/raid1/www/Hosts/bankrupt/TCRLA_Public/130913.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, September 13, 2013, Vol. 14, No. 182
Headlines
A R G E N T I N A
ARCOS DORADOS: Ratings Unchanged Over Planned Exchange Offer
CHUBUT PROVINCE: Moody's Rates New $50MM Class 1 Notes 'B3'
B R A Z I L
OGX PETROLEO: Faces Ibovespa Removal as Short-Sale Limit Raised
C A Y M A N I S L A N D S
ALPINE PRAX: Commences Liquidation Proceedings
ARES ADMINISTRATION: Creditors' Proofs of Debt Due Oct. 9
ARTIO GLOBAL: Commences Liquidation Proceedings
COASTAL CAPITAL: Commences Liquidation Proceedings
FOREST WOBURN: Commences Liquidation Proceedings
MERCANTILE INVESTMENTS: Creditors' Proofs of Debt Due Oct. 7
OECHSLE NIPPON: Creditors' Proofs of Debt Due Sept. 30
PACIFIC CENTURY: Creditors' Proofs of Debt Due Oct. 8
RAB OCTANE: Placed Under Voluntary Wind-Up
RAB OCTANE FUND: Placed Under Voluntary Wind-Up
THE A FUND: Commences Liquidation Proceedings
THE A1 FUND: Commences Liquidation Proceedings
WESTERN ASSET: Commences Liquidation Proceedings
WESTERN ASSET GLOBAL: Commences Liquidation Proceedings
WORLD 400: Creditors' Proofs of Debt Due Sept. 30
D O M I N I C A N R E P U B L I C
* DOMINICAN REP: President Asks Congress to Pass US$500MM Bond
J A M A I C A
* JAMAICA: Negotiations in Progress for Harmony Cove Development
M E X I C O
FINANCIERA FINCA: S&P Affirms 'BB-' Rating; Outlook Stable
NUEVO LEON: Moody's Takes Action on 13 Enhanced Loans
* Moody's Outlook on Mexican Banks Remain Stable Despite Slowdown
* Moody's: Education Costs Hamper Flexibility of Mexican States
* Moody's Confirms Ratings on Notes from Two METROCB RMBS Issues
P E R U
MAESTRO: Moody's Eyes Possible Downgrade of Ba2 Ratings
T R I N I D A D & T O B A G O
CARIBBEAN AIRLINES: To Get JM$400 Million Subsidy From T&T
CARIBBEAN AIRLINES: Won't Increase Ticket Prices
X X X X X X X X
* Moody's Notes Decline in Corporate Default Rate for August
- - - - -
=================
A R G E N T I N A
=================
ARCOS DORADOS: Ratings Unchanged Over Planned Exchange Offer
------------------------------------------------------------
Moody's Investors Service sees no immediate impact on the Ba2
corporate family rating and senior unsecured bond ratings of Arcos
Dorados Holdings Inc. and the Ba2 senior unsecured bond rating of
Arcos Dorados B.V. following the company's tender and exchange
offer for Arcos Dorados' B.V. outstanding $ 308.6 million 7.5%
Notes, due 2019.
Arcos Dorados announced on September 10, 2013 a proposed debt
tender and exchange offer and consent solicitation for its
outstanding $308.6 million principal amount of its 7.5% guaranteed
senior unsecured notes due 2019. "The prospective tender and
exchange offer, if and when successfully completed, is a modest
credit positive for Arcos Dorados as it will result in an
extension of the company's debt maturity profile and will slightly
reduce its yearly cost of debt", said Veronica Amendola, Moody's
lead analyst for Arcos Dorados. Following the transaction, Moody's
expects the company to maintain a moderate leverage position, with
adjusted debt/EBITDA below 4.5x, as well as an adequate liquidity
position.
The tender and exchange offer is subject to various conditions
including a provision that Arcos Dorados will only complete the
transaction if at least $ 154.4 million principal amount of
existing notes have been validly tendered in the tender offer,
exchange offer or both, and the aggregate notional amount of the
new notes is at least $ 300 million.
Following the exchange offer, the new notes will be fully and
unconditionally guaranteed on a senior unsecured basis by some of
the company's subsidiaries which represented in the aggregate
80.8%, 77.4% and 80.7% of Arcos Dorados' consolidated total
revenues, consolidated total assets and total Company-operated and
franchised restaurants as of and for the six months ended June 30,
2013, respectively. While the exchange will modestly increase
Arcos Dorados' total debt, the increase is not expected to be
material.
Headquartered in Buenos Aires, Argentina, Arcos Dorados Holdings
Inc. is the leading quick service restaurant operator in Latin
America and the Caribbean and McDonald's largest franchisee
globally in terms of systemwide sales and restaurant count,
representing 5.6% of McDonald's global sales in 2012. The company
has the exclusive right to own, operate and grant franchises of
McDonald's restaurants in 20 Latin American and Caribbean
countries. Arcos Dorados began operating in August 2007 when it
acquired most of McDonald's operations in Latin America and the
Caribbean in a leveraged buyout led by the company's controlling
shareholder Woods Staton, who is also the company's current CEO
and chairman. For the last twelve months ended on June 30, 2013,
the company's revenues reached $3.9 billion.
CHUBUT PROVINCE: Moody's Rates New $50MM Class 1 Notes 'B3'
-----------------------------------------------------------
Moody's Latin America has assigned debt ratings of B3 (Global
Scale, local currency) and Baa1.ar (Argentina National Scale) to
the Province of Chubut's Class 1 Notes for $50 million (payable in
ARS Pesos) to be issued under the provincial's Debt Program for up
to ARS2,065.5 million or its equivalent in other currencies
(around $360 million).
Ratings Rationale:
These Class 1 Notes constitute direct, unconditional, secured and
unsubordinated obligations of the province. Authorized by
Provincial Ministry of Finance's Resolutions N§ 127 and N§ 128 of
2013 and payable in Argentine pesos, the Notes carry a fixed
interest rate, and mature in 2019. The expected amount to be
issued under the Class 1 Notes is $50 million, which represents
around 25% of the provincial's net direct and indirect debt as of
June 2013, and only 3% of total revenues budgeted for 2013.
The ratings Moody's assigns to the Notes are in line with the
Province of Chubut's B3/Baa1.ar rating and long-term credit
quality. The ratings also incorporate Moody's view of the
willingness and capacity of the Province of Chubut to honor the
notes. The ratings also consider the fact that the Notes will be
guaranteed by a portion of provincial royalties. Debt service will
be paid on a quarterly basis and there is a two-year grace period
for principal payments.
The ratings assigned are based on documentation received by
Moody's as of the rating assignment date. Moody's does not expect
changes to the documentation over this period. In the event that
the structure changes from the documentation submitted to us,
Moody's will assess the impact that these differences may have on
the ratings and act accordingly.
What Could Change The Rating Up/Down
Given the links between the Notes and the credit quality of the
obligor, an upgrade of the Province of Chubut's issuer ratings
would likely result in an upgrade of the ratings on the Notes.
Conversely, a downgrade of the Province of Chubut's issuer ratings
could also exert downward pressure on the debt ratings of these
Notes. Also, a downgrade on the Sovereign rating could lead to a
rating downgrade.
The principal methodology used in this rating was Regional and
Local Governments published in January 2013.
Moody's National Scale Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within
a country, enabling market participants to better differentiate
relative risks. NSRs differ from Moody's global scale ratings in
that they are not globally comparable with the full universe of
Moody's rated entities, but only with NSRs for other rated debt
issues and issuers within the same country. NSRs are designated by
a ".nn" country modifier signifying the relevant country, as in
".mx" for Mexico.
===========
B R A Z I L
===========
OGX PETROLEO: Faces Ibovespa Removal as Short-Sale Limit Raised
---------------------------------------------------------------
Richard Richtmyer at Bloomberg News reports that OGX Petroleo &
Gas Participacoes SA has dropped the most on the Ibovespa this
year, faces removal from Brazil's benchmark index and the prospect
of more bets against the stock.
BM&FBovespa SA will exclude from the gauge any companies whose
shares trade for less than BRL1 real (44 cents), the exchange
operator said in a statement, according to Bloomberg News.
The limit on equity lending for OGX, which has plunged 91 percent
this year to 38 centavos in Sao Paulo, was raised to 50 percent of
shares available for trading from 45 percent, the bourse said in a
separate statement released, Bloomberg News relates.
Stock loans, used in short sales, climbed to 41.6 percent on Sept.
10, data compiled by Bloomberg show.
Bloomberg News relates that OGX may get dropped from the Ibovespa
even as its relative importance in the gauge grows because of the
index's reliance on trading volume for determining equity
weightings. Bloomberg News relays that while the oil producer is
the index's third-smallest company by market value, it has the
third-biggest weighting of 73 Ibovespa stocks. OGX has been
responsible for about half of the measure's 12 percent drop this
year as trading in the stock rose to all-time highs, Bloomberg
News discloses.
"With the changes, BM&FBovespa aligns the methodology of its main
index with practices in other countries," the exchange said in a
statement after the close of trading on Sept. 11, Bloomberg News
notes. "It adapts the Ibovespa to the current scenario of the
Brazilian market," the exchange said, Bloomberg News discloses.
Bloomberg News says that the index changes will be implemented in
two steps starting in January 2014, and will be fully effective by
May, BM&FBovespa said. Under the new methodology, company weights
on the gauge will be determined by the free-float market value,
adjusted for liquidity, Bloomberg News relays.
Positions will be limited to 20 percent of the index, the bourse
said, Bloomberg News relates.
Bloomberg News notes that a committee of exchange executives,
banks and brokerages developed the changes to the benchmark index.
BM&FBovespa said on its website that it hadn't made changes to the
gauge's methodology since its inception in 1968, Bloomberg News
adds.
Based in Rio de Janeiro, Brazil, OGX Petroleo e Gas Participaaoes
S.A. is an independent exploration and production company with
operations in Latin America.
* * *
As reported in the Troubled Company Reporter-Latin America on
July 17, 2013, Moody's Investors Service downgraded OGX Petroleo e
Gas Participacoes S.A.'s Corporate Family Rating to Ca from Caa2
and OGX Austria GmbH's senior unsecured notes ratings to Ca from
Caa2. The rating outlook remains negative.
==========================
C A Y M A N I S L A N D S
==========================
ALPINE PRAX: Commences Liquidation Proceedings
----------------------------------------------
On Aug. 20, 2013, the shareholders of Alpine Prax Real Estate I,
Ltd resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
John Sullivan
c/o Maples and Calder, Attorneys-at-law
PO Box 309, Ugland House
Grand Cayman KY1-1104
Cayman Islands
ARES ADMINISTRATION: Creditors' Proofs of Debt Due Oct. 9
---------------------------------------------------------
The creditors of Ares Administration LDC are required to file
their proofs of debt by Oct. 9, 2013, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on Aug. 29, 2013.
The company's liquidator is:
Ares Management, L.P.
P.O. Box 694, George Town Grand Cayman
Cayman Islands
c/o Nathalie Tolentino
Telephone: +1 (310) 921-7254
ARTIO GLOBAL: Commences Liquidation Proceedings
-----------------------------------------------
On Aug. 26, 2013, the sole shareholder of Artio Global Credit
Opportunities Fund, Ltd resolved to voluntarily liquidate the
company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Aberdeen Asset Management Inc.
c/o Fiona MacAdam
Walkers
190 Elgin Avenue, George Town
Grand Cayman KY1-9001
Cayman Islands
Telephone: +1 (345) 914 4273
COASTAL CAPITAL: Commences Liquidation Proceedings
--------------------------------------------------
On Aug. 27, 2013, the sole shareholder of Coastal Capital SPV
Limited resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Gordon Mckie
40 Berkeley Square
London W1J 5AL
United Kingdom
Telephone: +44 20 7451 4297
FOREST WOBURN: Commences Liquidation Proceedings
------------------------------------------------
On Aug. 27, 2013, the sole shareholder of Forest Woburn Holdco
resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Gordon Mckie
40 Berkeley Square
London W1J 5AL
United Kingdom
Telephone: +44 20 7451 4297
MERCANTILE INVESTMENTS: Creditors' Proofs of Debt Due Oct. 7
------------------------------------------------------------
The creditors of Mercantile Investments Limited are required to
file their proofs of debt by Oct. 7, 2013, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on Aug. 16, 2013.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1
Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
OECHSLE NIPPON: Creditors' Proofs of Debt Due Sept. 30
------------------------------------------------------
The creditors of Oechsle Nippon Offshore Fund, Ltd are required to
file their proofs of debt by Sept. 30, 2013, to be included in the
company's dividend distribution.
The company commenced wind-up proceedings on July 29, 2013.
The company's liquidator is:
Ogier
c/o Ridhiima Kapoor
Telephone: (345) 815 1875
Facsimile: (345) 949 9877
89 Nexus Way, Camana Bay
Grand Cayman KY1-9007
Cayman Islands
PACIFIC CENTURY: Creditors' Proofs of Debt Due Oct. 8
-----------------------------------------------------
The creditors of Pacific Century Global Investment Corporation are
required to file their proofs of debt by Oct. 8, 2013, to be
included in the company's dividend distribution.
The company commenced liquidation proceedings on Aug. 19, 2013.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1
Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
RAB OCTANE: Placed Under Voluntary Wind-Up
------------------------------------------
On Aug. 29, 2013, the sole shareholder of RAB Octane (Master) Fund
Limited resolved to voluntarily wind up the company's operations.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Avalon Management Limited
Reference: GL
Telephone: +1 (345) 769 4422
Facsimile: +1 (345) 769 9351
Landmark Square, 1st Floor
64 Earth Close West Bay Beach
P.O. Box 715, George Town
Grand Cayman KY1-1107
Cayman Islands
RAB OCTANE FUND: Placed Under Voluntary Wind-Up
-----------------------------------------------
On Aug. 29, 2013, the sole shareholder of RAB Octane Fund Limited
resolved to voluntarily wind up the company's operations.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Avalon Management Limited
Reference: GL
Telephone: +1 (345) 769 4422
Facsimile: +1 (345) 769 9351
Landmark Square, 1st Floor
64 Earth Close West Bay Beach
P.O. Box 715, George Town
Grand Cayman KY1-1107
Cayman Islands
THE A FUND: Commences Liquidation Proceedings
---------------------------------------------
On Aug. 26, 2013, the members of The A Fund resolved to
voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Eric Norman Ward
13 Walker Street
Cambridge MA 02138
U.S.A.
THE A1 FUND: Commences Liquidation Proceedings
----------------------------------------------
On Aug. 26, 2013, the members of The A1 Fund resolved to
voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Eric Norman Ward
13 Walker Street
Cambridge MA 02138
U.S.A.
WESTERN ASSET: Commences Liquidation Proceedings
------------------------------------------------
On Aug. 20, 2013, the sole shareholder of Western Asset Real Alpha
Portfolio Master Fund, Ltd resolved to voluntarily liquidate the
company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Gavin L. James
John O'Driscoll, Walkers
190 Elgin Avenue, George Town
Grand Cayman KY1-9001
Cayman Islands
Telephone: +1 (345) 914 4229
WESTERN ASSET GLOBAL: Commences Liquidation Proceedings
------------------------------------------------------
On Aug. 20, 2013, the sole shareholder of Western Asset Global
Alpha Opportunities Master Fund 3, Ltd resolved to voluntarily
liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Gavin L. James
John O'Driscoll, Walkers
190 Elgin Avenue, George Town
Grand Cayman KY1-9001
Cayman Islands
Telephone: +1 (345) 914 4229
WORLD 400: Creditors' Proofs of Debt Due Sept. 30
-------------------------------------------------
The creditors of World 400 Ltd are required to file their proofs
of debt by Sept. 30, 2013, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on Aug. 27, 2013.
The company's liquidator is:
Gene Dacosta
c/o Tania Dons
Telephone: (345) 814 7766
Facsimile: (345) 945 3902
P.O. Box 2681 Grand Cayman KY1-1111
Cayman Islands
===================================
D O M I N I C A N R E P U B L I C
===================================
* DOMINICAN REP: President Asks Congress to Pass US$500MM Bond
--------------------------------------------------------------
Dominican Today reports that Dominican Republic President Danilo
Medina submitted to Congress a bill to authorize the Finance
Ministry to issue a US$500 million bond, to counter Dominican
Republic's current dollar crunch.
Although the legislation aims to place the US$500 million in
financial markets, the letter doesn't specify if some of that
amount has been already offered, according to Dominican Today.
The report relates that President Medina's motivation also cites
the international markets' current favorable conditions on cost,
which he affirms boosts Dominican Republic's potential to write
bonds this fiscal year. The bond's interest would be paid twice
annually, the report says.
=============
J A M A I C A
=============
* JAMAICA: Negotiations in Progress for Harmony Cove Development
---------------------------------------------------------------
RJR News reports that the Jamaican government said negotiations
are in progress with Chinese investors who have expressed an
interest in the multi-billion dollar Harmony Cove project in
Trelawny. Prime Minister Portia Simpson-Miller gave Parliament an
update.
Earlier this year, Edmund Bartlett, Opposition Spokesman on
Tourism, claimed that Jamaica is losing up to JM$65 million
dollars annually due to the slow pace in completing the Harmony
Cove project, according to RJR News.
The report relates that an agreement between Harmonisation Limited
and the Tavistock Group was signed in September 2006 for the
development of the multi-billion dollar resort. The government's
stake in the project, which is managed by Harmonisation, was in
the form of 2,200 acres of prime beach front land, the report
relays.
Tavistock's role was to prepare the master plan, organize the
financing, and construct as well as market the development, the
report adds.
===========
M E X I C O
===========
FINANCIERA FINCA: S&P Affirms 'BB-' Rating; Outlook Stable
----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-/B' global-
scale and 'mxBBB+/mxA-2' Mexican national-scale issuer credit
ratings on Financiera Finca S.A. de C.V. SOFOM E.N.R. (FINCA).
The outlook is stable.
S&P's ratings on FINCA reflect the intense competition in the
Mexican microfinance market and the impact that this could have on
FINCA's asset quality. The company's good profitability and
capitalization metrics, and diversified funding profile support
the ratings.
FINCA is a microfinance company focused on granting credit to
urban and rural low-income families. Approximately 99% of its
portfolio is in group credits. Competition is high in the
microfinance sector, which has pressured FINCA's asset quality.
FINCA has applied a more conservative growth strategy, which has
helped the company to maintain a nonperforming assets (NPAs) to
total loans ratio below 5% in the last two years. As of June
2013, its NPAs reached 4.3%, compared to an average of 3.8% in the
past three years. The company's reserve coverage for past due
loans above 30 days has been steady at above 100%. Conservative
loan portfolio growth of about 7% for 2013, and stronger
origination practices, should maintain NPAs below 5%.
"FINCA's adequate profitability levels are supported by high net
interest margins and a conservative growth strategy that has kept
NPAs under control," said Standard & Poor's credit analyst Elena
Enciso. As of June 2013, the company reported a 4.14% return on
assets (lower than the 5.49% reported as of December 2012) due to
higher operating expenses, investments in technology and contained
growth. Under current market conditions, S&P don't expect major
changes regarding profitability levels in the next 12 months.
FINCA's access to foreign funding sources with favorable
conditions will remain a key factor in generating profits.
NUEVO LEON: Moody's Takes Action on 13 Enhanced Loans
-----------------------------------------------------
Moody's de Mexico affirmed the Baa3 (Global Scale, local currency)
and Aa3.mx (Mexico National Scale) ratings to the following two
enhanced loans:
- MXN 1.6 billion enhanced loan from Banobras (original face
value) with a maturity of 30 years.
- MXN 1.5 billion enhanced loan from Banco del Bajio (original
face value) with a maturity of 30 years.
At the same time, Moody's assigned debt ratings of Baa3 (Global
Scale, local currency) and Aa3.mx (Mexico National Scale) to the
following seven enhanced loans:
- MXN 8.85 billion from Banorte (original face value) with a
maturity of 20 years.
- MXN 5 billion from Inbursa (original face value) with a maturity
of 25 years.
- MXN 3.84 billion from Banobras (original face value) with a
maturity of 30 years.
- MXN 2.49 billion from BBVA-Bancomer (original face value) with a
maturity of 20 years.
- MXN 1.5 billion from Multiva (original face value) with a
maturity of 15 years.
- MXN 1.11 billion from BBVA-Bancomer (original face value) with a
maturity of 20 years.
- MXN 750 million from HSBC (original face value) with a maturity
of 10 years.
Moody's also assigned a Ba1 (Global Scale, local currency) and
A1.mx (Mexico National Scale) to a MXN 360.8 million enhanced loan
from Banobras (original face value) with a maturity of 15 years.
Finally, Moody's assigned debt ratings of Baa2 (Global Scale,
local currency) and Aa2.mx (Mexico National Scale) to the
following three enhanced loans:
- MXN 5.006 billion from Banobras (original face value) with a
maturity of 20 years.
- MXN 1.4 billion from Banobras (original face value) with a
maturity of 20 years.
- MXN 1.073 million from Banobras (original face value) with a
maturity of 20 years.
These three loans are contracted under federal programs to support
investment in infrastructure and security (Programa de Apoyo para
Infraestructura y Seguridad - PROFISE) and reconstruction after
natural disasters (Fondo de Reconstruccion de Entidades
Federativas -- FONAREC). The state of Nuevo Leon will pay
interests, while principal will be paid through zero-coupon bonds
issued by the Government of Mexico (Baa1, stable outlook).
All the 13 enhanced loans are payable through a master trust
(Evercore as trustee), to which the state has pledged the flows
and rights to 92.8% of its federal participation revenues. All the
loans under this master trust share the cash flow and are paid on
a pari passu basis.
Ratings Rationale:
The Baa3/Aa3.mx debt ratings affirmed and assigned to the
aforementioned enhanced loans reflect the underlying
creditworthiness of the State of Nuevo Leon (Ba2/A2.mx, negative
outlook), supported by the following legal and credit enhancements
embedded in the loans:
1. Validity of the legal authorization of the transaction, which
authorizes the trust to be used as a mechanism for debt service
payment.
2. Strong trust structure based on an irrevocable notification to
the federal treasury regarding the transfer of rights and flows of
participation revenues to the trustee.
3. Estimated cash flows generate moderate debt service coverage
ratios. Under a Moody's base case scenario, cash flows within the
master trust are projected to provide 2.0x debt service coverage
for all the loans at the lowest point over the life of the loan.
Under a stress case scenario, estimated cash flows are projected
to provide 1.6x debt service coverage for all the loans, at the
lowest point.
4. Strong level of reserves within the master trust that represent
3.0x debt service coverage under a stress case scenario and
provide enough cushion against payment delays.
The Ba1/A1.mx rating assigned to the MXN 360 million enhanced loan
from Banobras (original face value) is supported by the same debt
service coverages under both base case and stress scenario and the
absence of fund reserves.
The Baa2/Aa2.mx ratings assigned to the three enhanced loans
reflect the aforementioned credit enhancements and the provision
of the zero coupon bonds issued from the Government of Mexico to
pay the total outstanding loan amount at maturity.
What Could Change The Ratings Up/Down
Given the links between the loans and the credit quality of the
obligor, an upgrade of the State of Nuevo Leon's issuer ratings
could exert upward pressure on debt ratings for these loans.
Conversely, a downgrade of the State of Nuevo Leon's issuer
ratings or if debt service coverage levels fall materially below
Moody's expectations would likely result in a downgrade of the
ratings on the loans.
The principal methodologies used in this rating were Enhanced
Municipal and State Loans in Mexico published on January 2011 and
Regional and Local Governments published on January 2013.
Moody's National Scale Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within
a country, enabling market participants to better differentiate
relative risks. NSRs differ from Moody's global scale ratings in
that they are not globally comparable with the full universe of
Moody's rated entities, but only with NSRs for other rated debt
issues and issuers within the same country. NSRs are designated by
a ".nn" country modifier signifying the relevant country, as in
".mx" for Mexico.
* Moody's Outlook on Mexican Banks Remain Stable Despite Slowdown
-----------------------------------------------------------------
The outlook for Mexico's banking system remains stable, says
Moody's Investors Service in a new report titled "Banking System
Outlook: Mexico". The outlook reflects Moody's expectation that
Mexican banks will continue to have relatively sound financial
profiles despite moderate economic growth in 2013 and into 2014.
Moody's expects Mexican banks to maintain strong fundamentals over
the next 12-18 months, which supports the stable outlook for the
system. Capitalization and profitability levels will provide
sufficient resources to support growth and create additional
reserves, and absorb even large losses without falling below
regulatory capital minima. Bank asset quality also remains strong,
"While we expect some increase in non-performing loans from
current lows as delinquencies in consumer loans and loans to
homebuilders go up, bank profitability and capitalization continue
to be strong" said David Olivares-Villagomez, a Moody's Vice
President Senior Credit Officer and author of the report.
Mexican banks maintain stable funding and liquidity positions
because they primarily fund themselves with peso-denominated
customer deposits that make up 69% of total liabilities, as
opposed to interbank and money market funds. Large portfolios of
government securities also provide liquidity buffers against
funding stress.
Falling unemployment and relatively contained inflation reflect
the benign macroeconomic environment despite current economic
slowdown. "Even though the Mexican economy has slowed over the
last couple of years, Moody's estimates that GDP growth of 1.6% in
2013 and 3.1% in 2014 will continue to support bank lending", said
Olivares-Villagomez. Moreover, rising personal income and domestic
demand, along with good export levels are also positive credit
factors that sustain bank activity over the outlook period. These
estimates also reflect the rating agency's view that the proposed
structural reforms will have a greater impact than the recent
cyclical factors.
Moody's notes that the Mexican government is proposing structural
reforms to encourage economic growth. For the bank sector, the
reforms include streamlining the bankruptcy process and
facilitating the enforcement of collateral agreements and
guarantees. "These initiatives will encourage bank lending to the
private sector, which is currently low relative to other Latin
American countries," said Olivares-Villagomez.
* Moody's: Education Costs Hamper Flexibility of Mexican States
---------------------------------------------------------------
The gap between rising education costs and the federal transfers
earmarked to help pay for them is putting increasing strain on the
finances of the Mexican states, which are already limited in their
financial flexibility, says Moody's Investors Service in the
report "Education Expenditures Constrain Financial Flexibility of
Mexican States." Increases in education costs have outpaced those
in the federal transfers earmarked to cover them over the past
five years, contributing to cash deficits.
"The discrepancies between costs and federal transfers are
unlikely by themselves to lead to rating actions in the short
term," says Moody's Analyst Roxana Munoz. "However, if not
addressed, the states could consequently have less financial
flexibility, resulting in cash financing deficits and downward
rating pressure over the medium term."
Mexican states spend an average of 34% of their total revenues on
education, which is their largest overall expenditure. On average,
states cover 75% of their education expenditures with the Fondo de
Aportaciones de Educacion Basica (Fund of Earmarked Transfers for
Compulsory Education, or FAEB) the federal transfer for compulsory
education.
Moody's notes a large discrepancy among states on the portion of
their costs that FAEB funding covers. Some states cover over 90%
of their education costs with FAEB funds, but others are only able
to pay about 50% of their education budgets with FAEB money.
FAEB's distribution formula cannot account for all of the
discrepancy in funding allocations among the individual states,
says Moody's. Rather, it appears that portions of FAEB, depending
on enrollment numbers and performance metrics, are being assigned
discretionarily and reflect each state's negotiating capacity to
secure resources from the federal government.
* Moody's Confirms Ratings on Notes from Two METROCB RMBS Issues
----------------------------------------------------------------
Moody's de Mexico has confirmed the global local currency and
national scale ratings of METROCB 04U and METROCB 05U, two
residential mortgage-backed securitizations (RMBS) sponsored by
Metrofinanciera in Mexico. The mortgage pools consist of first-
lien, fixed-rate loans denominated in UDIS or Mexican Pesos and
granted primarily to low-income borrowers in Mexico.
The complete rating action is as follows:
Originator and Servicer: Metrofinanciera S.A.P.I. de C.V.,
Sociedad Financiera de Objeto Multiple, Entidad No Regulada.
Issuer: Banco Invex, S.A., Institucion de Banca Multiple, Invex
Grupo Financiero only in its capacity as trustee of the following
securitization trusts:
METROCB 04U, ratings of B1 (sf) (Global Scale, Local Currency) and
Baa1.mx (sf) (National Scale) confirmed. The last rating action
occurred on April 16, 2013 when the ratings were downgraded to B1
(sf) from Ba2 (sf) (Global Scale, Local Currency) and to Baa1.mx
(sf) from A2.mx (sf) (National Scale Rating) and ratings were
placed on review for possible downgrade.
METROCB 05U, ratings of B1 (sf) (Global Scale, Local Currency) and
Baa1.mx (sf) (National Scale) confirmed. The last rating action
occurred on April 16, 2013 when the ratings were downgraded to B1
(sf) from Ba2 (sf) (Global Scale, Local Currency) and to Baa1.mx
(sf) from A2.mx (sf) (National Scale Rating) and ratings were
placed on review for possible downgrade.
Ratings Rationale:
The rating action reflects the fact that the attachment of
Metrofinanciera's bank accounts has been lifted. Metrofinanciera
and Proyectos Adamantine have agreed to end the legal proceedings
that started on April 2, 2013 when Proyectos Adamantine sued
Metrofinanciera and attached Metrofinanciera's operating accounts,
where Metrofinanciera, as servicer, received collections from its
RMBS transactions. After Metrofinanciera's accounts were attached
as a result of the lawsuit, Metrofinanciera instructed mortgage
borrowers to pay directly in alternative bank accounts, also in
the name of Metrofinanciera. As per Metrofinanciera, currently 94%
of the collections are being deposited in these alternative bank
accounts. In addition, Metrofinanciera is now coordinating the
opening of bank accounts in the name of the RMBS issuing trusts so
that going forward RMBS borrowers pay directly into accounts in
the name of the trusts. This will be credit-positive for the
transaction, as it will mitigate the operational risk related to
the servicer.
Moody's notes that the affected certificates have not missed any
interest payment. In addition, the trustee did not have to request
a draw under the Partial Credit Guarantee (PCG) that Sociedad
Hipotecaria Federal (SHF) provides for the two transactions.
The METROCB 04U and METROCB 05U certificates currently have a low
bond factor of 20% and 28% and benefit from a Partial Credit
Guarantee (PCG) provided by SHF for 9% and 26% of the Class A
outstanding balance, respectively.
On April 16, 2013, Moody's had placed the ratings of six
certificates from Metrofinanciera RMBS on review for possible
downgrade after Metrofinanciera's announcement that the company's
assets had been attached as a result of a lawsuit filed against
the company by Proyectos Adamantine. This included a freeze of the
bank accounts where the company received collections from the
securitized mortgage loans prior to remitting them to the trust
account. As a result, Metrofinanciera was not able to transfer
collections to the securitization trust accounts during the first
month of the attachment, increasing considerably the risk that the
certificates would suffer interest payment shortfalls. The trustee
was able to make coupon payments in both transactions by using
available resources from the trusts' cash accounts and deferring
some payments like administrations fee and mortgage insurance
premiums.
With respect to the mortgage cash flow analysis, quantitative
models and measurements, Moody's considered these aspects:
As of June 2013, delinquencies greater than 90 days, including
outstanding real estate owned (REO), as a percent of the original
pool balance for each of the underlying pools were as follows:
- METROCB 04U: 7% after 104 months since closing, versus 5.5% as
of 12 months ago
- METROCB 05U: 9% after 96 months since closing, versus 7% as of
12 months ago
Moody's projected lifetime cumulative gross defaults in each
transaction is as follows:
- METROCB 04U: 7% of original balance, or 28% of current balance
- METROCB 05U: 10% of original balance, or 32% of current balance
After estimating projected lifetime gross default rates as a
percent of the current pool balances including REOs, Moody's
determined the pool expected losses by applying a severity of loss
assumption of 74% on the projected defaulted loan balance. Moody's
updated expected net loss projections are as follows:
- METROCB 04U: 21% of current balance
- METROCB 05U: 24% of current balance
Moody's then compared these net loss projections with the
estimated lifetime available credit enhancement by certificate
(including any subordination, overcollateralization, and any
remaining excess spread, as a percent of the outstanding pool
balance), which is as follows:
- METROCB 04U: 33.5% of current balance
- METROCB 05U: 35% of current balance
With respect to the sensitivity of the ratings, if Moody's were to
instead assume the following cumulative gross defaults as a
percent of the current pool balance, the certificates would
experience a one-notch downgrade or upgrade as follows:
- METROCB 04U: 43%, (instead of 28%), downgrade to B2 (sf) /
Baa3.mx (sf) from B1 (sf) / Baa1.mx (sf)
- METROCB 05U: 47% (instead of 32%), downgrade to B2 (sf) /
Baa3.mx (sf) from B1 (sf) / Baa1.mx (sf)
Moody's notes that once all collections are received directly into
a trust account and all remaining frozen amounts are reconciled,
Moody's may consider upgrading the ratings of the transactions if
the transactions continue to perform in line with historical
trends. According to the most recent distribution report of August
15, 2013, some cash collections that had been attached still have
to be reconciled.
The methodologies used in these ratings were "Moody's Approach to
Rating RMBS Using the MILAN Framework" published in May 2013 and
"Moody's Approach to Monitoring Residential Mortgage-Backed
Securitizations in Mexico" published in August 2009.
Period of time covered in the financial information used to
determine the rating was August 31, 2004 to August 15, 2013.
Moody's considered the servicer's practices and considers them
adequate.
Moody's National Scale Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within
a country, enabling market participants to better differentiate
relative risks. NSRs differ from Moody's global scale ratings in
that they are not globally comparable with the full universe of
Moody's rated entities, but only with NSRs for other rated debt
issues and issuers within the same country. NSRs are designated by
a ".nn" country modifier signifying the relevant country, as in
".mx" for Mexico.
=======
P E R U
=======
MAESTRO: Moody's Eyes Possible Downgrade of Ba2 Ratings
-------------------------------------------------------
Moody's Investors Service has placed Maestro's Ba2 corporate
family rating and its Ba2 senior unsecured rating under review for
downgrade, following a weaker than expected same store sales
growth for the 1st half of 2013, leading to higher leverage, while
internal liquidity may be insufficient to continue company's
current store opening plans for the next few years.
Ratings placed under review for downgrade:
Corporate Family Rating: Ba2
- $200 million senior unsecured notes due 2019: Ba2
Ratings Rationale:
"For the first half of 2013, Maestro continued to have good top-
line growth, but due to the faster pace of new store openings in
the 1H2013 (4 stores) vs. 1H2012 (1 store), same store sales
growth was only 2% and reported operating margin for the first
half of 2013 was 6.9% vs. 7.5% in the same period in 2012,"
explained Moody's Senior Credit Officer Soummo Mukherjee.
Additionally, due to an approximate 10% depreciation of the
Peruvian Soles against the $ since the beginning of the year,
Maestro's leverage, as measured by Total Debt to EBITDA, was 5.9
times," added Mukherjee
At the end of June 30th, 2013, Maestro had cash and cash
equivalents of SOL 37 million, which was sufficient to cover the
company's short-term debt of SOL 29 million but insufficient to
continue with the company's planned store openings.
The review for downgrade will focus on Maestro's: a) funding plans
to continue its planned store openings; b) its ability to improve
its same store sales growth and overall margins; and c) commitment
and ability to deleverage to levels appropriate for its rating
category.
The ratings are likely to be downgraded if the company's leverage
is likely to remain above 5.0x on a Total Debt to EBITDA basis at
the end of FY2013, after Moody's standard adjustments, such as
capitalization of operating leases. On the other hand, a realistic
deleveraging plan to have leverage (according to Moody's standard
adjustments) below 4.0x by the end of 2014, could result in a
confirmation at the Ba2 level.
The principal methodology used in this rating was the Global
Retail Industry Methodology published in June 2011.
Headquartered in the city of Lima, Peru, Maestro is controlled by
Enfoca, a Peruvian private equity fund. The company is the major
home improvement retailer in Peru, with 27 stores spread across
the country. For the LTM period ended June, 2013 the company
reported annual revenues of SOL 1.3 Billion (approximately $517
Million at current exchange rates) and adjusted EBITDA margin of
12.1%.
===============================
T R I N I D A D & T O B A G O
===============================
CARIBBEAN AIRLINES: To Get JM$400 Million Subsidy From T&T
----------------------------------------------------------
RJR News reports that despite losing its fuel subsidy and being
mandated to achieve financial viability, Caribbean Airlines
Limited is set to receive a JM$400 million subsidy from the
Trinidadian Government this fiscal year.
Larry Howai, Minister of Finance, confirmed the figure, saying it
will facilitate the airline's restructuring process, according to
RJR News.
RJR News relates that Mr. Howai said it was not a final figure and
could be changed when he obtained CAL's final report.
RJR News notes that Mr. Howai said CAL must move towards the
adoption of a financially sound business model for positioning the
airline in targeted segments of the global tourism market.
To this end, Mr. Howai proposed to discontinue the fuel subsidy
which CAL currently enjoys -- and had been the cause for much
complaint by regional islands in recent months, RJR News relays.
In the meantime, Mr. Howai is to receive Caribbean Airlines' new
business plan, RJR News discloses. CAL's report is expected to
come from the CAL board by September 17.
The Finance Minister said the report has to be examined by Finance
Ministry officials and CAL will also be doing some cost-cutting,
RJR News adds.
Caribbean Airlines Limited -- http://www.caribbean-airlines.com/
-- provides passenger airline services in the Caribbean, South
America, and North America. The company also offers freighter
services for perishables, fish and seafood, live animals, human
remains, and dangerous goods. In addition, it operates a duty
free store in Trinidad. Caribbean Airlines Limited was founded in
2006 and is based in Piarco, Trinidad and Tobago.
* * *
As reported in the Troubled Company Reporter-Latin America on May
20, 2013, Caribbean360.com said that Trinidad and Tobago Finance
Minister Larry Howai said Caribbean Airlines Limited recorded
losses estimated at US$70 million in 2012. In 2011, CAL had
recorded losses of US43.7 million.
TCRLA reported on March 21, 2012, that RJR News said Caribbean
Airlines Limited owes nearly US$30 million to Trinidad and
Tobago's fuel provider National Petroleum. Trinidad Express said
CAL enjoys a seven-day credit facility for aviation fuel from the
company, according to RJR News. However, the report related that
the airline has not been able to pay the full amount when invoiced
and instead has been issuing partial payments to sustain the
account. RJR News noted that Trinidad Express reported that the
arrears were built up as no payments have been made despite an
attractive fuel subsidy which the airline has enjoyed since it
began operations.
CARIBBEAN AIRLINES: Won't Increase Ticket Prices
------------------------------------------------
The Gleaner reports that Caribbean Airlines Limited has confirmed
that it will not be increasing ticket prices after the Kamla
Persad-Bissessar administration said it was ending its fuel
subsidy to the state-owned carrier.
Finance Minister Larry Howai said the subsidy, which was estimated
at US$40 million last year, would come to an end on October 1,
notes The Gleaner. The report relates that CAL said the trigger
price level for the subsidy has been increased each year over the
last two years.
"In other words, if the price of fuel remained the same over the
years, the subsidy per gallon was decreasing each year. Secondly,
Caribbean Airlines has not used the fuel subsidy as a competitive
pricing tool," the airline said in its statement, adding it had no
intention to change the broad pricing strategies, the report
discloses.
"The caveat, of course, is that there are no significant increases
in market fuel prices. These strategies recognize seasonal
demand, consumers' demands for value for money fares, as well as
the potential increased competition," the airline said, the report
notes.
Mr. Howai had told legislators that the new CAL board had
completed the first phase of a revised business plan for the
airline to achieve financial viability, the report adds.
Caribbean Airlines Limited -- http://www.caribbean-airlines.com/
-- provides passenger airline services in the Caribbean, South
America, and North America. The company also offers freighter
services for perishables, fish and seafood, live animals, human
remains, and dangerous goods. In addition, it operates a duty
free store in Trinidad. Caribbean Airlines Limited was founded in
2006 and is based in Piarco, Trinidad and Tobago.
* * *
As reported in the Troubled Company Reporter-Latin America on May
20, 2013, Caribbean360.com said that Trinidad and Tobago Finance
Minister Larry Howai said Caribbean Airlines Limited recorded
losses estimated at US$70 million in 2012. In 2011, CAL had
recorded losses of US43.7 million.
TCRLA reported on March 21, 2012, that RJR News said Caribbean
Airlines Limited owes nearly US$30 million to Trinidad and
Tobago's fuel provider National Petroleum. Trinidad Express said
CAL enjoys a seven-day credit facility for aviation fuel from the
company, according to RJR News. However, the report related that
the airline has not been able to pay the full amount when invoiced
and instead has been issuing partial payments to sustain the
account. RJR News noted that Trinidad Express reported that the
arrears were built up as no payments have been made despite an
attractive fuel subsidy which the airline has enjoyed since it
began operations.
===============
X X X X X X X X
===============
* Moody's Notes Decline in Corporate Default Rate for August
------------------------------------------------------------
Moody's trailing 12-month global speculative-grade default rate
came in at 2.9% in August, down slightly from July's revised rate
of 3.0%, Moody's Investors Service says in its monthly default
report. The latest global reading is very close to the rating
agency's year-ago forecast of 3.0%.
"Corporate defaults continue to track our expectations very
closely," notes Albert Metz, Managing Director of Moody's Credit
Policy Research. "Absent an abrupt change in monetary policy, we
expect the current low levels of corporate defaults to continue
for the near term."
Only two Moody's-rated corporate debt issuers defaulted last
month. In the year to date there have been 47 defaults: 27 from
North America, 13 from Europe and the remainder from Latin
America. In the comparable period last year, there were 46
defaults.
In the US, the speculative-grade default rate finished August at
2.8%, down from July's revised rate of 2.9%. Last year, the US
default rate finished August at 3.6%. In Europe, the rate held
steady at 3.4% from July to August, and a year ago it was also
3.4%.
Moody's default rate forecasting model now predicts that the
global speculative-grade default rate will finish 2013 at 3.1%,
before falling to 2.7% in August 2014.
Across industries over the coming year, Moody's continues to
expect default rates to be highest in the Media: Advertising,
Printing & Publishing sector in the US, and the Hotel, Gaming &
Leisure sector in Europe.
Measured on a dollar-volume basis, the global speculative-grade
bond default rate came in at 1.7% in August, down from 1.9% in
July. At this time last year, the rate was 2.2%.
In the US, the dollar-weighted speculative-grade bond default rate
fell to 1.3% in August from 1.5% in July. The comparable rate was
1.9% in August 2012. And in Europe the dollar-weighted rate
finished August at 3.1%, down from 3.2% in July. At this time last
year, the European rate was 3.3%.
Moody's global distressed index edged lower in August, to 8.5%
from 8.8% in July. A year ago, the index stood at 17.5%.
In the leveraged-loan market, just one Moody's-rated issuer
defaulted in August. Moody's trailing 12-month US leveraged loan
default rate finished August at 2.5%, down from 2.6% in July. A
year ago, the loan default rate stood at 2.6%.
***********
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., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Valerie U. Pascual, Julie Anne L. Toledo, Frauline S.
Abangan, and Peter A. Chapman, Editors.
Copyright 2013. 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$775 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 A. Chapman at 215-945-7000 or Nina Novak at
202-241-8200.
* * * End of Transmission * * *