/raid1/www/Hosts/bankrupt/TCRLA_Public/121228.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
Friday, December 28, 2012, Vol. 13, No. 257
Headlines
A R G E N T I N A
CENTRAL TERMICA: Moody's Reviews 'B3' Rating for Downgrade
HIDROELECTRICA PIEDRA: S&P Affirms 'B-' Corporate Credit Rating
ZUCAMOR SA: Moody's Assigns First-Time 'B3' CFR; Outlook Negative
* ARGENTINA: IDB Gives US$6-Bil. Support for Program
B R A Z I L
COMPANHIA ENERGETICA: Moody's Affirms 'Ba1' CFR; Outlook Stable
COMPANHIA DE SANEAMENTO: S&P Revises Outlook on 'BB+' CCR to Pos
JBS SA: S&P Affirms 'BB' Global Scale Ratings; Outlook Stable
C H I L E
INVERSIONES ALSACIA: Moody's Reviews 'Ba2' Rating for Downgrade
E L S A L V A D O R
* EL SALVADOR: S&P Revises Outlook on BB- Sovereign Credit Rating
M E X I C O
BANCO AGRICOLA: S&P Revises Outlook on 'BB-' Issuer Credit Rating
CYRELA BRAZIL: S&P Affirms 'BB' Corporate Credit Rating
EMPRESA ELECTRICA: S&P Affirms 'BB-' CCR Based on Steady Results
GRUPO POSADAS: S&P Raises Corp. Credit Rating to 'B'; Off Watch
HIPOTECARIA SU CASITA III: S&P Ups SPURs on 2 Note Series to 'CC'
PDG REALTY: S&P Affirms 'BB-' Corp. Credit Rating; Outlook Neg
RAGHSA SA: S&P Affirms 'B-' Corp. Credit Rating; Outlook Negative
SERVICIOS CORPORATIVOS: S&P Gives 'B+' Corporate Credit Rating
P A N A M A
PANAMA CANAL RAILWAY: S&P Affirms 'B+' Issuer Credit Rating
P U E R T O R I C O
BANCO BILBAO: S&P Raises Issuer Credit Rating From 'BB+'
T R I N I D A D & T O B A G O
CARIBBEAN AIR: Leases Planes to Transport Stranded Passengers
V E N E N Z U E L A
* VENENZUELA: VP Nicolas Maduro Can Issue Debt, Seize Assets
- - - - -
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A R G E N T I N A
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CENTRAL TERMICA: Moody's Reviews 'B3' Rating for Downgrade
----------------------------------------------------------
Central Termica Loma de la Lata S.A. (CTLLL) B3/A3.ar ratings on
review for possible downgrade.
Ratings Rationale
The review is prompted by the negative financial impact of the
recent technical failure on the plant's steam turbine unit, which
is now out of operation.
The failure occurred on November 15 and the company is currently
evaluating and analyzing the possible courses of action to remedy
the situation. At this moment there is not a precise timing for
the steam turbine unit to be again fully operational.
Moody's review will focus on the impact on cash flows while the
turbine continues to remain out of service and how much of the
lost cash flows will be covered by insurance. Finally, Moody's
will monitor how the company will manage its upcoming debt
servicing obligations in the context of the plant remaining out of
service for an extended period.
Central Termica Loma de la Lata S.A. (CTLLL) is an electric
generation company that operates a thermo-electric power plant
located in the province of Neuquen-Argentina, with an installed
net capacity of 535 MW. CTLLL is fully owned by Pampa EnergĦa S.A.
(not rated) the largest, fully-integrated electricity company in
Argentina. Through its subsidiaries, the company is engaged in the
generation, transmission and distribution of electricity within
the country. Pampa has an installed capacity of approximately
2,217 MW, which represents about 8% of the country's installed
capacity.
HIDROELECTRICA PIEDRA: S&P Affirms 'B-' Corporate Credit Rating
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Standard & Poor's Ratings Services affirmed its 'B-' ratings,
including the corporate credit rating, on Hidroelectrica Piedra
del Aguila S.A. (HPDA). The outlook remains negative.
"The rating on HPDA continues to reflect the high political and
regulatory risk it faces in Argentina, its exposure to droughts,
and high currency mismatch risk most of HPDA's revenues are in
Argentine pesos and its debt is in dollars. HPDA's solid
competitive position as a low-cost generator, its manageable debt
maturity schedule, and sizable cash reserves partly offset these
negative factors. We assess HPDA's business risk profile as
'vulnerable' and its financial risk profile as 'aggressive,'" S&P
said.
ZUCAMOR SA: Moody's Assigns First-Time 'B3' CFR; Outlook Negative
-----------------------------------------------------------------
Moody's Latin America assigned a first-time corporate family
rating of B3 on its global scale and Baa1.ar on its Argentina
national scale rating to Zucamor S.A. At the same time, Moody's
assigned a B3 local currency rating and an Baa1.ar NSR to
Zucamor's ARS48 million bank credit line with Banco de la Naci˘n
Argentina (BNA; not rated). Finally, Moody's assigned a B3 local
currency rating and a Baa1.ar NSR to Papel Misionero S.A.I.F.C.
(Papel Misionero)'s ARS 70 million BNA bank credit line. The
outlook for all ratings is negative.
Proceeds will be used to satisfy the group's capital expenditure
program.
The ratings assigned are as follows:
Issuer: Zucamor S.A.
- Corporate family rating: Assigned a B3 local currency rating
and an Baa1.ar NSR
- ARS48 million bank credit facility: Assigned a B3 local
currency rating and an Baa1.ar NSR
Negative outlook
Issuer: Papel Misionero S.A.I.F.C.
- ARS70 million bank credit facility: Assigned a B3 local
currency rating and an Baa1.ar NSR
Negative outlook
Ratings Rationale
Moody's notes that Papel Misionero's ratings reflect Zucamor's
consolidated credit profile given the companies' operational and
financial integration and the co-signing loan agreements contained
in Papel Misionero and Zucamor's rated bank credit facilities.
The B3/Baa1.ar ratings reflect Zucamor's strong local market
position in its Kraft paper business and adequate market position
in its corrugated containers business with long-term customer
relationships and end-market diversity that allowed the company to
maintain relatively stable operating margins. The company's
partially vertically-integrated operations, being 100% self
sufficient in pulp, also benefit the ratings.
Zucamor's rating is constrained by its small scale, single product
focus, exposure to volatile input costs, and to Argentina's
volatile economy and inflation, as Zucamor focuses almost
exclusively on the Argentine packaging market. The company's
liquidity is modest, with some exposure to refunding risk. The
risk arises from its local bank oriented debt structure, which is
mainly concentrated in the short term, and history of negative
free cash flow.
The company's credit metrics are strong for the rating category.
Moody's expects pro forma financial leverage near 1.5 times
Debt/EBITDA and interest coverage of about 5.5 times
EBITDA/Interest, with credit metrics improving as the company
repays its outstanding bank loans.
The negative outlook on Zucamor's ratings is in line with the
Argentine government rating. Moody's believes that a weaker
sovereign has the potential to create a ratings drag on companies
operating within its borders, and that it is therefore appropriate
to limit the extent to which these issuers can be rated higher
than the sovereign.
Even though an upgrade is not anticipated in the foreseeable
future, Zucamor's ratings could experience upward pressure if
Argentina's B3 government bond rating were upgraded. In addition,
upward pressure could result from an increased size and scale of
the company and/or improved liquidity profile, with positive free
cash flow.
Downward pressure could result from a weaker than expected
performance that leads to further deterioration in the company's
operating margins. A downgrade could also result from a drop in
Zucamor's EBIT margin to below 10% or a significant increase in
leverage, with adjusted total debt to EBITDA above 3.5 times.
Zucamor S.A. is engaged primarily in the manufacturing and selling
of corrugated containers, kraft and recycled paper and primarily
serves Argentina's corrugated packaging market. Its partially
integrated system includes three box plants, two paper recycling
plants, one kraft paper plant, one bags plant and 23.500 hectares
of forest assets. Headquartered in Buenos Aires, Argentina, the
company's revenues for the FYE in December 31,
* ARGENTINA: IDB Gives US$6-Bil. Support for Program
----------------------------------------------------
The Inter-American Development Bank (IDB) has approved a country
strategy with Argentina for the 2012-2015 period that focuses Bank
support on the Norte Grande and the greater Buenos Aires area, two
regions that lag behind the rest of the country in various
aspects.
The strategy will be supported by an IDB $6 billion program over
the four-year period.
The strategy's objectives are to reduce restrictions on growth and
promote social and productive inclusion, urban sustainability, and
environmental protection.
Despite some progress, significant development challenges remain,
particularly with regards to the need to reduce disparities in the
Norte Grande region and the greater Buenos Aires area in
comparison with the rest of the country.
The Norte Grande, made up of Argentina's nine northern provinces
and representing 27.2 percent of the country's land area and 20.7
percent of its population, has a lower level of economic and
social development than the country as a whole. The purpose of
the strategy is to help improve the region's competitiveness and
productivity and reduce development disparities.
The greater Buenos Aires area, which covers 2,400 km2 and contains
one third of the country's population, includes pockets of poverty
and exclusion and suffers from environmental problems. The new
Bank strategy aims to help improve the quality of life in the
region and increase opportunities for its people.
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B R A Z I L
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COMPANHIA ENERGETICA: Moody's Affirms 'Ba1' CFR; Outlook Stable
---------------------------------------------------------------
Moody's Investors Service revised the outlook of Companhia
Energetica de Sao Paulo's ("CESP") ratings to positive from
stable, based on the upgrade of the State of Sao Paulo's rating to
Baa2 from Baa3 and revised outlook to positive from stable. At the
same time, Moody's affirmed CESP's Corporate Family Rating (CFR)
at Ba1, the Baseline Credit Assessment (BCA) at ba2, and the
ratings of the Company's senior unsecured debt at Ba1.
Ratings Rationale
CESP is Brazil's fourth largest electricity generation utility.
Its generating fleet is composed of six hydroelectric plants with
nameplate capacity of 7,456 MW, with 3,916 MW of physical
guaranteed capacity. CESP's controlling shareholder is the State
of Sao Paulo, which owns 94.1% of CESP's voting capital, and 36%
of its total capital. Therefore, Moody's considers CESP a
Government-Related Issuer (GRI).
Moody's methodology for GRIs ("The Application of Joint-Default
Analysis to GRIs") incorporates the Company's stand-alone credit
risk profile (BCA), the likelihood that both entities (CESP and
the State of Sao Paulo) would default at the same time, and the
probability that the controlling shareholder (the State of Sao
Paulo) would provide extraordinary support to the Company's
financial obligations. Therefore, CESP's Ba1 GRI rating results
from the application of the joint-default analysis of the
Company's BCA of 12, the Baa2 rating of the State of Sao Paulo,
Moody's view of CESP's high dependence on the State of Sao Paulo
(i.e. the likelihood that both entities would default at the same
time), and the high probability of extraordinary support from its
controlling shareholder.
CESP's BCA of 12 (which maps to Ba2) is based on Moody's
methodology for the ratings of "Unregulated Utilities and Power
Companies" and reflects: (i) the relatively predictable operating
cash flows until and after 2015; (ii) the consistent deleveraging
process that has taken place in the last four years which has
resulted in significant improvement in the Company's credit
metrics; (iii) strong support from the State of Sao Paulo; and
(iv) the low expected capital expenditures (primarily
maintenance).
On December 3, 2012, Companhia Energetica de Sao Paulo ("CESP")
turned down the proposal from the Brazilian Federal Government set
out in the Provisional Measure #579 ("MP579") for the renewal of
the Company's 5.8 GW installed capacity concessions (equivalent to
2.8 GW average net assured energy) ahead of their scheduled
expiration in 2015. By turning down the Federal Government's
offer, CESP will keep the concessions until their expiration in
mid-2015 when CESP will return them to the Federal Government, and
then be entitled to receive an indemnification of up to BRL1.8
billion (at current value) representing the value of the non-
depreciated assets of the expired concessions related to the Tres
Irmaos, Ilha Solteira and Jupia hydroelectric plants. Moody's
notes that CESP's Tres Irmaos hydroelectric plant (808 MW
nameplate capacity; 246 MW physical guaranteed capacity)
concession expired in November 2011, and may have to be returned
to the Federal Government as soon as 2013 which is expected to
result in the payment of the largest portion of the
indemnification amount before 2015. This results from the fact
that a large portion of this asset has not yet been fully
depreciated, with the portion of the indemnification related to
Tres Irmaos representing almost the entire amount (BRL1.8
billion), while Ilha Solteira's indemnification would be only
BRL21 million. Jupia would not be indemnified since it has been
fully depreciated.
The non-renewal of the expiring concessions under MP579 conditions
will allow CESP to avoid the reduction of its electricity prices
currently ranging from BRL95 to 100/MWh to the BRL20-25/MWh range.
This would have had a significant negative impact on CESP's cash
flow generation which Moody's estimated at a BRL1.8 billion
reduction both in annual revenues and annual EBITDA (assuming no
immediate change in company's cost structure) combined with an
indemnification of BRL1.8 billion, far less than the BRL7.1
billion book value of the assets under the expiring concessions.
With the July 2015 expiration of two concessions, CESP will become
a significantly smaller company in terms of generation capacity
and revenues. Nevertheless, by continuing its financial
deleveraging process, CESP's indebtedness will decrease in the
same proportion, which will help reduce the pressure on the
Company's BCA.
Also, CESP's decision has prevented a potential mismatch related
to approximately 700 MW of average energy between PPAs in the free
(unregulated) market and available generating capacity, given that
MP579 would have required the allocation of the expired
concessions capacity to regulated market customers (i.e.
distribution companies), resulting in the lack of generating
capacity to fulfill the obligations under legally-binding PPAs
that have been executed with free-market customers.
Notwithstanding, CESP's BCA is constrained by the potential risks
and uncertainties associated with: (i) the Company's ability to
timely align its current cost structure to its new economic
reality; (ii) how the Company will manage its dividend
distributions and deleveraging process; (iii) the potential
volatility of energy prices for the non-contracted portion of its
assured energy; (iv) interest rate and exchange rate volatility;
(v) the final amount of contingent liabilities; and (vi) the
timing and amount of the indemnification of the already-expired
Tres Irmaos concession.
CESP's ratings could be upgraded if there is a material
improvement in CESP's cash flow generation such that Cash Flow
from Operations (CFO) Pre-Working Capital (WC)-to-Debt remains
above 20%, and Cash Flow Interest Coverage stays above 3.6x on a
sustainable basis. Lower contingent liability payments and a
timely indemnification payment for the Tres Irmaos concession
could further contribute to a possible upgrade.
CESP's ratings could be downgraded if there is a significant
deterioration in its cash generation so that CFO Pre WC-to-Debt
falls below 12% and Cash Flow Interest Coverage declines below
2.0x for an extended period of time. Higher contingent liabilities
as well as lower indemnification amounts (on a present value
basis) could also worsen the Company's credit metrics, and
therefore contribute to a possible downgrade.
The principal methodology used in this rating was Unregulated
Utilities and Power Companies published in August 2009 and the
Government-Related Issuers methodology published in July 2010.
COMPANHIA DE SANEAMENTO: S&P Revises Outlook on 'BB+' CCR to Pos
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Companhia de Saneamento BAsico do Estado de Sao Paulo (SABESP) to
positive from stable. "At the same time, we affirmed our 'BB+'
corporate credit rating on the company. Its stand-alone credit
profile (SACP) is 'bb+'," S&P said.
"The positive outlook reflects our expectation that the regulatory
environment is improving. It also reflects SABESP's improving
profitability and strengthening credit metrics. An upgrade is
possible if the new-tariff setting methodology allows the company
to maintain its current profitability and continue to improve its
total debt to EBITDA," S&P said.
JBS SA: S&P Affirms 'BB' Global Scale Ratings; Outlook Stable
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'brAA-' Brazilian
national scale rating to JBS S.A. "At the same time, we affirmed
our 'BB' global scale ratings on JBS S.A. and its U.S. subsidiary,
JBS USA LLC. Total rated debt is approximately $4.9 billion. The
outlooks on global and national scale ratings are stable," S&P
said.
"The ratings affirmation reflects our view that JBS to gradually
pay down its debt with an expected improvement in cash generation
throughout 2013. JBS's well-diversified business portfolio of
assorted proteins and its operations in the most competitive
protein-producing countries mitigate the volatile profile of the
commodity-oriented protein business. Lower cattle herd and higher
grain prices weakened JBS's U.S. beef operation's cost structure.
However, the company benefits from the favorable momentum in the
beef industry in Brazil, with cattle prices about 15% lower in
2012 compared to last year, boosting its cash generation in the
region," S&P said.
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C H I L E
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INVERSIONES ALSACIA: Moody's Reviews 'Ba2' Rating for Downgrade
---------------------------------------------------------------
Moody's Investors Service put the Ba2 rating of Inversiones
Alsacia S.A. on review for downgrade. The action was triggered by
the convergence of events in the second half of 2012 that have
resulted in lower than projected revenues, higher than budgeted
expenses and low liquidity available to pay debt service. The
budgetary imbalance led to cash generation that covered debt
service at a level just below 1.1x in August and will be sum
sufficient for the February 2013 payment. The project has a $33
million cash funded reserve fund which it could tap if necessary.
A stabilization of passenger validations alongside additional
liquidity to be received in May as part of the compensation
mechanism for low ridership built into the concession agreement
should help improve the company's cash position to pay debt
service in August 2013 and beyond. Over the next couple of months
Moody's will review the companies' operating performance and
assess the likelihood of the stabilization of financial metrics
and take rating action accordingly.
Ratings Rationale
The revenue shortfalls have come about from a combination of a
decline in validated passengers caused by lower demand and by a
provision in the restated revenue formula that does not count
transfer passengers as validations. Ridership on the new Feeder D
line was negatively affected during the transition time to full
operations by Express. Express -- including Feeder D - passenger
validations have started to grow in the last part of the year,
Higher than expected expenses included extraordinary expenditures
in 2012 due to the outsourcing of services for the initial period
of Feeder D operations, costs associated with collective
bargaining agreements, increased maintenance costs to improve
overhaul and parts replacement prior to the scheduled times, and
other personnel expenditures related to evasion control. A large
portion of these costs are non-recurring, which should help the
companies to stay within normal budgeted costs in 2013.
The challenges to credit quality are balanced by the generally
supportive concession agreements of Alsacia and Express with the
Ministry of Transportation and Communication (MTT), an entity of
the government of Chile (Aa3/Stable) which were amended in May
2012 in a manner that the operator is better compensated for
ridership that is lower than a predetermined projection in the
concession agreement. Additionally, the service fulfillment ratio
for both operators has been rising, which increases the amount of
the variable portion of revenue that is received.
The compensation built into the amended agreements reimburses
operators for ridership that is more than 3% below the
predetermined threshold. The compensations are to be distributed
annually in May starting in 2013. Using year to date information,
the companies have estimated that together they could receive
around US $18 million in May 2013, but the final amount will
depend on actual passenger demand in the January -- May period.
The compensations will provide much needed liquidity when
received. Additionally, Express will be receiving compensation
payments related to the restitution of the technical reserve (RTO)
paid by the concessionaires in 2005 in the amount 29.4 billion
CLP. The payments will spread out over 2014-2018 and will be made
by the MTT in January of each year. Alsacia received its payment
of 9 billion CLP in May of this year. The timeliness and magnitude
of these compensation payments will be critical to Inversiones
Alsacia's liquidity profile.
The MTT has demonstrated support for the bus transit system --
Transantiago -- and the operators with which it has concession
agreements through some rough patches of user service complaints,
liquidation of bus companies on other routes, and by increasing
the amount paid per passenger given the decline in ridership.
Additionally, the Government of Chile has put forth another
proposal to increase the necessary funding to subsidize
Transantiago, at an amount of US $730 million a year through 2022.
The principal methodology used in this rating was Generic Project
Finance Methodology published in December 2010.
====================
E L S A L V A D O R
====================
* EL SALVADOR: S&P Revises Outlook on BB- Sovereign Credit Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on the
Republic of El Salvador to negative from stable. "At the same
time, we affirmed our 'BB-/B' long- and short-term sovereign
credit ratings on El Salvador. Our 'AAA' transfer and
convertibility (T&C) assessment, reflecting the country's use of
the U.S. dollar as its local currency, is unchanged," S&P said.
"The outlook revision reflects the risk of a downgrade if
political polarization continues to weigh on investment and GDP
growth, resulting in a higher burden of fiscal and external debt,"
said Standard & Poor's credit analyst Joydeep Mukherji. "We expect
that per capita real GDP growth will be modest in 2013, about 1%
or less. A potential shortfall in economic growth would raise the
risk of fiscal slippage, despite the government's commitment to
reduce its fiscal deficit to 2.7% of GDP in 2013. Continued fiscal
slippage, in turn, would sustain the recent rise in the net
general government debt burden, projected to reach 43% of GDP in
2013," said Mr. Mukherji. Relatively low foreign direct investment
is leading to a higher reliance on external debt to fund the
country's persistent current account deficit, likely amounting to
4%-5% of GDP annually.
"In addition to the negative economic impact of political
polarization, El Salvador's limited monetary and fiscal
flexibility and its high general government and external debt
burdens constrain our ratings on the country. El Salvador's well-
regulated and healthy banking system, as well as its political
commitment to addressing fiscal and external imbalances, supports
the ratings," S&P said.
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M E X I C O
===========
BANCO AGRICOLA: S&P Revises Outlook on 'BB-' Issuer Credit Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its long-term outlook
on Banco Agricola and Banco Davivienda Salvadoreno to negative
from stable.
"The rating action on both banks follows our outlook revision on
El Salvador. Currently, the issuer credit ratings on both banks
are limited by the foreign-currency rating on El Salvador. In this
sense, the ratings continue to move in tandem with those of the
sovereign," S&P said.
"Our issuer credit ratings on Banco Agricola continue to reflect
its 'strong' business position, 'strong' capital and earnings,
'adequate' risk position, 'average' funding profile and 'adequate'
liquidity (as our criteria define these terms)," S&P said.
On the other hand the ratings on Banco Davivienda Salvadoreno
reflect its "adequate" business position, "adequate" capital and
earnings, "adequate" risk position, "average" funding profile and
"adequate" liquidity.
"The negative outlooks on both banks reflect that of the
sovereign. If there is a negative sovereign rating action on El
Salvador, the ratings on Banco Agricola and Banco Davivienda
Salvadoreno will also be downgraded," S&P said.
CYRELA BRAZIL: S&P Affirms 'BB' Corporate Credit Rating
-------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit ratings Cyrela Brazil Realty S.A. Empreendimentos e
Participacoes (Cyrela). The outlook is stable.
"The ratings on Cyrela reflect our assessment of its 'fair'
business risk profile and 'significant' financial risk profile.
Our analysis includes as risk factors the company's exposure to
the competitive homebuilding industry in Brazil that is working
capital intensive, its relatively high debt, and exposure to soft
market conditions. The positive ratings factors are Cyrela's
strong market position and well-known brand name, a national
project portfolio that mitigates market risks in specific cities,
and an 'adequate' liquidity, further boosted by sizable amounts of
accounts receivable resources that can be monetized if needed,"
S&P said.
EMPRESA ELECTRICA: S&P Affirms 'BB-' CCR Based on Steady Results
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Guatemala-based electricity distribution company
Empresa Electrica de Guatemala S.A. (EEGSA). The outlook remains
stable.
"Standard & Poor's ratings on EEGSA reflect our opinion that there
is a moderate likelihood of timely and sufficient extraordinary
support from Guatemala (Republic of) (foreign currency:
BB/Stable/B; local currency: BB+/Stable/B) to EEGSA in the event
of financial distress. In accordance with our criteria for
government-related entities, we base this opinion on our
assessment of EEGSA's important role as the largest electricity
distribution company in Guatemala, and its limited link with the
government, given the latter's 14% ownership stake in the company.
Empresas P£blicas de MedellĦn (EPM; unrated), a water and electric
utility and telecom operating group based in Colombia, holds an
80.9% ownership stake in EEGSA," S&P said.
"We assess EEGSA's standalone credit profile (SACP) at 'bb-'. The
SACP reflects the challenges inherent in doing business in
Guatemala, the discretionary role of Comisi˘n Nacional de EnergĦa
Electrica (CNNE, the National Electric Energy Commission) in
setting the Value Added Distribution (VAD) to compensate
distribution companies for their investment, and the Guatemalan
power sector's dependence on a developing economy that is
especially vulnerable in times of economic stress. In our view,
Guatemala's existing grid capacity, reaching only 67% of the
country's total population and requiring government concessions to
cover all its occupied territory, constrains EEGSA's expansion,"
S&P said.
"The stable outlook reflects our expectation that, despite the
weak and developing institutional and regulatory frameworks that
challenge Guatemala's business environment and the growth
prospects of its electric sector, EEGSA will maintain its current
financial risk profile," said Standard & Poor's credit analyst
Jose Coballasi.
"Moderate debt leverage and adequate cash flow generation
prospects over the next two years support this expectation. Under
our base-case scenario, we believe it will post FFO to total debt
exceeding 20% and total debt to EBITDA of about 3.5x. We could
lower our rating on EEGSA if its dividend policy or profitability
metrics reduce its key financial ratios or weaken its liquidity,"
S&P said.
GRUPO POSADAS: S&P Raises Corp. Credit Rating to 'B'; Off Watch
---------------------------------------------------------------
Standard & Poor's Rating Services raised its global scale
corporate credit rating on Mexican hotel operator Grupo Posadas
S.A.B. de C.V. to 'B' from 'CCC+', and its debt rating on the
company's $200 million unsecured notes, also to 'B' from 'CCC+'.
"We removed all ratings from CreditWatch with positive
implications. The outlook is stable," S&P said.
"At the same time, we raised our national scale rating on Posadas
to 'mxBB+' from 'mxB+' and immediately withdrew it because of the
company's prepayment of the local debt. We also affirmed our 'B'
rating on the $225 million senior unsecured notes due 2017," S&P
said.
"The upgrade is based on Posadas' liability management, which has
significantly improved the company's capital structure and
mitigated its liquidity risks through the payment of its local
debt due in 2013, about $13 million in bank loans, and $117
million of its senior unsecured notes due in 2015 through a tender
offer; with this, the amount outstanding is $83 million. Posadas
is Mexico's largest hotel operator, with about 105 hotels in 50
destinations in the country," S&P said.
"Through the proceeds of the sale of its South American division
and the issuance of $225 million in senior unsecured notes due in
2017, the company has paid down about MXN4 billion ($313
million)," S&P said.
"The sale and issuance of the notes provide Posadas with
additional financial flexibility, as its next significant debt
maturity is not until 2015," said Standard & Poor's credit analyst
Sandra Tinoco. "Moreover, we expect the company to continue paying
down debt with the remaining amount of these resources."
"The ratings on Posadas reflect our assessment of its business
risk profile as 'weak,' as defined in our criteria, because of the
cyclicality of the lodging industry, its geographic concentration
in Mexico, its low profitability compared with that of its core
peers, and our assessment of its 'fair' management and governance.
These factors are offset by the company's diversified hotel
portfolio, including well-recognized brands, despite the recent
sale of its South American division, and its position as the
largest hotel operator in Mexico. The ratings also reflect our
assessment of the company's financial risk profile as 'highly
leveraged,' reflected by still-high debt despite the improvement
in liquidity and capital structure," S&P said.
"Our base-case scenario calls for Mexican GDP growth of 3.8% in
2012 and 3.5% in 2013. Under these conditions, we believe Posadas
can achieve mid-single-digit revenue growth in the following year
and EBITDA margins of about 17% because of the company's focus on
managed hotels and achieving additional operating efficiencies.
This forecast also includes our expectations of an occupancy rate
of about 64% to 66% and revenues per available room (RevPAR) of
about MXN650 to MXN700. Despite our expectations of improved
company profitability, it is still below that of its global and
regional core peers, whose average EBITDA margins are above 20%,"
S&P said.
"We now assess Posadas' liquidity as 'less than adequate' for the
following 12 to 18 months, as we believe the company's resources
will cover its uses by less than 1.2x," S&P said.
"The stable outlook reflects our expectations that the company
will continue improving its capital structure and liquidity while
reinforcing its good market position in Mexico in terms of number
of hotels and rooms. We expect the company to achieve EBITDA
margins close to 20% by 2015 and a debt-to-EBITDA ratio below
5.0x," S&P said.
"We could raise the ratings if the company improves its capital
structure and liquidity beyond our expectations while maintaining
a good market position; this would translate into a debt-to-EBITDA
ratio below 4.0x and positive discretionary operating cash flow,"
S&P said.
"We could lower the ratings if liquidity or financial flexibility
deteriorate significantly, which could result from the company's
taking on additional debt to fund the remodeling of its current
hotels and an expansion program beyond what we currently expect,"
S&P said.
HIPOTECARIA SU CASITA III: S&P Ups SPURs on 2 Note Series to 'CC'
-----------------------------------------------------------------
Standard & Poor's Rating Services raised its Standard & Poor's
underlying ratings (SPURs) on the senior series notes BRHCCB 07U
and BRHCCB 07-2U to 'CC (sf)' from 'D (sf)' from one Mexican
residential mortgage-backed securities (RMBS) transaction issued
by Hipotecaria Su Casita-Bursatilizaciones de Hipotecas
Residenciales III (Su Casita) and serviced by Patrimonio, S.A. de
C.V. S.F.O.L. (Patrimonio). "Our global scale rating of 'B (sf)'
and Mexican national scale of 'mxBB+ (sf)' on the senior series
BRHCCB 07U and BRHCCB 07-2U, and our 'D (sf) rating on the
subordinated class BRHCCB 07-3U remain unchanged," S&P said.
"We raised our SPURs on BRHCCB 07U and BRHCCB 07-2U certificates
following the payment of past-due amounts to MBIA Mexico S.A. de
C.V. (MBIA Mexico; 'mxBB+/Negative', CaVal [Mexico] national scale
rating and 'B/Negative' insurer financial strength rating), as the
full financial guarantee insurance policy provider, from the
previous payment date," S&P said.
"The deals' default history, the weak financial position of the
trusts, and their decreasing excess spreads limit the SPURs on the
senior series, BRHCCB 07U, and BRHCCB 07-2U," S&P said.
"Global scale rating of 'B (sf)' and national scale rating of
'mxBB+ (sf)' for senior series BRHCCB 07U and BRHCCB 07-2U
reflect the full financial guarantee provided by MBIA Mexico.
Under our criteria, the issue rating on an insured bond reflects
the higher of the rating on the bond insurer or the SPUR on the
security. Our SPUR ratings on classes with full bond insurance
reflect the stand-alone capacity of an issue to pay debt service
without giving effect to the external enhancement, in this case,
without the protection given by the bond insurance provided by
MBIA Mexico," S&P said.
RATINGS RAISED
Hipotecaria Su Casita-Bursatilizaciones de Hipotecas Residenciales
III
Class Rating Outs. amount
Class type To From (mil.)
BRHCCB 07U SPUR CC (sf) D (sf) 23.73 UDIs
BRHCCB 07-2U SPUR CC (sf) D (sf) 425.20 UDIs
RATINGS UNCHANGED
Hipotecaria Su Casita-Bursatilizaciones de Hipotecas Residenciales
III
Class Rating Outs. amount
Class type (mil.)
BRHCCB 07U Senior B (sf) 23.73 UDIs
BRHCCB 07U Senior mxBB+ (sf) 23.73 UDIs
BRHCCB 07-2U Senior B (sf) 425.20 UDIs
BRHCCB 07-2U Senior mxBB+ (sf) 425.20 UDIs
BRHCCB 07-3U Sub. D (sf) 64.85 UDIs
PDG REALTY: S&P Affirms 'BB-' Corp. Credit Rating; Outlook Neg
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its national scale
issuer ratings on PDG Realty S.A. Empreendimentos e Participacoes
S.A. (PDG) to 'brA-' from 'brA'. "At the same time, we affirmed
our 'BB-' global scale corporate credit rating on PDG. The outlook
on both scales is negative," S&P said.
"The rating actions reflect our opinion that following PDG's weak
performance in the first half of 2012, its ability to improve its
results in 2013 is somewhat uncertain. In September 2012, PDG
raised about R$800 million in new capital under a share placement
that strengthened its cash reserves to cover its working capital
needs in the next few quarters. Since then, PDG has gone through
significant changes in senior management, which is currently
restructuring the company's operations and revising its strategy
and growth plans. We believe these actions will improve PDG's
ability to budget, manage, and control its projects and that its
growth strategy will ultimately be more conservative in the next
several years. As a result, the company should report stronger
operating performance and its cash flows should start to recover.
However, PDG's significant cost overruns are an obstacle. In
addition, in our opinion, the homebuilding industry conditions are
soft in 2012 due to slower sales pace, which is hampering PDG's
ability to deliver on its plans. Although we assume homebuyers
will timely raise mortgage financing so that PDG's cash inflows
are quickly captured once units are delivered, we believe
continuing cost revisions and potentially slower sales in 2013
could squeeze its results and keep its debt elevated. The ratings
also reflect PDG's strong market position and its segment and
geographic diversification. We also believe demand fundamentals
for new homes will remain favorable in the next few years, though
less robust than in the recent past. We view PDG's business risk
profile as 'fair' and its financial risk profile as 'aggressive,'"
S&P said.
RAGHSA SA: S&P Affirms 'B-' Corp. Credit Rating; Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B-' corporate
credit and senior unsecured ratings on RAGHSA S.A. The outlook is
negative. "The rating action follows our regular annual review,"
S&P said.
"The ratings on RAGHSA continue to reflect its exposure to the
Argentine business environment, its relative small scale, and high
leverage and weak credit metrics. The partly offsetting factors
are RAGHSA's extensive experience managing real estate projects in
Argentina and a comfortable debt maturity schedule for the next
three years. Furthermore, the company's brand recognition and its
focus on the office rental segment, which typically results in
more stable cash flows than housing projects for sale, should
allow it to increase results and cash flows gradually up to $12
million by 2016 when its debt starts amortizing. We assess
RAGHSA's business risk profile as 'vulnerable,' and its financial
risk profile as 'highly leveraged,'" S&P said.
SERVICIOS CORPORATIVOS: S&P Gives 'B+' Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Service assigned its 'B+' corporate
credit rating to Servicios Corporativos Javer S.A.P.I. de C.V.
The outlook is positive.
"The rating on Javer reflects the concentration of mortgage
originations for the company's homes with Infonavit, which
provides credit that's somewhat subject to political risk. Javer
will improve its geographic diversity and scale following its
acquisition of ViveICA's assets, a subsidiary of Empresas ICA
S.A.B. de C.V.'s (ICA; BB-/Stable/--), ViveICA. However, we
believe the company will remain exposed to a competitive and
mature housing industry in Mexico, especially in the central
states of the country. Javer will also face integration risks, as
it expects to collect significant efficiency gains from acquired
assets, but might be a challenge to realize. The rating
incorporates Javer's adequate liquidity and sound capital
structure due to low debt maturities in the next several years and
the high brand recognition in the regions where it operates. We
assess Javer's business risk profile as 'weak' and its financial
risk profile as 'aggressive,'" S&P said.
===========
P A N A M A
===========
PANAMA CANAL RAILWAY: S&P Affirms 'B+' Issuer Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' ratings on
Panama Canal Railway Co. (PCRC). The outlook remains stable.
"During 2012, PCRC has improved its key financial metrics by
achieving higher container transportation volumes due to the
gradual recovery in global trade and benefits arising from the
Panama Canal expansion. Nevertheless, its client concentration has
not changed and its scale of operations remains small when
compared to its rated peers," S&P said.
The ratings on PCRC reflect S&P's assessment of the company's
"weak" business risk profile that reveals its highly concentrated
revenues. "Its two largest clients account for about 90% of its
total container transportation volume, the company's small scale
of operations, its dependence on international trade volumes and
the performance of the ports in the Republic of Panama
(BBB/Stable/A-2), the risk inherent in operating a single-track
railway system as it is exposed to service interruptions due to
railroad damage or obstructions in the right-of-way, and the
potential increase in competition in the coming years as a result
of the Panama Canal expansion are all reflected in our analysis.
The ratings also reflect our assessment of the company's
'aggressive' financial risk profile. Despite PCRC's improved key
financial ratios, it has a limited cushion to absorb weaker
volumes and a leveraged capital structure," S&P said.
=====================
P U E R T O R I C O
=====================
BANCO BILBAO: S&P Raises Issuer Credit Rating From 'BB+'
--------------------------------------------------------
Standard & Poor's Ratings Services raised its issuer credit rating
on Banco Bilbao Vizcaya Argentaria Puerto Rico (BBVA PR) to 'BBB-'
from 'BB+'. "Subsequently, we withdrew the rating at the company's
request. We also raised the rating on the $50 million of
subordinated notes issued by BBVA PR to 'BB+' from 'BB'," S&P
said.
"The actions follow Oriental Financial Group's announcement that
it has completed its previously announced acquisition of the
Puerto Rico-based operations of BBVA PR. Immediately following the
closing of the acquisition, BBVA PR merged into Oriental's main
banking subsidiary, Oriental Bank & Trust, with Oriental Bank
continuing as the surviving entity. Following the acquisition, $50
million of subordinated notes issued by BBVA PR are now
obligations of Oriental Bank & Trust," S&P said.
===============================
T R I N I D A D & T O B A G O
===============================
CARIBBEAN AIR: Leases Planes to Transport Stranded Passengers
-------------------------------------------------------------
RJR News reports that Caribbean Airlines Limited leased two planes
to transport 300 passengers who were stranded in New York.
Clint Williams, CAL's Communications Manager, told RJR News that
the carrier had leased more than one Boeing 767-300 aircraft to
get all the passengers back home.
Mr. Williams said Caribbean Airlines was able to secure another
plane from the company it leased the 767-300 that experienced
mechanical problems that caused the delay, according to RJR News.
The report relates that the airline is US-based Omni Air
International and the 767-300s it is leasing to Caribbean Airlines
can each carry a total of 272 passengers.
Mr. Williams would not say whether Omni Air could be fined for
situations where its aircraft suffers mechanical problems, adding
that CAL reviews all of its contracts on an ongoing basis, RJR
News notes.
Mr. Williams confirmed that the delay in New York also affected
Caribbean Airlines connecting flights in the region but said those
challenges were also being addressed, RJR News adds.
===================
V E N E N Z U E L A
===================
* VENENZUELA: VP Nicolas Maduro Can Issue Debt, Seize Assets
------------------------------------------------------------
Corina Pons & Nathan Crooks at Bloomberg News report that
Venezuela President Hugo Chavez gave Vice President Nicolas Maduro
the right to authorize debt sales and seize assets.
The resolution, which was published in the Official Gazette on
Dec. 21 and distributed online by local news website Noticias24,
also gives the vice president the power to approve changes to
Venezuela's annual budget and accept or reject proposals submitted
by government ministers, according to Bloomberg News.
Bloomberg News notes that President Chavez said on Dec. 8 that
voters should elect Maduro to protect his legacy if he is unable
to remain in office.
"The decree published in the Gazette and the phone call with
Maduro makes you think that the government is ready to take
measures for an economic adjustment," Barclays Plc analyst
Alejandro Arreaza told Bloomberg News in a telephone interview
from New York.
Bloomberg News discloses that Venezuelan government's victory in
gubernatorial elections on Dec. 16 has increased the chances that
it will devalue the bolivar "sooner rather than later," Arreaza
and fellow Barclays analyst Alejandro Grisanti said today in an e-
mailed note to clients.
"The government may be willing to absorb the political cost of a
devaluation now and avoid having to do it at the beginning of a
possible new administration," the report quoted Mr. Arreaza and
Mr. Grisanti as saying.
***********
Monday's edition of the TCR-LA delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-LA editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Monday
Bond Pricing table is compiled on the Friday prior to publication.
Prices reported are not intended to reflect actual trades. Prices
for actual trades are probably different. Our objective is to
share information, not make markets in publicly traded securities.
Nothing in the TCR-LA constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR-LA editor holds some position in the
issuers' public debt and equity securities about which we report.
Tuesday's edition of the TCR-LA features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR-LA. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Valerie U. Pascual, Ivy B. Magdadaro, Frauline S.
Abangan, and Peter A. Chapman, Editors.
Copyright 2012. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$625 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 240/629-3300.
* * * End of Transmission * * *