TCRLA_Public/060228.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, February 28, 2006, Vol. 7, Issue 42

                            Headlines

A R G E N T I N A

AEROLINEAS ARGENTINAS: Government Does not Contest Balance Sheet
AGROPECUARIA TORNQUIST: Creditors Required to Submit Claims
BUENOS AIRES BROADCAST: Asks Court for Reorganization
EDENOR: Issuing US$282 Million Obligaciones Negociables
EL PRACTICO S.A.: Trustee Sets Date for Claims Verification End

FRANCOL S.R.L.: Trustee Stops Accepting Claims on April 4
REPSOL YPF: 2005 Net Income Up 29.2%
SANTA FE: Validation of Claims from Creditors Begins
SELECTO S.A.: Claims Verification Begins, Ending April 4
SYM SISTEMAS: Trustee Stops Accepting Claims on June 2

TANALCO S.R.L.: Trustee Stops Validating Claims on April 10
TELEMONITOREO INTERNACIONAL: Claims Verification Ends on Apr.26
TESORO MARINO: Debt Payments Halted, Set To Reorganize
* ARGENTINA: Poll Shows High Percentage Against Pulp Mills


B E R M U D A

PXRE GROUP: Deferred Tax Writedown Cues S&P to Cut Rating to BB-
PXRE REINSURANCE: A.M. Best Lowers ICR Ratings to B+ from B++
SEA CONTAINERS: Senior Vice-President David Benson Departs
SEA CONTAINERS: S&P Slices Corp. Credit Rating from BB- to B+


B R A Z I L

BANCO BRADESCO: Plans April 3 Capital Interest Payment
BRASKEM S.A.: Amends Borealis Brasil's Shareholders Agreement
COPEL: Reaches Thermoelectric Plant Agreement with Petrobras
PETROLEO BRASILEIRO: Inks Thermoelectric Plant Pact with Copel
MRS LOGISTICA: Realizes R$410.3 Million Profit in 2005

PETROLEO BRASILEIRO: Inks Thermoelectric Plant Pact with Copel
PETROLEO BRASILEIRO: Studies 7 New Ventures with Bolivian Gov't
PETROLEO IPIRANGA: Moody's Ups US$134MM Sr. Notes' Rating to Ba3
* Brazil and Mexico Launched Debt Buyback Programs


C A Y M A N   I S L A N D S

BLUERIDGE FINANCE: Sets Mar. 9 Deadline for Claims Submission
KAMNA LTD: Creditors Must Submit Claims to Liquidators by Mar. 9
PETERMAN PROPERTIES: Creditors Have Until Mar. 6 to File Claims
YOKOHAMA FINANCE: Creditors Must File Claims by March 9


E C U A D O R

* ECUADOR: Lifts State-of-Emergency in Napo Province
* ECUADOR: Remains Potential Loser with D Risk Rating


J A M A I C A

* JAMAICA: Agricultural Society Pres. Calls for Farm Development


M E X I C O

AXTEL: Raises US$319 Million Through Public Stock Offering
VITRO: Announces Organizational Changes
* Mexico and Brazil Launch Debt Buyback Programs


P E R U

* PERU: Remains Potential Loser with C Risk Rating


P U E R T O   R I C O

MUSICLAND HOLDING: Asset Sale Objection Must Be Filed on Mar. 17


U R U G U A Y

BANCO CITIBANK: S&P Puts B Rating on Counterparty Credit
* URUGUAY: Poll Shows Most Argentinians Against Pulp Mills


V E N E Z U E L A

PDVSA: Acquires 46% Stake in Argentine Fuel Distributor
PDVSA: Venezuela Delays Giving Oil Pact Details

     -  -  -  -  -  -  -  -

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


AEROLINEAS ARGENTINAS: Government Does not Contest Balance Sheet
----------------------------------------------------------------
Aerolineas Argentinas announced that the Argentine government
does not contest the company's 2004 balance sheet.

The government, as minority partner of the company and holder of
1.2% of the capital, dismisses to contest the 2002, 2003 and
2004 balance sheets pertaining to Aerolineas Argentinas.

Meanwhile, crude actions are attempted aiming at confusing the
public opinion in some argentine media, which spoke about the
contest of the accounts by the government attorneys.

The company stated that such news seems to be a filtration of
precursors that neatly harass the current administrators of the
company, aiming at creating confusion and doubt about the
management conducted in Aerolineas Argentinas.

The company revealed that it has proof that the forerunners are
the same individuals.  The company named Mr. Ricardo Muinos,
former counselor of the removed Bankruptcy Trustees of
Aerolineas, and Julio Semeria, current director of the company
Air Madrid, among others who filed a complaint against the
company directors with Court 35 of Madrid to create a climate of
doubt about the honesty of the persons in charge of the airline.

What is surprising about this is to prove how the government
legitimacy is usurped, with the clear intention of cheating and
manipulating the media as well as the public opinion, the
company said, adding that it will adopt legal measures against
the perpetrators, so that judges analyze and decide upon this
express extortion to which the current directors of the company
are subject.

The Marsans group has been working since October 2001 in the
airline with the intention of consolidating and creating a solid
company with a future projection, while it has assumed and
complied with all commitments acquired as from the privatization
thereof.

Last Thursday a document for the contest of the balance sheets
of the company was filed with the court in which the payment
suspension of Aerolineas Argentinas is pending.  In said
document signed by two attorneys, one of whom died two days
after the filing thereof -- it was understood they were acting
on behalf of the Argentine Government.  However, the government
authorities informed the individuals in charge of the company
that none of them was representing any government judicial
department.

This operation is carried out when the persons responsible of
such action are aware that the government does not want in any
manner whatsoever to contest the 2004 balance sheet.

Aerolineas has no doubt judges will be decisive about this
matter.

Aerolineas commands 80% of the domestic market.  It has been
renting airplanes from other companies because the absent
mechanics have made it difficult to carry on operations using
its own craft. The company had to shut down a maintenance center
in Bahia Blanca.

                        *    *    *

As reported by Troubled Company Reporter on June 15, 2000,
Aerolineas Argentinas needed a $650 million capital injection
and sweeping cost cuts to save it from bankruptcy.  Aerolineas'
biggest shareholder covered a bulk of its losses, which Spanish
sources put at $300 million in 2000.

                        *    *    *

Aerolineas Argentinas defaulted on a US$50 million bonds due on
December 23, 2003.


AGROPECUARIA TORNQUIST: Creditors Required to Submit Claims
-----------------------------------------------------------
Creditors against Agropecuaria Tornquist S.R.L. are required to
submit proofs of claim by April 21, 2006.  Infobae relates that
the claims will undergo a verification phase.  Claims that are
verified will then be submitted in court as individual reports
on June 6, 2006.

A general report, which will contain the company's audited
business records as well as a summary of events pertaining to
the liquidation, will be presented in court on Aug. 3, 2006.

Agropecuaria Tornquist S.R.L. was declared bankrupt by a Buenos
Aires court.  Mr. Julio Cesar Couselo was appointed as trustee.

Agropecuaria Tornquist S.R.L. can be reached at:

         San Martin 102
         Tornquist
         Buenos Aires

Mr. Julio Cesar Couselo, the trustee, can be reached at:

         Berutti 623
         Bahia Blanca
         Buenos Aires


BUENOS AIRES BROADCAST: Asks Court for Reorganization
-----------------------------------------------------
Buenos Aires Broadcast S.A. has requested for reorganization
after failing to pay its liabilities, La Nacion reports.

The reorganization petition, once approved by the court, will
allow the company to negotiate a settlement with its creditors
in order to avoid a straight liquidation.

The case is pending before Buenos Aires' Court No. 5.  Clerk No.
10 assists on this case.

Buenos Aires Broadcast S.A. can be reached at:

         Esparza 37
         Buenos Aires


EDENOR: Issuing US$282 Million Obligaciones Negociables
-------------------------------------------------------
Argentine power distributor, Edenor has announced that it will
be emitting Obligaciones Negociables for a total of US$282
million and that it will also open a primary emission of shares
which will have price at the 'Bolsa de Comercio de Buenos Aires'
(Buenos Aires stock market).

After leaving default, a process formalized last week, and after
obtaining 100% acceptance from its creditors, Edenor decided
to go directly to the capital markets.

The funds that it will obtain from the emission of Obligaciones
Negociables and the shares emitted at the 'Bolsa de Comercio de
Buenos Aires' will be used to rebuy debt and to make
investments.

                        *    *    *

As reported by Troubled Company Reporter on Jan. 2, 2006, the
Argentine arm of credit ratings agency Fitch Ratings maintained
its 'D' local scale rating on US$600 million of bonds issued by
power distributor Edenor.

Fitch attributed the rating to Edenor's inability to make its
credit payments, which are in US dollars, due to the devaluation
of the peso and the government having frozen rates.


EL PRACTICO S.A.: Trustee Sets Date for Claims Verification End
---------------------------------------------------------------
Court-appointed trustee -- accounting firm Estudio Palmero,
Montelar, Garcia -- will stop verifying claims from El Practico
S.A.'s creditors on March 24, 2006, reports Infobae.

Deadlines for the submission of individual reports as well as
the general report are not yet disclosed.

El Practico S.A. started reorganization after a Santa Fe court
approved its petition.

El Practico S.A. can be reached at:

        Belgrano 2910
        Boleteria 4
        Santa Fe

Estudio Palmero, Montelar, Garcia, the trustee, can be reached
at:

        Moreno 2971
        Santa Fe


FRANCOL S.R.L.: Trustee Stops Accepting Claims on April 4
---------------------------------------------------------
Ms. Marta Susana Polistina, trustee appointed by the Buenos
Aires court for the bankruptcy of Francol S.R.L., will no longer
entertain claims that are submitted after April 4, 2006, Infobae
reports.  Creditors whose claims are not validated will be
disqualified from receiving any payment that the company will
make.

Individual reports on the validated claims will be presented in
court on May 19, 2006.  The submission of the general report on
the case will follow on July 4, 2006.

Ms. Marta Susana Polistina, the trustee, can be reached at:

         Avda. Corrientes 745
         Buenos Aires


REPSOL YPF: 2005 Net Income Up 29.2%
------------------------------------
Spanish-Argentine oil firm Repsol YPF reported net income in
2005 was up 29.2% year-on-year to a record EUR3,120 million.
The performance was the result of growth in all the company's
business lines, producing a 31.5% rise in income from operations
to EUR6,161 million.

Cash flow in 2005 rose 50.6% year-on-year, to over EUR7,074
million, confirming both  the company's financial strength and
large capacity for cash generation, and permitting a 16.4%
cutback in debt.

These results were achieved in a scenario of high crude oil
prices, with Brent oil averaging a rise of 42.5% year-on-year,
as well as the stability of the dollar versus the euro.  The
company's refining margin indicator reached $8.46 per barrel in
2005, 48.2% above the average for 2004.

Repsol YPF net debt at December 2005 was EUR4,513 million,
EUR885 million lower than in December 2004.  This reduction came
mainly from the strong cash flow generated in the period, which
was also sufficient to clearly finance the investments made in
the year.

The net debt to capitalization ratio fell to 18.1%, posting a
6.2 percentage point drop with respect to December 2004.

Investments in 2005 were slightly lower year-on-year, at
EUR3,713 million, and went mostly to exploration & production --
EUR1,948 million -- and refining & marketing, EUR995 million.

At EUR3,246 million, income from exploration & production
operations in 2005 was 6% higher than the EUR3,062 million
posted a year earlier.

The growth was basically driven by the increase in crude oil
reference prices and gas selling prices in Trinidad & Tobago and
Argentina.

The Repsol YPF liquids realisation price averaged $37.14
(EUR31.37) per barrel versus $30.85 (EUR24.83) per barrel in
2004.  The average price of gas was $1.60 per thousand standard
cubic feet (tscf),  24% up on the $1.29 per tscf registered in
2004, shored up by higher average retail prices for gas in
Trinidad & Tobago and Argentina.

The company's average oil and gas production in the year, at
1,139,400 boepd, was 2.3% less than in 2004.  This decrease was
mainly the result of strikes in Argentina, 5,700 boepd),
scheduled turnovers and operating problems, 2,900 boepd, and the
effect of high crude oil prices on production sharing contracts,
3,600 boepd.

Gas production increased 1.6%, to 608,300 boepd, with enhanced
production mostly from Trinidad & Tobago, Bolivia and Venezuela,
which offset lower performance from Argentina and Algeria.

Repsol YPF reduced on Jan. 26, 2006, proved reserves by 1,254
million barrels of oil equivalent.  The negative revisions
affected 71% of gas, and are concentrated 52% in Bolivia and 41%
in Argentina.

Investments during 2005 in the exploration & production business
area rose 64.4% to EUR1,948 million.  Investment in development
represented 56.5% of total investment, and was spent mainly in
Argentina (64.9%), Trinidad & Tobago (8.9%), Venezuela (8.1%),
Bolivia (4.5%), Ecuador (3.9%), Brazil (3%) and  Libya (1.7%).

Income from operations in the refining & marketing area, at
EUR2,683 million, was up 69.3% year-on-year.

This considerable rise is mainly attributable to the positive
performance of refining margins, which rose 48.2%.  Marketing
margins were similar year-on-year in Spain, but lower in
Argentina.

Total oil product sales increased 5.4% over 2004 levels to 57.9
million tons.  Sales in Spain were 1.8% up year-on-year, and in
Argentina, Brazil and Bolivia, rose 4.9%.  In the rest of the
world, oil product sales showed a 23.7% growth, reaching 8.4
million tons.  Sales to our own marketing network were higher in
Spain, ABB and the rest of the world.

Turning to the LPG business, total sales reached 3.3 million
tons, showing a 3.9% rise from 2004.  In Europe there was 2.9%
sales growth thanks to larger volumes in Portugal, which
compensated for a 1.7% drop in Spain.  In Latin America, sales
were 5.2% higher year-on-year shored up by strong growth in
Ecuador (9.4%) and Peru (8.3%).

In 2005, investments in refining & marketing were EUR995
million, and were mainly allotted to current refining projects
and the acquisition of LPG assets in Portugal.

In chemicals, income from operations improved 17.6% year-on-year
to EUR308 million, versus EUR262 million a year earlier.  Strong
performance here came from wider international margins on our
product mix and the income contribution from the sines complex
acquired in Portugal.

Total petrochemical product sales reached 4.64 million tons,
13.3% more than in 2004.

Investments in chemicals totaled EUR170 million versus EUR292
million in 2004, and were mainly spent on increasing capacity,
particularly at the propylene oxide/styrene plant in Tarragona,
and in upgrading existing units.

Income from gas & power operations in 2005 rose 25.5% to EUR389
million, versus the EUR310 million posted in 2004.

There was improvement in gas distribution in Spain and also in
Latin America, where performance was boosted by organic
operating growth in Mexico, Colombia, and Brazil.

2005 investment in gas & power amounted to EUR457 million versus
EUR777 million the year before.

                        *    *    *

On June 20, 2005, Moody's Investors Service upgraded the ratings
of Spanish-Argentine oil company Repsol YPF's local subsidiary
YPF S.A. Moody's upgraded YPF's senior unsecured rating to Ba3
from B1 and the unit's domestic currency issuer rating to Baa2
from Baa3.

YPF's foreign currency issuer rating of Caa1 remained unchanged,
as it is constrained by the sovereign ceiling of Argentina.
YPF's Corporate Family Rating (formerly known as the senior
implied rating) is aligned with the foreign currency issuer
rating at Caa1.


SANTA FE: Validation of Claims from Creditors Begins
----------------------------------------------------
The verification phase for the claims submitted by Santa Fe 2081
S.R.L.'s creditors has started, Argentine daily La Nacion
reports.  The verification will end on April 14, 2006.
Creditors who are unable to submit claims after the said date
will be excluded from receiving any distribution or payment that
the company will make.

Santa Fe 2081 S.R.L. was declared bankrupt by Buenos Aires'
Court No. 17 with the assistance of Clerk No. 33.  The court
made the ruling in favor of the company's creditor, Mr. Sergio
Loyola.  The court selected Mr. Donato Sarkuno as the company's
trustee.

Santa Fe 2081 S.R.L. can be reached at:

         Av. Santa Fe 2081
         Buenos Aires

Mr. Donato Sarkuno, the trustee, can be reached at:

         Bernardo de Irigoyen 330
         Buenos Aires


SELECTO S.A.: Claims Verification Begins, Ending April 4
--------------------------------------------------------
Mr. Marcelo Dborkin, court-appointed trustee, has started
verifying claims against Selecto S.A.

La Nacion relates that Buenos Aires' Court No. 25 declared the
company's bankruptcy in favor of Ms. Natalia Tintaya Flores, the
company's creditor.  Ms. Flores has claims amounting to
$10,480.99 against the company.

Clerk No. 49 assists the court in this case.

Selecto S.A. can be reached at:

         Av. Pueyrredon 2015
         Buenos Aires

Mr. Marcelo Dborkin, the trustee, can be reached at:

         Av. Callao 295
         Buenos Aires


SYM SISTEMAS: Trustee Stops Accepting Claims on June 2
------------------------------------------------------
Ms. Beatriz Satachesky, trustee appointed by the Buenos Aires
court for the reorganization of SYM Sistemas y Microfilmaciones
S.R.L., will no longer entertain claims that are submitted after
June 2, 2006, Infobae reports.  Creditors whose claims are not
validated will be disqualified from receiving any payment that
the company will make.

An informative assembly is scheduled on March 14, 2007.

As reported by Troubled Company Reporter on Dec. 26, 2005, SYM
Sistemas y Microfilmacion S.R.L. requested for reorganization
after failing to pay liabilities worth $812,663.26 since July 4,
2005.

Court No. 3. handles the case with the assistance of Clerk No.
5.

SYM Sistemas y Microfilmaciones S.R.L. can be reached at:

         Dean Funes 488
         Buenos Aires

Ms. Beatriz Satachesky, the trustee, can be reached at:

         Av. Cordoba 817
         Buenos Aires


TANALCO S.R.L.: Trustee Stops Validating Claims on April 10
-----------------------------------------------------------
Mr. Ignacio Victor Kaczer, the trustee appointed by the Buenos
Aires court for the Tanalco S.R.L. bankruptcy case, will stop
validating claims from the company's creditors on April 10,
2006.

Mr. Kaczer will present the validated claims in court as
individual reports on May 26, 2006.  The trustee will also
submit a general report on the case on July 24, 2006.

Mr. Ignacio Victor Kaczer, the trustee, can be reached at:

         Avda. Callao 441
         Buenos Aires


TELEMONITOREO INTERNACIONAL: Claims Verification Ends on Apr.26
---------------------------------------------------------------
Telemonitoreo Internacional S.A.'s creditors are required to
present their claims against the company to Mr. Abel Latendorf,
the company's trustee, on April 26, 2006.

Argentine daily La Nacion relates that Buenos Aires' Court No.
14 declared the company's bankruptcy in favor of the company's
creditor, Mr. Marcelo Gimbatti, for nonpayment of about
$19,628.92 in debt.

Clerk No. 28 assists the court with the proceedings.

Telemonitoreo Internacional S.A. can be reached at:

         Tucuman 540
         Buenos Aires

Mr. Abel Latendorf, the trustee, can be reached at:

         Piedras 426
         Buenos Aires


TESORO MARINO: Debt Payments Halted, Set To Reorganize
------------------------------------------------------
Buenos Aires' Court No. 22 is reviewing the merits of Tesoro
Marino S.A.'s petition to reorganize.  La Nacion recalls that
the company filed the petition following cessation of debt
payments since August 2005.

Reorganization will allow Tesoro Marino S.A. to avoid bankruptcy
by negotiating a settlement with its creditors.

Clerk No. 43 is assisting the court on the company's case.

Tesoro Marino S.A. can be reached at:

         Conrado Villegas 5424
         Buenos Aires


* ARGENTINA: Poll Shows High Percentage Against Pulp Mills
----------------------------------------------------------
In a public opinion poll published in the Buenos Aires press, a
majority of Argentines are against the construction of two pulp
mills on the river that acts as a natural border between Uruguay
and Argentina.

According to the Merco Press, Argentinians may reject the pulp
mills for environmental reasons, but they would like to see a
resolution reached between Uruguayan President Tabare Vazquez
and Argentine's Nestor Kirchner.  Those who participated in the
poll disapproved the protest tactics of blockading the
international bridges leading to Uruguay.

Argentina previously announced bringing the case to the
International Court of Justice in The Hague, Netherlands

The construction of the two pulp mills involves US$1.8 billion
investment from the Uruguayan government.

The Merco Press relates that Argentine provincial and federal
authorities and environmentalist groups state that the pulp
mills' chlorine bleaching process is highly water and air
contaminating, but Uruguay argues both mills comply with the
latest and most stringent European Union regulations regarding
conservation of natural resources.

In spite of the opinion polls, residents from Gualeguaychu,
across from Fray Bentos, kept up the route and bridge blockade
for the 16th consecutive day and further north where some of the
traffic had been rerouted, Colon-Paysandu, environmentalist
groups and local residents also began organizing random cuts,
the Merco Press reports.


=============
B E R M U D A
=============


PXRE GROUP: Deferred Tax Writedown Cues S&P to Cut Rating to BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty
credit and financial strength ratings on Bermuda-based PXRE
Reinsurance Ltd. and U.S.-based PXRE Reinsurance Co.
(collectively referred to as PXRE) to 'BBB-' from 'BBB+'.

Standard & Poor's also said that it lowered its counterparty
credit ratings on holding companies PXRE Group Ltd. (NYSE:PXT)
and PXRE Corp. to 'BB-' from 'BB+'.

All of these ratings remain on CreditWatch with negative
implications, where they were placed on Feb. 16, 2006.

"The downgrades reflect PXRE's announcement of a writedown of
its deferred tax asset, the adverse impact of two counterparties
canceling their reinsurance contracts, and an increase in the
group's estimated 2005 hurricane losses," explained Standard &
Poor's credit analyst Steven Ader.

Although PXRE's capital and liquidity are sufficient to meet
known obligations, its competitive position has materially
diminished, as demonstrated by its disclosure that a substantial
loss in premium volume could result from current reinsurance
clients Exercising their right to cancel their reinsurance
contracts.  This possibility also materially hampers PXRE's
financial flexibility, borne from its prospective business
opportunities, previously incorporated into the rating.
Financial flexibility is further hampered by the group's
disclosure that it is currently precluded under Bermuda holding
company law from declaring or paying dividends, subject to a
shareholder vote in April 2006.

The ratings remain on CreditWatch negative because of the fluid
nature of developing events relative to PXRE's:

   * competitive position,
   * financial flexibility,
   * capital adequacy, and
   * liquidity.

Standard & Poor's expects to resolve the CreditWatch status of
the ratings within the next 90 days.  The absence of further
material negative events will likely result in the ratings being
affirmed.  Alternatively, the ratings could be lowered again if
there is further material adverse reserve development or an
unanticipated capital and liquidity impact from ongoing
commutations.

The current ratings reflect PXRE's:

   * good liquidity,
   * good capital adequacy, and
   * a favorable long-term debt maturity structure.

Offsetting these strengths are PXRE's materially diminished
competitive position and weak financial flexibility.


PXRE REINSURANCE: A.M. Best Lowers ICR Ratings to B+ from B++
-------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength rating to B+
from B++ and the issuer credit ratings to "bbb-" from "bbb" for
the reinsurance subsidiaries of the PXRE Group Ltd. (PXRE)
[NYSE: PXT] (Bermuda).  The rating actions apply to PXRE
Reinsurance Ltd. (Bermuda) and PXRE Reinsurance Company
(Hartford, CT).  A.M. Best has also downgraded PXRE's ICR to
"bb-" from "bb" and all its existing and indicative debt
ratings.  All ratings have been placed under review with
negative implications.

These actions follow A.M. Best's previous downgrading of PXRE's
ratings on February 16, 2006, after the company announced that
it had materially increased its net loss estimates for
hurricanes Katrina, Rita and Wilma.  The company has since
announced that in addition to those losses, and the subsequent
rating agency downgrades, it has also recorded a material
valuation allowance against its income tax recoverables due to
the uncertainty that they will be ultimately realized.  PXRE has
also announced that it has received notices from two of its
retrocessionaires that they will commute their coverages with
PXRE due to rating downgrades and other changes to the company.
This has resulted in pre-tax losses from the hurricanes being
revised slightly upward from the high end of previous estimates.

All ratings will remain under review with negative implications
as A.M. Best continues to analyze the impact on PXRE of the
additional capital loss to both the group and to the individual
operating subsidiaries. In addition, A.M. Best will continue to
actively monitor the impact of rating agency triggers on PXRE's
ability to continue to do business as well as any strategic
alternatives that may be developed.

The following debt rating has been downgraded:

  PXRE Capital Trust I

   -- "b" from "b+" on $100 million 8.85% trust preferred
      securities, due 2027.

The following indicative debt ratings for securities available
under shelf registration have been downgraded:

   PXRE Group Ltd.

   -- "bb-" from "bb" on senior unsecured;
   -- to "b+" from "bb-" on subordinated; and
   -- to "b" from "b+" on preferred stock

   PXRE Capital Trust IV

   -- "b" from "b+" on trust preferred securities.


SEA CONTAINERS: Senior Vice-President David Benson Departs
----------------------------------------------------------
Sea Containers, Ltd., announced Friday that David Benson, senior
vice-president of the ferries division, will leave the company
on Feb. 28, 2006.  This follows Sea Containers' announcement on
Nov. 3, 2005, that the company was undertaking a major
restructuring of its ferries division.

Mr. Benson has been employed at Sea Containers since 1983, where
he has undertaken a number of roles.  These include positions as
Chief Executive of Venice-Simplon Orient-Express and Senior
Vice-President of Passenger Transport Division for Sea
Containers, where he was the driving force behind some of the
most innovative passenger and vehicle ferry services in the
world.  Businesses included in this portfolio have included Isle
of Man Steam Packet Company, Hoverspeed, Silja, SeaLink and
SeaStreak and Great North Eastern Railway, the operator of high-
speed passenger trains services from London to Scotland.

Under Mr. Benson's leadership, Sea Containers' Passenger
Transport division played a leading role in pioneering the fast
ferry concept and operated one of the world's largest fleets of
fast-ferries from dedicated ports, following on from its cross-
channel hovercraft.  It had input at ship design level with
Incat in the build of the 74m and 81m SeaCat, and also won the
prestigious Hales Trophy for the Blue Riband of the North
Atlantic on the delivery voyage of its first SeaCat from
Australia.

Bob MacKenzie, President and Chief Executive Officer of Sea
Containers, Ltd., said, "We are grateful to David for all his
loyalty, efforts and commitment to the company since 1983,
especially in the last few years where trading conditions in the
ferries business have been extremely challenging."

Paul Clark, Sea Containers' Commercial Director of Ferries, will
assume Mr. Benson's remaining duties.

                        *    *    *

As reported by Troubled Company Reporter on Feb. 20, 2006,
Standard & Poor's Ratings Services lowered its ratings on Sea
Containers Ltd., including lowering the corporate credit rating
to 'B+' from 'BB-'.  All ratings remain on CreditWatch with
negative implications, where they were placed Aug. 25, 2005.


SEA CONTAINERS: S&P Slices Corp. Credit Rating from BB- to B+
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Sea
Containers Ltd., including lowering the corporate credit rating
to 'B+' from 'BB-'.  All ratings remain on CreditWatch with
negative implications, where they were placed Aug. 25, 2005.

"The downgrade is based on Sea Containers' weakened financial
profile after losses incurred at its ferry operations, a
business it is in the process of divesting, and lower margins
expected on its GNER rail franchise," said Standard & Poor's
credit analyst Betsy Snyder.  "The continuing CreditWatch status
reflects uncertainties about the timing and ultimate disposition
of the ferry operations, and resolution of a series of disputes
at GE SeaCo, a joint venture in which Sea Containers holds a 50%
stake," the analyst continued.

The ratings on Bermuda-based Sea Containers reflect a relatively
weak financial profile, even after the planned divestiture of
its unprofitable ferry operations, expected to occur in 2006.
However, the company does benefit from fairly strong competitive
positions in its two major remaining businesses, GNER (Great
North Eastern Railway, a passenger rail line between London and
Scotland) and marine cargo container leasing.  Sale of the Silja
assets, which account for approximately 75% of the ferry assets,
will likely occur first, with bids already submitted. The timing
and proceeds from sale of the other ferry assets are more
uncertain.  The remaining businesses generate more stable cash
flow than the very competitive ferry businesses, which
experienced significant losses in 2004-2005 due to excess
capacity, fare discounting, and high fuel prices.

Sea Containers is restructuring the ferry operations through the
sale of certain operations and/or individual vessels,
redeployment or chartering out vessels, and staff reductions.
In November 2005, the company sold the remainder of its Orient-
Express Hotels Ltd. shares, realizing proceeds of approximately
$262 million before expenses.  In 2006, debt will be reduced
using proceeds from the sale of OEH shares as well as expected
proceeds from sale of the ferry operations.

A further uncertainty, with potential ratings implications, is a
series of disputes between Sea Containers and General Electric
Capital Corp. regarding operations at GE SeaCo.  The disputes
are currently in arbitration, with a decision expected in early
2006.  The outcome is not determinable at this time and no loss
contingency had been recorded at Sept. 30, 2005.  Therefore, the
potential financial effects on Sea Containers and even possible
future ownership of GE SeaCo remain uncertain.

Standard & Poor's will monitor the progress of the sale of the
ferry operations, as well as resolution of the GE SeaCo
arbitration.  If either were to result in additional significant
charges that would further weaken Sea Containers' financial
profile, ratings would likely be lowered.


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


BANCO BRADESCO: Plans April 3 Capital Interest Payment
------------------------------------------------------
Banco Bradesco S.A. will pay on April 3, 2006, interests on its
own capital related to March 2006, in the amount of BRL0.0285000
per common stock and BRL0.0313500 per preferred stock to the
stockholders registered in the Company's records on March 1,
2006.

The payment, net of the withholding income tax of 15%, except
for legal entity stockholders exempted from the referred
taxation, which will receive for the stated amount, will be made
through the net amount of BRL0.0242250 per common stock and
BRL0.0266475 per preferred stock, as follows:

    -- credit in the current account informed by the
       stockholder;

    -- the stockholders who did not inform their banking data or
       do not hold a current account in a financial institution
       must go to a Bradesco branch on their preference having
       their identification document and the notice for receipt
       of earnings from book-entry stocks, sent by mail to those
       having their address updated in the company's records;

    -- those with stocks held on custody with the CBLC aka
       Brazilian Clearing and Depository Corporation, the
       payment will be made to CBLC, which will transfer them to
       the respective stockholders through the depository
       agents.

Headquartered in Sao Paulo, Brazil, Banco Bradesco S.A. Banco --
http://www.bradesco.com.br/-- prides itself on serving low- and
medium-income individuals in Brazil since the 1960s.  Bradesco
is Brazil's largest private bank, with more than 3,000 banking
branches, and also a leader in insurance and private pension
management.  Bradesco has branches throughout Brazil as well as
one in New York, two in the Bahamas, and four in the Cayman
Islands.  Bradesco offers Internet banking, insurance, pension
plans, annuities, credit card services (including football-club
affinity cards for the soccer-mad population), and Internet
access for customers.  The bank also provides personal and
commercial loans, along with leasing services.

                        *    *    *

As reported by Troubled Company Reporter on Feb. 23, 2006,
Moody's Investors Service shifted Banco Bradesco S.A.'s 'C-'
bank financial strength rating to positive from stable.


BRASKEM S.A.: Amends Borealis Brasil's Shareholders Agreement
-------------------------------------------------------------
Braskem S.A. announced Friday the amendment to the shareholders
agreement of Borealis Brasil S.A.

In December 2000, Braskem -- through OPP Petroquimica S.A. --
and Borealis A/S set up a joint venture for the production of
polyethylene and polypropylene compounds, then called Borealis-
OPP S.A and now called Borealis Brasil S.A. in which the former
companies had, as they now have, an equity participation of
respectively 20% and 80% of the total and voting capital stock.

Within the context of that association, the parties entered
into:

  -- a Supply Agreement for the supply of polypropylene by
     Braskem to Borealis Brasil, which was to remain in effect
     for five years; and

  -- a Shareholders Agreement which, among other matters, made
     provisions about:

           -- the Call Option of Borealis A/S to purchase the
              shares of Borealis Brasil held by Braskem, to be
              effective for 5 years as of 2002; and

           -- the Put Option of Braskem to sell its shares of
              Borealis Brasil to Borealis A/S for a period of 2-
              year beginning in 2005.

Braskem, Borealis A/S and Borealis Brasil executed on Feb. 22,
2006, the first amendment to the Shareholders Agreement and the
first amendment to the Supply Agreement, the latter being
extended for an additional 10 years.

Among other changes, the amendment to the Shareholders Agreement
extended the timeframe for the exercise of the Put Option by
Braskem for 24 months counted as of the date of the termination
of the Supply Agreement, as per its amendment, as well as it
relegated the Call Option held by Borealis A/S.  The remaining
provisions were maintained.

Braskem -- http://www.braskem.com.br/-- is a thermoplastic
resins producer in Latin American, and is among the three
largest Brazilian-owned private industrial companies.  The
company operates 13 manufacturing plants located throughout
Brazil, and has an annual production capacity of 5.8 million
tons of resins and other petrochemical products.

                        *    *    *

On Oct. 17, 2005, Fitch Ratings revised the Rating Outlook of
the `BB-' long-term foreign currency rating of Braskem S.A. and
Braskem International Ltd. to Positive from Stable.

The action followed the recent change in the Rating Outlook to
Positive from Stable of the 'BB-' foreign currency rating of the
Federative Republic of Brazil. The Brazilian corporate foreign
currency ratings continue to be linked to the 'BB-' foreign
currency rating of the sovereign.


COPEL: Reaches Thermoelectric Plant Agreement with Petrobras
------------------------------------------------------------
Companhia Paranaense De Energia aka Copel reached an agreement
with Petrobras regarding pending matters related to the gas
contract of the thermoelectric plant of Araucaria, which was
terminated on May 31, 2005.

Petrobras' executive office authorized the celebration of an
agreement with Copel and Copel Geracao S.A., Copel's fully owned
subsidiary, regarding the thermoelectric plant of Araucaria,
with the signature of an Out-of-Court Transaction Settlement, an
Instrument of Acknowledgment of Quote Transferring and a
Memorandum of Intent.

The Out-of-Court Transaction Settlement aims to settle Compagas'
debt with Petrobras, which is guaranteed by Copel, due to a gas
supply contract, with take or pay and ship or pay articles,
which was terminated on May 31, 2005.  At that time, the nominal
debt, not recognized by Copel, amounted to BRL266.4 million for
ship or pay and BRL140.1 million for take or pay, being this
last one recoverable as future gas supply.

By the agreement to be celebrated, Copel Geracao, having Copel
as guarantor, acknowledges the BRL150 million debt with
Petrobras, to be paid in 60 monthly installments as from January
2010, readjusted by the Selic rate, or any other rate that may
be substituted for the Selic.  As guarantee, Copel Geracao S.A.
and Copel offer its respective receivables.

In the Instrument of Acknowledgment, Petrobras informs that has
no objections of any kind to the acquisition of El Paso quotes
in UEGA by Copel.

By the Memorandum of Intent, Petrobras will exert their best
efforts to attend UEGA's operation fuel supply necessity, as
from 2010 such fuel can be natural gas or any other alternative
energizer.

The agreement settles, amicably, the existing conflicts
regarding gas supply of the thermoelectric plant of Araucaria,
which was terminated on May 31, 2005.

Headquartered in Parana, Brazil, COPEL aka Companhia Paranaense
de Energia SA -- http://www.copel.com/-- transmits and
distributes electricity to more than 3 million customers in the
state of Paran and has a generating capacity of nearly 4,600 MW,
primarily from hydroelectric plants.  COPEL also offers
telecommunications, natural gas, engineering, and water and
sanitation services.  The company restructured its utility
operations in 2001 into separate generation, transmission, and
distribution subsidiaries to prepare for full privatization,
which has been indefinitly postponed.  In response, COPEL is re-
evaluating its corporate structure.  The government of Paran
controls about 59% of COPEL.

                        *    *    *

Copel's BRL100,000,000 debentures due March 1, 2007, is rated
Ba3 by Moody's.


PETROLEO BRASILEIRO: Inks Thermoelectric Plant Pact with Copel
--------------------------------------------------------------
Companhia Paranaense De Energia aka Copel reached an agreement
with Petrobras regarding pending matters related to the gas
contract of the thermoelectric plant of Araucaria, which was
terminated on May 31, 2005.

Petrobras' executive office authorized the celebration of an
agreement with Copel and Copel Geracao S.A., Copel's fully owned
subsidiary, regarding the thermoelectric plant of Araucaria,
with the signature of an Out-of-Court Transaction Settlement, an
Instrument of Acknowledgment of Quote Transferring and a
Memorandum of Intent.

The Out-of-Court Transaction Settlement aims to settle Compagas'
debt with Petrobras, which is guaranteed by Copel, due to a gas
supply contract, with take or pay and ship or pay articles,
which was terminated on May 31, 2005.  At that time, the nominal
debt, not recognized by Copel, amounted to BRL266.4 million for
ship or pay and BRL140.1 million for take or pay, being this
last one recoverable as future gas supply.

By the agreement to be celebrated, Copel Geracao, having Copel
as guarantor, acknowledges the BRL150 million debt with
Petrobras, to be paid in 60 monthly installments as from January
2010, readjusted by the Selic rate, or any other rate that may
be substituted for the Selic rate.  As guarantee, Copel Geracao
S.A. and Copel offer its respective receivables.

In the Instrument of Acknowledgment, Petrobras informs that has
no objections of any kind to the acquisition of El Paso quotes
in UEGA by Copel.

By the Memorandum of Intent, Petrobras will exert their best
efforts to attend UEGA's operation fuel supply necessity, as
from 2010 such fuel can be natural gas or any other alternative
energizer.

The agreement settles, amicably, the existing conflicts
regarding gas supply of the thermoelectric plant of Araucaria,
which was terminated on May 31, 2005.

Headquartered in Parana, Brazil, COPEL aka Companhia Paranaense
de Energia SA -- http://www.copel.com/-- transmits and
distributes electricity to more than 3 million customers in the
state of Paran and has a generating capacity of nearly 4,600 MW,
primarily from hydroelectric plants.  COPEL also offers
telecommunications, natural gas, engineering, and water and
sanitation services.  The company restructured its utility
operations in 2001 into separate generation, transmission, and
distribution subsidiaries to prepare for full privatization,
which has been indefinitly postponed.  In response, COPEL is re-
evaluating its corporate structure.  The government of Paran
controls about 59% of COPEL.

                        *    *    *

Copel's BRL100,000,000 debentures due March 1, 2007 is rated Ba3
by Moody's.

                       *    *     *

Petroleo Brasileiro SA's long-term corporate family rating is
rate Ba3 by Moody's and its foreign currency long-term debt is
rated BB- by Fitch.


MRS LOGISTICA: Realizes R$410.3 Million Profit in 2005
------------------------------------------------------
Brazilian logistics company MRS Logistica registered a R$410.3
million net profit in 2005, double what the company earned in
2004.  The company handled 108.3 million tons of cargo last
year, 10.4% more than in 2004.  This year MRS expects to handle
between 120 million and 122 million tonnes of cargo, InvestNews
reports.

                        *    *     *

As reported on Nov. 10, 2005, Standard & Poor's Ratings Services
revised the outlook on the BB- long-term foreign currency rating
of MRS Logistica S.A. to positive from stable, following the
revision of the foreign currency outlook of the Federative
Republic of Brazil.


PETROLEO BRASILEIRO: Inks Thermoelectric Plant Pact with Copel
--------------------------------------------------------------
Companhia Paranaense De Energia aka Copel reached an agreement
with Petrobras regarding pending matters related to the gas
contract of the thermoelectric plant of Araucaria, which was
terminated on May 31, 2005.

Petrobras' executive office authorized the celebration of an
agreement with Copel and Copel Geracao S.A., Copel's fully owned
subsidiary, regarding the thermoelectric plant of Araucaria,
with the signature of an Out-of-Court Transaction Settlement, an
Instrument of Acknowledgment of Quote Transferring and a
Memorandum of Intent.

The Out-of-Court Transaction Settlement aims to settle Compagas'
debt with Petrobras, which is guaranteed by Copel, due to a gas
supply contract, with take or pay and ship or pay articles,
which was terminated on May 31, 2005.  At that time, the nominal
debt, not recognized by Copel, amounted to BRL266.4 million for
ship or pay and BRL140.1 million for take or pay, being this
last one recoverable as future gas supply.

By the agreement to be celebrated, Copel Geracao, having Copel
as guarantor, acknowledges the BRL150 million debt with
Petrobras, to be paid in 60 monthly installments as from January
2010, readjusted by the Selic rate, or any other rate that may
be substituted for the Selic rate.  As guarantee, Copel Geracao
S.A. and Copel offer its respective receivables.

In the Instrument of Acknowledgment, Petrobras informs that has
no objections of any kind to the acquisition of El Paso quotes
in UEGA by Copel.

By the Memorandum of Intent, Petrobras will exert their best
efforts to attend UEGA's operation fuel supply necessity, as
from 2010 such fuel can be natural gas or any other alternative
energizer.

The agreement settles, amicably, the existing conflicts
regarding gas supply of the thermoelectric plant of Araucaria,
which was terminated on May 31, 2005.

Headquartered in Parana, Brazil, COPEL aka Companhia Paranaense
de Energia SA -- http://www.copel.com/-- transmits and
distributes electricity to more than 3 million customers in the
state of Paran and has a generating capacity of nearly 4,600 MW,
primarily from hydroelectric plants.  COPEL also offers
telecommunications, natural gas, engineering, and water and
sanitation services.  The company restructured its utility
operations in 2001 into separate generation, transmission, and
distribution subsidiaries to prepare for full privatization,
which has been indefinitly postponed.  In response, COPEL is re-
evaluating its corporate structure.  The government of Paran
controls about 59% of COPEL.

                        *    *    *

Copel's BRL100,000,000 debentures due March 1, 2007 is rated Ba3
by Moody's.

                       *    *     *

Petroleo Brasileiro SA's long-term corporate family rating is
rate Ba3 by Moody's and its foreign currency long-term debt is
rated BB- by Fitch.


PETROLEO BRASILEIRO: Studies 7 New Ventures with Bolivian Gov't
---------------------------------------------------------------
Agencia Brasil reports that the Brazilian and Bolivian
government-run oil companies are examining seven possible
partnerships.

Petroleo Brasileiro S.A. aka Petrobras' director of Gas and
Energy, Ildo Sauer, affirmed in an interview with the Agencia
Brasil that these projects are under study with the Yacimientos
Petroliferos Fiscales Boliviano.

Mr. Sauer said that he spoke recently with Nestor Cervero,
director of the international division of the YPFB.  The ongoing
negotiations are geared to the signing a Memorandum of
Understanding between the two companies at the end of this month
or in the beginning of March, Agencia Brasil reports.

Under an MOU, there will be guidelines that will cover seven
areas of cooperation and association between the two firms.
These will include the possibility of technology transfer and
qualification of human resources by the Petrobras Training
Center.  The goal is to train the managers and technicians
needed to administer the Bolivian gas system and do research on
the industrial complex that is expected to go up on the border
between the two countries and which may eventually contain a
fertilizer factory, a thermoelectric plant, and a natural
gas/chemical pole, Agencia Brasil relates.

"These understandings mean association in the refineries and in
petroleum exploration and production and cooperation in the
areas of biofuels, development of the natural gas market,
conversion of vehicles from gasoline and diesel to natural gas
engines, and even the propagation of natural gas use in Bolivian
residences," Mr. Sauer told Agencia Brasil.

According to Mr. Sauer the investments are expected to amount to
around US$2.36 billion.  For these investments to materialize,
the participation of private Brazilian and Bolivian investors
will be necessary, Mr. Sauer explained to Agencia Brasil.

                        *    *     *

Petroleo Brasileiro SA's long-term corporate family rating is
rate Ba3 by Moody's and its foreign currency long-term debt is
rated BB- by Fitch.


PETROLEO IPIRANGA: Moody's Ups US$134MM Sr. Notes' Rating to Ba3
----------------------------------------------------------------
Moody's Investors Service has upgraded to Ba3 from B1 the
foreign currency rating of Companhia Brasileira de PetrĒleo
Ipiranga's outstanding US$134 million step-up senior unsecured
notes due 2008.  The outlook of the notes rating was changed
from positive to stable.  The Ba3 foreign currency rating of the
notes is presently not constrained by Brazil's sovereign
ceiling.

The rating is supported by Ipiranga's position as the second
largest fuel distribution company in Brazil, and its
demonstrated ability to defend and expand its market share in
the Brazilian fuel distribution market while maintaining
acceptable operating margins.  In addition, the rating
incorporates the company's efficient logistics and strong brand
recognition, as well as the improved competitive environment for
the diesel and gasoline markets in Brazil.

At the same time, the rating is constrained by Ipiranga's
volatile working capital needs, its high dependence on
Petrobras' for fuel supply, the increased capex and dividends
distribution which have negatively impacted its free cash flow
generation, and by the fierce competition in the fast-growing
ethanol market.

Ipiranga is the second largest fuel distributor in Brazil with
an estimated market share of about 17% and large coverage of
Brazilian territory, which is supported by efficient logistics
and continuous investments in information technology.

Despite the intense competition from unbranded fuel distributors
that have increased their market share aggressively over the
past several years, in many cases based on tax evasion and fuel
fraud, Ipiranga has managed, since 2003, to regain market share
while maintaining still acceptable operating margins for the
industry (average EBITDA margin of 1.8% in the past three fiscal
years). Marketing campaigns associating the company with high-
quality products and differentiated services have been
successful, while it has also made substantial investments in
modernization of gas stations and quality control.

While Moody's recognizes the efforts of the Brazilian regulator,
ANP, to improve quality control in the fuel distribution market
and the positive changes in the Brazilian tax laws for gasoline
and diesel that somewhat reduce tax evasion and, consequently,
contribute to healthier competition within the industry, we also
note that the fast-growing ethanol market still remains highly
susceptible to fraud and tax evasion.  Demand for ethanol has
increased sharply following the introduction of flex-fuel
vehicles in 2003, which currently represent close to 80% of new
passenger car sales in Brazil.

Moody's sees Ipiranga's dependency on Petrobras for its fuel
supply as negative for the company's credit, given Petrobras'
dominant position in the sector.  Ethanol, on the other hand, is
supplied by around 300 local alcohol mills and so has a low
concentration of suppliers.

Although Ipiranga has managed to maintain operating margins at
acceptable levels, Moody's notes that increased dividends
distribution and higher capital expenditure in logistics,
modernization and expansion of its own gas stations have
impacted the company's free cash flows and consumed most its
cash position, which has dropped from BRL285 million at 2003
year-end to just BRL21 million, reducing its financial
flexibility.

The stable outlook reflects Moody's belief that Ipiranga will
maintain its market share in the Brazilian fuel distribution
market while managing to maintain acceptable operating margins.
In addition, Moody's expects that the company will manage
investments and dividends in order to report positive free cash
flows going forward.

Since Moody's does not expect any structural change in the
competitive environment in the Brazilian fuel distribution
market to materialize in the foreseeable future, an upgrade of
the existing rating is unlikely.

On the other hand, the company's rating or outlook could be
under downward pressure if its market share and operating
margins were to experience significant erosion due to fiercer
competition, resulting in EBITDA margins below 1.2%.  Moreover,
the rating could also be negatively affected if Ipiranga
experiences a material increase in its financial leverage due to
continued negative free cash flow generation, and Total Debt to
EBITDA above 2.5 times.

Companhia Brasileira de PetrĒleo Ipiranga, based in Rio de
Janeiro, Brazil, is the second largest fuel distribution company
in Brazil, with large coverage of the country's territory. The
company reported consolidated revenues of BRL 19,477 million
(US$ 7,999,000) and net earnings of BRL326 million (US$134
million) in 2005.


* Brazil and Mexico Launched Debt Buyback Programs
--------------------------------------------------
The Financial Times reports that two of Latin America's biggest
economies, Brazil and Mexico, announced multi-billion dollar
debt buybacks on Thursday last week.

Brazil said it would buy back US$6.64 billion of so-called Brady
bonds, the country's total outstanding amount.  The move will
help remove the stigma associated with the country's debt
restructuring in 1994, the FT relates.

Mexico launched an offer to buy back US$5 billion of global
bonds denominated in U.S. dollars, sterling and euros, maturing
between 2007 and 2033, and announced a new dollar-denominated
benchmark bond, the FT states.

According to FT, the moves are part of a trend that has seen
emerging market countries buy back bonds denominated in foreign
currencies or pre-pay debt as their economies improve.  The
economic positions of many emerging market countries are getting
better, including higher foreign exchange reserves, faster
export growth and current account surpluses that have been
helped by rising commodity prices.

"This is part of an ongoing process of liability management that
is addressing the high level of indebtedness so problematic in
the past. The ability to refinance debt on improved terms is a
clear reflection of improved credit quality among emerging
market countries and will reduce further the risk of disruption
from external shocks," Philip Poole, head of emerging markets
research at HSBC, told the FT.

Industry analysts expect Brazil to receive an investment grade
sooner than expected.

Fitch Ratings assigns these ratings on Mexico:

                     Rating     Rating Date
                     ------     -----------
   Country Ceiling    BBB+      Nov. 18, 2004
   Long Term IDR      BBB       Dec. 14, 2005
   Short Term IDR     F3        Dec. 14, 2005
   Local Currency
   Long Term Issuer
   Default Rating     BBB+      Dec. 14, 2005


Fitch Ratings assigns these ratings on Brazil:

                     Rating     Rating Date
                     ------     -----------
   Country Ceiling    BB-      Nov. 18, 2004
   Long Term IDR      BB-      Dec. 14, 2005
   Short Term IDR     B        Dec. 14, 2005
   Local Currency
   Long Term Issuer
   Default Rating     BB-      Dec. 14, 2005


===========================
C A Y M A N   I S L A N D S
===========================


BLUERIDGE FINANCE: Sets Mar. 9 Deadline for Claims Submission
-------------------------------------------------------------
Blueridge Finance Ltd.'s Creditors are required to submit
particulars of their debts or claims on or before March 9, 2006,
to the company's appointed liquidators, Ms. Helen Allen and Ms.
Emile Small.  Failure to do so will exclude them from receiving
the benefit of any distribution that the company will make.

Blueridge Finance Ltd. started liquidating assets on Jan. 18,
2006.

Ms. Helen Allen and Ms. Emile Small can be reached at:

               Maples Finance Limited
               P.O. Box 1093 George Town
               Grand Cayman, Cayman Islands


KAMNA LTD: Creditors Must Submit Claims to Liquidators by Mar. 9
----------------------------------------------------------------
Creditors of Kamna Limited are given until March 9, 2006, to
submit claims to the appointed company liquidators, Ms. Sarah
Baudet of Royhaven Secretaries Limited.  Creditors must send
full particulars of their debts or claims by the said date or be
excluded from the benefit of any distribution that the company
will make.

Kamna Limited started liquidating assets on January 24, 2006.

Ms. Baudet can be reached at:

          Royhaven Secretaries Limited
          P.O. Box 707 George Town
          Grand Cayman, Cayman Islands
          Tel: 945-4777, Fax: 945-4799


PETERMAN PROPERTIES: Creditors Have Until Mar. 6 to File Claims
---------------------------------------------------------------
Peterman Properties Ltd.'s creditors are required to submit
particulars of their debts or claims on or before March 6, 2006,
to the company's appointed liquidators, Mr. Andrew G. Leggatt of
Royhaven Secretaries Limited.  Failure to do so will exclude
them from receiving the benefit of any distribution that the
company will make.

Peterman Properties Ltd. started liquidating assets on Jan. 24,
2006.

Mr. Andrew G. Leggatt can be reached at:

            Royhaven Secretaries Limited
            Coutts House, 1446 West Bay Road
            P.O. Box 707 George Town
            Grand Cayman, Cayman Islands
            Tel: 945 4777, Fax: 945 4799


YOKOHAMA FINANCE: Creditors Must File Claims by March 9
-------------------------------------------------------
Yokohama Finance Cayman's creditors are required to submit
particulars of their debts or claims on or before March 9, 2006,
to the company's appointed liquidators, Mr. Mike Hughes and Mr.
Jon Roney.  Failure to do so will exclude them from receiving
the benefit of any distribution that the company will make.

Yokohama Finance Cayman started liquidating assets on Jan. 27,
2006.

Mr. Mike Hughes and Mr. Jon Roney can be reached at:

                 Maples Finance Limited
                 P.O. Box 1093 George Town
                 Grand Cayman, Cayman Islands


=============
E C U A D O R
=============

* ECUADOR: Lifts State-of-Emergency in Napo Province
----------------------------------------------------
Ecuador's President Alfredo Palacio lifted the state-of-
emergency status from the Napo province after an agreement to
halt violent demonstrations was reached.

On Feb. 21, about 3,000 protesters hurled rocks and dynamite
Wednesday at security forces in Baeza, located 30 miles from OCP
Ecuador's pumping station, which was seized late Tuesday,
according to Reuters.  The takeover prompted the President to
declare a state of emergency in the region.

The protesters took over the Sardinas pumping station, forcing a
shutdown of the OCP pipeline -- principally owned by Argentina's
Repsol-YPF, U.S.-based Occidental Petroleum Corp. and Canada's
EnCana Corp.

The two pipelines form the Andean nation's main oil arteries in
a country where exports, taxes and royalties from crude account
for 43 percent of the national budget.

Ecuador reached an agreement with oil protesters late on
Wednesday to halt violent demonstrations in Napo province that
have shut down a major pipeline.

The EFE News Service reports that part of the bargain is a
promise from the Ecuadorian government to provide millions of
dollars for infrastructure in the depressed region.

Some of the 20-plus detainees, which include an unnamed mayor,
will face vandalism or sabotage charges stemming from damage to
public property, including roads and oil-industry
infrastructure, the EFE relates.

A government official said he understood the motivations of the
protesters, but condemned the violence that left at least 20
people wounded, two of them in serious condition, the EFE
relates.

Officials said the crude would not start flowing again until an
inspection for explosives is finished.

The pipeline is Ecuador's only facility for heavy crude and has
the capacity to transport 450,000 barrels daily from Nueva Loja
in the Amazon to Esmeraldas on the coast, the EFE relates.  The
pipeline traverses the jungle province of Napo and the Andean
province of Pichincha.

Before this week's tumult, the pipeline transported an average
of 150,000 barrels of heavy crude each day.

Petroleum is Ecuador's No. 1 export and income from crude oil
sales abroad finance about 35% of the national budget.

The Napo province, despite being home to the country's most
valuable asset, is lacking in basic services such as sewer
systems, potable water, health care facilities, roads, education
and housing, the EFE relates.


* ECUADOR: Remains Potential Loser with D Risk Rating
-----------------------------------------------------
Ecuador remains on the watchlist of the Economist Intelligence
Unit as a potential loser.

Ecuador's overall risk rating remains in the "D" band.  Despite
some improvements since last September, reflecting the shift in
the assessment period in our risk model, a deterioration in
other areas has prompted a one-point deterioration in Ecuador's
overall score to 67.  In particular, political risk remains one
of the key factors constraining the rating.  The loss of the
congressional majority of the president, Alfredo Palacio, has
brought the reform process to a standstill, while the departure
of several key ministers has increased instability.  The outcome
of next year's presidential election is uncertain, but given the
highly fragmented party system the next president will be
reliant on forming coalitions in order to pass legislation.  The
Palacio government and its successor will come under pressure to
meet wage demands from public-sector workers and increase
spending in areas such as healthcare and education.  This will
have a negative impact on the sovereign's creditworthiness,
since the public finances will become increasingly vulnerable to
external shocks, the Economist says.

Economic policy risk remains C-rated.  Supporting this rating is
Ecuador's success in lowering inflation and interest rates since
dollarization was introduced in 2000, as well as the success of
the authorities in reducing the public debt/GDP ratio. However,
an improvement in the rating is unlikely.  Creditworthiness
remains vulnerable to a downturn in external conditions, owing
to the government's dependence on oil revenue and its more
expansive fiscal policy.  High repayments on external debt and a
widening current-account deficit are increasing the country's
financing requirement.  Any deterioration in the outlook could
lead to a downgrade in the rating for economic policy risk to a
"D". Economic structure risk is C-rated, underpinned by strong
GDP growth in 2003-05 and the prospect of solid, if less
spectacular, growth in 2006-07.  Nonetheless, an improvement
towards a "B" rating is unlikely as a result of several
constraining factors.  High exposure to commodity price changes
remains a vulnerability, and the risk has increased following
the 2005 decision to dismantle the Oil Stabilisation Fund. Weak
investment ratios, high unemployment, low levels of non-oil
investment and mounting domestic debt repayments also hamper the
rating. Liquidity risk is D-rated.  Although Banco Central del
Ecuador (the Central Bank) reserves have increased, import cover
is low (2.3 months), and the sovereign has limited access to
international capital markets to secure financing.  Although
confidence in the banking sector is increasing, it remains weak,
a problem that is magnified by the lack of a lender of last
resort.  Meanwhile, a forecast widening of the current-account
deficit and a rise in debt repayments will place growing
pressure on the sovereign's payments capacity, the Economist
says.


=============
J A M A I C A
=============

* JAMAICA: Agricultural Society Pres. Calls for Farm Development
----------------------------------------------------------------
Senator Norman Grant, president of the Jamaica Agricultural
Society has forwarded several recommendations to improve the
condition of the island's farmers, chief of which is the
establishment of a US$200 million 30-year rural development
bond, the Jamaica Gleaner reports.

The Gleaner quoted the senator as saying that the bond would
represent a workable solution for sustainable road repairs in
rural Jamaica.  He suggested that the bond could be floated at a
coupon rate, which would be pegged to the inflation rate plus
one per cent, with tax-free interest, and made payable after one
year of the issue date without penalty.  Senator Grant said the
instrument could also be transferable after 15 years.

Senator Grant also said the facility would attract investors,
both nationally and internationally, and recommended that local
companies that invested should benefit from tax breaks, the
Gleaner relates.

                        *    *    *

Jamaica's foreign currency long-term debt is rated B1 by Moody's
and B by S&P.


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


AXTEL: Raises US$319 Million Through Public Stock Offering
----------------------------------------------------------
Axtel S.A. de C.V. has made a public offering of nearly a third
of its stock, raising Mx$3.36 billion (US$319 million), the
Latin Lawyer reports.

The combined equity offering sold 132 million shares, at 25.5
pesos each, through the Mexican Stock Exchange and in the
international markets under rule 144A and regulation S, the
Latin Lawyer reports.

"The transaction was particularly complex due to the number of
governmental authorisations that were required since the company
is a telecommunications concessionaire and therefore heavily
regulated in Mexico," the Latin Lawyer quoted Ricardo Maldonado
Y Īez, of Mijares, Angoitia, Cort‚s y Fuentes SC, as saying.

Axtel has seen significant growth in recent years, reporting an
increase of 140% in its operating cash flow between 2004 and
2005.  In November 2005, the company signed an agreement with
Intel to develop WiMAX technology in Mexico, to offer broadband
Internet access.

The offering was underwritten by Acciones y Valores Banamex and
Credit Suisse First Boston.

Axtel, S.A. de C.V. provides local and long distance
telecommunications services, data transmission and internet
services in Mexico, to both residential and business customers.
The company has 600,000 installed lines.  Axtel posted net
profits of 306 million pesos (US$29 million) for 2005 compared
to a loss of 79.6 million pesos in 2004.

                        *    *    *

Axtel's 11% $249,870,000 note due Dec. 15, 2013, is rated B1 by
Moody's and B+ by Standard & Poor's.


VITRO: Announces Organizational Changes
---------------------------------------
Vitro announced that on Friday, Jose Domene, President of
Vitro's flat glass business unit has decided to leave Vitro in
order to fulfill personal projects.

This decision was shared today with the board of directors
during its monthly meeting in Monterrey.  The board took the
opportunity to thank Mr. Domene for its important contributions
to the company during his stay and wished him the best of
success in his future endeavors.

Hugo Lara, until now Flat Glass Commercial Vice President, has
been appointed Flat Glass President.

Vitro, S.A. de C.V. -- http://www.vitro.com-- is a major
participant in three principal businesses: flat glass, glass
containers and glassware.  Founded in 1909 in Monterrey, Mexico-
based Vitro has joint ventures with major world-class partners
and industry leaders that provide its subsidiaries with access
to international markets, distribution channels and state-of-
the-art technology.  Vitro's subsidiaries have facilities and
distribution centers in eight countries, located in North,
Central and South America, and Europe, and export to more than
70 countries worldwide.

                       *    *    *

As reported by Troubled Company Reporter on Nov. 14, 2005,
Standard & Poor's Ratings Services has revised its outlook on
its 'B' long-term corporate credit rating on Vitro S.A. de C.V.,
and Vitro's glass containers subsidiary Vitro Envases
Norteamerica S.A. de C.V., to negative from stable.


* Mexico and Brazil Launch Debt Buyback Programs
------------------------------------------------
The Financial Times reports that two of Latin America's biggest
economies, Brazil and Mexico, announced a multi-billion dollar
debt buyback on Thursday last week.

Brazil said it would buy back US$6.64 billion of so-called Brady
bonds, the country's total outstanding amount.  The move will
help remove the stigma associated with the country's 1994 debt
restructuring, the FT relates.

Mexico launched an offer to buy back US$5 billion of global
bonds denominated in U.S. dollars, sterling and euros, maturing
between 2007 and 2033, and announced a new dollar-denominated
benchmark bond, the FT states.

According to FT, the moves are part of a trend that has seen
emerging market countries buy back bonds denominated in foreign
currencies or pre-pay debt as their economies improve.  The
economic positions of many emerging market countries are getting
better, including higher foreign exchange reserves, faster
export growth and current account surpluses that have been
helped by rising commodity prices.

"This is part of an ongoing process of liability management that
is addressing the high level of indebtedness so problematic in
the past. The ability to refinance debt on improved terms is a
clear reflection of improved credit quality among emerging
market countries and will reduce further the risk of disruption
from external shocks," Philip Poole, head of emerging markets
research at HSBC, told the FT.

Industry analysts expect Brazil to receive an investment grade
sooner than expected.

Fitch Ratings assigns these ratings on Mexico:

                     Rating     Rating Date
                     ------     -----------
   Country Ceiling    BBB+      Nov. 18, 2004
   Long Term IDR      BBB       Dec. 14, 2005
   Short Term IDR     F3        Dec. 14, 2005
   Local Currency
   Long Term Issuer
   Default Rating     BBB+      Dec. 14, 2005


Fitch Ratings assigns these ratings on Brazil:

                     Rating     Rating Date
                     ------     -----------
   Country Ceiling    BB-      Nov. 18, 2004
   Long Term IDR      BB-      Dec. 14, 2005
   Short Term IDR     B        Dec. 14, 2005
   Local Currency
   Long Term Issuer
   Default Rating     BB-      Dec. 14, 2005


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


* PERU: Remains Potential Loser with C Risk Rating
--------------------------------------------------
Peru remains on the watchlist of the Economist Intelligence Unit
as a "potential loser".

The EIU stated, `Peru's overall score and rating were stable in
the fourth quarter, at 43 and at the less risky end of the "C"
band (and on a par with Mexico), but we have placed the Andean
country on our Watchlist as a potential loser.  Presidential and
congressional elections will be held on April 9th 2006, and with
a proliferation of candidates the outcome is uncertain.  The
candidate of the right-wing Unidad Nacional alliance, Lourdes
Flores, leads the polls for next April's presidential vote.
However, Ollanta Humala, a retired army officer with a
nationalist, anti-globalisation message, has rapidly gathered
support since August, pushing a former president, Alan Garcia
(1985-90), into third place.  In early December 2005 it was
announced that he would stand as the candidate of the Union por
el Peru, a centre-left party, rather than his own Partido
Nacionalista, which did not obtain registration from the Jurado
Nacional de Elecciones (JNE, the electoral authority).  A
nationwide survey in mid-December by a pollster, Apoyo, showed
that Ms. Flores, a lawyer and former member of Congress, has the
support of 25% of prospective voters.  Her backing is strongest
in Lima, but is relatively solid throughout Peru. Mr. Humala
polled 22%, with his backing firmest in the southern and central
Andean highlands.  Mr. Garcia obtained 16%, his support having
fallen by 3 percentage points since August.  Peruvian lawmakers
have approved a law setting a threshold of 4% of the national
vote, which parties must obtain in order to win a seat.  This
should help to limit fragmentation in Congress. However, with so
many parties running (32 are registered), the next president is
unlikely to have a majority in the next Congress.  The main
forces in the next legislature are likely to be Mr. Garcia's
Partido Aprista Peruano, Ms. Flores's UN, Mr. Humala's UPP, the
party of the former president (1990-2000) Alberto Fujimori, Si
Cumple, and Valentin Paniagua's Frente del Centro, the Economist
states.

Mr. Humala's spectacular rise has recalled the way in which the
outsiders, Mr. Fujimori and the incumbent, Alejandro Toledo,
swept past more experienced rivals to capture the sympathy of
Peruvian voters in elections in 1990 and 2000 respectively.  Mr.
Humala, who led a short-lived military rebellion against Mr.
Fujimori's government in 2000, appeals to large swathes of
Peruvians who have not felt the benefits of strong economic
growth under Mr. Toledo's government.  His strong criticism of
so-called traditional politicians such as Ms. Flores, Mr. Garcia
and Mr. Paniagua, and of legislators in the badly discredited
Congress also resonates with this group, the Economist states.

Few details have yet emerged about Mr. Humala's program.  He has
recently moved to reassure voters that he does not represent a
threat to economic or political stability, but his nationalist
platform causes concern in Peru's business sector and among
international investors.  He has in the past proposed favoring
national over foreign investment, supported greater state
involvement in "strategic" sectors such as oil, gas, ports and
airports, and has pledged to renegotiate oil and gas contracts
that he says damage the national interest.  He would also seek a
new constitution and refuse to ratify the free-trade agreement
signed with the US in December.  Like the leftist Mr. Morales,
who won the presidential election in Bolivia on December 18th by
a landslide, Mr. Humala has proposed legalizing coca, the raw
material for cocaine.  He appeals most strongly to voters in
Peru's southern region near the Bolivian border and could
benefit from Mr. Morales's victory.  His candidacy could,
however, be damaged by association with his more extreme
brother, Antauro, who attacked a police station in southern Peru
in 2005, leading to the deaths of three policemen.  His trial is
due to begin in Lima in the coming weeks.  Antauro and some
other members of the Humala family have begun to criticise
Ollanta for apparently moving towards the centre ground and away
from some of the more extreme policy positions he has adopted in
the past.'

                        *    *    *

Fitch Ratings assigns these ratings on Peru:

                     Rating     Rating Date
                     ------     -----------
   Country Ceiling     BB      Nov. 18, 2004
   Long Term IDR       BB      Dec. 14, 2005
   Short Term IDR      B       Dec. 14, 2005
   Local Currency
   Long Term Issuer
   Default Rating      BB+     Dec. 14, 2005


=====================
P U E R T O   R I C O
=====================


MUSICLAND HOLDING: Asset Sale Objection Must Be Filed on Mar. 17
----------------------------------------------------------------
Musicland Holding Corp. and its debtor-affiliates have talked to
industry participants and private equity funds regarding a sale
transaction, James H.M. Sprayregen, Esq., at Kirkland & Ellis
LLP, in New York, relates.

According to Mr. Sprayregen, the Debtors also considered
pursuing a stand-alone plan of reorganization, but determined
that that course of action would not be the best strategy to
maximize recoveries for their creditors.  Moreover, the Debtors
believe that a stand-alone reorganization plan would be
difficult to confirm because some of their key constituencies
won't support a reorganization plan.

The Debtors determined that a sale of substantially all of their
assets is in the best interests of their estates and their
creditors, customers, associates and other stakeholders after a
thorough analysis of all of these factors, industry trends, and
other considerations.

                      The Stalking Horse Offer

The Debtors seek to conduct an auction for substantially all of
its assets with Trans World Entertainment Corporation as their
stalking horse.  TWEC, which is a public-traded company with a
healthy balance sheet, is one of the Debtors' principal
competitors.

The basic contours of the business deal between the Debtors and
TWEC are:

    (i) TWEC has agreed, if not outbid at the auction, to
        purchase substantially all of the Debtors' assets for
        approximately $104,160,000, free and clear of liens and
        claims except as specifically provided for in their
        asset purchase agreement, executed on February 17, 2006;
        and

   (ii) TWEC has, in turn, partnered with a joint venture
        comprised of Hilco and Gordon Brothers Retail Partners,
        LLC, for an arrangement by which Hilco and Gordon Bros.
        will conduct inventory liquidation sales at certain of
        the Debtors' stores.

The purchase price is payable in this manner:

    -- TWEC will pay Musicland a $10,000,000 deposit, which will
       be held in a segregated, interest bearing account with
       interest to accrue for the benefit of TWEC, as soon as
       the Court approves the Bidding Procedures.

    -- TWEC will pay Musicland $68,120,000 (less interest
       accrued on the Deposit) and will post letters of credit
       for the balance of $26,040,000 at the Closing.

    -- TWEC will pay Musicland the $26,040,000 balance, plus or
       minus adjustments, after the final reconciliation of the
       Inventory Taking.

The Debtors expect to enter into a definitive agency agreement
with Hilco and Gordon Bros. in the near future, as required by
the APA.

The APA contemplates that at the closing of the sale, TWEC will
designate about 80% of the Debtors' remaining stores as "TWEC
Stores," and will continue to operate those stores during some
or all of what the APA denominates as the "Designation Period."
TWEC will be responsible for the "Carrying Costs" of the TWEC
Stores during the Designation Period.

The Assumed Liabilities include:

    * cure claims -- $4,200,000
    * gift certificates and store credits -- $11,700,000
    * 50% of any transfer fees -- $1,000,000
    * accrued vacation for transferred employees -- $869,000
    * field bonuses for transferred employees -- $350,000

Prior to the end of the Designation Period, TWEC will instruct
the Debtors to assume and assign the leases of at least 250 TWEC
Stores to TWEC, and TWEC will continue to run those stores.  The
Debtors will be free to reject the leases of TWEC Stores that
they are not directed to assume and assign.

TWEC will select about 20% of the Debtors' stores at the closing
of the sale as "GOB Stores."  While the consideration the
Debtors receive for allowing Hilco and Gordon Bros. to conduct
sales on the GOB Stores is enumerated in the APA and will be
paid to the Debtors by TWEC, the other terms of the conduct of
the sales in the GOB Stores will be addressed in the Agency
Agreement.

A full-text copy of the Asset Purchase Agreement is available
for free at

   http://bankrupt.com/misc/musicland_twecpuchaseagreement

Schedules and exhibits to the APA and the executed Agency
Agreement will be filed and noticed as soon as practicable.

The Debtors believes that TWEC's proposal offered the best
opportunity to initiate a sale process that will maximize
creditor recoveries (both in terms of purchase price and in
terms of cutting-off operational losses), and comply with the
covenants in their postpetition financing arrangement.  The
Debtors have and will continue marketing their assets and
business in an effort to solicit further interest from both
strategic acquirers and financial buyers and investors.

Thus, the Debtors ask the Court to:

    (a) authorize and schedule an auction for the sale of their
        assets to TWEC or another bidder or bidders determined
        have submitted the Winning Bid or Bids, free and clear
        of all liens, claims, encumbrances and interests;

    (b) approve procedures for the submission of higher and
        better offers for any or all of the Assets;

    (c) approve bid protections; and

    (d) approve the Sale Notice and Publication Notice.

                   Auction & Bidding Procedures

The Debtors propose to conduct an Auction on March 21, 2006, at
11:00 a.m., prevailing Eastern Time, at the offices of the
Debtors' counsel:

      Kirkland & Ellis LLP
      Citigroup Center
      153 East 53rd Street
      New York, New York

At the Auction, only parties submitting written bids in
compliance with the Bidding Procedures may bid against TWEC's
offer.  The highest or best bid, as chosen by the Debtors in
their business judgment, will be submitted to the Court for
approval at the hearing to approve the sale of the Assets.  If
there is no Qualified Bid other than the Bid submitted by TWEC,
no Auction will be held.

If TWEC is the Winning Bidder, the Debtors ask the Court to
schedule a hearing on the Sale Motion on March 22, 2006, at
10:00 a.m., prevailing Eastern Time.

In the event that TWEC is not the Winning Bidder, the Debtors
may ask the Court to schedule a hearing on the Sale Motion on
March 29, 2006, in order to accommodate service of and responses
to the Second Notice.

A full-text copy of the Bidding Procedures is available for free
at http://bankrupt.com/misc/musicland_twecbiddingprocedures.pdf

To induce TWEC to expend the time, energy and resources
necessary to submit a stalking horse bid, the Debtors have
agreed to provide certain bid protections provided to TWEC,
including a $3,124,800 break-up fee -- 3% of the $104,160,000
cash portion of the purchase price.

The Break-Up Fee would be payable upon the announcement of a
stand-alone chapter 11 plan, the withdrawal of the Sale Motion,
or the consummation of a sale transaction with another party.

The Debtors have also agreed to provide reimbursement of the
reasonable expenses TWEC has and will incur in connection with
serving as the stalking horse bidder, up to a $500,000.  The
Expense Reimbursement, if any, would enjoy the same priority as
the Break-Up Fee.

In no event is TWEC entitled to both the Break-Up Fee and
Expense Reimbursement, Mr. Sprayregen says.

Other protections, including minimum overbid amounts, were also
negotiated with TWEC.

The Debtors propose to give notice of the Bidding Procedures,
the Bidding Procedures Order, the Auction and the proposed Sale
to parties-in-interest.  The Debtors will also publish the
notice in The Wall Street Journal (National Edition) and an
appropriate trade publication.

The Debtors will serve on all counterparties a notice that the
Debtors may assume and assign that party's unexpired lease or
executory contract to TWEC.  That Notice will include the cure
amount necessary to assume each unexpired lease.

Objections to the Sale must be filed and served no later than
4:00 p.m., prevailing Eastern Time on March 17, 2006, on:

    (a) The Office of the United States Trustee
        for the Southern District of New York
        33 Whitehall Street, 21st Floor
        New York, New York
        Attn: Deirdre A. Martini

    (b) counsel for the Company
        Kirkland & Ellis LLP
        200 East Randolph Drive
        Chicago, Illinois 60601-6636
        Attn: James Stempel, Esq., and Jonathan Friedland, Esq.

        with a copy to:

        Curtis, Mallet-Provost, Colt & Mosle LLP
        101 Park Avenue
        New York, New York 10178
        Attn: Steven J. Riesman

    (c) counsel for TWEC
        Skadden, Arps, Slate, Meagher & Flom, LLP
        333 West Wacker Drive, Chicago, Illinois 60606-1285
        Attn: Timothy R. Pohl

    (d) counsel for the Unofficial Committee of Secured Trade
        Creditors
        Morgan Lewis & Bockius LLP
        1701 Market Street
        Philadelphia, Pennsylvania 19103-2921
        Attn: Michael A. Bloom, Esq.

        -- and --

        Morgan Lewis & Bockius LLP
        101 Park Avenue
        New York, New York 10178
        Attn: Richard S. Toder, Esq.

    (e) counsel for the Official Committee of Unsecured
        Creditors Hahn & Hessen LLP
        488 Madison Avenue
        New York, New York 10022
        Attn: Mark S. Indelicato, Esq.

    (f) counsel for the Senior Secured Lenders
        Otterbourg, Steindler, Houston & Rosen, P.C.
        230 Park Avenue
        New York, New York 10169
        Attn: Andrew M. Kramer, Esq.

Headquartered in New York, New York, Musicland Holding Corp., is
a specialty retailer of music, movies and entertainment-related
products.  The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064).  James H.M. Sprayregen, Esq., at Kirkland & Ellis,
represents the Debtors in their restructuring efforts.   Mark T.
Power, Esq., at Hahn & Hessen LLP, represents the Official
Committee of Unsecured Creditors.  When the Debtors filed for
protection from their creditors, they estimated more than $100
million in assets and debts.  (Musicland Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000)


=============
U R U G U A Y
=============

BANCO CITIBANK: S&P Puts B Rating on Counterparty Credit
--------------------------------------------------------
Standard & Poor's rating Service rates Banco Citibank S.A./
Citibank N.A. (Uruguay Branch).

Banco Nacional de Mexico, S.A. (Banamex)

   Counterparty Credit

    * Local currency BBB+/Stable/A-2

   Counterparty Credit

    * Foreign currency BBB/Stable/A-3

   Certificate of deposit

    * Local currency BBB+/A-2

   Certificate of deposit

    * Foreign currency BB/A-3

Citibank N.A. (Uruguay Branch)

    * Counterparty Credit B/Positive/B
    * Certificate of deposit B/B

                   Major Rating Factors
Strengths:

    * High and relatively stable core earnings, measured by
      absolute dollar amounts and as returns on revenues.

    * Extraordinarily diverse set of businesses operating
      worldwide.

    * Disciplined management structure with clear acquisition
      goals and stringent expense management.

    * Leadership position in credit cards, subprime lending,
      investment banking, cash management, and custody
      operations.

Weaknesses:

    * Operations in businesses where legal and reputation risks
      remain high even after major litigation is settled.

    * High-risk mix of business lines, e.g. consumer finance,
      emerging markets activities, investment banking, and
      venture capital.

    * Capital and reserves relative to the company's risk
      profile are not exceptional but are offset by
      considerations of diversification and financial
      flexibility.

    * Lack of a strong home country base in retail branch
      banking.

    * Challenged to generate revenue growth.

Rationale

Strong earnings generation from an extraordinarily diverse set
of businesses allows Citigroup Inc. to cover some of the high
risks that it incurs.  In the aftermath of a wave of heavy
litigation expenses and criticism of its business practices from
regulators around the world, management has tightened up
controls and governance and has laid the groundwork for a change
of corporate culture.  Although these issues have not resulted
either in financial instability or in major reputational damage
outside of Japanese private banking, they have stymied growth.
U.S. regulators discouraged major acquisitions during 2005, and
organic growth is proving difficult at least in mature markets.
However, Citi is making smaller acquisitions, focusing mainly on
emerging markets.  Larger acquisitions are possible in the near
future.  In addition, it is focusing on expanding its consumer
network globally through new branch openings.  Despite the slow
growth, the basic retail and corporate banking franchises are
very impressive, with an infrastructure that is best in class in
many areas.

Earnings volatility has been dampened over this last period of
turbulence by stringent cost controls, as well as continual loan
loss reserve reversals, gains on sale, and the ability to post
certain losses in Argentina directly to equity.  Acquisitions
have benefited the bottom line in part because the companies
purchased possessed high loan loss reserves that were
subsequently reversed into income as credit improved.  With
litigation expenses hopefully behind the company, future
earnings stability will depend more directly on credit costs.
Loan quality metrics in the consumer sector deteriorated in the
U.S. and Germany, in part due to Hurricane Katrina and
bankruptcy law changes.  While the effects of these issues
should be temporary, it is unlikely that credit will remain as
pristine as it was in early 2005. Credit costs should rise more
rapidly than charge-offs, however, because loan loss reserve
reductions, which have been contributing substantially to
earnings over the past three years, have run their course at
this point, particularly as the company's reserve cushion is
lower than that of other banks. Citigroup Inc., as a holding
company, has ample earnings capacity to deal with adversity,
including the ability to draw on the resources of three major
regulated and unregulated subsidiary groups that together are
capable of producing a substantial and stable earnings base:
Citibank N.A. and other banking affiliates and subsidiaries; the
CitiFinancial consumer finance operations; and Citigroup Global
Markets Holdings Inc., a securities firm. The sheer size of the
$63 billion adjusted tangible common equity base, the $19
billion annual core earnings base, and the firm's valuable
franchises across a wide variety of products globally afford it
financial flexibility in the face of considerable adversity.

Share repurchases and goodwill generated by the acquisitions
have suppressed the accumulation of tangible capital, so that
economic capital, as measured by Standard & Poor's Ratings
Services, is not exceptionally strong for the rating category.
It is improving, however, with the sale of the insurance and
asset management businesses, which reduce the need for risk
capital.

Liquidity

The company generally funds its global operations in local
markets and enjoys access to a wide variety of funding sources
on a secured (including securitizations and repos) and unsecured
basis.  Many of those sources are wholesale rather than core
deposits, however.  The holding companies maintain less coverage
of short-term financing needs than peer banks, in part because
of the heavy financing needs of the consumer finance operations
and the brokerage operations.

Outlook

Citigroup's ratings should remain stable despite the improving
operating environment in many of its business lines, as
expectations of superior performance have already been built
into the current ratings.  That superior performance is expected
to mitigate the effects of an above-average risk profile.
Nevertheless, the risk profile argues against a higher rating at
this time.  For an upgrade, we would like to see core earnings
volatility excluding loss reserve reversals subside, improved
risk management become more embedded in the culture, and a
demonstration of an ability to grow organically and to produce
superior profit margins in some of the higher risk businesses.

Profile

Citigroup consists of subsidiaries engaged in three principal
industries: commercial banking, consumer finance, investment
banking, and institutional and retail brokerage; in addition,
there is a small life insurance operation, Primerica.  Despite
the divestiture of the insurance and asset management
businesses, they represent extraordinary product and
geographical diversification and include a number of major
business lines in which the firm enjoys a leading market
position either globally or in local markets.  This fact augurs
well for earnings power and stability in the future.

The group derives a third of its revenues from nonbanking
operations.  The negative aspect of this is that the nonbank
subsidiaries, as well as the credit card banks, require
substantial funding from the holding company.  The banking
operations are conducted through Citibank N.A.'s branches and
subsidiaries in 100 countries (of which the largest are
Citigroup Korea Inc., Banco Citiban1k Brazil, and Bank Handlowy
w Warczawie; see the separate full analyses for each of these on
RatingsDirect) and through other banking affiliates including
Banco Nacional de Mexico, Citibank (West), FSB (formerly Golden
State), and through the credit card banks in Nevada and South
Dakota.  The network is diverse but does not generally enjoy a
leading position in any geographic area other than in Mexico or
the New York metropolitan area.  In many countries, it is a
niche player focused on corporate banking or the affluent
consumer sector.  Consumer services also include branch banking,
mostly internationally in 21 countries, with 3,505 branches,
1,382 of which are in Mexico and only about 896 of which are in
the U.S. (largely New York City, California, and Texas).

The credit card operations represent a significant concentration
at this point and consist of $164 billion of receivables
including $23 billion that are non-U.S., or 23% of managed
loans. The proprietary investing portfolio also represents a
significant concentration; consisting of $8 billion ($4.8
billion of which is private equity) of investments, it is the
largest among global banks and comprises 10% of adjusted total
equity.

CitiFinancial's commercial and consumer finance operations are a
significant part of group profits.  The U.S. operations are one
of the three very large franchises in North America providing
secured and unsecured lines of credit for consumers (2,705
offices) and also large- and small-ticket leasing for office
equipment.  Operations include finance companies in Japan, Latin
America, and other countries (1,759 offices) as well as some
consumer banking operations that are of a consumer finance
nature, for example the German bank.  The Japanese network has
been rationalized in response to some poor performance following
a period of aggressive growth.

Citigroup Global Markets, including investment banking, both
institutional and retail brokerage, and sales and trading
operations, accounts for about 23% of revenues.  About 29% of
CGM's earnings are derived from the Smith Barney retail
brokerage activities, which are a close second to those of
Merrill Lynch following the acquisition of the Legg Mason retail
operations in late 2005, and include 13,414 brokers with $1,103
billion of client assets in its retail operations.  Its
investment banking standing in the league tables places it as
the largest debt underwriter in both high-yield and investment-
grade issues. In equities, it is one of six bulge-bracket
players who are fairly close in their market shares.  Investment
banking is carried out in an integrated fashion with the
corporate banking functions of the bank to provide a full
spectrum of financing, as well as sales and trading services for
large corporations and governments worldwide.  The retail
brokers are also effective in selling the products of other
group subsidiaries such as insurance products and loans.  CGM is
the legal entity with the greatest amount of managerial
integration with the commercial bank as it seeks to provide a
full spectrum of financial services for corporate clients.  It
accounts for a very large proportion of the revenues of the
corporate and investment banking segment.

The remaining insurance operations are in Mexico and Primerica.
Primerica is a direct marketing organization that focuses on
term life, investment products, and the sale of other group
products such as home equity loans.

Ownership And Legal Status

The ratings on the various legal Citigroup entities around the
world reflect the legal and regulatory structure as well as the
stand-alone strength of the operations.  Legally a bank holding
company as well as a financial services company, Citigroup
benefits from the general oversight of the Federal Reserve
Board. Its major subsidiary groups are regulated by the
appropriate functional regulatory bodies.  Standard & Poor's
believes that these regulators will ensure that resources of the
subsidiaries will, as a first order of business, be conserved
for the benefit of their respective constituents.  As a
corollary, the subsidiaries are expected to be largely self-
funding and capitalized to industry standards.  Only those
resources deemed to be excess are available to support other
entities, so that the holding company and other subsidiaries
benefit from the additional resources.  For example, the
investment-banking arm of the company, Citigroup Global Markets,
has received large capital infusions twice in the past three
years.  Citigroup has also had a long track record of supporting
its overseas subsidiaries even in periods of major stress, so
that the ratings of its overseas banks benefit, in Standard &
Poor's view, from a substantial element of support from the
parent.

         Strategy: Focus On Re-igniting Growth

Citigroup is emerging from a very difficult period during which
it was focused on putting a series of major litigation issues
behind it and on dealing with regulatory investigations of its
risk management at home and abroad.  At this point, it has
settled much of the major litigation for a total cost of about
$6 billion, and has about $3 billion of remaining legal
reserves. Reputational damage is evident only in the private
banking segment, and mostly in Japan.  It has also been trying
to change its corporate culture to prevent future litigation
risk, which will remain elevated for the investment banking
business. This effort will take some time to become deep-seated
within the organization.  It involves making staff more client
rather than bottom line focused, and on getting management away
from an emphasis on making quarterly numbers.

At this point, Citigroup is able to think about shaping its
business for the future and about re-igniting growth. It is
focusing on high growth and high profit businesses in which it
can achieve a number one to number three position in the
marketplace.  To this end, it has jettisoned most insurance and
asset management operations as well as several more peripheral
operations.  The diminution of diversification is not desirable
in Standard & Poor's view, but it still leaves Citi as the most
diversified financial institution globally.  With major
acquisitions discouraged by regulators for the time being, it is
opting for organic expansion.  It is investing heavily to
organically expand its distribution system in all retail
segments, opening substantial numbers of branches for banking,
finance, and wealth management, especially in emerging markets
but in the U.S. as well.  It is also spending to build out its
equities trading platform as well as its U.S. mortgage banking
operation.  The expenses required for such investment will only
partly come out of a continued unrelenting focus on cost
reduction.  While they will affect operating leverage, they are
critical to the ongoing health of the franchise and a welcome
correction to a trend that had resulted in underinvestment in
some businesses.  The expansion in the emerging market and more
downmarket aspects of mature markets will, however, trend toward
a higher risk profile to the businesses.  Citigroup will at some
point also need to address the fact that its branch banking
presence in the U.S. is undersized for its product capabilities,
though that would likely need to take the form of a large
acquisition.

Citigroup is one of only a few universal banks that operate
indigenous banking operations in the majority of mature
economies as well as a broad range of emerging markets.  This
provides it with a unique ability to provide services to
multinational companies and to take advantage of growth
opportunities in higher-growth economies.  It also results in an
extraordinary amount of diversification.  These factors have ong
been critical to the high ratings the firm enjoys.  The
challenge will be to lever off of what is a small market share
in foreign markets (generally 2%-3%) where local institutions
are learning rapidly.

Risk Management

The principal credit risk issues are at the bank and the finance
companies, although CGM also provides bridge loans and other
forms of financing and is an active participant in the credit
trading markets, which can involve credit risk-taking in a
marked-to-market context.  In addition to the $679 billion of
managed loans at Sept. 30, 2005 (including $92 billion of
securitized credit cards), there were $55 billion of derivative
counterparty risks and guarantees and other binding commitments
of $412 billion.

The credit risk profile of the loan portfolio is high relative
to those of its banking peers because emerging market, finance
company receivables, and commercial real estate lending
businesses, all of which can have high loss rates associated
with them, account for a large portion of managed loans.

Credit cards in particular represent a significant concentration
at $157 billion of managed loans (23%).  These concerns are
mitigated by the high returns earned on these higher-risk loans
and the diversification of the portfolio.  The loan portfolio
will, however, produce higher levels of nonperforming assets and
charge-offs than at peer banks over the economic cycles.
Indeed, NPAs remain at the highest level of any sizable bank in
the country, although they have been declining rapidly.  The
issues are of mix rather than of risk controls, as the bank is
performing in line with its peers within each sector.

Part of the reason that asset quality has remained relatively
stable is that about two-thirds of managed loans are to the
consumer sector, which produces high but less volatile loss
rates.  In addition, loans to large corporations in mature
markets (excluding commercial finance), which have created
problems for other competing banks, amount to only $35 billion
and have a lesser concentration in telecom, media, and energy
loans, so that nonperforming loans in that portfolio reached
only about 3% at their peak in 2003.  Commercial loan quality
may be the best it can be and can deteriorate from this point as
the overheated market for corporate credit cools.

Citigroup also has substantial credit risk off balance sheet in
securitization pools on which it retains a substantial portion
of the associated credit risk.  These include $96 billion of
credit card loans on which it retains substantially all risk and
$1.1 billion of credit enhancements on mortgage loans sold with
recourse.  It has $637 million of interest-only strips on its
balance sheet that represent the capitalized expected future
income generated by noncash gains on sale of securitized assets.
Other securitizations include about $54 billion of CP conduits
that have been restructured to avoid being consolidated on
balance sheet according to new accounting rules and no longer
represent significant risk.

Consumer credit is as good as it can get in North America.  The
hurricane-related costs and the effect of the change in
bankruptcy laws caused a $1 billion blip in losses in the second
half of 2005; 2006 should benefit from lower bankruptcy-related
charges, but other factors such as an increase in minimum
required payments on cards could offset much of that benefit.
We expect the underlying trend of about 5.5% NCOs in the card
portfolio to be stable in 2006; this is high relative to those
of peers even though the private label cards have improved more
dramatically to levels approaching the bank cards.
Internationally (which is about 19% of consumer loans, excluding
Mexico), credit is superior to the U.S. and quite stable with
two exceptions.  In Japan, where the finance company loans
suffered a severe deterioration, loss rates remain at 9.8%
despite an effort to move more upscale in clientele.  The German
consumer bank charged off $1 billion of loans in the third
quarter of 2005 to bring the write-off policy into conformity
with U.S. standards. This represented a one-time catch-up of two
years of deterioration, though write-offs will remain elevated
over the medium term in Germany due to poor economic conditions.
The Korean operations are being reoriented to consumer lending
and credit is on an improving trend, but could be risky going
forward.

Reserves have fallen to very low levels.  Citigroup has been
provisioning at a lesser rate than charge-offs in each of the
past three years, resulting in a $477 loan loss reserve reversal
in 2005, and a $2.4 billion reversal in 2004.  Reserves now
cover only 1.2x annual NCOs of on-balance-sheet assets; reserves
do not cover NPLs and 90-day past due loans, which is unique
among U.S. banks.  In particular, the consumer reserves cover
only 10 months of NCOs of on-balance-sheet assets; securitized
assets cannot be reserved for under current accounting rules,
although this distorts comparisons with those banks that fund
credit card assets on balance sheet.  Reserves are determined
according to a rigorous methodology that, however, focuses on
identifiable losses rather than one that would produce a cushion
for potential losses.  The shortfall of surplus reserves (which
is expressed in Standard & Poor's calculation of general
reserves) argues for maintaining higher capital instead of
reserves.

Market Risk

Market risk is a major component of overall risk for the
company, largely because of the large trading operations and the
private equity and hedge fund operations.  Trading risk
management practices at Citigroup are generally on par with
industry practices.  The structure of the risk management
function includes a chief risk officer, who reports to the CAO,
with divisional risk heads reporting to him whose function is to
ensure that sufficient dialogue exists between the business and
Risk Management.  Risk analytics are a strength both in terms of
the pricing models used and the framework for stress testing.
Formal limits are set by risk management down to the desk level.
Traders have limits that are set informally by the business
managers.

Trading revenues have been sluggish, in part due to a low risk
appetite.  To address that, Citi is building its prime brokerage
and its equities trading operations. Risk appetite has been
growing as well, and with it trading volatility.

Structural interest rate risk is a complex issue because of the
diversity of currencies and locations in which Citigroup
operates.  CGM is fundamentally short-funded, as trading
operations generally are.  The card operations are fundamentally
asset sensitive due to the tendency of card yields to remain
stable throughout the rate cycle.  Thus, the net interest margin
(NIM) will generally be better in a period of steep yield
curves. It will also be sensitive to the level of securitization
and other issues of the on-balance-sheet business mix.  Given
the flattening tendency currently, the margin should remain
under pressure during the near future.

The $4.8 billion private equity portfolio has been quite
profitable this year, although its performance can be volatile.
It performed relatively well through the last down-cycle in
stock markets because of the lower component of start-up company
investments than at some other banks.  Citigroup also has $2.2
billion of shares of MetLife Inc. and St. Paul Travelers Cos.
shares that were carried at $609 million below their market
value at Sept. 30, 2005.

Liquidity Risk

Like other money center banks and brokers, Citigroup is heavily
reliant on purchased funding, as well as on collateralized
borrowings against securities portfolios and securitizations
that effectively function as collateralized borrowings.  Funding
is further complicated by the variety of subsidiaries that
operate in numerous countries and currencies among which funds
cannot necessarily be freely or instantly transferred.  To
manage these complexities, the major operating subsidiaries
operate under a uniform liquidity risk management policy with a
single set of standards for the measurement of liquidity risk to
ensure consistency across businesses, stability in
methodologies, and transparency of risk.  Funding is
decentralized, however, with foreign subsidiaries funding
themselves to the extent possible in local markets, or by
borrowing under market terms on a matched basis from a central
treasury function.  Of paramount importance, however, is the
amount of liquidity cushion maintained at the holding companies
that provide funding to the operating subsidiaries that need it.
On this score, the target for the liquidity cushion remains in
the low range of competitors.  The concerns are somewhat
mitigated by the broad diversity of funding sources, both
secured and unsecured, across a myriad of products and
geographies.

The banking operations include a large, geographically diverse
retail and corporate deposit base sourced from clients of
Citigroup's branches and subsidiaries in foreign countries, a
significant portion of which can be considered core even though
they do not fit the strict definition of FDIC-insured core
deposits.  The cash management and custody business yields $147
billion of liquidity balances that could be seen as customer
related and relatively stable, and $41 billion of customer sweep
accounts of Smith Barney brokerage customers are maintained as
insured deposits at Citibank.  In addition, many of the retail
depositors in foreign banks and branches could also be
considered core.  At Sept. 30, 2005, $136 billion of foreign
deposits were consumer-related, for example.  In some sense,
therefore, the operating bank, Citibank N.A. is self-funding.
Other sources of funding include collateralized borrowings.  For
example, CGM borrows on a collateralized basis ($317 billion at
Sept. 30, 2005) and follows its own discipline of maintaining
unencumbered securities to cover short-term maturities of debt.
The banks also rely on securitizations (primarily $92 billion of
credit cards) as a form of collateralized borrowing and a
valuable diversification of funding sources.

The principal users of unsecured purchased funds are the
investment banking operations (Citigroup Global Markets) and the
finance companies, which are primarily funded by the holding
company's borrowings.  The holding company and Citigroup Funding
Inc. (a funding vehicle that issues CP and MTNs under a
Citigroup guarantee) are substantial borrowers in the capital
markets on a long- and short-term basis.  Consolidated Citigroup
had $214 billion of long-term debt at Sept. 30, 2005, issued by
the holding company and by Citigroup Funding Inc.($104 billion)
or other subsidiaries under the Citigroup guarantee.  It also
had $27 billion of CP. of the total Citigroup debt, Citigroup
Global Markets Holdings Inc. had $55 billion of debt and $44.7
billion of short-term borrowings, the SEC registered portion of
which is covered by the Citigroup guarantee.  The holding
companies maintain liquidity cushions to cover short-term
maturities of debt that are less than typically found at large
bank holding companies but have access to 23(A) borrowings from
the bank on a collateralized basis, and could migrate finance
company receivables to the Citibank balance sheet.  They also
have supplemental contingent sources of liquidity in the form of
the ability to securitize finance company assets.

The holding companies are partly dependent on dividends from
their subsidiaries to meet interest payments because of the
double leverage that exists between the successive holding
companies and their subsidiaries, which means that debt has been
downstreamed to subsidiaries in the form of equity, upon which
dividends rather than interest is paid.  Regulated subsidiaries
had about $10.1 billion of dividending capacity at Sept. 30,
2005.  The presence of unregulated subsidiaries also provides
financial flexibility.

Accounting

Citigroup's earnings quality has been affected by a number of
special items over the past few years that have obscured the
underlying trends.  Tax and litigation cost recaptures boosted
earnings in the past three years.  In addition, large gains on
sale of businesses and buildings boosted earnings in 2004 by $2
billion and in 2002 by $1.1 billion pretax.  These special items
are deducted from earnings to derive "core earnings" under
Standard & Poor's definition.  Gains on the sale of the life
insurance and asset management operations of $2.1 billion each
were recorded in discontinued operations and are also not
included in core earnings.  Earnings volatility was also
dampened in 2002 by the fact that $589 million of devaluation
losses in Argentina were recorded directly to the foreign
currency translation loss account in equity rather than taken
through income, although arguably the losses are permanent.  It
is 0noteworthy that cumulative foreign currency translation
losses totaled $4.0 billion at Sept. 30, 2005, although that
number also includes the Mexican peso devaluation effect on the
Banamex investment.

These gains have helped to offset the $10 billion of litigation
reserves (pretax) taken over the past four years (net of a $600
million recapture in 2005).  After the $521 million of
regulatory penalties, and the settlements of the $2.65 billion
WorldCom-related suits and the $2.0 billion Enron class action
suit, about $3.9 billion of reserves remain at Sept. 30, 2005.
In addition, there were $400 million (pretax) for the
restitution of losses by private banking clients in Japan and
$173 million for disgorgement of income from the transfer agency
fees to mutual fund clients.  However, the most unpredictable
case was the class action suit, the settlement of which dispels
much of the uncertainty about the sufficiency of remaining
reserves.

Loan loss reserves are low by U.S. industry standards in terms
of coverage of annual charge-offs and of delinquent loans.
Reserve reversals of $477 million in 2005, $2.4 billion in 2004,
and lesser amounts in the previous three years reflected
improvement in credit trends, which triggered releases mandated
by policy, but their magnitude was made possible by the fact
that recent acquisitions of banks and card portfolios carried
high reserves. With further improvements and reversals unlikely,
earnings comparisons will be difficult in the future.

Securitization activities make a significant impact on the
financial statements.  The company provides good disclosure on
the income statement and balance-sheet line item effects related
to $96 billion of credit card receivables to represent what the
true operating performance of the business is.  Other
securitizations on which the bank retains a small amount of
credit risk, although not the first loss portion, include about
$54 billion of CP conduits that are off balance sheet.
Disclosure could be improved on those risks, as well as on
mortgage loans sold with recourse and retained interests in
other types of securitizations.

Little disclosure is provided about the impact of acquisitions
on the income statement.  Certain other types of disclosure
typically made by peer banks are also missing, such as loan
category details, more detail on balance-sheet items, average
balance sheets, etc.  On the other hand, there is good detail on
a large number of segments or business lines.

Profitability

Some of the volatility may have gone out of core earnings
(before nonrecurring gains) with the major chunk of the
litigation settlements behind the company.  However, earnings
growth will be difficult given that Citigroup has not been able
to make significant acquisitions, which had been major
contributors to growth in past years, and has in fact been
selling businesses. In addition, the flat yield curve is hurting
NIMs, reserve levels are now so low that reserve reversals can
no longer contribute to earnings, credit quality cannot continue
improving, and expense controls need to be relaxed somewhat to
make room for investments in the business.  What growth there is
is mostly coming from Asia (excluding Japan), Mexico, and the
nonbanking businesses.  In 2005, a variety of special gains and
tax and reserve reversals helped offset weakness in revenues and
a sharp rise in consumer charge-offs due to Hurricane Katrina
and bankruptcy law changes in the U.S. and Germany.  Excluding
special gains, reserve reversals, and tax recoveries, underlying
earnings would have been about $18.9 billion in 2005, flat with
the $18.8 billion in 2004 (calculated on a similar basis but
excluding the $5 billion in litigation costs), though the 2005
number does not include the contributions of the asset
management and life insurance businesses that were sold.  Given
the earnings pressures and diminished opportunities to reverse
reserves, Citi will be hard pressed to match 2005's reported
earnings from continuing operations.  Nevertheless, that level
of core earnings represents strong profitability, with pretax
returns on operating revenues of about 35%.  The sheer size of
that earnings power also permits the company to absorb a
considerable amount of risk without affecting its capital base
and ensures that no single issue can destabilize the firm.

About 60% of group earnings come from the consumer-related
businesses, each of which benefits from superior management and
is highly profitable due to scale efficiencies and the company's
funding cost advantage.  With a strong infrastructure to manage
operations with a high degree of efficiency and control, the
company is poised for rapid expansion through acquisitions as
well as organic growth as the economy recovers.  In particular,
the U.S. retail branch network is capable of managing a much
larger network than it currently has.  The breadth of consumer
products will also mean that as consumer preferences for
managing finances shift, the bank will be well placed to
capitalize on the changes or at least move with them.

The cards business is the largest of the businesses and the most
profitable of the now very concentrated field of large credit
card players.  Some of the profitability comes from the funding
advantage, some from restraint on marketing spending, and some
from high efficiency levels.  Organic growth in the U.S. has
been negative, but high growth in Asia and Mexico permitted
management receivables to remain stable in 2005.  While growth
prospects for receivables are not improving due to high consumer
leverage and higher repayment rates, credit costs should subside
in 2006 as a portion of bankruptcy-related charge-offs were
accelerated into 2005 in the run-up to the change in bankruptcy
laws in the U.S., so earnings should rebound.

The international consumer finance operations (largely Japan)
have been in the throes of reorganization to up-tier on credit
and reformat the network to be more efficient.  Loan quality is
improving, so 2006 could see a real turnaround.

U.S retail banking and consumer finance profitability is
excellent in a benign credit environment, steady growth in
lending, and continued attention to expenses.

International retail banking suffered from a spike of $1 billion
of losses in the German bank when the timing of loss recognition
was changed. Good growth in Asia and Mexico is likely to propel
earnings higher in 2006.

The commercial banking segment, which contains the real estate
and equipment leasing operations, is benefiting from shedding
noncore businesses.  Growth should remain slow as commercial
real estate lending opportunities plateau.

The wholesale and investment bank has had a spectacular year in
2005 boosted by net loan recoveries. Sales and trading
operations have driven revenue increases and improved
efficiency. Investment banking revenues have been strong as
well.  These benefits may not be repeatable in 2006, but the
investments in the equities division could help support
revenues.  The litigation issues have not hurt the bank's
standing in the league tables for mergers and acquisitions and
underwriting business.

The cash management, custody, and trade finance segments, where
Citigroup is a global leader as well, are growing and providing
some greater stability to earnings.  While credit recoveries are
much diminished, growth in assets under administration should
push up earnings, which were up 6.5% year to year for the nine
months of 2005 if tax recoveries are excluded.

The brokerage line of business has been sluggish with the weak
transaction levels, although they should pick up as market
activity increases.  Throughout the difficult period, the bank
has been innovative in attracting net new assets by cross-
selling to clients of other parts of the bank and adding new
channels of sales.  It has also practiced strong expense
controls that provide superior efficiency ratios to other
competitors.  The addition of the Legg Mason business should
provide opportunities for cost synergies and revenue growth
through greater product sales per FC.

Private banking operations are suffering from the loss of
revenue and the expenses of the regulatorily mandated wind-down
of the Japanese operations as well as investments in better
platforms. However, with those costs waning in 2006 and managed
assets exhibiting growth in the U.S., earnings could expand
strongly. Reaching full potential in this business will require
success in plans to provide a better client proposition in the
face of strong competition.

Private equity gains have been very strong for 2005, so that
comparisons could be difficult in the future.  However, this
segment also includes alternative investments management and
investments in MetLife and Travelers, which are likely to be
divested and could affect returns.

While Citigroup must comply with bank regulatory risk-adjusted
capital ratios, these ratios are not particularly applicable to
the substantial nonbank industry groups within the organization.
For example, they do not factor in capital requirements for
insurance, or operational risk in transaction processing, wealth
management, and trading operations in particular. Securitized
assets also are not fully reflected, nor are higher risk assets
such as the nonprime lending and emerging markets businesses.
The Tier 1 regulatory ratio therefore should appropriately
remain high by industry standards.  On a more risk-adjusted
basis than the regulatory scheme, capitalization remains more
moderate before taking into consideration the benefits of the
company's enormous diversification and financial flexibility.

Citigroup has been generating a huge amount of capital in the
past two years.  Not only is capital generation due to the $19
billion annual earnings capacity, but asset sales freed up a
substantial amount of capital from the Standard & Poor's
adjusted common equity perspective.  For example, the sale of
the asset management and life insurance business reduced
economic risk capital requirements, and the sale of the stake in
Samba along with the reduction in Nikko Cordial holdings reduced
the amount of equity in unconsolidated subsidiaries, which
Standard & Poor's deducts from capital.  The gains on sale also
generated about $6 billion of capital. Thus, adjusted common
equity rose substantially in 2004 and 2005, despite the
continued acquisitions that have increased total intangibles to
$44 billion excluding MSRs, and the accelerated share
repurchases.  Standard & Poor's expects Citigroup to hold on to
some of the improvement in capital due to divestitures to help
keep its economic capital measures more in line with those of
other large universal banks.

Capital held in various subsidiaries is not necessarily
available to the holding company or other subsidiaries,
especially when different regulators are involved.  Banking
regulators are likely to act fairly stringently to prevent
transfers of resources detrimental to the bank they regulate, as
are the other regulators of the respective industry groups.
Only to the extent that the operating subsidiaries enjoy
financial flexibility in the form of excess capital or the
ability to direct investments or divestitures can those
resources can be made available to the holding company and its
weaker subsidiaries.  Conversely, the holding company may also
be required at times to recapitalize weak subsidiaries, as it
did from CGM in 2004 and 2002. CGM has been recapitalized to
industry standards on Standard & Poor's measures after losing
money in two of the past three years as it absorbed the
litigation costs.

While its extraordinary international diversification and
earnings power mitigate concerns over levels of risk-adjusted
capital, the sheer size of the capital base also means that any
one event could not severely deplete the base.


* URUGUAY: Poll Shows Most Argentinians Against Pulp Mills
----------------------------------------------------------
In a public opinion poll published in the Buenos Aires press, a
majority of Argentines are against the construction of two pulp
mills on the river, which acts as a natural border between
Uruguay and Argentina.

According to the Merco Press, Argentinians may reject the pulp
mills for environmental reasons but they would like to see a
resolution reached between Uruguayan President Tabare Vazquez
and Argentine's Nestor Kirchner.  Those who participated in the
poll disapproved the protest tactics of blockading the
international bridges leading to Uruguay.

Argentina previously announced bringing the case to the
International Court of Justice in The Hague, Netherlands

The construction of the two pulp mills involves US$1.8 billion
investment from the Uruguayan government.

The Merco Press relates that Argentine provincial and federal
authorities and environmentalist groups state that the pulp
mills with their chlorine bleaching process are highly water and
air contaminating, but Uruguay argues both mills comply with the
latest and most stringent European Union regulations regarding
conservation of natural resources.

In spite of the opinion polls, residents from Gualeguaychu,
across from Fray Bentos, kept up the route and bridge blockade
for the sixteenth consecutive day and further north where some
of the traffic had been rerouted, Colon-Paysandu,
environmentalist groups and local residents also began
organizing random cuts, the Merco Press reports.


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


PDVSA: Acquires 46% Stake in Argentine Fuel Distributor
-------------------------------------------------------
State oil firm Petroleos de Venezuela aka PDVSA bought a 46%
stake in Petrolera del Cono Sur, Argentine fuel distributor to
162 petrol stations operating under the Sol Petroleo, Economist
Intelligence Unit reports.

PDVSA is set to pay about US$15 million to Ancap, Uruguay's
state oil company, relates EIU.  Ancap will hold a 46%
participation in Petrolera after the conclusion of the deal.

According to EIU, Sol Petroleo's remaining 8% trades as shares
on the Buenos Aires stock exchange.

PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry,
as well as planning, coordinating, supervising and controlling
the operational activities of its divisions, both in Venezuela
and abroad.

                        *    *    *

On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign
currency ratings of Petroleos de Venezuela S.A. aka PDVSA to
'BB-' from 'B+'.  The rating of PDVSA's export receivable future
flow securitization, PDVSA Finance Ltd, was also upgraded to
'BB+' from 'BB'.  In addition, Fitch has assigned PDVSA a
'AAA(ven)' national scale rating.  The Rating Outlook is Stable.
Both rating actions follow Fitch's November 2005 upgrade of
Venezuela's sovereign rating.


PDVSA: Venezuela Delays Giving Oil Pact Details
-----------------------------------------------
The Associated Press reports that Venezuela's oil minister,
Rafael Ramirez, has delayed submitting to congress details on
new oil contracts that are being awaited by 32 private energy
producers.

Minister Ramirez was scheduled to deliver to the National
Assembly on Thursday the general guidelines for new joint-
venture agreements that bring operations by private oil firms
here under state control.

Private oil companies signed preliminary agreements last year to
migrate all 32 existing operating agreements in the country to
new joint ventures controlled by PDVSA, which will have an
average 60% stake in all new joint venture contracts.  The 32
fields previously under operating agreements are now under a
transition scheme controlled by special "transitional technical
committees" to guarantee their normal operations and transition
to the new contract model.

Mario Isea, a lawmaker from congress's Energy and Mines
Commission, told the AP that the new business model is under
discussion and that the final document will not be ready until
next month.

Industry analysts say the companies' investments have stalled as
they await the outcome of the difficult contract negotiations.

The contract overhaul is part of the Chavez government's wider
strategy to gain more control over private oil operations and
increase revenue from existing oil output.

The 32 fields pump approximately 500,000 barrels a day, roughly
a fifth of the Venezuela's total petroleum production, according
to industry estimates.

Venezuela is the world's fifth-largest exporter of oil and among
the top five suppliers to the United States.

PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry,
as well as planning, coordinating, supervising and controlling
the operational activities of its divisions, both in Venezuela
and abroad.

                        *    *    *

On Jan. 23, 2005, Fitch Ratings upgraded the local and
foreign currency ratings of Petroleos de Venezuela S.A. aka
PDVSA to 'BB-' from 'B+'.  The rating of PDVSA's export
receivable future flow securitization, PDVSA Finance Ltd, was
also upgraded to 'BB+' from 'BB'.  In addition, Fitch has
assigned PDVSA a 'AAA(ven)' national scale rating.  The Rating
Outlook is Stable.  Both rating actions follow Fitch's November
2005 upgrade of Venezuela's sovereign rating.


                            ***********


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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