TCRLA_Public/020103.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, January 3, 2002, Vol. 3, Issue 2

                            Headlines




A R G E N T I N A

AGUAS ARGENTINAS: Fitch Lowers IDB `B' Loan Rating
TGN/TGS: Fitch Downgrades `B' Loan Participations
YPF: Sells 85% Stake In Repsol-YPF Gas For $118M


B R A Z I L

BRAZILIAN AIRLINES: Aiming To Report Better 4Q01 Performance
CEEE: Government To Take On Part Of $522M Debt
VASP: Results Show Passenger Numbers Up But Earnings Drop


M E X I C O

GRUPO DESC: U.S. Recession Weighs On Stock Price


P E R U

NBK BANK: Remaining Assets, Liabilities To Be Liquidated



V E N E Z U E L A

SIDOR: Cuts Back On Expansion Program Amid Global Steel Crisis
SIDOR: Restructures Debt Following Default



      - - - - - - - - - -



=================
A R G E N T I N A
=================

AGUAS ARGENTINAS: Fitch Lowers IDB `B' Loan Rating
---------------------------------------------------
Fitch downgraded Aguas Argentinas S.A.'s IDB `B' Loan
Participation to `B' from `B+'. The rating remains on Rating
Watch Negative status.

The rating revision follows Fitch's downgrade of Argentina's
sovereign ratings on Dec. 21, 2001. The imminent prospect for a
combination of sovereign default and devaluation has led to
heightened uncertainty in the Argentine operating environment.
The multilateral A/B loan participations have been downgraded to
a rating level on par with sovereign obligations to the World
Bank. The preferred creditor status of multilateral lenders is
currently under review.

The current tumultuous economic and political environment has led
to increased doubts on the future of the convertibility regime in
Argentina. The potential impact of devaluation is widespread,
including adherence to the existing legal regime. The general
uncertainty in the Argentine system has extended to the viability
of the laws supporting financial transactions. The ability to
convert and/or transfer currency abroad has been hampered.
Furthermore, in recent days, there has been increased speculation
on the viability of dollar-denominated contracts. Although the
securitization transactions have performed well to date, the
recent developments in the sovereign environment have further
increased the overall risk profile.

Fitch will continue to monitor the operating environment in
Argentina and reassess ratings as necessary.

Standard & Poor's recently downgraded Aguas Argentinas S.A.'s
foreign currency rating to `CC' from `CCC+' with the same
negative outlook. The action came following the Argentine
government's announcement of a moratorium on the government's
foreign currency debt, more comprehensive foreign exchange
controls, and an extended bank holiday.

CONTACT:  Sam Fox 1-312-606-2307, Chicago
           Or
           Mia Koo 1-212- 908-0651, New York


TGN/TGS: Fitch Downgrades `B' Loan Participations
-------------------------------------------------
Fitch downgraded the ratings on the following Argentine
structured transactions:

Transportadora de Gas del Norte S.A. (TGN)
-IFC `B' Loan Part. downgraded to `B' from `B+';

Transportadora de Gas del Sur S.A. (TGS)
-IDB `B' Loan Part. downgraded to `B' from 'B+'.

The ratings remain on Rating Watch Negative status.

The rating revisions follow Fitch's downgrade of Argentina's
sovereign ratings on Dec. 21, 2001. The imminent prospect for a
combination of sovereign default and devaluation has led to
heightened uncertainty in the Argentine operating environment.
The multilateral A/B loan participations have been downgraded to
a rating level on par with sovereign obligations to the World
Bank. The preferred creditor status of multilateral lenders is
currently under review.

The current tumultuous economic and political environment has led
to increased doubts on the future of the convertibility regime in
Argentina. The potential impact of devaluation is widespread,
including adherence to the existing legal regime. The general
uncertainty in the Argentine system has extended to the viability
of the laws supporting financial transactions. The ability to
convert and/or transfer currency abroad has been hampered.
Furthermore, in recent days, there has been increased speculation
on the viability of dollar-denominated contracts. Although the
securitization transactions have performed well to date, the
recent developments in the sovereign environment have further
increased the overall risk profile.

Fitch will continue to monitor the operating environment in
Argentina and reassess ratings as necessary.

CONTACT:  Sam Fox 1-312-606-2307, Chicago
                        Or
           Mia Koo 1-212- 908-0651, New York


TGS BUENOS AIRES CONTACTS:  Eduardo Pawluszek
                             Finance & Investor Relations Manager
                             or
                             Gonzalo Castro Olivera
                             Investor Relations
                             email: gonzalo_olivera@tgs.com.ar
                             or
                             Mar¡a Victoria Quade
                             Investor Relations
                             email: victoria_quade@tgs.com.ar
                             Tel: (5411) 4865-9077


YPF: Sells 85% Stake In Repsol-YPF Gas For $118M
------------------------------------------------
YPF, the argentine subsidiary of Spanish oil company Repsol-YPF,
informed the Buenos Aires stock market that it has sold its 85
percent stake in Repsol-YPF Gas to Repsol Butano for $118
million, says Business News Americas.

Additionally, YPF has closed a $400-million deal with Repsol-YPF
in which it will sell and export crude to Repsol-YPF. With the
help of Spanish bank BBVA, Repsol-YPF will pay cash up front
periodically over a seven-year period.

YPF will use revenues from the deal to pay debts to Repsol-YPF
and other subsidiaries of the same group.

Just recently, Moody's cut the local currency issuer rating of
YPF to Baa2 from Baa1 and kept the rating under review for
possible further downgrade.

Moreover, the ratings agency also kept the Ba3 foreign currency
bond ratings of YPF and its guaranteed subsidiary, Maxus Energy,
and the Baa1 rating of YPF's structured export notes, under
review for possible downgrade.

The rating actions reflected the rapidly deteriorating economic,
financial and social conditions in Argentina.


CONTACT:  Carmelo de las Morenas L¢pez, CFO
           Avenida Presidente Roque S enz Pe¤a 777
           1364 Buenos Aires, Argentina
           Phone: +54-11-4329-2000
           Fax: +54-11-4329-2113



===========
B R A Z I L
===========

BRAZILIAN AIRLINES: Aiming To Report Better 4Q01 Performance
------------------------------------------------------------
After posting losses of more R$1 billion in the January - June
period of 2001, Brazilian airlines experienced better performance
in the last quarter of the year, reports Gazeta Mercantil

Airlines are expected to benefit from the decrease in the value
of the US dollar, but the non-payment of the ICMS tax ruled by
the justice department will benefit only TAM and Varig, with an
additional R$50 million per year.

Transbrasil is struggling to face competition against the
newcomer Gol, which won a 7-percent share in the market.

Varig, with the highest amount of debt, struck an agreement with
Boeing to alleviate pressures in the cash flow, and is
restructuring, slashing 1,700 job positions saving $160 million.
The Company realized sales of R$5.4 billion in 2000 and expects
to repeat the same results in 2001.

TRANSBRASIL CONTACT:  Antonio Celso Cipriani, CFO
                       Rua Geral Pantaleao Telles, No. 4,
                       Jardim Aeroporto
                       04355-040 Sao Paulo, Brazil
                       Phone: +55-11-533-7111
                       Fax: +55-11-543-9083

VARIG CONTACT:  Legal Department:
                 Rua 18 de Novembro nr. 800 Navegantes
                 Zip : 90240-040
                 City : Porto Alegre / RS - Brazil
                 Telephone numbers: (51) 358-7039/7040
                                    (51) 358-7010/7042

                 INDEPENDENT ACCOUNTANTS
                 Arthur Andersen S/C
                 Rua Alexandre Dumas 1981
                 Cep: 04.717-906 - Centro / Sao Paulo / S P-
                 Brazil
                 Tels.: (11) 5504-8200
                 Fax:   (11) 5504-8373

                 INVESTOR RELATIONS MANAGER/STOCKHOLDER SERVICES
                 Leir s  Stortti
                 E-mail: leir.stortti@varig.com.br
                 Av. Almte. Silvio de Noronha, n§ 365 -
                 Bloco "A" - s/416
                 Centro - Rio de Janeiro - RJ
                 Cep.:  20021-010
                 Tels.: (21) 3814-5401/5402/5403/5415
                 Fax:  (21) 3814-5543


CEEE: Government To Take On Part Of $522M Debt
----------------------------------------------
The Brazilian government will assume part of the debts of
Companhia Estadual de Energia Eletrica (CEEE), which is estimated
at $522 million, says South American Business Information.

The debts of the Rio Grande Sul state electrical company were
initially made for the construction of the thermal electric
facility known as Candiota III. The Company's major creditor is
the French-based GEC Alsthom.


VASP: Results Show Passenger Numbers Up But Earnings Drop
---------------------------------------------------------
The Brazilian airline Via‡ao A‚rea Sao Paulo (VASP) informed the
CVM that it lost R$247.4 million during the July-September 2001
period, reports O Estado de Sao Paulo. In the same period in
2000, the airline's loss stood at only R$29.9 million.

The volume of passengers increased by 23 percent between July and
September in 2001, but gross earnings fell 2 percent, reaching
R$223.3 million.

The results also included the performance of the foreign airlines
held by Vasp Chairman Wagner Canhedo: the Ecuatoriana de Aviacion
and Lloyd Aereo Boliviano (LAB).

Net income between January and September 2001 amounted to R$971.7
million, a drop of 4.4 percent compared to the same period in
2000.

CONTACT:  For Investors
           Cesis Canhedo, Chief Financial Officer
           Pra‡a Comandante Lineugomes, s/n
           04626-910 Sao Paulo, Brazil
           Phone: +55-11-532-3000
           Fax: +55-11-533-0444



===========
M E X I C O
===========

GRUPO DESC: U.S. Recession Weighs On Stock Price
------------------------------------------------
Shares Of diversified holding group Desc SA declined on concern
the U.S. recession will drag on earnings in Mexico, reports
Bloomberg.

According to a report by Bloomberg, Desc, an industrial
conglomerate, dropped 5.9 percent to 4.51 pesos, giving back much
of its 7.1 percent gain last week.

"We continue to see statistics, like the trade balance, coming
out worse than expected," said Alejandro Baez-Sacasa, who manages
$850 million in Latin America stocks with JP Morgan Fleming Asset
Management in New York. Sacasa said he holds relatively less in
Mexican stocks than their weighting in benchmark equity indexes
such as the Morgan Stanley International MSCI indexes.

Sacasa recently bought "some of the conglomerates" in Mexico on
expectations that their stock prices are cheap and that the
exporters to the U.S. will benefit when the economy improves.
"But not Desc," he said.

About 80 percent of Mexico's exports go to the U.S., which has
been in a recession since March. The U.S. recession has extended
an economic slowdown in Mexico, reducing exports and tax revenue.

Desc, in October 2001, has a total debt of $960 million.

CONTACTS IN MEXICO:  Arturo D'Acosta Ru¡z
                      Chief Financial Officer
                      Tel: (5255) 261 8000

                      Alejandro de la Barreda
                      Investor Relations
                      Tel: (5255) 261 8000 ext 2806
                      abarredag@mail.desc.com.mx

                      Adriana Estrada Vergara
                      Investor Relations
                      Tel: (5255) 261 8000 ext 2846
                      aestradav@mail.desc.com.mx



=======
P E R U
=======

NBK BANK: Remaining Assets, Liabilities To Be Liquidated
--------------------------------------------------------
The assets and liabilities of NKB Bank, which were not included
in the intervened bank's sale to compatriot Banco Financiero,
will be liquidated by the Peruvian banking regulator, reports
Business News Americas.

NBK Bank was intervened in December 2000 after a run on its
deposits triggered by then President Alberto Fujimori's sudden
flight to Japan. Banco Financiero's purchase allowed authorities
to avoid full-scale liquidation.



=================
V E N E Z U E L A
=================

SIDOR: Cuts Back On Expansion Program Amid Global Steel Crisis
--------------------------------------------------------------
Global steel crisis pushed Sidor into cutting back on its
expansion program, said Maritza Izaguirre, the Venezuelan
integrated steelmaker's company chairman.

In a report released by Business News Americas, Izaguirre
explained that, by investing another $360 million, it could take
capacity to 4Mtpy within two years, but because of "market
problems" it will not achieve more than 3.1Mtpy.

Investment and process improvements increased capacity by 17
percent to 2.8Mtpy in the last two years. Meanwhile, oversupply
has reduced steel prices by 40 percent to $210/t, and forced
companies around the world to close their doors.

>From the outset of Sidor's privatization at the start of 1999,
the company's new majority owners - multinational consortium
Amazonia - embarked on an ambitious investment and increased-
efficiency program (including slimming down the workforce) based
on increasing debt.

CONTACTS: CARACS:
           Flats. Alejandro Benedetto.
           Longs. Sa£l Berm£dez.
           Av. la Estancia, Edificio General, Piso 9, Chuao
           Telephone: +58 2 9023800


SIDOR: Restructures Debt Following Default
------------------------------------------
Ciudad Guayana-based steelmaker Sidor is restructuring its debt
after defaulting on a $31.3 million repayment, reports Business
News Americas. The Company expects to complete the debt
restructuring talks by May.

Sidor's $1.33 billion total liabilities are equally divided
between the state and banks, led by Citibank. Maritza Izaguirre,
the Company's chairman, asked for understanding from the smaller
local banks that would be more seriously affected by the default.

A company statement said it was continuing to pay suppliers, and
mentioned productivity has increased 120 percent since its
privatization.

"Our problem as we enter 2002, is that if we pay interest and
amortize capital on such a high debt, we do not have the
resources available to operate," Izaguirre said.

An added problem in the debt refinancing is that two of
Amazonia's members, Sivensa (Venezuela) and Hylsamex (Mexico),
are also restructuring their own debts. Amazonia has already
defaulted on an $8.1 million obligation.

If a fresh capital injection is needed in Sidor, the Venezuelan
state has said it is interested in putting more money into the
Company, taking its stake up to 45 percent. The Company is
currently 70-percent held by Amazonia and 30 percent by the
state, with some shares promised to Sidor workers.

CONTACTS: CARACAS:
           Flats. Alejandro Benedetto.
           Longs. Sa£l Berm£dez.
           Av. la Estancia, Edificio General, Piso 9, Chuao
           Telephone: +58 2 9023800




S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter Latin American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick and Edem
Psamathe P. Alfeche, Editors.

Copyright 2002.  All rights reserved.  ISSN 1529-2746.

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