/raid1/www/Hosts/bankrupt/TCRLA_Public/131007.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
Monday, October 7, 2013, Vol. 14, No. 198
Headlines
A R G E N T I N A
* ARGENTINA: Barred by U.S. Judge From Planned Bond Exchange
B E R M U D A
ENDURANCE SPECIALTY: Moody's Cuts Preferred Stock Rating to Ba1
B R A Z I L
OGX: Hammerhead Oil Reserves Estimate Cut in Degolyer Report
OSX BRASIL: Scrambling to Escape Fate of Sister Firm
PETROLEO BRASILEIRO: Moody's Cuts Multiple Sr. Shelf to (P)Ba1
SUZANO PAPEL: Fitch Affirms Long-Term Local Currency IDR at 'BB-'
* Moody's Takes Rating Actions on Brazilian Fin'l. Institutions
* Moody's Alters Outlook on Several Brazilian Issuer/Debt Ratings
C A Y M A N I S L A N D S
BLACK SHEEP: Shareholder to Hear Wind-Up Report on Nov. 1
BLUE POINT: Shareholders' Final Meeting Set for Oct. 23
C ESCAPE: Shareholder to Hear Wind-Up Report on Oct. 22
COSTA DORADA: Shareholders' Final Meeting Set for Oct. 24
DELAWARE STREET: Shareholder to Hear Wind-Up Report on Nov. 1
NISSAY 2005: Shareholder to Hear Wind-Up Report on Nov. 1
SCANDIUM FUND: Shareholders' Final Meeting Set for Oct. 15
STANDARD INVESTMENT: Shareholder to Hear Wind-Up Report on Nov. 1
STRAUS CHINA: Shareholder to Hear Wind-Up Report on Oct. 15
STREAMLINE FUND: Shareholders' Final Meeting Set for Nov. 7
C O L O M B I A
MILLICOM INT'L: Fitch Rates New Senior Unsecured Notes 'BB+'
M E X I C O
ALESTRA: S&P Raises CCR to 'BB'; Outlook Stable
LATIN AMERICAN: S&P Puts 'BB-' CCR on CreditWatch Negative
METROFINANCIERA SAPI: S&P Affirms CCC Rating on MTROCB 07U Notes
TENEDORA NEMAK: S&P Raises CCR to 'BB+'; Outlook Stable
U R U G U A Y
* URUGUAY: IMF Concludes 2013 Article IV Mission
X X X X X X X X
BOND PRICING: For the Week From Sept. 30 to Oct. 4, 2013
- - - - -
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A R G E N T I N A
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* ARGENTINA: Barred by U.S. Judge From Planned Bond Exchange
------------------------------------------------------------
Bob Van Voris at Bloomberg News reports that Argentina was barred
by a U.S. Judge from going forward with a plan by President
Cristina Fernandez de Kirchner to exchange restructured bonds for
debt payable in that country.
U.S. District Judge Thomas Griesa in Manhattan said the plan,
disclosed by Kirchner in a national address on Aug. 26, is "an
apparent attempt to evade" his orders in a case by billionaire
hedge fund manager Paul Singer's Elliott Management Corp. and
other holders of defaulted bonds against Argentina, according to
Bloomberg News.
Bloomberg News notes that Argentina in 2001 defaulted on a record
US$95 billion of foreign debt. Holders of more than 90 percent of
the bonds agreed to take new exchange bonds in 2005 and 2010, at a
deep discount. Judge Griesa in February issued orders barring
Argentina from paying holders of the restructured debt without
also paying in full holders of US$1.5 billion of its defaulted
bonds.
Bloomberg News recalls that President Kirchner's plan would allow
holders of the exchange bonds, which are governed by New York law,
to swap them for debt governed by Argentina law. The plan's
purpose is to shield payments on the restructured debt from action
by U.S. courts, Bloomberg News notes.
Bloomberg News relates that Judge Griesa, who referred
specifically to the Kirchner plan, barred Argentina from "altering
or amending the processes or specific transfer mechanisms by which
it makes payments on the exchange bonds, without prior approval of
the court."
Bloomberg News says the case was filed in 2008 by holders of the
defaulted bonds, led by Elliott and Aurelius Capital Management
LP.
Bloomberg News notes that Argentina has vowed never to pay the
hedge funds and other holders of its defaulted bonds, whom the
country's leaders have called "vultures." The legislature passed
a law in 2005 barring payment of the defaulted bonds, Bloomberg
News added.
Bloomberg News relates that after Judge Griesa issued the February
orders tying payments on the exchange bonds to payment of the $1.5
billion in defaulted debt, he delayed enforcement to allow
Argentina to appeal. Judge Griesa also ordered Argentina not to
"take any action to evade" his rulings before the appeals are
concluded, Bloomberg News discloses.
Bloomberg News adds that the federal appeals court in New York
upheld Judge Griesa's rulings in August. Argentina is seeking
U.S. Supreme Court review, notes the report.
Lower court case is NML Capital Ltd. v. Republic of Argentina, 08-
cv-06978, U.S. District Court, Southern District of New York
(Manhattan). The appeal is NML Capital Ltd. v. Republic of
Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit
(New York).
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B E R M U D A
=============
ENDURANCE SPECIALTY: Moody's Cuts Preferred Stock Rating to Ba1
---------------------------------------------------------------
Moody's Investors Service has lowered the ratings of Endurance
Specialty Holdings Ltd. (NYSE: ENH, "Endurance", senior debt to
Baa2 from Baa1) and the insurance financial strength ratings of
its principal operating subsidiaries (IFSR to A3 from A2). The
outlook for the ratings is stable.
Ratings Rationale
Moody's said that the rating downgrades result from a
deterioration in the company's credit profile over the past couple
of years, including higher financial and operational leverage, as
well as muted profitability that has been suppressed by
catastrophe losses. The company's common equity capital remains
12.8% below YE2010 levels, the result of $344 million in share
repurchases executed in 1Q2011 and an inability to fully replenish
equity capital following two heavy back-to-back catastrophe loss
years in 2011 and 2012. While the company is performing better in
2013 and has meaningfully reduced its catastrophe risk exposure to
levels more in line with its peers, Moody's views Endurance's
overall credit profile to be more appropriately positioned at A3
for insurance financial strength at the current time.
In May 2013, Endurance elected John R. Charman as its Chairman and
Chief Executive Officer, replacing David Cash. Mr. Charman was
previously CEO of AXIS Capital Holdings Limited for 11 years
following a long and distinguished track record in the Lloyd's
market. Mr. Charman has articulated a strategy that would enhance
Endurance's credit profile over time, in our opinion, including
increasing the scale of the company, maintaining moderate peak
risk exposures, improving core underwriting profitability and
increasing geographic and product diversification. If successful,
these strategic and operational initiatives could improve
Endurance's competitive position and its business and financial
profile relative to its peers over the next few years.
According to Moody's, Endurance's ratings are based on the group's
good position in specialty insurance and reinsurance lines, its
conservative reserving philosophy and investment profile and its
sizable capital base. These strengths are tempered by the
company's weaker diversification by product and geography relative
to some of its peers, weak core profitability and increased
financial and operational leverage metrics relative to historical
levels and by the inherent underwriting volatility in many of the
company's core lines of business, including catastrophe exposed
property risks and certain casualty-based exposures.
Going forward, Moody's noted several factors that could lead to
negative pressure on Endurance's ratings: 1) adjusted financial
leverage above 30%; 2) a decline in shareholders' equity
(including share repurchases) by more than 10% over a rolling
twelve month period; and 3) unadjusted gross underwriting leverage
above 3.0x.
Conversely, the rating agency stated that the following factors
could lead to positive ratings pressure: 1) Improved geographic
and product diversification (e.g. GPW for US-based exposures to
around 2/3 of total GPW and crop insurance to less than 20% of
total NPW); 2) returns on capital consistently in low double digit
percentage range; 3) adjusted financial leverage in the low 20%
range; and 4) a catastrophe risk appetite in line with current
levels (e.g. largest 1/100 occurrence PML less than 15% of total
equity, largest 1/250 occurrence PML less than 20% of total
equity).
The following ratings have been lowered with a stable outlook
assigned:
Endurance Specialty Insurance Ltd. -- insurance financial
strength to A3 from A2;
Endurance Reinsurance Company of America -- insurance financial
strength to A3 from A2;
Endurance Specialty Holdings Ltd. -- senior debt to Baa2 from
Baa1, provisional senior debt to (P)Baa2 from (P)Baa1,
provisional subordinated debt to (P)Baa3 from (P)Baa2, preferred
stock to Ba1(hyb) from Baa3(hyb), and provisional preferred
stock to (P)Ba1 from (P)Baa3;
Endurance Holdings Capital Trusts I and II - provisional
capital securities to (P)Baa3 from (P)Baa2.
Endurance Specialty Holdings Ltd., based in Bermuda, is engaged
through its subsidiaries in underwriting insurance and reinsurance
on a worldwide basis. For the six months ended June 30, 2013,
Endurance reported net income available to common shareholders of
$145 million. As of June 30, 2013, the company reported total
shareholders' equity of approximately $2.7 billion.
The principal methodology used in this rating was Moody's Global
Rating Methodology for Reinsurers published in December 2011.
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B R A Z I L
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OGX: Hammerhead Oil Reserves Estimate Cut in Degolyer Report
------------------------------------------------------------
Rodrigo Orihuela and Peter Millard at Bloomberg News, citing a
report by DeGolyer & MacNaughton, report that OGX Petroleo & Gas
Participacoes SA's venture with Petroliam Nasional Bhd. holds less
than 40 percent of the oil reserves that the explorer run by
former billionaire Eike Batista announced last year.
Tubarao Martelo field off Rio de Janeiro's coast may hold as much
as 108.5 million barrels of oil, including proven, probable and
possible reserves, or 3P, the oil-reserves auditing company said,
according to Bloomberg News. That compares with 285 million
recoverable barrels announced by OGX in April 2012, when it
declared the field commercial, without explaining how the estimate
was obtained at the time, Bloomberg News notes.
Proved reserves, or 1P, were estimated to be zero because of the
"uneconomic nature of the project," Bloomberg News quoted DeGolyer
as saying.
Bloomberg News notes that OGX is preparing to start production at
Tubarao Martelo, or Hammerhead Shark, after an oil platform
operated by its sister company OSX Brasil SA (OSXB3) arrived this
week. The cut in estimated reserves comes two days after OGX
missed a US$45 million payment on foreign bonds amid negotiations
with creditors, Bloomberg News says.
"You need money for those things. . . . They have to go through a
debt restructuring," the report quoted Eric Conrads, who manages
about US$750 million of Latin American stocks at ING Investment
Management, as saying.
Bloomberg News relays that Petronas, as the Malaysian state-run
partner is known, in May agreed to pay as much as US$850 million
for 40 percent of Tubarao Martelo, with part of the payment
hinging on output. The first payment is pending Brazilian
regulatory approval, Bloomberg News notes.
Drilling Tests
According to Bloomberg News, the field's proven and probable
reserves, or 2P, amount to 87.9 million barrels of oil equivalent,
DeGolyer said. The report follows additional drilling tests
carried out after OGX discloses the previous estimates, Bloomberg
News notes.
The "Lack of 1P reserves is concerning" and "intriguing for a
field that should start up in a couple of months," Morgan Stanley
analyst Bruno Montanari said in a note to clients obtained by
Bloomberg News.
Revenue from the field in the coming two decades, based on proven,
probable and possible reserves and price and cost premises
supplied by OGX could reach US$11.2 billion, Bloomberg News quoted
DeGolyer as saying. Output next year may reach 6.2 million
barrels of oil, DeGolyer added, notes the report.
Bloomberg News adds that on July 1, OGX said it would scrap
development of three offshore fields because they weren't
commercially viable and that it may shut down its Tubarao Azul
field next year. That would make Tubarao Martelo its only oil
producing field, Bloomberg News relays.
About OGX Petroleo
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 Participaaoes 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.
OSX BRASIL: Scrambling to Escape Fate of Sister Firm
----------------------------------------------------
Luciana Magalhaes at Daily Bankruptcy Review reports that the
Brazilian shipbuilding company OSX Brasil SA is seeking to escape
the fate of its sister company, oil firm OGX Petroleo e Gas
Participacoes SA, which defaulted on a bond payment amid one of
Latin America's biggest corporate collapses ever.
OSX Brasil SA is a shipbuilder controlled by billionaire Eike
Batista.
As reported in the Troubled Company Reporter-Latin America on
June 26, 2013, Reuters said that OSX Brasil denied a report it
failed to make payments on debt held by Spanish infrastructure
group Acciona. The local Folha da S.Paulo newspaper reported that
Batista's OSX Brasil was struggling to avoid bankruptcy after it
defaulted on some BRL500 million ($222 million) in debt held by
Acciona, according to Reuters.
PETROLEO BRASILEIRO: Moody's Cuts Multiple Sr. Shelf to (P)Ba1
--------------------------------------------------------------
Moody's Investors Service downgraded Petrobras S.A.'s global
foreign currency and local currency debt ratings to Baa1 from A3.
The downgrade reflects Petrobras's high financial leverage and the
expectation that the company will continue to have large negative
cash flow over the next few years as it pursues its capital
spending program. The outlook remains negative.
"We see Petrobras's leverage to be nearing peak levels in 2013 and
2014, significantly higher than those of its industry peers and
only likely to decline in 2015 and beyond. Successful execution on
its ambitious capital program and delivery on aggressive
production targets will be key to reducing leverage in the next
few years and to stabilizing the rating outlook," said Thomas
Coleman, Senior Vice President.
Downgrades:
Issuer: Petrobras Argentina S.A.
Senior Unsecured Regular Bond/Debenture May 15, 2017, Downgraded
to Baa1 from A3
Issuer: Petrobras Global Finance B.V.
Multiple Seniority Shelf Aug 28, 2015, Downgraded to (P)Baa1
from (P)A3
Multiple Seniority Shelf Aug 28, 2015, Downgraded to (P)Baa2
from (P)Baa1
Senior Unsecured Regular Bond/Debenture May 20, 2016, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 15, 2019, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Oct 1, 2029, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture May 20, 2016, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 15, 2019, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture May 20, 2023, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture May 20, 2043, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Apr 1, 2019, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Oct 2, 2023, Downgraded
to Baa1 from A3
Issuer: Petrobras International Finance Company
Multiple Seniority Shelf Aug 28, 2015, Downgraded to (P)Baa1
from (P)A3
Multiple Seniority Shelf Aug 28, 2015, Downgraded to (P)Baa2
from (P)Baa1
Multiple Seniority Shelf, Downgraded to (P)A3 from (P)A2
Multiple Seniority Shelf, Downgraded to (P)Baa1 from (P)A3
Multiple Seniority Shelf, Downgraded to (P)Baa2 from (P)Baa1
Senior Unsecured Regular Bond/Debenture Mar 1, 2018, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Feb 6, 2015, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 27, 2021, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Feb 6, 2017, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 27, 2041, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Dec 10, 2018, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Dec 14, 2026, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Mar 15, 2019, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 20, 2020, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 20, 2040, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Sep 15, 2014, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 27, 2016, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 27, 2021, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Jan 27, 2041, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Oct 6, 2016, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Mar 7, 2022, Downgraded
to Baa1 from A3
Senior Unsecured Regular Bond/Debenture Mar 7, 2018, Downgraded
to Baa1 from A3
Issuer: Petroleo Brasileiro S.A. - PETROBRAS
Issuer Rating, Downgraded to Baa1 from A3
Multiple Seniority Shelf Aug 28, 2015, Downgraded to (P)Baa1
from (P)A3
Multiple Seniority Shelf Aug 28, 2015, Downgraded to (P)Baa2
from (P)Baa1
Multiple Seniority Shelf Aug 28, 2015, Downgraded to (P)Baa3
from (P)Baa2
Multiple Seniority Shelf, Downgraded to (P)Baa1 from (P)A3
Multiple Seniority Shelf, Downgraded to (P)Baa1 from (P)A3
Multiple Seniority Shelf, Downgraded to (P)Ba1 from (P)Baa3
Multiple Seniority Shelf, Downgraded to (P)Baa2 from (P)Baa1
Outlook Actions:
Issuer: Petrobras Argentina S.A.
Outlook, Remains Negative
Issuer: Petrobras Global Finance B.V.
Outlook, Remains Negative
Issuer: Petrobras International Finance Company
Outlook, Remains Negative
Issuer: Petroleo Brasileiro S.A. - PETROBRAS
Outlook, Remains Negative
With the largest capital program among its peers, Petrobras's
spending in 2013 could be almost double its internally generated
cash flow. The company's total debt liabilities increased in the
first half of 2013 by $16.3 billion, or $8.36 billion net of cash
and marketable securities, and should increase again in 2014,
based on an outlook for negative cash flow through 2014 and into
2015.
Leverage metrics have increased steadily and are elevated, with
Total Debt/EBITDA of 3.8x, Debt/Proved Reserves of $11.25/BOE, and
Debt/Daily Production approaching $64,000/BOE, the highest among
its peer group of integrated and national oil companies.
CEO das Gracas Foster is leading a revised capital program focused
on project execution and delivery, as well as cost controls that
will help contain capital increases and realize production growth.
The program includes new production units coming onstream in 2013
and 2014, the staged delivery of a fleet of drilling rigs to
advance exploration and development in both the post and pre-salt
zones, and major refinery expansions.
While noting the company's progress in bringing new units online
to increase production, it also will continue to face significant
execution risk on a plan targeting production to reach 3 million
BOE/day in 2016 and 5.2 MM BOE/day in 2020. In addition to the
inherent geological and technological challenges of the deepwater,
the company faces staging, delivery and delay risks on drilling
and development, which could be exacerbated by mandates to meet
local content requirements.
Petrobras's funding needs and leverage will also be pressured by
continuing losses in its downstream operations. Petrobras's
refineries are running at higher rates and are increasing output
in 2013, reducing the need for product imports, and the government
has granted a series of price increases on regulated product
prices. Still, the downstream is generating sizeable losses and it
is not clear whether sufficient further price increases will be
forthcoming, given political pressures on the government and its
focus on controlling inflation.
Petrobras's Baa1 ratings are supported by its large-scale reserve
base and dominance in the Brazilian oil industry with a leading
position in one of the industry's most prospective offshore areas,
and by its sizeable new pre-salt discoveries and technological
expertise. In addition, the company's focus on project execution
and cost reduction should ease some of the cost overrun issues and
delays it has experienced in the past.
Petrobras's Baa1 rating reflects government support and the impact
of joint-default analysis. Underlying the ratings downgrade,
Moody's has lowered Petrobras's baseline credit assessment to baa2
from baa1, reflecting its rising leverage profile and execution
risk. We are maintaining assumptions of high support from the
government of Brazil (rated Baa2 with a stable outlook) and
moderate dependence, or default correlation between Petrobras and
the government.
While government support continues to provide one notch of uplift,
we note increasing linkages between Petrobras and the sovereign.
The government is playing a larger oversight role in Petrobras's
strategic direction and offshore development, and is promoting
local content and other initiatives that will have an impact on
its development program. Petrobras's financing arrangements
include strong ties to BNDES, the state development bank, which is
also closely involved as a holder in Sete Brasil, the new entity
charged with overseeing development of the Brazilian based
offshore rig fleet that will be contracted to Petrobras.
Moody's is maintaining a negative outlook on Petrobras's ratings
to assess the company's execution on its capital program and
achievement of targeted production growth, as well as the trend in
leverage, which should begin to decline after 2014.
The ratings could be downgraded as result of limited progress
adjusting and finding flexibility in the capital program, if
financial leverage increases and is sustained with Debt/EBITDA
above 4x, or if production growth falls short of targets.
Increased government linkages could also result in the convergence
of the ratings with the sovereign rating.
Moody's does not see momentum for an upgrade in the near-to-medium
term. In the longer-term it could be upgraded as it delivers on
rising and profitable production and reserves growth, with a
decline in the leverage profile, in conjunction with a higher
rating on Brazil's government debt.
The principal methodology used in this rating was the Global
Integrated Oil & Gas Industry Methodology published in November
2009. Other methodologies used include the Government-Related
Issuers methodology published in July 2010.
SUZANO PAPEL: Fitch Affirms Long-Term Local Currency IDR at 'BB-'
-----------------------------------------------------------------
Fitch Ratings has affirmed the following ratings of Suzano Papel e
Celulose S.A.'s (Suzano) and its subsidiary Suzano Trading Ltd.:
Suzano
-- Long-term foreign currency Issuer Default Rating (IDR) at
'BB-';
-- Long-term local currency IDR at 'BB-';
-- Long-term national scale rating at 'A(bra)';
-- 3rd Debentures Issuance, second series in the amount of
BRL167 million, due in 2019, at 'A(bra)'.
Suzano Trading Ltd.
-- Long-term foreign currency IDR at 'BB-';
-- USD650 million senior notes due Jan. 23, 2021 at 'BB-'.
The Rating Outlook for the corporate ratings was revised to
Positive from Stable.
The revision of the company's Outlook to Positive from Stable
reflects Fitch's expectation of a gradual deleverage process in
2014 and 2015 following the completion of the Maranhao pulp mill.
They also reflect a renewed focus by the company's leadership team
on decreasing leverage, which has resulted in a suspension of the
Piaui and Renewable Energy projects until the company's leverage
is more manageable.
Suzano Trading Ltd. is a wholly owned subsidiary of Suzano and is
incorporated in the Cayman Islands. The USD650 million senior
notes are unconditionally and irrevocably guaranteed by Suzano.
The credit quality of Suzano and Suzano Trading Ltd. have been
linked according to Fitch's 'Parent and Subsidiary Rating Linkage'
criteria report dated Aug. 5, 2013.
Key Rating Drivers
Solid Business Position
Suzano is the leading producer of printing and writing paper in
Brazil, as well as paperboard, with 1.3 million tons of annual
production capacity. The company's market shares of 37% in
uncoated printing and writing paper and 26% in paperboard allow it
to be a price leader in Brazil. Suzano also produces 1.9 million
tons of market pulp, which makes it one of the 10 largest
producers of market pulp in the world. Suzano's new pulp mill at
Maranhao should begin operations at the end of 2013 and will add
an annual production capacity of 1.5 million tons. Like other
producers of hardwood pulp in Brazil, Suzano enjoys a production
cost structure that is among the lowest in the world. This enables
Suzano to generate positive cash flows during troughs in the pulp
and paper cycle. Suzano's competitive advantage is viewed as
sustainable. The company owns and leases 847,000 hectares of land
in Brazil, of which 442,000 are used for the development of
eucalyptus plantations (357,000 own planted area). The value of
the company's land and forests as of June 30, 2013 was BRL7.0
billion.
High Leverage Should Decline in 2014
Despite having a strong business position, Suzano's rating have
been constrained at 'BB-' due to the company's high leverage.
Suzano had BRL12.1 billion of total debt and BRL4.5 billion of
cash as of June 30, 2013, resulting in net debt of BRL7.7 billion.
These figures compare with net debt of BRL6.6 billion at the end
of 2012 and BRL5.6 billion at the end of 2011. Net debt has
increased due to nearly USD3 billion of investments in the
Maranhao pulp mill and related forests. As of June 30, 2013,
Suzano's net debt-to-EBITDA ratio for the LTM was 5.3x.
Historically, Suzano has operated with a higher level than its
Latin America peer group, with an average net leverage ratio of
3.6x between 2008 and 2011. Leverage should gradually reduce to
below 4.5 during 2014 due to the startup of the Maranhao mill. The
reduction in leverage during 2014 should be tempered by weak pulp
prices, which should begin to recover in 2015. By the end of 2015,
Fitch expects Suzano's leverage to fall to 3.0x or below.
Strong Liquidity and Comfortable Debt Amortization Schedule
Suzano has historically maintained a strong cash position. As of
June 30, 2013, the company had BRL4.5 billion of cash and
marketable securities. The cash position was supported by a USD535
million Export Credit Agency (ECA) facility that the company
received in May. Liquidity covered short-term debt obligations by
a ratio of 5.1x. Suzano has manageable debt maturities of BRL1.3
billion up to December 2014 and BRL860 million in 2015.
Cash Flow Generation Pressured by High Investments
Suzano generated BRL1.5 billion of EBITDA and BRL535 million of
funds from operations (FFO) during the latest 12 months (LTM)
ended June 2013. This compares with BRL1.3 billion of EBITDA and
BRL989 million of fund from operations (FFO) during 2011. The
company's EBITDA generation benefited from higher pulp and paper
prices, depreciation of the Brazilian real against the USD, as
well as reduction in operational costs and expenses. With
investments of BRL2.6 billion and dividends of BRL100 million,
free cash flow was negative BRL2.1 billion during the LTM. Cash
flow is not expected to materially improve during the next 12
months due to additional capital expenditures on the Maranhao
mill, weak pulp prices, and rising pulp cash cost due to the
acquisition of more wood from third parties.
Rating Sensitivities
Suzano's credit ratings could be positively affected by higher
than expected cash generation during 2014. Additional proactive
steps by the company to materially bolster its capital structure
in the absence of high operating cash flow would be viewed
positively and could result in a positive rating action. A
positive outlook for pulp prices in 2015 could also bolster the
probability of positive rating actions.
Negative rating actions are unlikely in the near term. If the
company's ratios continue to decline beyond levels anticipated by
Fitch, additional negative rating actions could follow. A
weakening of the company's liquidity position could also result in
negative rating actions.
* Moody's Takes Rating Actions on Brazilian Fin'l. Institutions
---------------------------------------------------------------
Moody's Investors Service has changed to stable, from positive,
the outlook on the standalone bank financial strength ratings of
three Brazilian financial institutions. Moody's also changed to
stable, from positive, the outlook on the long-term global local
currency deposit, issuer, and debt ratings of eight financial
institutions. In addition, Moody's changed to stable, from
positive, the outlook on the long-term global foreign currency
deposit, senior and subordinated debt ratings of 10 financial
institutions and their respective foreign branches.
These rating actions follow the change in outlook to stable, from
positive, on Brazil's government bond ratings.
Concurrently, Moody's has downgraded the long-term global deposit,
issuer, and debt ratings of six financial institutions. Moody's
reassessment of the level of the Brazilian government's capacity
to provide systemic support to these banks in case of need is the
main driver of these rating downgrades. The likelihood of such
support is an important part of Moody's credit analysis, and it
provides uplift to the ratings above that which would be implied
by the banks' own financial strength. For the Brazilian banks, the
downgrades bring the ratings closer in line with that of the
government's own rating of Baa2. Moody's assigns ratings to 34
other banks in Brazil; their ratings were unaffected by these
actions because they are already positioned below the rating of
the sovereign.
In addition, Moody's has revised to negative, from stable, the
outlook on the standalone bank financial strength rating of Banco
do Brasil and has placed on review for downgrade the standalone
bank financial strength rating, the long and short-term deposits
and debt ratings of Banco Votorantim.
The outlooks on all remaining ratings assigned to these issuers
and not included in this action remain unchanged.
RATINGS RATIONALE
CHANGE IN RATINGS OUTLOOK TO STABLE, FROM POSITIVE
The change in outlook to stable, from positive, on Brazilian
banks' standalone bank financial strength ratings, long-term
global local and foreign currency deposit and issuer ratings, and
long-term foreign currency debt ratings, follows the change in
outlook on Brazil's Baa2 sovereign ratings; the sovereign ratings
constrain these banks' ratings. The standalone credit assessments
of these banks remain unchanged.
The outlooks on the following Brazilian banks' standalone
financial strength ratings were changed to stable, from positive:
- Banco Bradesco S.A.
- Itau Unibanco S.A.
- Banco Itau BBA S.A.
The outlooks on the following financial institutions' long-term
global local currency deposits and issuer ratings were changed to
stable, from positive:
- Banco Bradesco S.A.
- Itau Unibanco S.A.
- Banco Itau BBA S.A.
- Itau Unibanco Holding S.A.
- Banco do Brasil S.A.
- Caixa Economica Federal
- Banco Safra S.A.
- BNDES -- Banco Nac. Desenvolv. Economico e Social S.A.
The outlook on the following financial institutions' long-term
global foreign currency deposits, senior and/or subordinated debt
ratings were changed to stable, from positive:
- Banco Bradesco S.A.
- Banco Bradesco S.A. -- Cayman Branch
- Banco Bradesco S.A. -- New York Branch
- Itau Unibanco S.A.
- Ita£ Unibanco S.A. -- Cayman Branch
- Banco Itau BBA S.A.
- Banco Itau BBA S.A. -- Nassau Branch
- Ita£ Unibanco Holding S.A.
- Ita£ Unibanco Holding S.A. -- Cayman Branch
- Banco do Brasil S.A.
- Banco do Brasil S.A. -- Cayman Branch
- Banco Nacional de Desenvolvimento Econ“mico e Social -- BNDES
- Caixa Economica Federal
- HSBC Bank Brasil -- Banco Multiplo S.A.
- Banco Santander (Brasil) S.A.
- Banco Safra S.A.
- Banco Safra S.A. -- Cayman Branch
DOWNGRADE OF DEPOSIT AND DEBT RATINGS
Moody's lowered the long-term global deposit and debt ratings of
six financial institutions from one to two notches to reflect the
reassessment of the level of capacity of the Brazilian government
to provide systemic support in case of need. The rating agency
considers the government's capacity to provide systemic support to
large banks to have weakened relative to prior years. Two factors
are driving our reassessment:
1- The government's fiscal position has weakened, as evident in
the deterioration of government debt indicators. These have been
adversely affected by Treasury borrowings to fund public-sector
bank lending equivalent to some 9% of GDP. At the same time, the
government has relied on sizable dividend payouts by public-sector
banks to meet its fiscal targets.
2- The growing size of the banking system, at 138% of Brazil's GDP
as of June 2013, and of the public-sector banks in particular,
which accounted for 51% of the system's loans, has increased the
risk of systemic banking losses being realized. The robust
expansion and larger presence of the public-sector banks have
increased the potential size of contingent liabilities from the
banking sector relative to the government's balance sheet.
Moreover, the deposit and debt ratings assigned to Banco do Brasil
are now aligned to those of the sovereign, to more appropriately
capture the correlation between their creditworthiness and that of
Brazil's government.
"Despite our reassessment of lower support capacity, Moody's
ratings continue to incorporate a view that the likelihood
systemic support of large Brazilian banks is very high. This view
is underpinned by the broad array of financial and non-financial
tools available to the regulatory authorities to support Brazilian
banks, as well as the intrinsic strength of the banking system.
Nevertheless, Moody's views the capacity of the government to
support the nation's banks to have become more closely aligned
with its own creditworthiness," Moody's said.
The reassessment of systemic support has led to a one-notch
downgrade of the following financial institutions' supported
ratings:
Long-term global local currency deposit ratings:
Banco Bradesco S.A.: to Baa1, from A3; stable outlook
Itau Unibanco S.A.: to Baa1, from A3; stable outlook
Banco Itau BBA S.A.: to Baa1, from A3; stable outlook
Banco Santander (Brasil) S.A.: to Baa2, from Baa1; stable outlook
Banco do Nordeste do Brasil S.A.: to Baa3, from Baa2; stable
Outlook
Short-term global local currency deposit rating:
Banco do Nordeste do Brasil S.A.: to Prime-3, from Prime-2
Long-term global local currency issuer rating:
Itau Unibanco Holding S.A.: to Baa2, from Baa1; stable outlook
Long-term global foreign currency senior debt / programme rating:
Itau Unibanco Holding S.A.: to (P)Baa2, from (P)Baa1; stable
outlook
Itau Unibanco Holding S.A. -- Cayman Branch: to (P)Baa2, from
(P)Baa1; stable outlook
Itau Unibanco Holding S.A. -- Cayman Branch: to Baa2, from Baa1;
stable outlook
Banco do Brasil S.A. : to (P)Baa2, from (P)Baa1; stable outlook
Banco do Brasil S.A. Cayman Branch: to (P)Baa2, from (P)Baa1;
stable outlook
Banco do Brasil S.A. Cayman Branch: to Baa2, from Baa1; stable
outlook
Banco Santander (Brasil) S.A.: to (P)Baa2, from (P)Baa1; stable
outlook
Banco Santander (Brasil) S.A. Cayman Branch: to (P)Baa2, from
(P)Baa1; stable outlook
Banco Santander (Brasil) S.A.: to Baa2, from Baa1; stable outlook
Banco Santander (Brasil) S.A. Cayman Branch: to Baa2, from Baa1;
stable outlook
Banco do Nordeste do Brasil S.A.: to Baa3, from Baa2; stable
Outlook
The following financial institution's supported ratings were
downgraded by two notches as a result of the systemic support
reassessment and alignment to the sovereign:
Long-term global local currency deposit rating:
Banco do Brasil S.A.: to Baa2, from A3; stable outlook
Foreign currency subordinated debt rating
Banco do Brasil S.A. -- Cayman Branch: to Baa3, from Baa1; stable
outlook
Foreign currency junior subordinated debt rating
Banco do Brasil S.A. -- Cayman Branch: to Ba1(hyb), from
Baa2(hyb); stable outlook
StandAlone Ratings
Moody's has revised its outlook on Banco do Brasil's standalone
C- BFSR to negative from stable, to reflect the decline in the
bank's tangible common equity capital ratio over the past year, as
well as the potential for further reduction as risk-weighted
assets continue to grow. Moody's assessment incorporates Banco do
Brasil's credit growth expectations, at the mid-teen range or
higher. In addition, Moody's has incorporated the risks associated
to the high loan growth pace of last years, particularly as loans
season in an environment of lower-than-expected domestic economic
activity. Moody's noted that BB's adjusted non-performing loan
formation remained somewhat stable over the last three quarters,
whereas private bank competitors recorded an improvement. However,
Moody's also acknowledges that most of the robust loan growth in
the last years focused on lower risk credit segments.
In placing Banco Votorantim's ratings on review for downgrade,
Moody's noted ongoing pressures on its capital base exerted by the
continued losses reported by the bank on a quarterly basis as a
result of higher provisioning expenses and narrowing margins. The
recovery of profitability levels largely depends on a significant
reduction of credit costs, which however, could be more difficult
to achieve under a slower growth economy over the next few
quarters. The bank's consolidated asset quality indicators have
been steadily improving over the last two quarters, with the
corporate segment remaining the main source of upward pressure.
However, Moody's noted that the increase in non-performing loan
formation in the last two quarters raises early signs of asset
quality pressure, as it may delay the bank's reduction in loan
loss provisions. In this sense, the maintenance of adequate
capitalization is largely connected to the development of risk-
weighted assets, which in turn will dictate the degree of
profitability recovery necessary going forward.
Moody's recognizes Banco Votorantim's ability to enhance its
liquidity by lengthening its funding base through the issuance of
long-term banknotes. In addition, Moody's acknowledges that Banco
do Brasil's ownership provides direct and indirect benefits to
Banco Votorantim's asset and liability management.
The outlook on Banco do Brasil's standalone financial strength was
changed to negative, from stable:
Bank financial strength rating of C-
The following ratings assigned to Banco Votorantim S.A. were
placed on review for possible downgrade:
Bank financial strength rating: D+
Long and short-term global local currency deposit ratings: Baa2
and Pime-2
Long and short-term foreign currency deposit ratings: Baa2 and
Prime-2
Long and short-term foreign currency senior unsecured debt
ratings assigned to programme: (P)Baa2 and (P)Prime-2
Long-term foreign currency senior unsecured debt rating: Baa2
Long-term foreign currency subordinated debt rating: Baa3
The following ratings assigned to Banco Votorantim S.A. Nassau
Branch were placed on review for possible downgrade:
Long and short-term foreign currency senior unsecured debt
ratings assigned to programme: (P)Baa2 and (P)Prime-2
Long-term foreign currency senior unsecured debt rating: Baa2
INSURANCE SUBSIDIARIES RATINGS AFFIRMED; OUTLOOK ON GLOBAL RATINGS
CHANGED TO STABLE FROM POSITIVE
Moody's affirmed Itau Seguros' and Ita£ Vida e Previdencia's
global local currency (GLC) insurance financial strength (IFS)
ratings at Baa1 but changed the outlook for the Baa1 GLC ratings
to stable from positive. The rating agency has also affirmed the
companies' Aaa.br IFS ratings on the Brazilian national scale with
a stable outlook. The rating actions of the insurance subsidiaries
follow the rating downgrades of Itau Unibanco S.A. and Itau
Holding S.A. (the insurers' ultimate parent companies) and the
change in their outlooks to stable.
According to Moody's, Itau Seguros' stand-alone credit profile
continues to stand at Baa1. Conversely Itau Vida e Previdˆncia's
stand-alone credit profile continues to stand at Baa2, considering
the assessment of the insurer's very high investment exposure to
Brazil sovereign bonds relative to its capital base. Because of
Ita£ Vida e Previdˆncia's significant product and distribution
integration with its banking affiliates, as well as its brand-
sharing with the parent bank, Moody's insurance financial strength
rating for the company reflects one notch of uplift from its
stand-alone credit profile due to the parental ownership and
support from Ita£ Unibanco. The shift to a stable outlook -- from
positive -- for both insurers primarily reflects the shift to a
stable outlook at the parent companies.
The affirmation of the insurers' Aaa.br national scale IFS
ratings, with a stable outlook, reflects the fact that their Baa1
GLC IFS ratings continue to map exclusively to the Aaa.br rating
on the national scale.
METHODOLOGY USED & LAST RATING ACTIONS
The principal methodology used in rating Banco Bradesco, Banco do
Brasil, Itau Unibanco, Banco Itau BBA, Banco Safra, Caixa
Economica Federal, HSBC Bank Brasil Banco Multiplo, Banco
Santander (Brasil), Banco Votorantim and Banco do Nordeste do
Brasil was Moody's Global Banks methodology published on 31 May
2013. Please see the Credit Policy page on www.moodys.com for a
copy of this methodology.
The principal methodology used in rating BNDES was Government-
Related Issuers: Methodology Update published in July 2010.
The principal methodologies used in rating the insurance companies
-- Itau Seguros and Itau Vida e Previdencia -- are Moody's Global
Methodology for Property and Casualty Insurers and Moody's Global
Methodology for Life Insurers, both published in May 2010.
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. For further information on Moody's approach to
national scale ratings, please refer to Moody's Rating Methodology
published in October 2012 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings".
The last rating action on Banco Bradesco S.A. was on February 26,
2013, when Moody's downgraded the foreign currency subordinated
debt rating to Baa2, from Baa1, assigned to subordinated notes
issued by Banco Bradesco S.A. acting through its Cayman Branch.
All other ratings remained unchanged at that moment.
The last rating action on Itau Unibanco Holding S.A. was on
February 26, 2013, when Moody's downgraded the foreign currency
subordinated debt rating to (P)Baa3, from (P)Baa2, assigned to
subordinated notes issued by Itau Unibanco Holding S.A. acting
through its Cayman Branch. All other ratings remained unchanged at
that moment.
The last rating action on BFB Leasing S.A. Arrendamento Mercantil
was on February 26, 2013, when Moody's downgraded the local
currency subordinated debt rating to Baa2, from Baa1, assigned to
existing subordinated debentures. Other ratings remained unchanged
at that moment.
The last rating action on Dibens Leasing S.A. Arrendamento
Mercantil was on February 26, 2013, when Moody's downgraded the
local currency subordinated debt rating to Baa2, from Baa1,
assigned to existing subordinated debentures. Other ratings
remained unchanged at that moment.
The last rating action on Itaubank Leasing S.A. Arrendamento
Mercantil was on February 26, 2013, when Moody's downgraded the
local currency subordinated debt rating to Baa2, from Baa1,
assigned to existing subordinated debentures. Other ratings
remained unchanged at that moment.
The last rating action on Itau Unibanco S.A. was on June 27, 2012
when Moody's downgraded the bank's standalone bank financial
strength (BFSR) and lowered the standalone baseline credit
assessment (BCA) to C- and baa1, from B- and a1, and also
downgraded the long-term global local currency (GLC) deposit
rating to A3 from A1. This rating was placed on positive outlook.
Other ratings remained unchanged.
The last rating action on Banco Itau BBA S.A. was on June 27, 2012
when Moody's downgraded the bank's standalone bank financial
strength (BFSR) and lowered the standalone baseline credit
assessment (BCA) to C- and baa1, from B- and a1, and also
downgraded the long-term global local currency (GLC) deposit
rating to A3 from A1. This rating was placed on positive outlook.
Other ratings remained unchanged.
The last rating action on Itau Investimentos S.A. was on June 27,
2012 when Moody's downgraded the long-term local currency issuer
rating to Baa2 from A3; as well as the issuer's local currency
senior unsecured debt rating to Baa2 from A3. These ratings were
placed on positive outlook.
The last rating action on Banco do Brasil S.A. was on July 18,
2013 when Moody's assigned a Baa1 foreign currency debt rating to
the Euro-denominated 2018 senior unsecured notes issued by Banco
do Brasil S.A. through its Grand Cayman Branch (BB Grand Cayman),
under the existing US$5 billion Global Medium Term Note Program,
rated (P)Baa1. Other ratings remained unchanged at that moment.
The last rating action on Banco Votorantim S.A. was on June 27,
2012, when the foreign currency deposit and baseline credit
assessment ratings were downgraded to Baa2 from A3, and to baa3
from baa2, respectively.
The last rating action on BNDES was on September 19, 2013 when
Moody's assigned a Baa2 foreign currency debt rating to 2016 and
2023 senior unsecured notes issued by BNDES. Other ratings
remained unchanged at that moment.
The last rating action on BNDESPAR was on March 20, 2013 when
Moody's downgraded the long-term global local currency issuer
rating to Baa2, from A3, and its long-term global local currency
senior unsecured debt rating to Baa2, from A3. The outlook on
these ratings was positive, in line with the positive outlook on
BNDES, which, in turn, was in line with the positive outlook on
Brazil's government bond rating.
The last rating action on Banco Santander (Brasil) S.A. was on
June 4, 2013 when Moody's assigned a Baa1 foreign currency senior
unsecured debt rating to the 1.125% CHF 125,000,000 senior
unsecured notes issued by Banco Santander (Brasil) S.A., acting
through its Grand Cayman Branch. The notes are due June 2015 and
were issued under the existing US$10 billion Global Medium Term
Program rated (P)Baa1. The rating had a stable outlook.
The last rating action on Banco Safra S.A. was on June 27, 2012
when Moody's confirmed the bank's standalone bank financial
strength (BFSR) of C- and lowered the standalone baseline credit
assessment (BCA) to baa2, baa1. At the same time, Moody's
downgraded the bank's long-term global local and foreign currency
(GLC) deposit rating to Baa2 from Baa1. The foreign currency
senior unsecured and subordinated debt ratings assigned to Banco
Safra S.A. and to Banco Safra S.A. Cayman Branch were also
downgrade to Baa2 and Baa3, respectively, from Baa1 and Baa2,
respectively. These ratings were placed on positive outlook. Other
foreign currency and national scale deposit ratings remained
unchanged.
The last rating action on HSBC Bank Brasil Banco Multiplo S.A. was
on June 27, 2012 when Moody's downgraded the bank's standalone
bank financial strength (BFSR) and lowered the standalone baseline
credit assessment (BCA) to C- and baa2, from C and a3. This rating
was placed on stable outlook. Other ratings remained unchanged.
The last rating action on Caixa Economica Federal was on March 20,
2013 when Moody's downgrade the bank's standalone bank financial
strength (BFSR) to D, from D+, mapping to a lower baseline credit
assessment (BCA) of ba2, from baa3. Moody's also downgrade the
bank's local currency deposit rating to Baa2 from A3, and its
foreign currency senior unsecured debt rating to Baa2 from Baa1.
These ratings were placed on positive outlook in line with the
outlook of Brazil's debt rating. Other ratings remained unchanged.
The last rating action on Banco do Nordeste do Brasil S.A. (BNB)
was on July 2, 2012, when Moody's affirmed the all ratings
assigned to BNB, including its unsupported bank financial strength
(BFSR) of D, the long and short-term global local and foreign
currency deposit and debt ratings of Baa2 and Prime-2, and the
long-term and short-term Brazilian national scale deposit ratings
of Aaa.br and BR-1, respectively. All ratings had a stable
outlook.
The last rating action on Itau Seguros and Itau Vida e Previdencia
was on June 27, 2012, when Moody's downgraded Itau Seguros and
Itau Vida e Previdencia's global local currency (GLC) insurance
financial strength (IFS) ratings to Baa1 (positive outlook) from
A2 (review down) and affirmed the companies' Aaa.br/Stable rating
on the Brazilian national scale.
* Moody's Alters Outlook on Several Brazilian Issuer/Debt Ratings
-----------------------------------------------------------------
Moody's America Latina has changed to stable, from positive, the
outlook on the long-term global local currency issuer and debt
ratings of BNDES Participacoes S.A. (BNDESPAR), Itausa - Itau
Investimentos S.A. (Itausa), BFB Leasing S.A., Itaubank Leasing
S.A., and Dibens Leasing S.A.. The outlook change is in line with
the outlook on these entities' respective parent banks' ratings,
which have been changed to stable, from positive as a result of
the outlook change on Brazil's government debt ratings.
The outlooks on all national scale issuer and debt ratings
assigned to these issuers and not included in this action remained
unchanged.
Concurrently, Moody's has downgraded the long-term global local
currency issuer and debt ratings of four financial institutions,
in line with similar action taken on these entities' parent banks.
The rating action on the parent banks are driven by Moody's
reassessment of the level of capacity of the Brazilian government
to provide systemic support to these banks in case of need.
RATINGS RATIONALE
CHANGE TO STABLE, FROM POSITIVE, OUTLOOK OF LOCAL CURRENCY ISSUER
AND DEBT RATINGS
The change in outlook to stable, from positive, on the long-term
global local currency issuer and debt ratings of five financial
institutions follows the change in outlook on their respective
parent banks' ratings, which, on the other hand, followed the
change in outlook on Brazil's Baa2 sovereign ratings.
The outlook on the following financial institutions' long-term
global local currency issuer ratings changed to stable, from
positive:
- BFB Leasing S.A. Arrendamento Mercantil
- Dibens Leasing S.A. Arrendamento Mercantil
- Itaubank Leasing S.A. Arrendamento Mercantil
- Itausa - Itau Investimentos S.A.
- BNDES Participacoes S.A. - BNDESPAR
The outlook on the following financial institutions' local
currency senior and subordinated debt ratings changed to stable,
from positive:
- BFB Leasing S.A. Arrendamento Mercantil
- Dibens Leasing S.A. Arrendamento Mercantil
- Itaubank Leasing S.A. Arrendamento Mercantil
- BNDES Participacoes S.A. - BNDESPAR
Downgrade of Local Currency Issuer and Debt Ratings
The local currency issuer and debt ratings of the five financial
institutions declined by one notch to reflect the downgrade of the
global local currency deposit and issuer ratings of their
respective parent banks. The rating action on the parents'
ratings, in turn, reflects Moody's reassessment of the systemic
support that is incorporated into the banks' deposit and issuer
ratings.
The following financial institutions' supported ratings were
downgraded by one-notch as a result of the parent banks'
downgrades:
Long-term global local currency issuer ratings:
BFB Leasing S.A. Arrendamento Mercantil S.A.: to Baa1, from A3;
stable outlook
Dibens Leasing S.A. Arrendamento Mercantil S.A.: to Baa1, from
A3; stable outlook
Itaubank Leasing S.A. Arrendamento Mercantil S.A.: to Baa1, from
A3; stable outlook
Itausa - Itau Investimentos S.A.: to Baa3, from Baa2; stable
outlook
Long-term global local currency senior unsecured debt rating:
Dibens Leasing S.A. Arrendamento Mercantil S.A.: to (P)Baa1,
from (P)A3; stable outlook
METHODOLOGY USED & LAST RATING ACTIONS
The principal methodology used in rating the parent Itau Unibanco
of these leasing companies was Moody's Consolidated Global Bank
Rating Methodology published on June 29, 2012.
The principal methodology used in rating parent of BNDESPAR
(BNDES) was Government-Related Issuers: Methodology Update
published in July 2010.
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. For further information on Moody's approach to
national scale ratings, please refer to Moody's Rating Methodology
published in October 2012 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings".
The last rating action on BFB Leasing S.A. Arrendamento Mercantil
was on February 26, 2013, when Moody's downgraded the local
currency subordinated debt rating to Baa2, from Baa1, assigned to
existing subordinated debentures. Other ratings remained unchanged
at that moment.
The last rating action on Dibens Leasing S.A. Arrendamento
Mercantil was on February 26, 2013, when Moody's downgraded the
local currency subordinated debt rating to Baa2, from Baa1,
assigned to existing subordinated debentures. Other ratings
remained unchanged at that moment.
The last rating action on Itaubank Leasing S.A. Arrendamento
Mercantil was on February 26, 2013, when Moody's downgraded the
local currency subordinated debt rating to Baa2, from Baa1,
assigned to existing subordinated debentures. Other ratings
remained unchanged at that moment.
The last rating action on Itau Investimentos S.A. was on June 27,
2012 when Moody's downgraded the long-term local currency issuer
rating to Baa2 from A3; as well as the issuer's local currency
senior unsecured debt rating to Baa2 from A3. These ratings were
placed on positive outlook.
The last rating action on BNDESPAR was on March 20, 2013 when
Moody's downgraded the long-term global local currency issuer
rating to Baa2, from A3, and its long-term global local currency
senior unsecured debt rating to Baa2, from A3. The outlook on
these ratings was positive, in line with the positive outlook on
BNDES, which, in turn, was in line with the positive outlook on
Brazil's government bond rating.
==========================
C A Y M A N I S L A N D S
==========================
BLACK SHEEP: Shareholder to Hear Wind-Up Report on Nov. 1
---------------------------------------------------------
The shareholder of Black Sheep Offshore, Ltd. will receive on
Nov. 1, 2013, at 10:30 a.m., the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Intertrust SPV (Cayman) Limited
190 Elgin Avenue, George Town
Grand Cayman KY1-9005
Cayman Islands
c/o Kim Charaman/Jennifer Chailler
Telephone: (345) 943 3100
BLUE POINT: Shareholders' Final Meeting Set for Oct. 23
-------------------------------------------------------
The shareholders of Blue Point, Ltd. will hold their final meeting
on Oct. 23, 2013, at 10:00 a.m., to receive the liquidator's
report on the company's wind-up proceedings and property disposal.
The company's liquidator is:
Jonathan Pierre
541 Prospect Drive
P.O. Box 12422 Grand Cayman KY1-1011
Cayman Islands
C ESCAPE: Shareholder to Hear Wind-Up Report on Oct. 22
-------------------------------------------------------
The shareholder of C Escape Ltd will receive on Oct. 22, 2013, at
10:00 a.m., the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Marcia F. Cannell
1220 Hillscrest Avenue
Pasadena, CA 91106
USA
Telephone: (310) 268 2089
Facsimile: (310) 479 6460
COSTA DORADA: Shareholders' Final Meeting Set for Oct. 24
---------------------------------------------------------
The shareholders of Costa Dorada Limited will hold their final
meeting on Oct. 24, 2013, to receive the liquidator's report on
the company's wind-up proceedings and property disposal.
The company's liquidator is:
Eagle Holdings Ltd.
c/o Barclays Private Bank & Trust (Cayman) Limited
FirstCaribbean House, 4th Floor
P.O. Box 487 Grand Cayman KY1-1106
Cayman Islands
DELAWARE STREET: Shareholder to Hear Wind-Up Report on Nov. 1
-------------------------------------------------------------
The shareholder of Delaware Street Capital Offshore, Ltd will
receive on Nov. 1, 2013, at 10:45 a.m., the liquidator's report on
the company's wind-up proceedings and property disposal.
The company's liquidator is:
Intertrust SPV (Cayman) Limited
190 Elgin Avenue, George Town
Grand Cayman KY1-9005
Cayman Islands
c/o Kim Charaman/Jennifer Chailler
Telephone: (345) 943 3100
NISSAY 2005: Shareholder to Hear Wind-Up Report on Nov. 1
---------------------------------------------------------
The shareholder of Nissay 2005 Fund (Cayman) Inc. will receive on
Nov. 1, 2013, at 10:15 a.m., the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Intertrust SPV (Cayman) Limited
190 Elgin Avenue, George Town
Grand Cayman KY1-9005
Cayman Islands
c/o Kim Charaman/Jennifer Chailler
Telephone: (345) 943 3100
SCANDIUM FUND: Shareholders' Final Meeting Set for Oct. 15
----------------------------------------------------------
The shareholders of Scandium Fund Limited will hold their final
meeting on Oct. 15, 2013, at 10:00 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Eclipse Consulting LLC
c/o Solomon Harris
FirstCaribbean House, 3rd Floor
P.O. Box 1990 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345) 949 0488
STANDARD INVESTMENT: Shareholder to Hear Wind-Up Report on Nov. 1
-----------------------------------------------------------------
The shareholder of Standard Investment Research Hedged Equity Sam
Master Fund, Ltd. will receive on Nov. 1, 2013, at 10:00 a.m., the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Intertrust SPV (Cayman) Limited
190 Elgin Avenue, George Town
Grand Cayman KY1-9005
Cayman Islands
c/o Kim Charaman/Jennifer Chailler
Telephone: (345) 943 3100
STRAUS CHINA: Shareholder to Hear Wind-Up Report on Oct. 15
-----------------------------------------------------------
The shareholder of Straus China Offshore Fund, Ltd. will receive
on Oct. 15, 2013, at 10:00 a.m., the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Ogier
c/o Jacqueline Haynes
Telephone: (345) 815 1759
Facsimile: (345) 949 9877
STREAMLINE FUND: Shareholders' Final Meeting Set for Nov. 7
-----------------------------------------------------------
The shareholders of Streamline Fund SPC will hold their final
meeting on Nov. 7, 2013, at 4:00 p.m., to receive the liquidator's
report on the company's wind-up proceedings and property disposal.
The company's liquidator is:
DMS Corporate Services Ltd
c/o Nicola Cowan
Telephone: (345) 946 7665
Facsimile: (345) 949 2877
dms House, 2nd Floor
P.O. Box 1344 Grand Cayman KY1-1108
Cayman Islands
===============
C O L O M B I A
===============
MILLICOM INT'L: Fitch Rates New Senior Unsecured Notes 'BB+'
------------------------------------------------------------
Fitch Ratings has assigned a 'BB+(exp)' rating to Millicom
International Cellular, S.A.'s (MIC) proposed senior unsecured
notes. Proceeds from the notes will be used to fund the merger
with UNE in Colombia, which is expected to be approved in 2014.
Until the merger is approved, proceeds from the issuance will
remain in an escrow account.
Key Ratings Drivers:
MIC's ratings reflect the company's geographically diversified
portfolio, leading market positions in most of its markets, value
added services orientation, expectation of moderate leverage, good
liquidity and pre-dividend free cash flow generation. The ratings
are tempered by exposure to markets with low sovereign ratings and
low GDP per capita, pricing pressures, debt allocation between
subsidiaries and the holding company, shareholder returns policy
and recent M&A activity.
MIC's rating reflects its leading positions in the majority of its
markets, resulting in free cash flow generation. For the 12 months
ended June 30, 2013 approximately two-thirds of EBITDA was
generated in countries where the company has leading market share
in mobile services. Strong brand recognition and extensive
distribution networks help the company mitigate a very competitive
environment, particularly in mobile voice services. The company's
focus in growing data revenues as part of its strategy of evolving
to a digital company from a communications company is aimed to
alleviate pressures from voice revenues.
The ratings incorporate the company's operational exposure to
countries with low sovereign ratings, which tend to be more
politically unstable and more volatile in terms of economic
growth. This adds currency risk, as part of MIC's debt is
denominated in USD and cash flow is generated in local currencies.
For the 12 months ended June 30, 2013, approximately 85% of EBITDA
was generated by Central and South American operations. The
African operations, with the exception of Tanzania, are not
expected to generate significant cash flows over the next few
years.
The company's strategy involves developing value added services
(VAS) as traditional mobile services mature. During 2012 MIC
restructured its business segments in each country by product
categories to focus on new revenue sources, which include data and
mobile financial services among others. In addition the company
acquired cable television (CATV) provider Cablevision in Paraguay,
entered into an agreement to acquire an initial 20% stake in
Rocket Internet, a regional holding with operations in Latin
America and Africa and during this year entered into an agreement
with UNE in Colombia to merge their assets.
Fitch believes that a successful merger will improve the
competitive position of the resulting entity in Colombia, as they
offer complementary services. Pro forma net debt to EBITDA
(including corporate expenses) should approximate to 1.7 times (x)
after the transaction with UNE is completed. Fitch also believes
there is some room to achieve synergies that could result in lower
leverage levels over the medium term. MIC is expected to own a 50%
minus 1 economic stake in the resulting entity but will
consolidate the entire operation as it will have control and will
appoint four of the seven board directors.
Fitch remains concerned that over the medium term the investment
in Rocket could require additional capital injections, which could
cause MIC's leverage to increase. The company does not expect
Rocket to become EBITDA neutral until 2015, with EBITDA guidance
for 2013 being negative in the range of USD125 million-USD150
million. MIC is committed to the exercise the option to increase
the ownership in Rocket's Latin America Internet Holdings (LIH)
and Africa Internet Holdings (AIH) to 35% from 20% for a combined
EUR85 million (USD109 million). MIC has an option to increase its
stake in Rocket to 50% by September of 2014 by an additional
EUR170 million and also has an option to acquire the remaining 50%
by September of 2016 depending on the performance and valuation of
the business.
Pre-dividend FCF margins are expected to remain somewhat stable in
the next few years. As MIC moves to lower margin businesses but
less capital intensive, EBITDA margin is expected to trend towards
35% in the next few years, but it should be offset by lower
capital expenditures. Operating performance has come under
pressure due to mobile termination cuts in several markets, strong
competitive environment in Central America, data investments in
South America and currency devaluation in Africa.
Fitch expects MIC's net debt to EBITDA ratio (after corporate
expenses) to be close to 1.5x over the long term. For the 12
months ended June 30, 2013 net debt to EBITDA was 1.3x. The
ratings take into account the company's shareholder distribution
policy, with Fitch expecting that any excess cash flow generation
after ordinary dividends will be used to reduced leverage.
MIC has historically maintained a strong liquidity position with
high cash balances. Total consolidated unrestricted cash as of
June 30, 2013 was USD914 million. Total on-balance sheet debt was
USD3.329 billion with USD784 million at the holding company level
and the rest at operating companies, with 36% of total debt being
guaranteed by MIC. Fitch expects that over the medium term most of
the debt will continue to be allocated at the operating companies
and a small proportion allocated at the holding company. Debt
maturity profile should be manageable given the company's
liquidity position, pre-dividend FCF and debt maturity profile.
Rating Sensitivities:
-- Positive factors for MIC's credit quality include a strong
management commitment towards a net debt to EBITDA of 1.0x
over the long term.
-- Negative factors for MIC's credit quality include an increase
in net debt to EBITDA to 2.0x without a clear path to
deleveraging due to a single or combination of M&A activity,
additional funding to Rocket, and increased shareholder
distributions or competitive pressures.
Fitch's existing ratings for MIC are as follows:
-- Local Currency Issuer Default Rating (IDR) 'BB+';
-- Foreign Currency IDR 'BB+';
-- US500 million senior unsecured notes due 2020 'BB+'.
The Rating Outlook is Stable.
Millicom is a global telecommunications investor with cellular
operations and licenses in 13 countries in Latin America and
Africa. Millicom operates in El Salvador, Guatemala and Honduras
in Central America; in Bolivia, Colombia and Paraguay in South
America; in Chad, the Democratic Republic of Congo, Ghana,
Mauritius, Rwanda, Senegal and Tanzania in Africa. Millicom also
operates cable businesses in six countries in Central and South
America. During the last twelve months ended in June 30, 2013, its
revenues reached $4, 969 million.
===========
M E X I C O
===========
ALESTRA: S&P Raises CCR to 'BB'; Outlook Stable
-----------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit and
issue-level ratings on Alestra S. de R.L. de C.V. to 'BB' from
'B+'. The '3' recovery rating on the company remains unchanged,
indicating S&P's expectation of a meaningful (50%-70%) recovery in
the event of a payment default. The outlook is stable.
The upgrade reflects S&P's greater comfort about the company's
options to refinance its 2014 bond maturity, and it incorporates
one notch of support from its parent company, ALFA, S.A.B. de C.V.
(Alfa; not rated). S&P believes that Alestra has various
alternatives to fund the bond maturity, including access to bank
loans and capital markets, as well as support from the parent.
Moreover, Alfa has strong access to credit markets and committed
credit lines that it could use to support its subsidiaries. After
reviewing Alfa's strategy towards its subsidiaries, S&P is
revising its assessment of likelihood of the parent's support.
"We view Alestra as moderately strategic for Alfa, as we believe
the subsidiary is likely to receive support from its parent if
needed. For this reason, we now incorporate one notch of support
from the parent into our ratings on Alestra, in line with our
parent-subsidiary criteria. Although we don't rate Alfa, based on
public information, we view its credit profile stronger than that
of Alestra," said Standard & Poor's credit analyst Marcela Duenas.
LATIN AMERICAN: S&P Puts 'BB-' CCR on CreditWatch Negative
----------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit rating on Latin American Airports Holdings Ltd. (LAAH) and
its 'BB-' issue-level rating on Aeropuertos Dominicanos Siglo XXI
S.A (Aerodom)'s $550 million senior secured notes on CreditWatch
with negative implications. Aerodom is LAAH's subsidiary and
issued the notes that LAAH guaranteed.
"The CreditWatch listing follows our uncertainty on whether
Inmobiliaria Fumisa S.A. de C.V. will reach an agreement to extend
its master lease contract with AICM before its Dec. 31, 2013
expiration. This leads to uncertainty regarding Fumisa's
operations at AICM beyond this date. An unfavorable conclusion to
the negotiations could jeopardize LAAH's cash flow which would
lead to a negative rating action," said Standard & Poor's credit
analyst Veronica Ya¤ez.
METROFINANCIERA SAPI: S&P Affirms CCC Rating on MTROCB 07U Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services took various rating actions on
seven Mexican residential mortgage-backed securities (RMBS)
transactions originated and serviced by Metrofinanciera S.A.P.I.
de C.V. SOFOM E.N.R. (Metrofinanciera):
-- S&P lowered its CaVal Mexico National (CaVal) scale ratings
on two series.
-- S&P affirmed its CaVal scale ratings on five series and also
affirmed its global scale ratings on two of these.
-- S&P removed all of the affirmed and lowered ratings from
CreditWatch with negative implications, where S&P placed
them on April 9, 2013.
The downgrades on Metrofinanciera - Bursatilizaciones de Hipotecas
Residenciales's METROCB 05U and MFCB 05U reflect S&P's opinion
that the current levels of credit protection in the form of
overcollateralization, excess spread, and external credit
enhancement no longer support the previous rating levels. This is
mainly driven by the continued deterioration of the underlying
assets, which have experienced further increases in defaults and
delinquencies compared to S&P's last review, which also showed
decreasing credit enhancement.
On the other hand, the affirmations of the ratings on
Metrofinanciera - Bursatilizaciones de Hipotecas Residenciales's
METROCB 04U and METROCB 06U, and on Metrofinanciera -
Bursatilizaciones de Hipotecas Residenciales II's, MTROCB 07U,
MTROCB 08U, and MTROFCB 08 reflect that the current credit
enhancement in the form of overcollateralization, excess spread,
liquidity reserves, and partial credit guarantees in some of the
transactions is sufficient to support the ratings under current
and projected stress scenarios consistent with the assigned rating
levels.
The CreditWatch actions reflect that the legal proceedings against
Metrofinanciera have ended, as the company announced on Aug. 23,
2013. S&P believes that the operational and liquidity risks
derived from those legal proceedings have been resolved because
the affected accounts have been unfrozen and the amounts in them
distributed according to each transaction's payment waterfall.
While the Metrofinanciera accounts were frozen, the company
managed to redirect most of the collections to unfrozen accounts,
or directly into the trust accounts, and to apply some of the
funds in the trusts according to the payment waterfalls. The
redirected collections grew during this period, and reached around
90% of the total as of the latest collection report in August
2013. As a result, none of the transactions failed to meet their
payment obligations.
DEFAULT RATIOS AND CREDIT ENHANCEMENT LEVELS(i)
Series Defaults(%)(ii) Defaults(%) C/E(%)
(iii) (iv) (v)
METROCB 04U 22.73 5.45 7.72
METROCB 05U 30.25 8.64 0.14
MFCB 05U 31.46 10.76 (19.73)
METROCB 06U 41.09 17.49 (23.77)
MTROCB 07U 45.79 25.73 (62.30)
MTROCB 08U 42.82 25.52 (66.54)
MTROFCB 08 26.73 15.42 29.19
(i)Calculations used data as of August 2013. (ii)Standard & Poor's
estimates defaults considering the reported delinquency buckets of
61-90 days and more than 90 days. (iii)Measured over the
outstanding amount of the loans. (iv)Measured over the initial
balance of the loans. (v)Calculated as one minus the liabilities
divided by current assets, plus the available PCG amount.
C/E--Credit enhancement. PCG--Partial credit guarantee.
S&P estimated the transactions' delinquency and default rates and
current credit enhancement levels using our RMBS methodology and
assumptions, and analyzed the transactions using the LEVELS Mexico
model to determine updated foreclosure frequency and loss severity
levels. S&P then used its Mexican RMBS cash flow model to
determine its rating on each deal based on its financial position,
projected performance, and structure. S&P modeled each deal's
expected recovery using asset liquidations that are consistent
with the model's output.
FORECLOSURE FREQUENCY AND LOSS SEVERITY LEVELS MODELED
Series FF (%) LS (%) LSDP (%)
METROCB 04U 26.80 55.36 61.47
METROCB 05U 26.77 44.31 56.43
MFCB 05U 28.56 32.72 45.10
METROCB 06U 23.61 21.41 35.80
MTROCB 07U 17.21 19.78 35.61
MTROCB 08U 8.46 24.06 22.76
MTROFCB 08 21.10 32.68 67.73
FF--Foreclosure frequency. LS--Loss severity. LSDP-Loss severity
of the defaulted portfolio.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and a
description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
RATING AND CREDITWATCH ACTIONS
Metrofinanciera - Bursatilizaciones de Hipotecas Residenciales
Series Maturity Rating
date To From
METROCB 04U 11/11/2033 mxAA (sf) mxAA (sf)/Watch Neg
METROCB 05U 2/20/2034 mxA (sf) mxA+ (sf)/Watch Neg
MFCB 05U 10/24/2033 mxBBB- (sf) mxBBB+ (sf)/Watch Neg
METROCB 06U 11/14/2033 mxB- (sf) mxB- (sf)/Watch Neg
Metrofinanciera - Bursatilizaciones de Hipotecas Residenciales II
Series Maturity Rating
date To From
MTROCB 07U 12/1/2033 CCC (sf) CCC (sf)/Watch Neg
MTROCB 07U 12/1/2033 mxB- (sf) mxB- (sf)/Watch Neg
MTROCB 08U 4/1/2033 CCC+ (sf) CCC+ (sf)/Watch Neg
MTROCB 08U 4/1/2033 mxB (sf) mxB (sf)/Watch Neg
MTROFCB 08 6/1/2039 mxAA (sf) mxAA (sf)/Watch Neg
TENEDORA NEMAK: S&P Raises CCR to 'BB+'; Outlook Stable
-------------------------------------------------------
Standard & Poor's Ratings Services raised its global scale long-
term corporate credit and issue ratings on Tenedora Nemak S.A. de
C.V. (Nemak) to 'BB+' from 'BB-'. S&P also raised its national
scale long-term corporate credit rating to 'mxAA-' from 'mxA-'.
The recovery rating of '3' on Nemak's $500 million senior
unsecured notes remains unchanged. S&P revised the outlook to
stable from positive.
The upgrade on Nemak reflects its improved business risk profile
which S&P now assess as "fair." "The successful integration of
its latest acquisition, its improved position as a strategic
supplier of complex automotive components and its strong operating
margins stemming from its efficient operations, and ability to add
value in the auto industry production chain support our revision
of the company's business risk profile. Also, the company's key
financial metrics have improved thanks to its strong operating
performance," said Standard & Poor's credit analyst Bernardo
Gonzalez.
S&P now incorporates one notch of support from Nemak's parent
company, Alfa S.A.B. de C.V. (N.R.; Alfa), as S&P views Nemak as
moderately strategically important to its parent, and that it
would receive support if needed. Although Alfa is not rated, S&
assess its credit quality based on public information as stronger
than Nemak's.
==============
U R U G U A Y
==============
* URUGUAY: IMF Concludes 2013 Article IV Mission
------------------------------------------------
An International Monetary Fund mission visited Uruguay from
September 23 to October 4 to conduct the country's annual Article
IV consultation.
The mission met with Minister of Finance Fernando Lorenzo, Central
Bank President Mario Bergara, other senior officials, academics
and representatives of the private sector.
At the end of the visit, Oya Celasun, the chief of the mission,
issued the following statement:
"After the decade of strong expansion, the growth of the Uruguayan
economy has moderated to a more sustainable pace. External demand
has weakened, but domestic demand remains robust. We project
growth at 4 percent for 2013 and about 3.5 percent for 2014-15.
Inflation persists above the target range. The current account
deficit has widened but is expected to narrow as external demand
gradually recovers. Foreign direct investment remains strong.
"There are risks surrounding the broadly solid economic outlook,
stemming from global, regional and domestic factors. The
prospects for regional trading partners could imply some downside
risks for Uruguay, with potential spillovers through the trade,
tourism and Foreign Direct Investment (FDI) channels. Global
downside risk scenarios include a lasting drop in export commodity
prices and tighter global financial conditions. As for domestic
risks, continued strong increases in labor costs could result in
higher inflation and further real appreciation, and the ensuing
loss of external competitiveness would eventually hurt exports and
growth.
"Macro-financial vulnerabilities are contained. The central
government has a resilient liability structure thanks to astute
debt management; it also has a comfortable level of foreign assets
and contingent credit lines. Uruguay's financial system is not
likely to act as an amplifier or propagator of external shocks
given its small size and muted links to the real sector; banks are
well regulated and their balance sheets generally appear robust.
The central bank and commercial banks have sizable net foreign
asset positions.
"Inflation persisting above the ceiling of the BCU's target band
remains an important macroeconomic policy issue. The mission
welcomes the tightening of the stance over the last two months
that is evidenced by the rise in nominal peso yields.
"At the same time, the recent change in the operational target for
monetary policy has raised new practical challenges and put an
extra premium on communication. Additional efforts by the central
bank to communicate its targeted monetary policy stance and
inflation goal would help market participants adapt to a new
operational framework and smooth market volatility. Going
forward, the effectiveness of the new regime in delivering the
inflation targets needs to be closely monitored.
"In the view of the mission, a moderation in real wage growth is
critical to support the goal of lowering in inflation. At the
same time, reducing the backward-indexation of wages would help
safeguard employment in the face of downside risks.
"A tighter fiscal policy stance would also help relieve some of
the burden on monetary policy in taming inflation. It would also
help keep net public debt on a downward trajectory, which is an
appropriate aim given the uncertain global environment expected
for the years ahead.
"The mission acknowledges the circumstances that led to the
adoption of reserve requirements on foreign purchases of locally-
issued government securities, since at the time of the
introduction of the policy there was little scope to counteract
currency appreciation pressures from portfolio inflows with
monetary easing or prompt fiscal tightening. Such capital flow
management measures, however, should be temporary. They should be
removed once there is clear evidence that the capital inflow surge
has abated.
"The medium-term outlook for Uruguay is broadly favorable but will
require various policy actions to maintain solid and stable
growth. Specifically, boosting public infrastructure and raising
the efficiency of labor markets would help sustain high
productivity and investment growth, and enhance competitiveness.
Improving access to finance and spurring capital market
development would increase the financial sector's contribution to
growth.
===============
X X X X X X X X
===============
BOND PRICING: For the Week From Sept. 30 to Oct. 4, 2013
--------------------------------------------------------
Issuer Coupon Maturity Currency Price
------ ------ -------- -------- -----
Argentine Government
Int'l Bond 8.28 12/31/2033 USD 65
Argentine Government
Int'l Bond 7.82 12/31/2033 EUR 63
Argentine Government
Int'l Bond 7.82 12/31/2033 EUR 62.5
Argentine Government
Int'l Bond 8.28 12/31/2033 USD 63.5
Provincia de Buenos
Aires/Argentina 9.625 4/18/2028 USD 67.691
Empresa Distribuidora Y
Comercializadora Norte 9.75 10/25/2022 USD 52
Capex SA 10 3/10/2018 USD 71.25
Banco Macro SA 9.75 12/18/2036 USD 76.9
Transener SA 9.75 8/15/2021 USD 52.78
Argentina Boden Bonds 2 9/30/2014 ARS 8.49
Argentina Bonar Bonds 20.6633 1/30/2014 ARS 11.27
Argentine Government
Int'l Bond 1.18 12/31/2038 ARS 4.96
Cia Latinoamericana
de Infraestructura & Servic 9.5 12/15/2016 USD 65
Inversora de Electrica
de Buenos Aires SA 6.5 9/26/2017 USD 33.875
Argentine Government
Int'l Bond 8.28 12/31/2033 USD 64
Empresa Distribuidora
Y Comercializadora Norte 10.5 10/9/2017 USD 53
Argentine Government
Int'l Bond 8.28 12/31/2033 USD 64.125
Argentina Bocon 2 3/15/2014 ARS 3.53
Banco Macro SA 9.75 12/18/2036 USD 76.25
Capex SA 10 3/10/2018 USD 73.375
Argentina Bocon 2 1/3/2016 ARS 7.92
Argentina Bocon 2 3/15/2024 ARS 15.56
Argentine Government
Int'l Bond 7.82 12/31/2033 ARS 45
MetroGas SA 8.875 12/31/2018 EUR 68.75
Empresa Distribuidora
Y Comercializadora Norte 9.75 10/25/2022 USD 51.25
Argentine Government
Int'l Bond 4.33 12/31/2033 USD 35
Provincia de Buenos
Aires/Argentina 9.625 4/18/2028 JPY 68
Transener SA 9.75 8/15/2021 USD 50
Banco Macro SA 9.75 12/18/2036 USD 75
Argentine Government
Int'l Bond 0.45 12/31/2038 USD 8
Argentine Government
Int'l Bond 4.33 12/31/2033 JPY 35
MetroGas SA 8.875 12/31/2018 JPY 65.375
Banco Hipotecario SA 3.95 8/14/2017 USD 69.75
Provincia del Chaco 4 12/4/2026 USD 31.375
Formosa Province of Argentina 5 2/27/2022 USD 68.25
Provincia del Chaco 4 11/4/2023 USD 59.875
Argentine Republic
Government International Bon 5.83 12/31/2033 USD 21.65
BR Cia Energetica
de Sao Paulo 9.75 1/15/2015 ARS 67.234
Gol Finance 8.75 USD 63.5
Sifco SA 11.5 6/6/2016 USD 47.125
Gol Finance 8.75 USD 62
SMU SA 7.75 2/8/2020 USD 66
SMU SA 7.75 2/8/2020 63.2
Cia Sud Americana
de Vapores SA 6.4 10/1/2022 USD 64.7677
Talca Chillan Sociedad
Concesionaria SA 2.75 12/15/2019 CLP 61.2163
Almendral
Telecomunicaciones SA 3.5 12/15/2014 CLP 33.1948
Cia Cervecerias Unidas SA 4 12/1/2024 CLP 59.3633
Empresa de Transporte
de Pasajeros Metro SA 5.5 7/15/2027 CLP 3.69218
Aguas Andinas SA 4.15 12/1/2026 CLP 72.9238
Hidili Industry
International 8.625 11/4/2015 USD 74.75
Development Ltd
Renhe Commercial
Holdings Co Ltd 13 3/10/2016 USD 62.55
Renhe Commercial
Holdings Co Ltd 11.75 5/18/2015 USD 67.507
China Forestry
Holdings Co Ltd 10.25 11/17/2015 USD 36.375
Renhe Commercial
Holdings Co Ltd 13 3/10/2016 USD 61.75
Hidili Industry
International Development 8.625 11/4/2015 USD 72.75
Ltd
China Forestry
Holdings Co Ltd 10.25 11/17/2015 USD 36.375
Renhe Commercial
Holdings Co Ltd 11.75 5/18/2015 USD 67.625
Global A&T
Electronics Ltd 10 2/1/2019 USD 68.125
Global A&T Electronics
Ltd 10 2/1/2019 USD 68.375
Bank Austria
Creditanstalt
Finance Cayman Ltd 1.614 EUR 56.95
BCP Finance Co Ltd 5.543 EUR 28.875
BES Finance Ltd 5.58 EUR 61.7
Bank Austria Creditanstalt
Finance Cayman Ltd2 1.838 EUR 56.827
ESFG International Ltd 5.753 EUR 50.75
BCP Finance Co Ltd 4.239 EUR 28.767
BES Finance Ltd 4.5 EUR 56.438
Caixa Geral De
Depositos Finance 1.021 EUR 30.55
Banif Finance Ltd 1.591 EUR 44
Banco Finantia
International Ltd 2.475 7/26/2017 EUR 44.05
BES Finance Ltd 3.058 EUR 73.875
ERB Hellas Cayman
Islands Ltd 9 3/8/2019 EUR 42.125
BCP Finance Bank Ltd 5.31 12/10/2023 EUR 67.5
BCP Finance Bank Ltd 5.01 3/31/2024 EUR 64.625
Banco BPI SA/
Cayman Islands 4.15 11/14/2035 EUR 45.625
Mongolian Mining Corp 8.875 3/29/2017 USD 74.75
Puerto Rico Conservation 6.5 4/1/2016 PR 53
Petroleos de
Venezuela SA 9.75 5/17/2035 USD 73.25
Petroleos de
Venezuela SA 5.375 4/12/2027 USD 55
Venezuela Government
International Bond 8.25 10/13/2024 USD 70.5
Venezuela Government
International Bond 9.25 5/7/2028 USD 74.5
Petroleos de
Venezuela SA 5.5 4/12/2037 USD 54.25
Venezuela Government
International Bond 6 12/9/2020 USD 69.75
Venezuela Government
International Bond 7 3/31/2038 USD 62.25
Venezuela Government
International Bond 7.65 4/21/2025 USD 67.5
Petroleos de
Venezuela SA 9.75 5/17/2035 USD 72.5
Bolivarian Republic
of Venezuela 7 3/31/2038 USD 62.157
***********
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
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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.
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