implements its development plans and
countercyclical policies in the Northeast Region of Brazil.
Important Policy Role: BNB is Brazil's largest regional policy bank
and, thus, important to the country's economic growth and social
development. Its strategy is aligned with national development
objectives and is highly influenced by Brazilian government policy.
BNB focuses on financing infrastructure, agricultural loans, small
and medium-sized enterprises (SMEs), and micro-lending to small
entrepreneurs. Although there has not been any structural change in
the bank's overall corporate governance thus far, Fitch continually
monitors the potential for political interference from the federal
government that could materially affect BNB's role and financial
metrics
Facilitator for State Funds Distribution: BNB is the manager of
Fundo Constitucional de Financiamento do Nordeste (FNE), and,
through these operations, supports companies of several segments
and sizes, and implements public policies. FNE's resources aim to
fill the credit demand gap and promote businesses in urban and
rural areas. The focus is primarily in the Brazilian semi-arid
region, which, for natural characteristics, demands greater
investment to reduce inequality. FNE is comprised of public funds,
and its lending assets increased 17% annually, to BRL 121.2 billion
in 2023, while BNB's own portfolio was BRL13.4 billion, a 1.5% yoy
decrease from 2022.
Well-Managed Asset Quality: Despite BNB's weaker risk profile than
domestic commercial banks, the bank's asset-quality metrics are
adequate and remained so in the last years. The bank's
four-year-average impaired loans ratio (D-H definition) of 7.1%
compares well with industry average, although its policy role
implies that grace periods are often granted. BNB's expanded credit
risk includes FNE loans on which the bank bears a risk-sharing
agreement of 50%, and are accounted off balance-sheet. At YE 2023,
this portfolio of BRL56 billion had around BRL4.1 billion of
impaired loans, 77% covered by BNB reserves.
Performance Linked to Policy Role: BNB's earnings can be more
volatile than pure commercial banks due to its countercyclical
role. However, profitability has been strong through multiple
economic cycles, with an operating profits/risk-weighted assets
(RWA) ratio of 3.35% in 2023 and a four-year average of 3.3% (ROAE
of 21.3% and 21.7%, respectively). Low funding costs, sizeable
revenues stemming from FNE fees and well-controlled credit costs
underpin BNB's profitability.
As the exclusive FNE administrator, BNB receives a management fee
over FNE's equity, responsible for 23% of BNB's operating income in
2023. The bank charges an additional yearly fee (del credere) over
FNE's on-lending operations with shared risk, that corresponds to
32% of BNB's operating income. Recent regulatory changes reduced
FNE's management fee to 1.5% (from 1.8% in 2022), negatively
impacting that source of revenue. However, going forward, Fitch
expects BNB's profitability to remain adequate and close to its
historical levels, thanks to the steady revenue stream from fund's
fees, and to the pivotal role the bank plays in enacting public
policies.
Good Capital Buffers: BNB has an adequate buffer over minimum
regulatory requirements, with CET1 ratio of 10.5% at end-2023, from
10.75% at end-2022. The bank has a residual legacy hybrid
instrument, that adds only 17bps to the bank's CET1 ratio, and will
be repaid in 2024. BNB's total capital metrics are complemented by
Tier II instruments from FNE, subject to an annual phaseout until
2029. In Fitch's view, BNB's good internal capital generation
prospects will likely be sufficient to manage the gradual reduction
of those instruments in the coming years.
Stable Liquidity: Fitch views BNB's funding and liquidity as
stable, despite being less diversified than commercial banks', in
terms of sources. BNB's funding structure is mainly comprised of
FNE's resources (38% of total funding), followed by deposits,
subordinated debt, LFT (financial treasury bills) and funding lines
from multilateral agencies. Its liquidity remains adequate, added
by FNE's cash and equivalents position, that is accounted on BNB's
balance sheet and must be invested in government securities. Due to
its structure and business model, Fitch does not expect material
changes in BNB's funding and liquidity profiles in the foreseeable
future.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
BNB's Long-Term IDRs and GSR would be downgraded if Brazil's
sovereign rating is downgraded, though this is not its base case
given the Stable Outlook on Brazil's Long-Term IDRs.
BNB's ratings are also sensitive to a reduced propensity of
support, which could indicate an adverse change in BNB's policy
role or a material reduction in government ownership, which Fitch
views as unlikely.
BNB's National Long-Term Rating is also sensitive to a negative
change in Fitch's opinion of the bank's creditworthiness relative
to other Brazilian issuers. A downgrade of the National Short-term
Rating is not likely as this would require the NLTR to be
downgraded to at least 'A(bra)'.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Any upside of BNB's Long-term IDRs and GSR is contingent on an
upgrade of Brazil's Long-term IDRs;
- BNB's National Long-Term Rating is at the highest level on
Fitch's Brazilian national rating scale for entities with
international ratings equalized with the sovereign and therefore
cannot be upgraded.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
BNB's ratings are equalized with Brazil's sovereign rating.
ESG CONSIDERATIONS
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
----------- ------ -----
Banco do
Nordeste
do Brasil S.A. LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Natl LT AAA(bra)Affirmed AAA(bra)
Natl ST F1+(bra)Affirmed F1+(bra)
Government Support bb Affirmed bb
BANCO NACIONAL: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Banco Nacional de Desenvolvimento
Economico e Social's (BNDES) Long-Term Foreign- and Local-Currency
Issuer Default Ratings (IDRs) at 'BB'. The Rating Outlook is
Stable. In addition, Fitch has affirmed BNDES's Long-Term National
Rating at 'AAA(bra)'/Stable.
KEY RATING DRIVERS
Ratings Equalized with Sovereign: BNDES's IDR and Government
Support Rating (GSR) are equalized with Brazil's IDRs
(BB/Stable/B), with the sovereign being the sole shareholder, and
the Stable Outlook on BNDES's Long-Term IDRs is in line with those
on the sovereign.
As is usual for development banks, Fitch does not assign BNDES a
Viability Rating (VR), since by the agency's criteria VRs are not
assigned to policy banks whose operations are largely determined by
their policy roles. The bank's business model is fully aligned with
public policy guidelines and the majority of the disbursements
involve directed lending to strategic sectors, which Fitch believes
represents BNDES's unique policy role, which cannot be carried out
on a commercial basis.
Government Support: BNDES's ratings reflect Fitch's view of the
authorities' high propensity to support the country's leading
development bank, if required, as well as its limited financial
flexibility to do so - as indicated by the level of the sovereign's
Long-Term IDR. The equalization of the rating reflects the full
federal ownership, BNDES' policy bank status, and its role in the
implementation of government economic policies. There has been no
structural change corporate governance thus far, but Fitch will
monitor the potential for political interference that could affect
BNDES's role and financial metrics.
Key Policy Role: BNDES is highly influenced by government policy,
while directly under Ministry of Development, Industry and Commerce
(MDIC), the bank aligns itself with the policies of the Ministry of
Finance. It focuses on financing infrastructure, developmental and
large infrastructure projects in strategically important sectors,
such as mitigation of climate change, (specifically electric
energy), agriculture, and SMEs. BNDES's management plans to
reinforce the development agenda by accelerating loan growth after
strong balance-sheet deleveraging over the last five years. The
bank expects disbursements to grow and represent approximately 2%
of GDP by 2026, and has been keen to grow and diversify funding
sources to support the expected growth of the loan portfolio.
Reduced Market Risk: BNDES's exposure to market risk has come down
substantially over the last few years following equity divestments
in line with the bank's revised business plan, which includes its
goal to reduce market-risk volatility from its equity holdings,
prioritizing capital allocation aligned to its policy agenda, while
partnering with private agents on infrastructure projects.
Accordingly, market risk-weighted assets went down to 7.15% of
total equity by end-2023, from 88% at end-December 2018.
Resilient Asset-Quality: BNDES's non-performing loan ratios (over
90 days) compare well with those of the financial system's
averages, reflecting the development bank's conservative
underwriting standards, as well as the bank's large exposure to
well-rated financial institutions, and exposure to sectors whose
historical default rate is very low. Growth has been strong in its
loan disbursements during the past year, and the bank's expectation
is that healthy growth will continue in 2024.
Satisfactory Profitability: Net profit in 2023 (in terms of
accounting net income) amounted to BRL21.9 billion (ROAE 15.6%),
while the adjusted recurring net income was reported as BRL11.9
billion (ROAE 8.5%); the adjustments consisted of the exclusion of
extraordinary dividends and reversals of excess loan provisions.
Ample Liquidity Despite Debt Pre-Payments: After large prepayments
since 2015, BNDES is entering the final phase of its repayment
program, with 20.5 billion left to be repaid until 2030. These
prepayments have resulted in a decline in its own liquid assets,
though it retains sufficient headroom on its metrics as it has
deleveraged significantly since it started paying back the National
Treasury.
BNDES's funding and liquidity profile is underpinned mainly by
large and relatively low-cost funding, but management plans to
accelerate funding from multilateral organizations and the market
in the context of future repayments and to lower its dependence on
FAT (Fundo de Amparo ao Trabalhador - the national worker's
unemployment support fund), in light of BNDES's growth targets.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Rating downside for the bank's IDRs and GSR would be contingent
primarily on a downgrade of Brazil's IDRs, though this is not
Fitch's base case - given its Stable Outlook on the sovereign's
Long-Term IDRs.
BNDES's ratings are also sensitive to changes in its strategic
importance to the Brazilian government.
The National Long-Term Rating is sensitive to a negative change in
Fitch's opinion of the bank's creditworthiness relative to other
Brazilian issuers. A downgrade of the National Short-Term Rating is
not likely, though, as this would require a downgrade of the
National Long-Term Rating to at least 'A(bra)'.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
BNDES's National Long-Term Rating is at the highest level on
Fitch's Brazilian national rating scale for entities with
international ratings equalized with the sovereign, and therefore
can not be upgraded.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
BNDES's ratings are equalized with Brazil's sovereign rating
ESG CONSIDERATIONS
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
----------- ------ -----
Banco Nacional de
Desenvolvimento
Economico e Social
(BNDES) LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Natl LT AAA(bra)Affirmed AAA(bra)
Natl ST F1+(bra)Affirmed F1+(bra)
Government Support bb Affirmed bb
BRAZIL: Unveils Proposal to Reduce Debt Service on States' Debt
---------------------------------------------------------------
Reuters reports that Brazil's finance ministry unveiled its
proposal to reduce the burden of states' debt to the federal
government, conditioned upon allocating resources to technical high
school education.
The move comes after several governors have requested lower
charges, arguing that the amount paid in interest is excessively
high and hampers investment, according to Reuters.
Finance Minister Fernando Haddad, who previously served as
education minister in a prior administration of leftist President
Luiz Inacio Lula da Silva, met with governors to discuss the issue
and predicted the draft of a bill on the subject to be ready in
about two months, the report notes.
Speaking with reporters after the meeting, he said that new rounds
of discussions will take place with states to reach the bill's
final format, the report relays.
In a presentation released by the ministry's press office, the
government said that states joining the program would be able to
opt for interest rates of 2%, 2.5% or 3% per year, varying
according to the adopted counterparties, 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.
S&P Global Ratings raised on Dec. 19, 2023, its long-term global
scale ratings on Brazil to 'BB' from 'BB-'. The outlook on the
long-term ratings is stable. S&P affirmed Brazil's global scale
short-term ratings at 'B' and its national scale long-term rating
at 'brAAA'. S&P also raised the transfer and convertibility
assessment on the country to 'BBB-' from 'BB+'. S&P said, "The
stable outlook reflects our expectation that Brazil will maintain a
strong external position, thanks to strong commodity output and
limited external financing needs. We also believe Brazil's
institutional framework can sustain stable and pragmatic
policymaking based on extensive checks and balances across the
executive, legislative, and judicial branches of government. We
expect a very gradual fiscal correction but anticipate fiscal
deficits will remain large."
Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable
Outlook. Fitch said 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.
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).
CAIXA ECONOMICA: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Caixa Economica Federal's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'.
The Rating Outlook is Stable. In addition, Fitch has affirmed
Caixa's Government Support Rating (GSR) at 'bb' and Long-Term
National rating at 'AAA(bra)'/Outlook Stable.
KEY RATING DRIVERS
Ratings Driven By GSR: Caixa's IDRs are driven by its 'bb'
Government Support Rating (GSR) and aligned with Brazil's 'BB'
IDRs. Caixa's National Ratings measure credit risk relative to its
Brazilian peers.
Moderate Probability of Support: As a state-owned policy bank,
Caixa's IDRs are equalized with Brazil's IDRs due to the
government's strong propensity to support the bank. This is due to
Caixa's important and unique public policy role, and long-term and
strategic government ownership. However, the sovereign's ability to
provide support is moderate due to its actual rating level.
Public Policy Role: Fitch does not assign Caixa a Viability Rating
(VR) since according to the agency's criteria, VRs are not assigned
to policy banks whose operations are largely determined by their
policy roles. Nevertheless, although there has not been any
structural change in the bank's overall strategy thus far, Fitch
will continue to monitor the potential for political interference
from the federal government that could materially affect Caixa's
role and financial metrics.
Sovereign Ratings: Brazil's sovereign 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.
Brazil's Largest Mortgage Lender: Caixa is the third-largest bank
in Brazil in terms of total assets. It dominates the mortgage and
savings sectors, with market shares of 67.3% and 36.5%,
respectively as of 2023. Leveraging its considerable size, ability
to operate at scale, widespread presence, and established
reputation, Caixa enjoys various competitive advantages. These
strengths contribute to a diverse and stable revenue stream.
Strategically, Caixa aims to sustain its strong position in the
agribusiness market while continuing to expand its total credit
origination.
Policy Role Drives Risk Profile: Caixa's primary exposure is to
credit risk, which constitutes 61% of its asset base. The
institution's underwriting standards have traditionally fluctuated
with economic conditions, mirroring its mandate and approach to
providing credit to individuals with lower incomes. Nonetheless,
Caixa's leadership is progressively refining these standards,
demonstrating a subdued risk tolerance, increased prudence, and an
enhanced emphasis on financial performance.
Resilient Asset Quality: Fitch believes Caixa's asset quality has
remained stable, even throughout the demanding operating
environment of the past few years. The ratio of impaired loans to
gross loans was 7.0% at 2023, which is in line with that of other
sizable Brazilian bank. The four-year average was 7.6% from 2020 to
2023. The ratio of non-performing loans (NPLs) was modest at 2.1%
at 2023, reflecting its low delinquency mainly in the real estate
loan portfolio. Fitch does not foresee a marked uptick in impaired
loans over the medium to long term, given the solid collateral
backing of the loan portfolio.
Profitability Below Private Sector Peers: Caixa has traditionally
exhibited lower profitability compared to its peers, due to its
narrower net interest margin and more substantial operating costs
associated with its policy role and social mandate. In 2023,
Caixa's operating profit as a percentage of risk-weighted assets
slumped to 1.0%. From 2020 to 2023, this ratio averaged 1.2%
despite ongoing struggles to enhance its profitability metrics,
Fitch anticipates these ratios will maintain their current levels
through the course of 2024.
Capitalization Adequate: Caixa's Common Equity Tier 1 (CET1)
capital ratio was 13.9% in 2023, showing a slight decrease from
15.0% at the end of December 2022. To strengthen its capital
structure, Caixa has taken steps such as cutting costs and boosting
its share capital. Currently, Caixa's CET1 ratio is in line with
those of other major Brazilian banks. Fitch anticipates this ratio
will not experience significant drops in the upcoming years.
Positively, in October 2023, CEF managed to negotiate with the
national treasury an extension of BRL18.1 billion in payments from
the remaining BRL33 billion to 2030 from 2026, previously.
Strong Funding Profile: The bank's funding base is highly
diversified and supported by its extensive network. It is
predominantly retail funded, with customer deposits (including
savings) and deposit-like local financial bills comprising 59% of
total funding at 4Q23. The gross loan/deposits ratio was 164% at
December 2023 and 155% at 4YE average (2020-2023). Despite the
decline in recent years, Caixa maintains a strong position in
savings and has also increased its issuance of financial bills,
especially those backed by real estate credit, where Caixa has
abundant exposure.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Caixa's Long-term IDRs and National Rating, as well as its GSR,
would be downgraded if Brazil's Long-term IDRs are downgraded,
though this is not its base case given the Stable Outlook on the
sovereign's Long-term IDRs.
- Caixa's ratings are also sensitive to a reduced propensity of the
government to support the bank. This could be indicated by an
adverse change in Caixa's policy role or a material reduction in
government ownership, which Fitch views as highly unlikely.
- Caixa's National Long-Term Rating is also sensitive to a negative
change in Fitch's opinion of the bank's creditworthiness relative
to other Brazilian issuers.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Positive rating actions on Caixa's Long-Term IDRs and GSR are
contingent on an upgrade on of Brazil's Long-Term IDRs.
- Caixa's National Long-Term Rating is at the highest level on
Fitch's Brazilian National Rating scale for entities with
international ratings equalized with the sovereign and therefore
cannot be upgraded.
VR ADJUSTMENTS
Fitch does not assign a VR or score the standalone credit factors.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Caixa's ratings are driven by Brazil's Sovereign Support.
ESG CONSIDERATIONS
Caixa Economica Federal's has an ESG Relevance Score for Community
Relations, Social Access, Affordability of '4[+]'. Caixa's public
sector ownership supports its ability to attract low-cost retail
deposits, while its policy role ensures it retains a dominant
position in the low-income retail mortgage market. These factors
considerably boost Caixa's franchise, strengthen its credit profile
and have a moderately positive impact on its ratings in conjunction
with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Caixa Economica
Federal LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Natl LT AAA(bra)Affirmed AAA(bra)
Natl ST F1+(bra)Affirmed F1+(bra)
Government Support bb Affirmed bb
GOL LINHAS: Court OKs Interim Cash Collateral Access
----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Gol Linhas Aereas Inteligentes SA to use cash collateral
on an interim basis, in accordance with the budget.
The Debtor is permitted to use the Secured Amortizing Notes Cash
Collateral, which include, without limitation, all Secured
Amortizing Notes Prepetition Collateral that is subject to valid,
enforceable, non-avoidable and perfected liens in existence on the
Petition Date to secure the Secured Amortizing Notes and that
constitutes cash and cash equivalents.
TMF Brasil Administração e Gestão de Ativos Ltda., as
collateral
agent for the holders of the Secured Amortizing Notes, is granted,
for the benefit of itself and the Prepetition Secured Amortizing
Notes Secured Parties, effective and perfected upon the date of the
Order and without the necessity of the execution of any mortgages,
security agreements, pledge agreements, financing statements,
fiduciary assignments, or other agreements, a valid, perfected
replacement security interest in and lien upon the Secured
Amortizing Notes Prepetition Collateral and all receivables,
proceeds, products, rents, and profits generated and/or created
from and after the Petition Date that secure the amounts due under
the Secured Amortizing Notes Indenture in accordance with the
Credit Rights Assignment Agreement.
The Collateral Agent is granted, for the benefit of itself and the
Prepetition Secured Amortizing Notes Secured Parties, an allowed
superpriority administrative expense claim against GLA, which will
have priority under 11 U.S.C. section 507(b) and otherwise over all
administrative expense claims and unsecured claims against GLA and
its estate.
The Debtors' right to use Secured Amortizing Notes Cash Collateral
terminates on the earlier to occur of the following:
(a) the date that both (i) a DIP Event of Default has occurred and
(ii) the DIP Secured Parties have validly terminated the DIP
Commitments or otherwise began exercising remedies;
(b) the failure of the Debtors to make any payment required under
the Order within 10 business days after such payment becomes due
under the terms thereof;
(c) 15 days after either the Collateral Agent (acting on its own
initiative or at the direction of the Prepetition Secured
Amortizing Notes Secured Parties) or the Required Holders delivers
a notice to the Debtors that the Debtors are in breach of any other
obligations under the Order, to the extent the Debtors have in fact
breached any such obligations;
(d) an order is entered by the Court or other court of competent
jurisdiction reversing, amending, supplementing, staying, vacating
or otherwise modifying this Order without the written consent of
the Collateral Agent (acting at the direction of the Required
Holders);
(e) the effective date of a plan of reorganization for any of the
Debtors in its Chapter 11 Cases that has been confirmed by the
Court;
(f) the date of an order converting any Debtor's Chapter 11 Case to
a case under chapter 7 of the Bankruptcy Code;
(g) the Court (or any court of competent jurisdiction) enters an
order appointing a chapter 11 trustee or any examiner with enlarged
powers relating to the operation of the businesses in the Chapter
11 Cases or any Debtor files any motion, pleading or proceedings
(or solicits, supports, or encourages any other party to file any
motion, pleading or proceeding) seeking or consenting to the
granting of any of the foregoing relief;
(h) the date that the Debtors announce that they have permanently
discontinued substantially all scheduled passenger service;
(i) the date of substantial consummation of a sale of all or
substantially all assets of the Debtors;
(j) the Court (or any court of competent jurisdiction) enters an
order terminating the authorization for the Debtors' use of Secured
Amortizing Notes Cash Collateral;
(k) the filing by any Debtor of any motion, pleading, application
or adversary proceeding challenging the grant, perfection or
priority of the liens asserted by the Prepetition Secured
Amortizing Notes Secured Parties on the Secured Amortizing Notes
Prepetition Collateral and/or the liens and/or rights granted
thereunder (or if any Debtor supports any such motion, pleading,
application or adversary proceeding commenced by any third party);
(l) upon 30 days' notice by either (i) the Debtors or (ii) either
the Required Holders or the Collateral Agent (acting at the
direction of the Required Holders), to the other that such entity
is electing to terminate the consensual use of Secured Amortizing
Notes Cash Collateral as provided therein; and
(m) any such other date as (i) either the Collateral Agent (acting
at the direction of the Required Holders) or the Required Holders,
on the one hand, and (ii) the Debtors, on the other, may agree in
writing.
A copy of the order is available at https://urlcurt.com/u?l=tdn87f
from PacerMonitor.com.
About Gol Linhas
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and cargo;
and maintenance services for aircraft and components in Brazil and
internationally. The company offers Smiles, a frequent-flyer
program to approximately 20.5 million members, allowing clients to
accumulate and redeem miles. It operates a fleet of 146 Boeing 737
aircraft with 674 daily flights. The company was founded in 2000
and is headquartered in Sao Paulo, Brazil.
GOL Linhas Aereas Inteligentes and its affiliates and subsidiaries
voluntarily filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead
Case No. 24-10118) on Jan. 25, 2024. As of the bankruptcy filing,
the Debtors estimated $1 billion to $10 billion in both assets and
liabilities.
Judge Martin Glenn oversees the cases.
The Debtors tapped Milbank, LLP as bankruptcy counsel; Seabury
Securities, LLC as restructuring advisor, financial advisor and
investment banker; Alixpartners, LLP as financial advisor; and
Hughes Hubbard & Reed, LLP as aviation counsel. Kroll
Restructuring
Administration, LLC, is the claims agent.
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
GOL LINHAS: Slips to 4Q Loss as it Works Through Bankruptcy
-----------------------------------------------------------
FlightGlobal reports that restructuring Brazilian low-cost carrier
Gol swung to a net loss of BRL1.1 billion ($221 million) in the
fourth quarter, the first results it has disclosed since entering
bankruptcy protection in January.
The loss compared to a net profit of BRL231 million for the same
period in 2022 and reflects the BRL1.1 billion impact of foreign
exchange losses and other one-off items during the fourth quarter,
according to the report.
By contrast, Gol reported a near-doubling of profits at an
operating level, posting earnings before interest and tax (EBIT)
for the last three months of 2023 of almost BRL1.2 billion, the
report notes.
Gol boosted revenues almost 7% to BRL5 billion ($1 billion) in the
fourth quarter, on passenger levels broadly flat at 7.8 million,
the report relays.
Load factor climbed almost four points to 84%.
The revenue performance was set against a 6% cut in operating costs
during the quarter to BRL3.86 billion, the report discloses.
Full-year revenues climbed 12% over 2022 to reach BRL17 billion, in
carrying 30 million passengers during 2023, the report relays. The
carrier in January filed for bankruptcy protection in a U.S. court
and is working its way through a restructuring, the report adds.
At the end of the fourth quarter, Gol had 141 aircraft in its
all-Boeing 737 fleet, of which 91 were older-generation NGs, 44
were Max variants, and six were Cargo NGs. It still has 101 orders
for further Max aircraft, including for 64 examples of the Max 8
and 37 for the as yet-uncertificated Max 10 model, notes the
report.
About Gol Linhas
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and cargo;
and maintenance services for aircraft and components in Brazil and
internationally. The company offers Smiles, a frequent-flyer
program to approximately 20.5 million members, allowing clients to
accumulate and redeem miles. It operates a fleet of 146 Boeing 737
aircraft with 674 daily flights. The company was founded in 2000
and is headquartered in Sao Paulo, Brazil.
GOL Linhas Aereas Inteligentes and its affiliates and subsidiaries
voluntarily filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead
Case No. 24-10118) on Jan. 25, 2024. As of the bankruptcy filing,
the Debtors estimated $1 billion to $10 billion in both assets and
liabilities.
Judge Martin Glenn oversees the cases.
The Debtors tapped Milbank, LLP as bankruptcy counsel; Seabury
Securities, LLC as restructuring advisor, financial advisor and
investment banker; Alixpartners, LLP as financial advisor; and
Hughes Hubbard & Reed, LLP as aviation counsel. Kroll
Restructuring Administration, LLC, is the claims agent.
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
=============
J A M A I C A
=============
JAMAICA: Gov't Must Partner w/ Private Sector for Water Investment
------------------------------------------------------------------
RJR News reports that a major player in the private sector is
contending that the government will have to meet the private sector
half way to get more investment in water projects.
CEO of the Pan Jamaica Group Jeffrey Hall is pushing for more
public-private partnerships to develop the nation's water
infrastructure, according to RJR News.
"We have to take a view on the cost of capital that's realistic,
and we have to see it quickly. And we have to take a view that if
private capital can . . . provide water at less than the current
marginal cost or marginal revenue of water, depending on what your
target levels are, then we have to say to the private players, in
connection with the NWC, rapidly get on with it," he proposed, the
report notes.
Mr. Hall described the public-private agreement for the
construction of the $12 billion Rio Cobre Water Treatment Plant in
St. Catherine, as a step in the right direction, the report
discloses.
The Pan Jam Group, Eppley and Vinci Construction Grands Projects
are the other local players involved in the project, the report
relays.
The three entities have formed the Rio Cobre Water that will build,
finance, operate, maintain and transfer the water treatment plant
for an initial period of 23 years of operation and an estimated two
years of construction, the report discloses.
"We thought it'd be an easy ask because we figured that local
capital would say, well, of course . . . the OUR is going to make
sure that the rate at which the NWC can charge for water is going
to be adequate to compensate us. And we're all here and we know if
we don't get water to our people, our people can be very demanding.
So the credit risk ought not to be that significant. We found that
the deal needed to attract global capital to happen," he said, the
report notes.
The project is being financed by Sagicor Jamaica, Proparco and IDB
invest, the report adds.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. The upgrade of Jamaica's
rating to B1 reflects the government's sustained commitment to
fiscal consolidation and debt reduction. The positive outlook
reflects Moody's assessment that a continuation of the favorable
fiscal trajectory will further increase Jamaica's credit
resilience.
S&P Global Ratings raised on September 13, 2023, its long-term
foreign and local currency sovereign credit ratings on Jamaica to
'BB-' from 'B+', and affirmed its short-term foreign and local
currency sovereign credit ratings at 'B'. The stable outlook
reflects S&P's expectation that the government will remain
committed to prudent fiscal policies and reducing debt, as well as
supportive economic policies including a flexible exchange rate
regime and effective monetary policy.
In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
NCB: Board Cleared of Jamaicans, Replaced by Canadians
------------------------------------------------------
David Rose at Jamaica Observer reports the latest round of board
changes at NCB Financial Group Limited (NCBFG) has seen the board
composition effectively becoming mainly Canadian, a possible
reflection of where chairman and majority owner Michael Lee-Chin
intends to take the financial conglomerate.
Howard L Shearer, son of former Prime Minister Hugh Shearer, and
current chief executive officer of Hitachi Canada, was appointed to
the NCBFG board on March 13, according to Jamaica Observer. This
was preceded by the election of Gary W Brown and Bruce Bowen as
directors of NCBFG at its annual general meeting on February 9.
Sandra AC Glasgow was also re-elected as an NCBFG director at the
same meeting where Professor Alvin Wint retired from NCBFG and its
subsidiary boards, the report notes.
However, in a notice published March 21, it was announced that
Glasgow resigned as a NCBFG director on March 20, but would remain
on the boards of National Commercial Bank Jamaica Limited (NCBJ)
and Clarien Bank Limited, the report relays. It was also noted
that Sanya Goffe would resign from NCBJ's board on March 20 but
would remain as an NCBFG director, the report discloses. Gary
Brown was also appointed as the new lead independent director of
NCBFG while John Bailey was appointed as a NCBJ director on
February 21.
"All these changes, including the previously announced appointment
of Mr Howard Shearer to the board of NCBFG, are in keeping with
ongoing efforts to enhance the independence, diversity and strength
of the oversight of our boards as key to the governance structure
of the Group," stated the NCBFG release, the report notes.
As a result of these changes, NCBFG's board is now composed of
Lee-Chin, Robert Almeida, Bowen, Brown, Shearer, Thalia Lyn and
Goffe, the report relays. The first five mentioned directors are
all Canadians with Bowen being the former CEO of the Bank of Nova
Scotia Jamaica Limited (BNSJ) and Brown being former CEO of
FirstCaribbean International Bank Limited (FCIB), two regional
banks with Canadian parent companies, the report discloses. Lyn
also spent some time in Canada and was a former investment dealer
in that market. Almeida is the CEO of NCBFG and Bowen the CEO of
NCBJ, the report says.
A year ago, NCBFG's board was made up of Lee-Chin, Patrick Hylton,
Dennis Cohen, Lyn, Almeida, Glasgow, Goffe and Wint. NCBJ's board
was also made up of Lee-Chin, Hylton, Cohen, Septimus ‘Bob'
Blake, Almeida, Glasgow, Goffe and Wint.
NCBJ's board is now composed of Lee-Chin, Almeida, Bowen, Brown,
Glasgow and Bailey. NCB Capital Markets Limited's board is also
composed of Bowen, who chairs the board, Michael Ammar Jr, Harry
Smith, Dr Cecil Batchelor, and Shamena Khan, a Canadian who serves
as managing director of AIC Global Holdings Limited, the report
recalls.
It's yet to be seen how these Canadian lead boards will impact
NCBFG's stock price and future growth potential, but NCBFG
shareholders are likely happy with the return of quarterly dividend
payments, the report relays.
NCBJ is continuing to see several high-level executive changes with
Dr Karlene Bailey, a senior vice-president in the group risk
management division, announcing her resignation recently as she
heads to Massy Holdings Limited, where she has been appointed as
vice-president and group chief risk officer, effective May 6, the
report notes. Her move to Massy also comes at a time when the
Trinidadian conglomerate is also undergoing its own changes. Massy
President and Group CEO Elliot Gervase Warner is set to go on early
retirement on April 6, the day of his 59th birthday, with David
Affonso to take over Warner's role on the same day, the report
says. David O'Brien, Massy's vice-president of global expansion,
is also set to resign from Massy on June 8. These changes all come
after Massy's December 18 AGM where Angelique Parisot-Potter,
executive vice-president in charge of business integrity and group
general counsel, asked questions regarding a Florida retreat and
the events that take place there, the report adds. Parisot-Potter
was sent on leave before she resigned on December 27.
The NCB Financial Group Limited is a financial services
conglomerate operating in the Caribbean region and headquartered in
Kingston, Jamaica. NCB Financial Group Limited is the parent
company of the National Commercial Bank of Jamaica, the largest and
most profitable financial institution in Jamaica.
As recently reported in the Troubled Company Reporter-Latin
America, Jamaica Observer relayed that the NCB Financial Group is
yet to complete negotiations with its former president and CEO
Patrick Hylton and his deputy, Dennis Cohen, over the settlement in
relation to their separation from the company. At the centre of
the negotiations is the size of the separation package for the two
men who served the financial conglomerate for the last two decades,
including what value the company should compensate the men for
shares they were asked to surrender in July 2021, according to
Jamaica Observer. Both men were asked to surrender 95.1 million
shares valued at $13.8 billion at the time with the understanding
that, over time, they would recoup that value, the report noted.
Some were recouped in compensation for both men to the tune of $3.6
billion in the last financial year, the report relayed.
===========
M E X I C O
===========
KUO SAB DE CV: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed KUO, S.A.B. de C.V.'s (KUO) Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) and
unsecured senior notes at 'BB'. Fitch has also affirmed KUO's
National Scale Long-Term rating at 'A(mex)'. The Rating Outlook is
Stable.
The affirmation reflects the expectation of KUO's deleveraging
trend after 2024. Fitch expects a slight recovery in KUO's business
units in 2024-2025, as the pork business faces a more favorable raw
materials environment and the chemical sector moves from the bottom
of the cycle. A slower recovery in the pork segment or in the
chemical businesses could pressure the ratings.
The ratings reflect KUO's diversified business portfolio, leading
market positions across the industries where it participates, and
its joint ventures (JVs) with recognized companies. The ratings are
limited by the company's exposure to volatility in product demand
and input costs across its business units.
For analytical purposes, Fitch incorporates financial information
for KUO under the proportional consolidation of its JVs (pro
forma). Fitch considers reported consolidated figures, which
account for the JVs under the equity method (consolidated).
KEY RATING DRIVERS
Deleverage Expected: Fitch forecasts KUO's proforma net debt to
EBITDA (pre IFRS-16) including non-recourse factoring and debt from
its JVs, to be at 2.4x in 2024 and trend toward levels around 2.0x
by 2025. Fitch expects deleveraging to be through higher EBITDA
generation and modest debt reduction, as stability of raw materials
in the pork business allows to improve profitability, the chemical
business moves slowly from lower raw material prices and oversupply
of synthetic rubber from Asia and lower impacts on exports due to
the exchange rate. A negative trend in the company's leverage
metrics beyond 2024 could pressure the ratings.
Challenging Markets Conditions: Fitch expects an improvement in
KUO's financial performance in 2024-2025 after weaker than expected
2023 results for its chemical and pork business. On a pro forma
basis, Fitch forecasts for 2024-2025 revenue growth average of
around 8% and the EBITDA margin to trend to 8.5%, while on a
consolidated basis, revenue growth to be close to 8% and EBITDA
margin at around 7%. Fitch expects a steady recovery in the pork
business with a more favorable environment of sales in the domestic
and export market, while the chemical industry overcomes from low
reference prices and volumes and the JV with Herdez del Fuerte and
the aftermarket business maintain a positive trend.
Diversified Business Portfolio: KUO's diversified business
portfolio in the consumer, automotive and chemical industries allow
to partially mitigate the volatility from economic and industry
cycles. The stability of the consumer business through the Herdez
del Fuerte JV, oriented to more stable consumer segments, has
partially offset the cyclicality of the chemical and automotive
businesses, as well as the volatility of raw materials in the pork
business. Fitch estimates that the contribution of the consumer
division including the pork business, to recover above levels of
50% of EBITDA in the next two years.
Negative FCF: Fitch forecasts KUO's FCF on a pro forma basis to be
negative for 2024 and 2025. For 2023 the FCF on a pro forma basis
was slightly negative due to a lower cash flow of operations, while
the company reduced CAPEX and did not distribute dividends as a
measure to strengthen its balance sheet. Fitch expects CAPEX to be
around 3.5% of revenues and Dividends to be around MXN435 million
for the next two years. On a consolidated basis, Fitch projects
KUO's FCF to be neutral to slightly positive for 2024 and 2025.
Leading Markets Positions: KUO's businesses holds significant
market positions in their industries. The company's Pork Meat
business is the largest producer in Mexico with vertically
integrated operations that serves the domestic market and exports
products to Japan, Korea and U.S. Under its Herdez Del Fuerte JV,
KUO has highly recognized brands with leading market shares in
Mexico with different products such as guacamole, tomato paste and
mole, among others. This JV also has relevant operations in the
U.S. as a producer and distributor of Hispanic brands.
Its transmissions business is a leading producer of rear wheel
transmissions in North America for the high-performance segment. In
the Aftermarket business, KUO is a leader in engine components with
recognized proprietary brands and third-party products in Mexico.
In addition, the company is the largest producer of synthetic
rubber in Mexico through its JV with Dynasol, as well as the main
producer of polystyrene in the country. For 2023, exports
represented around 50% of total sales.
DERIVATION SUMMARY
KUO's ratings are supported by its diversified business portfolio,
the solid business position of its main brands and products across
various industries, geographic diversification and stable financial
position. KUO's credit profile is comparable with other diversified
groups as Alfa, S.A.B. de C.V. (BBB-/Stable), Votorantim, S.A.
(BBB-/Positive) and Grupo Mexico S.A.B. de C.V. (BBB+/Stable).
KUO's business positions are considered weaker, given its lower
scale, geographic diversification and financial market access. In
terms of financial profile, KUO's EBITDA margin of around 9% and
net leverage of around 2.5x are similar as Alfa´s, and compares
weaker with Votorantim's, which projects an EBITDA margin of around
20% and net leverage around 1.0x, as well as Grupo Mexico, as Fitch
forecasts EBITDA margin of around 42% and net leverage below 1.0x.
KUO's current leverage is considered in line with the 'BB' rating,
but negative FCF across the business cycle limits the ratings.
Other comparable companies in the 'BB' category are Cydsa, S.A.B.
de C.V. (BB+/Stable) and Fortaleza Materiales, S.A.P.I. de C.V. s
(BB/Stable).
KEY ASSUMPTIONS
A Pro Forma Basis, Including Proportional Consolidation of JVs,
Include
Revenue growth of 8% average in 2024-2025;
EBITDA margin of around 8% in 2024-2025;
Capex around 3% of revenues in 2024-2025;
Dividends around MXN435 million for the next two years;
Total debt/EBITDA and net debt/EBITDA to trend to 2.5x and to 2.0x
respectively, by YE 2025.
Fitch's Key Assumptions on a Consolidated Basis, Excluding
Proportional Consolidation of JVs, Include
Revenue growth of 8% average in 2024-2025;
EBITDA margin of around 7% in 2024-2025;
Capex around 3.5% of revenues in 2024-2025;
Dividends around MXN435 million for the next two years;
Total debt/EBITDA and net debt/EBITDA to trend to 3.0x and to 2.5x
respectively, by YE 2025.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Lower volatility in the consumer portfolio, mainly in the Pork
business;
- Neutral to positive FCF through the economic cycle;
- Maintaining a strong liquidity position;
- Sustaining lower leverage ratios for pro forma total debt to
EBITDA and net debt to EBITDA of around 2.5x and 2.0x,
respectively.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Higher than expected negative FCF over the next two years;
- A weak liquidity position;
- Sustained deterioration in operating performance across the
company's businesses, leading to pro forma total debt to EBITDA and
net debt to EBITDA consistently above 3.0x and 2.5x, respectively.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: KUO's YE 2023 readily available cash of MXN3.2
billion, on a pro forma basis, is sufficient to cover MXN1 billion
of debt amortization in the short term, which includes MXN0.5
billion of nonrecourse factoring and MXN0.4 billion of JV debt. The
company's liquidity is also supported by available committed credit
lines of around USD300 million. On a consolidated basis, KUO's cash
balance was MXN1.8 billion and MXN0.6 billion of short-term debt.
KUO's total debt, including nonrecourse factoring, at YE 2023 was
MXN13.1 billion on a pro forma basis, and MXN12.1 billion
consolidated. Fitch considers KUO to have good access to capital
markets and bank loans, and its debt maturity is manageable, with
around 85% maturing at 2027 and after.
ISSUER PROFILE
KUO is a Mexican conglomerate with a diversified portfolio of six
strategic business units that participates in the consumer,
automotive and chemical industries, with a strong presence in
international markets through operations located outside Mexico.
ESG CONSIDERATIONS
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
----------- ------ -----
KUO S.A.B. de C.V. LT IDR BB Affirmed BB
LC LT IDR BB Affirmed BB
Natl LT A(mex) Affirmed A(mex)
senior unsecured LT BB Affirmed BB
=====================================
T R I N I D A D A N D T O B A G O
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TRINIDAD & TOBAGO: Amendment to Beekeeping Act Sours Honey Industry
-------------------------------------------------------------------
Ryan Bachoo at Trinidad and Tobago Guardian reports that the news
of potential legislation that will amend the law restricting the
importation of honey into T&T has stung local beekeepers.
It first broke when T&T's High Commissioner to Guyana, Conrad
Enill, revealed last November that the legislation would be tabled
in Trinidad's Parliament, according to Trinidad and Tobago
Guardian.
The bill was tabled in Parliament and will come up for debate soon,
the report notes.
The importation issue has troubled governments of the past and has
come knocking at the door of the Rowley administration, the report
relays.
Speaking to the Business Guardian from Guyana, Enill explained that
T&T and Guyana developed a memorandum of understanding between both
countries as a result of Guyana's leadership in agriculture for
Caricom, the report discloses.
In that context, the first thing both countries explored was the
barriers to goods and services, the report says.
Honey emerged at the top of the list.
According to Enill, President Dr Irfaan Ali of Guyana and Prime
Minister Dr Keith Rowley "worked through what was necessary to
change the legislation to allow for the honey issue to be
resolved," the report discloses.
He said there are several committees between both countries working
through their various ministries on any issue that is interfering
with the free movement of trade and are moving via legislation to
make trade easier, the report relates.
Minister in the Ministry of Agriculture, Land and Fisheries,
Avinash Singh, reaffirmed this in an interview with a regional
newspaper on March 19.
"The honey matter is close to being resolved," Singh had said while
attending the Food and Agriculture Regional Conference in Guyana,
the report discloses.
"All of the technical matters have already been reviewed and are
ready for implementation," he added.
The Business Guardian reached out to Singh for further details
regarding the proposed move but he directed questions to Minister
of Agriculture, Land and Fisheries, Kazim Hosein, the report
notes.
Several questions to the ministry seeking clarity on the
legislation, but no response was given, the report relays.
Is the Local Honey Industry in Jeopardy?
For over half a century, this country's honey, bees and bee-related
products have been guided by the Food and Drug Act of 1960 and
Beekeeping and Bee Products Act of 1935, the report notes.
The act prohibits the importation of the product.
It has long been a contentious issue at the regional level, which
goes against the Treaty of Chaguaramas signed in 1973 which created
a Caribbean Single Market and Economy (CSME), the report
discloses.
Guyana has long called for access to enable its honey to pass
through T&T's ports and move to other Caribbean countries, the
report relays.
While the amendment to the legislation may be sweet news for the
region, local beekeepers have concerns, noting that before the news
of the amendment, the honey industry was already facing many
challenges, the report relates.
According to the beekeepers the Business Guardian spoke to, the top
of the list was the continued deforestation across the country.
Veteran beekeeper, Bernard Mahabir, pointed to "indiscriminate
logging," which he said has led to vast acreages of trees being cut
down, resulting in fewer and fewer trees for the bees to forage
nectar, the report discloses.
Beyond logging, climate change is also having a severe impact on
the local honey industry, the report notes.
Mahabir said there is too much heat and not enough moisture in the
ground, the report says.
"For the trees to produce the nectar, you need photosynthesis. In
the severe dry season, there is not enough moisture in the ground
and we are having too many dry nights so it is drying up the
nectar," he explained, the report notes.
The number of bushfires across the country has also been
contributing to the challenges the honey industry faces, the report
relates.
Mahabir, who is a second-generation beekeeper, started in the
industry in 1972, the report recalls.
His father was a beekeeper and now Mahabir's son is also a
beekeeper.
Mahabir who served as president of the T&T Beekeepers' Association
between 1985 and 1995 further lamented that access roads into the
forests are a major problem for farmers and the rise of the
Africanized bees is forcing beekeepers further away from housing
developments and into forested areas, the report notes.
Another beekeeper, Amit Ramlochan, who has been in the business
since 2001 also echoed that weather patterns, particularly the dry
season, have been negatively impacting the production of honey, the
report says.
Illegal Honey in T&T?
Despite the challenges the industry faces, Mahabir insists
beekeepers across the country are meeting the demand for the
product, the report relays.
However, beekeepers point to the illegal entry of the product from
Venezuela which has been hampering business, the report notes.
Why the a need for the illegal importation of a product that is not
in short supply locally?
The price.
According to beekeepers, an average rum bottle of local honey costs
between $175 and $200, the report relays.
A bottle of honey illegally imported from Venezuela costs between
$100 and $150, the report says.
The average price of local honey has gone up by $25 over the last
few years, one beekeeper told the Business Guardian, the report
notes.
"It's a quick fix for the unscrupulous people out there," Mahabir
said.
"They are getting the honey very cheap in Venezuela and they are
selling it for exorbitant prices here in Trinidad," he added.
Meanwhile, Ramlochan added factors such as deforestation and
logging are driving up the costs of production for local honey, the
report discloses.
"People keep cutting down the trees and developing land. It is
harder for us to produce the amount of honey we used to produce
long time. The price of sugar has also gone up," he added.
While the price of local honey is higher than the illegally
imported one, the quality of T&T honey however, has long been
recognised as among the best in the world, with the product having
won international awards down the years, the report relays.
Importing honey - An International Issue
T&T opening up its market to honey importation is not only a
domestic issue, the report says.
It's an international one.
Over the last two decades, the European Union (EU), Canada and the
US have all banned the importation of honey, the report notes.
The major culprit has been China.
In January 2021, the American monthly magazine, WIRED, cited the
reasons behind such a mass shut-out of Chinese honey, the report
relays.
"There, cheap honey and sugar syrup are produced on an industrial
scale and blended together by fraudsters.
"Beekeepers believe this adulterated honey is responsible for
saturating the market, crashing global prices and deceiving
millions of customers," the report stated, Trinidad and Tobago
Guardian notes.
Anthony Telesford, a Tobagonian beekeeper who has been in the
industry since the 1970s, said he is concerned about Chinese honey
entering this country, the report says.
"My main concern with that is if you find somebody on the island
who is going to import cheap, adulterated honey from China,"
Telesford said.
He further explained, "Grenadian people have been trying to sell
honey in Tobago so this will be their chance to do it, but, we in
Trinidad need to put some type of control on it.
"For instance, if you have a beekeeper in a Caribbean country and
they have 1,000 gallons of Grenadian honey to sell to Trinidad. We
have to ensure he is not buying cheap honey from China, packaging
it and sending it here as Grenadian honey."
He recommended that controls must be put in place to avoid
adulterated Chinese honey entering the country, the report relays.
The adulterated honey from China could include corn syrup,
antibiotics or sugar, Telesford claimed.
He said if imported honey can be verified as coming from the
Caribbean, he has no problem with amending legislation to lift
restrictions on honey imports in T&T, the report notes.
In response to concerns Enill however, assured that the agencies
that have responsibilities within the territories will have the
"wherewithal" to ensure that honey being sold on the Caribbean
market is authentic, the report says.
Regarding the standard of technology and equipment to meet the
requirements of testing for authentic honey, Enill added, "To the
best of my knowledge there are agencies tasked with that
responsibility and those agencies will be strengthened to ensure
that there is very strict compliance because there is a recognition
towards what can occur and we have to protect the Caricom
industry," he added.
Proper Legislation Imperative
Another major concern that comes with importing honey is the
potential diseases that could come with it, the report notes.
It is one of the major reasons why local beekepeers have been able
to monopolise the industry, the report says.
Diseases are already a concern for local beekeepers amid the
illegal trade of Venezuelan honey, the report relays.
One beekeeper who has inside knowledge of how the honey industry is
being dealt with at the State level sounded the alarm on
Government's legislation amendment, the report discloses.
"It is not a good thing for the industry, it is not a good thing
for the country and it is not a good thing for the environment, and
it is not a good thing for the consuming public that uses honey.
When you open the market, if they don't have proper legislation,
conditions, and the ability to monitor the conditions, which I know
that they don't have, then anything will come in [the country],"
the beekeeper said, the report relates.
The consequences, he warned will be more fake honey entering the
country.
"When that comes in, if we don't have the capacity to test honey,
which we don't, and you are consuming it with chloramphenicol and
all the other antibiotics, that is going to affect the health of
the consumer. Not to mention, if honey comes in with diseases, that
could be transferred to the bees here and that is what we are
trying to safeguard against. That is what the Beekeeping Act has
safeguarded Trinidad bees against since 1935," the report notes.
Meanwhile, former minister of food production, land and marine
affairs under the former People's Partnership government, Vasant
Bharath, said the importation of honey has been a challenge he also
had to confront when dealing with Caricom during his time in
office, the report says.
"We had discussions during my time to see how we could work with
other Caricom leaders to ensure the honey coming into Trinidad, if
it was allowed to come in, would meet certain certification so the
bee population here would not be infecte in a way that they could
die out," he added.
In response to such concerns, Enill he believes the focus at this
time is "simply Caricom because the region is operating with a new
mandate both in terms of trade and in terms of movement for
citizens when it comes to services - the Caricom region should have
no restrictions," the report discloses.
Saving Bees and Beekeepers
Beekeepers feel there is a genuine threat to the industry, and it
goes beyond opening up the market to foreign imports, the report
relays.
Mahabir said T&T must also do its part environmentally to save the
honey industry, the report notes.
He said, "If the Government concentrates on planting native species
again, we could boost up. We can't only concentrate on planting
pine but also the native species that produce honey like sip and
mahogany and also integrate it with fruits so that the animals will
also have food to eat. All the things that are high-producing
nectar plants."
On the financial side, Bharath said the Government must move to
revolutionise the honey industry to take this international quality
product to the global stage, the report notes.
"If we are doing anything at all in the industry, we should
encourage it to be not just a store but it should be cultivated on
a commercial basis so that it becomes more competitive on the
economies of scale on which it is being produced and it will allow
us to get back onto the export markets to highlight the rich
quality of Trinidadian honey," he suggested, the report relays.
Enill remained confident the respective agencies that need to deal
with any issues emerging from this new era of beekeeping in T&T
will be dealt with, the report discloses.
Beekeeping and Bee Products Act
The report notes that there are certain stipulations as outlined in
this act, governing the importation of honey.
The report adds that these include:
Section 22 (1) No honey arriving in T&T by sea or by air shall be
transshipped except as provided in this regulation.
Section 22 (2) Honey originating elsewhere than in any of the
territories in the Windward and Leeward Islands shall not be
transshipped in T&T.
Honey originating in any of the above-mentioned territories may be
transshipped in the harbour of Port-of-Spain under the authority of
a permit issued by the inspector and subject to the following
provisions of this regulation.
Section 22 (3) No honey shall be brought or kept ashore or within
one mile of the shore during transshipment or pending loading on
the outgoing vessel.
Section 22 (7) No honey arriving in T&T in any vessel or aircraft
from places overseas whether for transshipment or not shall in any
circumstances be brought ashore from such vessel or removed from
such aircraft on a land aerodrome.
*********
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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