/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/131220.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, December 20, 2013, Vol. 14, No. 252 Headlines B A R B A D O S SAGICOR LIFE: Sagicor Investments to Pay Dividends in January B R A Z I L OGX PETROLEO: Fitch Affirms and Withdraws D Issuer Default Rating OSX BRASIL: Sees Bondholders Accepting Delayed Interest RB CAPITAL: Moody's Affirms Ba1 Local Currency Rating on Certs. C A Y M A N I S L A N D S ABSOLUTE RETURN DAMA: Shareholders' Final Meeting Set for Dec. 20 ABSOLUTE RETURN: Shareholders' Final Meeting Set for Dec. 20 AVATAR FINANCE: Shareholders' Final Meeting Set for Dec. 20 BLACKSTONE LR: Shareholders Receive Wind-Up Report CAYMAN LTD: Shareholders Receive Wind-Up Report CMA CAPITAL: Shareholders Receive Wind-Up Report CRAFT 2010-1: Shareholders' Final Meeting Set for Dec. 20 CRAFT 2010-4: Shareholders' Final Meeting Set for Dec. 20 CRAFT 2010-5: Shareholders' Final Meeting Set for Dec. 20 CRAFT 2012-1: Shareholders' Final Meeting Set for Dec. 20 KARSCH TRADING: Shareholders' Final Meeting Set for Dec. 20 LAMA INTERNATIONAL: Shareholders Receive Wind-Up Report MA ABSOLUTE: Shareholders' Final Meeting Set for Dec. 20 MA KARSCH: Shareholders' Final Meeting Set for Dec. 20 PALO ALTO: Shareholders Receive Wind-Up Report H O N D U R A S HONDURAS: Moody's Rates $500MM Bond at B2; Outlook Negative J A M A I C A * JAMAICA: Tax Collections Still Affected by Smoking Regulations M E X I C O URBI DESARROLLOS: Fitch Affirms, Withdraws 'C/RR4' Note Ratings T R I N I D A D & T O B A G O CARIBBEAN CEMENT: Makes First Shipment of Clinker to Venezuela BANCO DELA REPUBLICA: Moody's Affirms Standalone BFSR at D+ V E N E Z U E L A PETROLEOS DE VENEZUELA: Moody's Cuts Currency Bond Rating to Caa1 - - - - - =============== B A R B A D O S =============== SAGICOR LIFE: Sagicor Investments to Pay Dividends in January ------------------------------------------------------------- RJR News reports that shareholders of Sagicor Investments are to get a dividend on January 28. Sagicor Investment is a subsidiary of Sagicor Life Inc. The company declared a J$0.91 cents per share dividend at a reconvened board meeting, according to RJR News. The report relates that the dividend is to be paid to those on record as owning its shares on January 7 which means the latest day to buy the share to benefit from the dividend is January 3. The dividend commits the company to paying out more than J$500 million, the report notes. Headquartered in St. Michael, Barbados, Sagicor Life Inc. -- http://www.sagicorlife.com/-- is a financial services company, and through its subsidiaries, offers life and health insurance, annuities, pensions, property and casualty insurance, and banking services. * * * As reported in the Troubled Company Reporter-Latin America on Nov. 27, 2013, Standard & Poor's Ratings Services said that the 'BB+' financial strength and counterparty credit ratings on Sagicor Life Inc. (Sagicor) and its 'BB-' issue-level ratings on Sagicor Finance Ltd. remain on CreditWatch with negative implications where S&P placed them on Feb. 13, 2012. =========== B R A Z I L =========== OGX PETROLEO: Fitch Affirms and Withdraws D Issuer Default Rating ----------------------------------------------------------------- Fitch Ratings has affirmed and withdrawn the following ratings of OGX Petroleo e Gas Participacoes S.A. (OGX): -- Foreign currency Issuer Default Rating (IDR) at 'D'; -- Local currency IDR at 'D'; -- National Long Term Rating at 'D(bra)'; -- Unsecured debt at 'C/RR5'. Fitch has withdrawn these ratings due to company's bankruptcy filing in October 2013, the ongoing debt restructuring process and limited information being provided during this time. OSX BRASIL: Sees Bondholders Accepting Delayed Interest ------------------------------------------------------- Jeb Blount at Reuters reports that OSX Brasil SA Chief Financial Officer Claudio Antonio da Silva Zucker said the company expects a deal in the coming days to delay an interest payment on bonds sold to finance an oil production ship, a move that will help the ailing Brazilian shipbuilder move ahead with a restructuring plan. A deal will allow OSX SA, controlled by tycoon Eike Batista, to put off a Dec. 20 interest payment on US$500 million of 9.25% bonds due in 2015. Reuters reported on Dec. 5 that 95% of the holders of the securities had agreed to delay the Dec. 20 payment, worth about US$11.6 million. One of the conditions is that OSX give up control, but not ownership, of the OSX-3 ship that secured the bonds to a captain and crew under the control of creditors, sources told Reuters at that time. OSX Brasil, which operates a shipyard north of Rio de Janeiro, last month filed for protection from creditors on liabilities of BRL5.34 billion (US$2.30 billion). OSX Brasil, part of Mr. Batista's troubled Grupo EBX, filed for bankruptcy after Oleo e Gas Participacoes SA, formerly known as OGX Petroleo e Gas Participacoes, filed for bankruptcy Oct. 30, according to Reuters. Reuters notes that the bankruptcy petition left OSX's ship-leasing unit, which owns three floating, production, storage and offloading (FPSO) ships, out of the petition as it seeks buyers for the ships and deals with bondholders and banks that financed them. A deal to sell the OSX-2 FPSO, which is in storage in Malaysia, could be complete in the first half of 2014, Mr. Zucker said, Reuters relates. OSX is renegotiating its US$263,000 a day lease- fee on the OSX-1 in Tubarao Azul, Mr. Zucker added. The OSX-3 started output in Oleo e Gas Participacoes' Tubarao Martelo field earlier this month, and oil production from the field is sufficient to cover its lease, OSX Chief Executive Officer Eucherio Rodrigues said at the event, the report notes. The report discloses that OSX SA is also in talks with construction and engineering companies to lease space at its shipyard at the Port of Acu. The port is controlled by Prumo Logistica SA, formerly known as LLX Logistica SA. Control of Prumo, EBX's former port operator, was sold by Batista earlier this year to Washington-based EIG Global Energy Partners LLC. About OSX OSX Brasil SA is a shipbuilder controlled by billionaire Eike Batista. As reported in the Troubled Company Reporter-Latin America on Nov. 12, 2013, The Wall Street Journal said that OSX Brasil SA filed for bankruptcy protection, the second such filing for a commodities empire that crumbled this year as losses piled up and investor confidence plummeted. The move on Nov. 11 at a Rio de Janeiro court follows a default and bankruptcy filing the prior month for Mr. Batista's flagship oil firm OGX Petroleo e Gas Participacoes SA, according to the WSJ report. The firm went public in 2008 for $4.1 billion but failed to produce nearly any of the up to 10.8 billion barrels it claimed to have. Recently, OGX declared several of its once promising fields were actually duds. RB CAPITAL: Moody's Affirms Ba1 Local Currency Rating on Certs. -------------------------------------------------------------- Moody's America Latina has affirmed the provisional ratings of (P)Aa2.br (National Scale, Local Currency) and of (P)Ba1 (Global Scale, Local Currency) assigned to the 97th, 98th and 99th Series of the 1st Issuance of real estate certificates to be issued by RB Capital Companhia de Securitizacao S.A. (RB Capital, the Issuer or the Securitizadora). Issuer / Securitizadora: RB Capital Companhia de Securitizacao S.A. 97th, 98th and 99th Series of the 1st Issuance of CRIs for a total amount up to BRL 400,200,000; ratings affirmed at (P)Aa2.br / (P)Ba1 Ratings Rationale: The rating affirmation follows an update to the proposed transaction structure. The transaction has not closed yet. The changes to the transaction structure are credit-positive or neutral, and do not affect the rating of the certificates, which is based on the rating of BR Malls Participacoes S.A. (BR Malls). The updated structure has two main changes. First, after the termination of any tenant agreement, BR Malls will now continue to make payments to the securitization company according to the original terms of the terminated tenant agreement. Previously, BR Malls had up to 90 days to sign a new tenant agreement and only if 90 days had passed without a new tenant agreement in place, BR Malls was obligated to pay. Moody's considers this change credit positive given that the guarantee that BR Malls provides on the underlying assets will be more timely. Second, the current structure does not include a minimum coverage ratio trigger ( "Indice de Cobertura Minimo -- Lastro") that was previously in the documents. Moody's considers this change to be credit neutral because the updated obligation of BR Malls to continue making payments according to the terms of the original tenant agreements turns this trigger irrelevant. The ratings of the certificates are based, among others, on the following factors: -- The ability and willingness of BR Malls, which has a senior unsecured rating of Aa2.br (Brazilian National Scale) and Ba1 (Global Scale, Local Currency), to make payments due under the guarantee. The irrevocable and unconditional guarantee issued by BR Malls in favor of the Issuer and consequently to the investors of the CRI, obligating itself as guarantor and principal payer, together with the tenants, for full and timely payments of the real estate credits ultimately backing the CRI; -- The structure of the transaction whereby payments under the guaranteed Real Estate Credits match payments under the CRI; -- Legal and structural features, including (i) mandatory repurchase events defined in transaction documents which obligate the Sellers (Ecisa, Nattca and Ecisa Engenharia, fully controlled by BR Malls) to repurchase automatically any outstanding credit rights and (ii) non-automatic and automatic early redemption events. The assigned ratings reflect the guarantee provided by BR Malls S.A and are based on its ability to make payments under the guarantee, as reflected by its senior unsecured rating. Any future change in the senior unsecured rating of BR Malls will lead to a change in the ratings of the CRI. In assigning the ratings, Moody's has not given credit to the pledged real estate backing the certificates, or the pledged real estate receivables (pledged tenancy revenues). The CRI are backed by real estate credits rights derived from two shopping malls located in Brazil ("Real Estate Credits") and benefit from: (i) a guarantee (fianca) provided by BR Malls Participacoes S.A. ("BR Malls") on the Real Estate Credits, (ii) a pledge of the Real Estate Assets (alienacao fiduciaria) in favor of the issuer, (iii) a pledge of cash flows derived from the shopping mall operation, including the parking lot (cessao fiduciaria), and (iv) a pledge of the escrow account where rental payments are deposited (cessao fiduciaria). BR Malls is the largest owner and manager of shopping centers in Brazil. The company has grown significantly to BRL18.1 billion in gross assets at 2Q13 from BRL 2.8 billion at YE07. BR Malls currently owns interests in 51 malls plus it has five projects in development. The malls are geographically diversified across the country and diversified across consumer income groups. Another credit strength is the portfolio's high occupancy of 97.7% and its solid operating margins at 74% as of 2Q13. Factors that would lead to an upgrade or downgrade of the rating Any future changes in the senior unsecured rating of BR Malls Participacoes S.A. will lead to a change in the CRI's ratings. ========================== C A Y M A N I S L A N D S ========================== ABSOLUTE RETURN DAMA: Shareholders' Final Meeting Set for Dec. 20 ----------------------------------------------------------------- The shareholders of Absolute Return Capital Partners Dama Limited will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands ABSOLUTE RETURN: Shareholders' Final Meeting Set for Dec. 20 ------------------------------------------------------------ The shareholders of Absolute Return Capital Partners Trading Limited will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands AVATAR FINANCE: Shareholders' Final Meeting Set for Dec. 20 ----------------------------------------------------------- The shareholders of Avatar Finance will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands BLACKSTONE LR: Shareholders Receive Wind-Up Report -------------------------------------------------- The shareholders of Blackstone LR Offshore Fund, Ltd received on Dec. 11, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Patrick Agemian Global Funds Management Ltd P.O. Box 10034 Harbour Place, 2nd Floor 103 South Church Street Grand Cayman KY1-1101 Cayman Islands CAYMAN LTD: Shareholders Receive Wind-Up Report ----------------------------------------------- The shareholders of Cayman Ltd. Holdco received on Dec. 10, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Thomas Edward Walsh 385 Ravendale Drive Mountain View CA, 94043 United States of America CMA CAPITAL: Shareholders Receive Wind-Up Report ------------------------------------------------ The shareholders of CMA Capital Partners Fund received on Dec. 16, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Rolf Kung IFIT Fund Services AG, Voltastrasse 61, P.O. Box 2520, CH-8033 Zurich Telephone: +41 44 366 4016 Facsimile: +41 44 366 4039 CRAFT 2010-1: Shareholders' Final Meeting Set for Dec. 20 --------------------------------------------------------- The shareholders of Craft 2010-1, Ltd will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands CRAFT 2010-4: Shareholders' Final Meeting Set for Dec. 20 --------------------------------------------------------- The shareholders of Craft 2010-4, Ltd will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands CRAFT 2010-5: Shareholders' Final Meeting Set for Dec. 20 --------------------------------------------------------- The shareholders of Craft 2010-5, Ltd will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands CRAFT 2012-1: Shareholders' Final Meeting Set for Dec. 20 --------------------------------------------------------- The shareholders of Craft 2012-1, Ltd will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands KARSCH TRADING: Shareholders' Final Meeting Set for Dec. 20 ----------------------------------------------------------- The shareholders of Karsch Trading Limited will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands LAMA INTERNATIONAL: Shareholders Receive Wind-Up Report ------------------------------------------------------- The shareholders of Lama International Ltd. received on Nov. 29, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: MBT Trustees Ltd. Telephone: 945-8859 Facsimile: 949-9793/4 P.O. Box 30622 Grand Cayman KY1-1203 Cayman Islands MA ABSOLUTE: Shareholders' Final Meeting Set for Dec. 20 -------------------------------------------------------- The shareholders of Ma Absolute Return Capital Partners Limited will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands MA KARSCH: Shareholders' Final Meeting Set for Dec. 20 ------------------------------------------------------ The shareholders of Ma Karsch Limited will hold their final meeting on Dec. 20, 2013, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands PALO ALTO: Shareholders Receive Wind-Up Report ---------------------------------------------- The shareholders of Palo Alto Global Energy Offshore Liquidating Fund, Ltd. received on Dec. 9, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Scott Smith Walkers 190 Elgin Avenue, George Town Grand Cayman KY1-9001 Cayman Islands Telephone: (345) 914 6386 =============== H O N D U R A S =============== HONDURAS: Moody's Rates $500MM Bond at B2; Outlook Negative ----------------------------------------------------------- Moody's Investors Service has assigned a B2 rating to the $500 million bond maturing on December 16, 2020 issued by the government of Honduras. The rating matches Honduras' B2 issuer rating, whose outlook was revised to negative from stable on February 26, 2013. This was Honduras' second bond placement on international capital markets. The first took place in March of this year and involved a $500 million 11-year bond. At the beginning of the year, congress approved government debt issuance of up to $750 million in 2013. That amount was increased to $1 billion last week, thus allowing the government to issue another $500 million bond this year. Ratings Rationale: The B2 rating with a negative outlook reflects (1) the deterioration of the government accounts in 2012 and 2013, partly related to this year's elections; (2) a weakening of the external accounts that has led to a widening current account deficit that has been only partially covered by foreign direct investment inflows. Consideration of a stable outlook will require clear evidence of fiscal consolidation, as well as material improvement in the external accounts. Alternatively, the rating could come under downward pressure in the event of a continued and marked deterioration of fiscal and/or external finances. ============= J A M A I C A ============= * JAMAICA: Tax Collections Still Affected by Smoking Regulations ---------------------------------------------------------------- RJR News reports that the Jamaican government has released information showing that its tax collection is still being hit by the smoking regulations. The impact was shown in a decline in the amount of Special Consumption Tax (SCT), collected for tobacco products, according to RJR News. The report relates that data from the Ministry of Finance show that SCT intake at the ports was running behind by almost J$3 billion. The decline was however not due only to lower tobacco imports, but also to a falloff in imports of refined petroleum and petroleum products as Petrojam increased refining operations in the year, the report notes. =========== M E X I C O =========== URBI DESARROLLOS: Fitch Affirms, Withdraws 'C/RR4' Note Ratings --------------------------------------------------------------- Fitch Ratings has affirmed and simultaneously withdrawn the ratings for Urbi Desarrollos Urbanos, S.A.B. de C.V. (Urbi) as follows: -- Foreign currency Issuer Default Rating (IDR) at 'RD'; -- Local currency IDR at 'RD'; -- National long-term rating at 'RD(Mex)'; -- Urbi's national short-term rating at 'RD(Mex)'; -- MXN600 million in Certificados Bursatiles (CBs) due in 2014 at 'D(mex)'; -- US$150 million senior notes due 2016 at 'C/RR4'; -- US$300 million senior notes due 2020 at 'C/RR4'; -- US$500 million senior notes due 2022 at 'C/RR4'. Key Rating Drivers: Fitch has withdrawn the aforementioned ratings due to the ongoing financial debt restructuring of the company and the lack of information provided by the issuer. Accordingly, Fitch will no longer provide ratings or analytical coverage for Urbi. =============================== T R I N I D A D & T O B A G O =============================== CARIBBEAN CEMENT: Makes First Shipment of Clinker to Venezuela -------------------------------------------------------------- RJR News reports that Caribbean Cement Company Limited was to make its first shipment of clinker to Venezuela Dec. 19. The shipment is part of compensation for oil bought from the South American country under the PetroCaribe initiative, according to RJR News. The report relates that under that agreement, Jamaica can pay for oil with exports of some manufactured goods and agricultural items. "As you are aware we've been pursuing sales to Venezuela under the trade compensation mechanism of the PetroCaribe agreement for the past few years, and it's all coming to fruition now. Today, we will be doing our first shipment 19,000 tons-plus or minus-of clinker going to Venezuela for conversion at their plant down there," the report quoted Anthony Haynes, general manager of Caribbean Cement, as saying. The report notes that the company has signed a deal which could see it export up to 100 tons of clinker to Venezuela to earn US$9 million. In the meantime, the report discloses that Mr. Haynes said 2014 should be a better year for Caribbean Cement. The company saw some recovery this year as the local market stabilized, the report says. Its intra-company debt was also restructured, the report adds. Caribbean Cement Company Limited manufactures and sells cement. * * * As reported in the Troubled Company Reporter-Latin America on Aug. 7, 2013, RJR News said that Caribbean Cement Company Limited suffered a consolidated loss of J$137 million for the first six months of 2013 down from J$1.2 billion during the corresponding period last year, according to RJR News. The report related that this year's loss resulted from J$701 million of non-cash foreign exchange losses compared to J$136 million in 2012. ============= U R U G U A Y ============= BANCO DELA REPUBLICA: Moody's Affirms Standalone BFSR at D+ ----------------------------------------------------------- Moody's Investors Service affirmed all ratings for Banco de la Republica Oriental del Uruguay. These are the D+ standalone bank financial strength rating, which now maps to a baseline credit assessment (BCA) of baa3, the Baa2/P-2 and the Baa3/P-3 global long- and short-term local and foreign currency deposit ratings respectively, as well as the local and foreign currency Aaa.uy and Aa1.uy national scale deposit ratings. The outlook on all ratings is stable. The following ratings assigned to Banco de la Republica Oriental del Uruguay were affirmed: Standalone Bank Financial Strength Rating: D+ Global Local Currency Deposit Rating: Baa2/P-2 Global Foreign Currency Deposit Rating: Baa3/P-3 Local Currency National Scale Deposit Rating: Aaa.uy Foreign Currency National Scale Deposit Rating: Aa1.uy The following standalone baseline credit assessment of Banco de la Republica Oriental del Uruguay was raised: Standalone baseline credit assessment, raised to baa3 from ba1 Ratings Rationale: In affirming BROU's deposits ratings, Moody's reflects its assessment of high probability of support in a situation of stress to be provided by the Oriental Republic of Uruguay, which owns the bank and fully guarantees all of its obligations unconditionally. This lifts the baa3 BCA up, producing a long-term global local- currency (GLC) deposit rating of Baa2/P-2, and a national scale rating of Aaa.uy. In raising the bank's standalone BCA to an investment grade level Moody's acknowledges BROU's improving financial fundamentals over the last two years, particularly its earnings generation power, efficiency metrics, its stable and sizeable deposits base, as well as its prudent risk management practices as illustrated in a lower than average nonperforming loan ratio and ample reserve coverage. Moody's also considers the bank's well established market positioning and diversified business model, consolidated as the dominant bank in the Uruguayan financial system, with loan and deposit market shares of 41% and 43% respectively, and a 131 branch network. Moody's also pointed to the bank's steady funding as a positive rating driver. BROU has access to a stable and sizable low-cost granular deposit base, which is predominantly composed of core customer deposits sourced from payroll, pensioners and government deposits in the bank's wide network. Households represent 79% of BROU's total private sector deposits, providing stable financial margins and ample liquidity. Non-resident deposits have been stable over the past years at 4% of total deposits, considerably lower than the private banks that have in average 22% of non residential deposits over total. The ratings capture the bank's good profitability metrics, which derive largely from lending activities to the private sector, generating a good fee base for the bank. They also derive from interbank loans and its investments in securities, a shelter for the bank's excess liquidity. BROU's net interest margin, at 5% over the last four quarters, also benefits from increasing domestic credit demand in a benign scenario of 3.3% real GDP expansion, according to Moody's, coupled with a high employment rate and sustained real wages gains. BROU nevertheless faces increasing competition in the Uruguayan market as the international banks consolidate their positions and gear up to take advantage of stronger loan demand. A key risk for BROU is the rising level of inflation in Uruguay, which is nearing an annual 9% rate and pressures the bank's operating expenses, as is the case for the whole Uruguayan banking system. Uruguayan banks typically present high operating expenses as a result of largely inelastic labor costs; these costs represent almost 54% of total operating expenses. However, Moody's highlighted BROU management's efforts to improve the bank's efficiency metrics, by placing greater emphasis on alternative and lower cost distribution channels, the opening of new Mini BROU branches, and encouraging the use of home banking and telephone banking, thus fostering economies of scale. Its operating expenditures to operating income ratio declined to 56.8% as of September 2013, from 59.4% as of YE2012, even after the recent absorption of 150 employees and nine branches of Banco Bandes Uruguay. The ratings also incorporate BROU's lending appetite, as evidenced by annual loan growth rates that peaked in 2013 at nearly 15.3%, up from 11.5% the year before. BROU's non-performing loan ratio, at 1.8%, has been fairly stable in recent years, given the bank's large share of payroll accounts and pensioners that collect their salaries and pensions in the bank. Reserves coverage is also sound, at 364% of total non-performing loans or 6.7% over gross loans, indicating that the bank has ample provisions to withstand potential loans losses. Moody's also noted that the expansion of the loan book, coupled with higher capital requirements for operational and systemic risks, have also led to lower capital ratios, as evidenced by a tier one ratio that, though adequate, has declined to 15% in 2013, from 16.4% in 2012. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Moody's Cuts Currency Bond Rating to Caa1 ----------------------------------------------------------------- Moody's Investors Service downgraded the foreign currency bond rating and global local currency rating of Petroleos de Venezuela (PDVSA) to Caa1 from B2 and B1, respectively, and maintained a negative outlook on the ratings. Moody's also downgraded CITGO Petroleum Corporation's Corporate Family Rating to B1 from Ba2; its Probability of Default rating to B1-PD from Ba2-PD; and its senior secured ratings on term loans, notes and industrial revenue bonds to B1, LGD3-43% from Ba2, LGD3-41%. Moody's also assigned a rating of Ba3, LGD3-30% to CITGO's senior secured bank credit facility. The rating outlook for CITGO is negative. CITGO is PDVSA's wholly-owned US-based refining subsidiary. The rating actions follow Moody's downgrade on December 16, 2013 of the Venezuelan government's foreign currency and local currency bond ratings to Caa1, from B2 and B1, also with a negative outlook. The sovereign rating action reflects concerns over the Venezuela's severe economic stress in the post-Chavez era, reflected in rising economic imbalances. These imbalances are exacerbated by government policies, which have resulted in high inflation, a huge disconnect between official and parallel market foreign currency exchange rates, a scarcity of many essential goods and services, and deterioration in the country's external accounts and foreign currency reserves. Ratings Rationale: In downgrading PDVSA's ratings to equal those of the government, Moody's acknowledges the state oil company's substantial oil and gas resources, among the largest in the world, and that the company to date has never defaulted on its debt obligations. In addition, PDVSA's on-balance-sheet debt obligations remained relatively unchanged at $39.3 billion as of its latest June 30, 2013 interim financial statements. However, PDVSA's ratings reflect it its key role as the state oil company and the government's control over PDVSA's finances and access to foreign currency. PDVSA is a driver of Venezuela's economy, a key source of the government's revenues and the country's primary source of foreign exchange. The government approves and controls PDVSA's budget and has steeply increased its transfer payments over the past few years in the form of royalties, social payments and dividends to support government spending and social programs, a trend that accelerated in the run- up to the presidential election in 2012. At the same time, PDVSA is borrowing heavily from the Central Bank of Venezuela, with drawings of equivalent $40 billion as of the end of November 2013, according to bank reports. Under a scenario of fiscal and economic deterioration in Venezuela in the post- Chavez era, the government could become even more dependent on PDVSA, which would further constrain the state oil company's capital investments and increase an already rising debt burden. As a government-related issuer, PDVSA's ratings reflect a high level of imputed government support and default correlation between the two entities. Any future negative ratings action affecting the government's ratings, which have a negative outlook, would also be likely to result in a downgrade of PDVSA's ratings as well. The downgrade of CITGO Petroleum's ratings with a negative outlook primarily reflects heightened risk associated with PDVSA's ownership and financial stress. While CITGO's assets are located in the US and its credit agreements provide certain protections to lenders, including limitations on dividends, it lacks an independent board, with its members and senior management appointed by PDVSA. Meanwhile, the refineries continue to generate good financial results, fund capital spending internally, and maintain a solid liquidity profile, including cash and committed bank facilities. *********** 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. 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 * * *