/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/140124.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, January 24, 2014, Vol. 15, No. 17 Headlines A R G E N T I N A BANCO DE SERVICIOS: Moody's Rates 6th and 7th Issuances 'B3' B R A Z I L ARALCO S.A.: Fitch Downgrades Issuer Default Ratings to 'CCC' OGX PETROLEO: Struggles to Meet Deadline for Restructuring Plan C A Y M A N I S L A N D S BATTERYMARCH ASIA: Shareholders Receive Wind-Up Report BATTERYMARCH ASIA GP: Shareholders Receive Wind-Up Report BROADMEAD LIMITED: Members Receive Wind-Up Report CASHMERE HOLDINGS: Members Receive Wind-Up Report CCBI GROWTH: Shareholders Receive Wind-Up Report CHEYNE CR: Shareholders Receive Wind-Up Report CHEYNE FUND: Shareholders Receive Wind-Up Report CHINA OVERSEAS: Members Receive Wind-Up Report DALEY INVESTMENT: Sole Member Receives Wind-Up Report DTP TRADING: Shareholders Receive Wind-Up Report GREAT HARMONY: Members Receive Wind-Up Report GREENWOOD GROVE: Members Receive Wind-Up Report HIGHFAR CAPITAL: Shareholders Receive Wind-Up Report LONGWAY CAPITAL: Members Receive Wind-Up Report MSGI LIMITED: Members Receive Wind-Up Report MUNDER TALF: Shareholders Receive Wind-Up Report RYLETT LIMITED: Members Receive Wind-Up Report SSARIS MARK: Shareholders Receive Wind-Up Report WESTON-ATLAS: Shareholders Receive Wind-Up Report WESTON-ATLAS MASTER: Shareholders Receive Wind-Up Report D O M I N I C A N R E P U B L I C * DOMINICAN REP.: Fitch Sees Stable Outlook for Insurance Sector J A M A I C A CARIBBEAN CEMENT: Gets First Payment for Deliveries to Venezuela FINSAC: Continues to Pay Expenses for Chen Young, Ministry Says * JAMAICA: Business & Consumer Confidence Indices to be Released M E X I C O GRUPO CEMENTOS: Fitch Affirms Issuer Default Ratings at 'B+' P U E R T O R I C O PUERTO RICO: White House Not Considering Bailout, Official Says U R U G U A Y BANQUE HERITAGE: Moody's Affirms 'B3/Not Prime' Deposit Ratings - - - - - ================= A R G E N T I N A ================= BANCO DE SERVICIOS: Moody's Rates 6th and 7th Issuances 'B3' ------------------------------------------------------------ Moody's Latin America Agente de Calificacion de Riesgo assigned a B3 global local-currency debt rating to Banco de Servicios y Transacciones S.A. (BST)'s sixth expected issuance up to ARS 30 million, which will be due in 18 months, and to the seventh expected issuance up to of ARS 150 million, which will be due in 36 months, both under the ARS 500 million multicurrency MTN Debt Program. At the same time, Moody's assigned an A2.ar national scale local currency debt rating to the expected issuances. The outlook for all ratings is negative, following the negative outlook on the sovereign rating. The following ratings were assigned to BST's expected issuances: -- Sixth Expected Issuance up to ARS 30 million: -- B3 Global Local Currency Debt Rating, with negative outlook A2.ar Argentina National Scale Local Currency Debt Rating, with negative outlook -- Seventh Expected Issuance up to ARS 150 million: -- B3 Global Local Currency Debt Rating, with negative outlook -- A2.ar Argentina National Scale Local Currency Debt Rating, with negative outlook RATINGS RATIONALE Moody's explained that the local currency senior unsecured debt rating derives from BST's B3 global local currency deposit rating. Moody's also noted that seniority was taken into consideration in the assignment of the debt ratings. Banco de Servicios y Transacciones has a baseline credit assessment (BCA) of b3, which largely derives from its modest positioning and business prospects, focused on consumer lending to medium and low income households, and also in corporate banking. The rating also captures the bank's wholesale funding structure and modest profitability. The rating is however supported by the bank's highly granular loan book given its business strategy and adequate asset quality. Banco de Servicios y Transacciones is headquartered in Buenos Aires, with assets of ARS 2,387 million and equity of ARS 156,62 million as of September, 2013. =========== B R A Z I L =========== ARALCO S.A.: Fitch Downgrades Issuer Default Ratings to 'CCC' ------------------------------------------------------------- Fitch Ratings has downgraded Aralco S.A Industria e Comercio's Foreign Currency and Local Currency Issuer Default Ratings (IDR) to CCC from B, and National Long-Term Rating to 'CCC(bra)' from 'BBB-(bra)'. Fitch has also downgraded to 'CCC' from 'B' the rating for the USD250 million unsecured senior notes due 2020. The issuer of the notes was Aralco Finance S.A. (Aralco Finance), a fully-owned subsidiary of Aralco Industria e Comercio S/A. The recovery rating is unchanged at 'RR4'. Key Rating Drivers The downgrades reflect Fitch's concerns about Aralco's short-term liquidity position and escalating refinancing risks due to its inability to generate positive cash flow from operations. Aralco's struggles are partly related to the company's underinvestment in its sugarcane fields that has resulted in cane fields that have a higher average age than its peers, which has driven down its yields. During the last 12 months (LTM) ended Sept. 30, 2013, the company had high working capital requirements due to its need to finance its third party suppliers of sugarcane. Aralco recently revised its previous guidance down by 1 million tons and is now forecasting total crushed volumes of 5 million tons for the FY14. As a result, capacity utilization should be significantly lower than its peers in Brazil. Due to depressed global sugar prices and modest ethanol prices in Brazil, the company's funds flow from operations (FFO) is not expected to materially improve during the next 12 months. Aralco's free cash flow (FCF) is expected to be negative in FY14 due to its limited FFO, supplier financing, and investments in rejuvenating its cane fields. Consequently, the company will remain reliant upon external sources of financing to fund its operations. Moderate Business Scale Aralco is a medium-sized sugar and ethanol company operating in a fragmented, commodity-based sector where scale is relevant and volatility, common. The company runs 7.2 million tons of crushing capacity spread over four industrial units in the Northwest of the Sao Paulo State. Its business model benefits from lower logistics and land lease costs, but production flexibility is low as two thirds of all sucrose it produces goes to production of hydrous and anhydrous ethanol sold in the domestic market. This reduces the volatility of its earnings, though, at the same time, it makes the company more exposed to political risk as the domestic ethanol industry dynamics is strongly linked to Brazil's regulated gasoline prices and related government energy policies. The company's forecast crushed volumes of 5 million tons for the FY14 places utilization capacity at 69%, considerably lower than its peers. Average Business Position Benefits from Link to Copersucar Aralco owns a 5.8% stake in the cooperative Copersucar. The company ownership stake in Copersucar mitigates demand risk, lowers logistics costs and provides better stability in the company's collection flow. Copersucar's large scale business accounts for approximately 22% of crushed sugar cane in the Central South region of Brazil and for 11% and 12% of the global trade of sugar and ethanol, respectively, making it an important price making agent. Copersucar is formed by 47 mills that belong to 24 independent economic groups. Its members crushed 118 million tons of sugar cane in the 2012/2013 season. Aralco sells 100% of its production to Copersucar through a long- term exclusivity contract. Prices for its products are linked to the average sugar and ethanol market prices plus a small premium. Copersucar's members are responsible for the agricultural activities and for the sugar and ethanol production, while Copersucar is responsible for all commercial activities and associated logistics, as well as for the implementation of hedging policies. Copersucar remunerates Aralco based on the realized production on a monthly basis during the year, independent of the moment the sale to the final customer occurs. Weak Liquidity and Negative CFO As of Sept. 30 2013, Aralco's cash position of BRL61 million accounted for only 16% of the company's short-term debt. The ratio would be 28% if the advances from Copersucar are excluded from the short-term debt calculations. Aralco's cash from operations (CFO) was negative BRL 105 million during the LTM, adding pressure to its short-term liquidity position and increasing refinancing risks significantly. This negative cash flow generation compares unfavourably with a cash inflow of BRL108 million in the FYE13 and resulted from the combination of weaker operating performance and higher working capital requirements. These higher working capital requirements arose from the company's need to finance its suppliers at a much larger extent than in the prior year. Aralco's weak liquidity position is partly mitigated by the working capital financing line that is provided by Copersucar. This credit line is limited to a maximum of 40% of the company's revenues. This line, which is equivalent to approximately BRL200 million, enhances financial flexibility and is linked to guarantees on inventories and/or bank guarantees. Higher Leverage For the LTM ended Sept. 30, 2013, Aralco's consolidated net debt/EBITDA ratio was 14.2 times as per Fitch's internal methodologies, the highest level among its peers by far. Excluding advances from Copersucar which are backed by sugar and ethanol inventories of BRL173 million, Aralco's net debt/EBITDA would be 12.4 times for the same period. This compares unfavorably with net debt to EBITDA of 6x as of the FY13. Fitch's EBITDA metrics do not include non-cash gains of BRL66 million generated under a tax financing program granted by the State of Sao Paulo. This higher leverage reflected not only the negative CFO reported as of Sept. 30, 2013 but also Copersucar's strategy of holding ethanol inventories in anticipation of better prices to be achieved over the off-season. Although it does not affect its cash flow generation, Copersucar's cash & carry strategy delayed the recognition of revenues by Aralco, causing an accounting impact on its EBITDA generation. Rating Sensitivities A negative rating action will be triggered if Aralco's FFO and CFO do not recover in the near term and if liquidity deteriorates further. A positive rating action could occur if both FFO and CFO recover and if leverage goes down on a consistent basis. A positive rating action could also occur if the company obtains significant amounts of external financing, either through debt or equity. OGX PETROLEO: Struggles to Meet Deadline for Restructuring Plan --------------------------------------------------------------- Luciana Magalhaes, writing for The Wall Street Journal, reported that a crucial deadline for the restructuring agreement of Brazilian oil company Oleo e Gas Participacoes SA, controlled by businessman Eike Batista, might not be met this week, according to two people familiar with the situation. According to the report, in one of Latin America's largest bankruptcy cases, OGP filed for protection from creditors in late October. In December, the company formerly known as OGX Petroleo e Gas Participacoes SA announced a deal with creditors to exchange debts valued at some $5.8 billion for shares, and to give bondholders an option to invest an additional $200 million to $215 million in the company. OGP had said it aimed to present the restructuring plan to the bankruptcy court in Rio de Janeiro on or before Jan. 24, when it was to receive the fresh funding from current bondholders, the report said. The financing agreement hadn't been completed as of the afternoon of Jan. 23 because documents are still being drawn up, according to one the people, the report related. There is a good chance the restructuring plan won't be finished until next week, according to one of the people. Both, however, said OGP will likely still be able to receive an injection of capital of around $200 million, including a $50 million bridge loan, announced earlier this month, as a part of the restructuring plan. A longer delay in arranging the financing could cause more problems for OGP, which in January announced the first monthly output figures for its only producing oil field, Tubarao Martelo, off the coast of Rio de Janeiro, the report noted. 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. OGX filed for bankruptcy in a business tribunal in Rio de Janeiro on Oct. 30, 2013, case number 0377620-56.2013.8.19.0001. The bankruptcy filing puts $3.6 billion of dollar bonds into default in the largest corporate debt debacle on record in Latin America. The filing by the oil company that transformed Eike Batista into Brazil's richest man followed a 16-month decline that wiped out more than $30 billion of his personal fortune. The filing, which in Brazil is called a judicial recovery, follows months of negotiations to restructure the dollar bonds, in which OGX sought to convert debt to equity and secure as much as $500 million in new funds. OGX said Oct. 29 that the talks concluded without an agreement. The company's cash fell to about $82 million at the end of September, not enough to sustain operations further than December. ========================== C A Y M A N I S L A N D S ========================== BATTERYMARCH ASIA: Shareholders Receive Wind-Up Report ------------------------------------------------------ The shareholders of Batterymarch Asia Fund, Ltd. received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands BATTERYMARCH ASIA GP: Shareholders Receive Wind-Up Report --------------------------------------------------------- The shareholders of Batterymarch Asia GP, Ltd. received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands BROADMEAD LIMITED: Members Receive Wind-Up Report ------------------------------------------------- The members of Broadmead Limited received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Buchanan Limited P.O. Box 1170, George Town Grand Cayman KY1-1102 Cayman Islands CASHMERE HOLDINGS: Members Receive Wind-Up Report ------------------------------------------------- The members of Cashmere Holdings Limited received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Buchanan Limited P.O. Box 1170, George Town Grand Cayman KY1-1102 Cayman Islands CCBI GROWTH: Shareholders Receive Wind-Up Report ------------------------------------------------ The shareholders of CCBI Growth Fund GP Limited received on Dec. 24, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Ngai Li Royal Garden, Flat 8A 27 Repulse Bay Road Hong Kong CHEYNE CR: Shareholders Receive Wind-Up Report ---------------------------------------------- The shareholders of Cheyne CR Limited received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands CHEYNE FUND: Shareholders Receive Wind-Up Report ------------------------------------------------ The shareholders of Cheyne Fund Inc. received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands CHINA OVERSEAS: Members Receive Wind-Up Report ---------------------------------------------- The members of China Overseas Finance (Cayman) I Limited received on Dec. 24, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mr. Liu Jun Three Pacific Place, 10th Floor 1 Queen's Road East Hong Kong DALEY INVESTMENT: Sole Member Receives Wind-Up Report ----------------------------------------------------- The sole member of Daley Investment Ltd. received on Jan. 13, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Lion International Management Limited HSBC House 68 West Bay Road Grand Cayman Cayman Islands DTP TRADING: Shareholders Receive Wind-Up Report ------------------------------------------------ The shareholders of DTP Trading Ltd received on Dec. 24, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands GREAT HARMONY: Members Receive Wind-Up Report --------------------------------------------- The members of Great Harmony Holdings Limited received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Buchanan Limited P.O. Box 1170, George Town Grand Cayman KY1-1102 Cayman Islands GREENWOOD GROVE: Members Receive Wind-Up Report ----------------------------------------------- The members of Greenwood Grove Limited received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Buchanan Limited P.O. Box 1170, George Town Grand Cayman KY1-1102 Cayman Islands HIGHFAR CAPITAL: Shareholders Receive Wind-Up Report ---------------------------------------------------- The shareholders of Highfar Capital (Cayman) Ltd received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands LONGWAY CAPITAL: Members Receive Wind-Up Report ----------------------------------------------- The members of Longway Capital Limited received on Dec. 24, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Gene Dacosta c/o Jonathan McLean Telephone: (345) 814 7376 Facsimile: (345) 945 3902 P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands MSGI LIMITED: Members Receive Wind-Up Report -------------------------------------------- The members of MSGI Limited received on Dec. 31, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Alan De Saram Stephen Nelson Telephone: 949-4544 Facsimile: 949-7073 Charles Adams Ritchie & Duckworth Zephyr House, 2nd Floor, 122 Mary Street P.O. Box 709 Grand Cayman, KY1-1107 Cayman Islands MUNDER TALF: Shareholders Receive Wind-Up Report ------------------------------------------------ The shareholders of Munder Talf Offshore Fund, Ltd. received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands RYLETT LIMITED: Members Receive Wind-Up Report ---------------------------------------------- The members of Rylett Limited received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Buchanan Limited P.O. Box 1170, George Town Grand Cayman KY1-1102 Cayman Islands SSARIS MARK: Shareholders Receive Wind-Up Report ------------------------------------------------ The shareholders of SSARIS Mark IV Fund Ltd. received on Dec. 24, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands WESTON-ATLAS: Shareholders Receive Wind-Up Report ------------------------------------------------- The shareholders of Weston-Atlas Partners Fund Ltd. received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands WESTON-ATLAS MASTER: Shareholders Receive Wind-Up Report ------------------------------------------------- The shareholders of Weston-Atlas Partners Master Fund Ltd. received on Dec. 23, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay, George Town P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands ================================== D O M I N I C A N R E P U B L I C ================================== * DOMINICAN REP.: Fitch Sees Stable Outlook for Insurance Sector ---------------------------------------------------------------- The Outlook on the ratings assigned in Central America and the Dominican Republic is stable for 2014, which implies a high probability of affirming the ratings, according to Fitch. Fitch also maintains insurers sectors of the region in stable outlook, considering basically the greatest economic and financial dynamism projected for most countries of the region. However, the agency seniala some challenges that the insurance industry in the region must face in 2014 as the strong competition in rates, high exposure to natural disasters, and inflationary and devaluation of currencies in some countries, all of which would impose desempenio pressures. According to Fitch's projections, the production of consolidated premium dollars in the region of Central America and the Dominican Republic would record an annual nominal growth of 7.5% in 2013 and 9% in 2014. This projection is based on the estimated growth of two digits for the sector in Costa Rica, Guatemala and El Salvador, countries whose production bonuses together represent about half of the total region. Fitch also projected desempenio better for the insurance industry in the region, posting operating profits and lower combined costs index at 100%. This desempenio influenced by better designed for the Costa Rican sector, the second largest market in the region, and the sector in El Salvador and Guatemala, markets in the last Anios have been experiencing an outstanding operating desempenio. The improved operating desempenio is essential to reduce dependence on the contribution of investment performance, especially in some countries of the region. Furthermore, Fitch estimates that the region will maintain adequate levels of capitalization, based on prudent policy of reinvestment of income in most countries, the trend of regional regulations aimed at strengthening the solvency margin and in the discipline this sense that promotes participation of important international financial groups on the shareholding composition of insurers in the region. The agency believes that the insurance industry will keep the region therefore a level of operating leverage relatively low (Retained Premiums / Equity) in 2014, around 1.1x. ============= J A M A I C A ============= CARIBBEAN CEMENT: Gets First Payment for Deliveries to Venezuela ---------------------------------------------------------------- RJR News reports that the government of Jamaica disbursed $180 million to Caribbean Cement Company as part payment for the provision of clinker to Venezuela, under the PetroCaribe Agreement. The initiative, which commenced last month, is expected to continue until May, according to RJR News. Under the arrangement, the report relates, Jamaica will supply Venezuela with 100,000 tons of clinker, valued at US$8.5 million, for the production of cement. The report notes that the arrangement facilitates Jamaica's repayment of a portion of its oil debt to Venezuela under PetroCaribe, with goods and services in lieu of cash. The report adds that Jamaica's oil debt to Venezuela currently stands at US$2.5 billion. 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. FINSAC: Continues to Pay Expenses for Chen Young, Ministry Says --------------------------------------------------------------- RJR News reports that a Ministry Paper tabled in Parliament shows that the Financial Sector Adjustment Company (FINSAC) has continued to pay the monthly expenses of Dr. Paul Chen Young, former head of the Eagle Financial Network. The Ministry Paper contains FINSAC's 2011/2012 annual report. According to the document, there was a continued delay regarding an appeal by Dr. Chen-Young and two entities in the Eagle group for FINSAC to be paid J$1billion plus interest, the report relates. In accordance with a court order, pending the appeal, FINSAC continued to pay living expenses of US$5,000 monthly to Dr. Chen- Young, according to RJR News. The report says that FINSAC also paid his legal fees. The funds came from the rental of Eagle's Grenada Crescent property, the report discloses. Net Surplus According to the Ministry Paper, the report relays, FINSAC saw a reduction in its net surplus during the 2011/2012 period. The surplus for the year in review was J$168 million, compared to just over one billion dollars in the previous year, the report notes. The decline resulted from impairment losses of $4 billion as well as a $525 million decrease in other operating income, the report adds. As reported in the Troubled Company Reporter-Latin America on July 23, 2010, RJR News said that the Public Sector Transformation Unit has recommended that the FINSAC and Financial Institution Service Limited (FIS) should be abolished. The report related that the Public Sector Transformation Unit has also recommended that FINSAC be wound up over a period of time. According to the report, both institutions were established during the financial sector collapse in the late 1990s and were given responsibility to manage failed banks and insurance companies and oversee the collection and sale of their assets. The report noted that the Transformation also recommended that several major agencies which fall under the Ministry of Finance could be transferred to other ministries. * JAMAICA: Business & Consumer Confidence Indices to be Released ---------------------------------------------------------------- RJR News reports that the Jamaica Conference Board will release the fourth quarter 2013 Business and Consumer Confidence Indices this week. The indices are calculated based on quarterly island wide surveys involving business decision makers and consumers, according to RJR News. The report relates that the third quarter results, released in October, showed business and consumer confidence in Jamaica at an all-time low. The report notes that the data revealed that 92 percent of respondents said jobs were scarce while 33 percent did not expect their income to improve. The slide in the value of the Jamaican dollar and price increases were factors highlighted by the business sector as contributing to negative growth, the report says. =========== M E X I C O =========== GRUPO CEMENTOS: Fitch Affirms Issuer Default Ratings at 'B+' ----------------------------------------------------------- Fitch Ratings has affirmed Grupo Cementos de Chihuahua, S.A.B. de C.V.'s (GCC) local and foreign currency Issuer Default Ratings (IDRs) at 'B+' and senior secured 2020 notes at 'BB-/RR3'. The Rating Outlook is revised to Positive from Stable. The expected recovery ratings of 'RR3' reflect good recovery prospects given default. 'RR3' rated securities have characteristics consistent with securities historically recovering 51% - 70% of current principal and related interest. The revision of the Outlook to Positive reflects Fitch's view that GCC's operations could gain momentum resulting from U.S. construction spending expanding in 2014 driven by continued strength in residential construction, and to a lesser extent in modest recovery in commercial and public construction spending. The Outlook also incorporates an expectation of higher public spending in Mexico in 2014. In Fitch's view, materialization of such expectations, in conjunction with scheduled debt amortizations, would likely result in a strengthening of the company's leverage metrics, which in turn could result in a positive rating action. GCC's ratings reflect the company's solid business position in the cement, ready mix and aggregates segments in the regions where it has a presence; diversified operations in Mexico and the U.S. in the non-residential and residential sectors; as well as positive free cash flow generation through the cycle. The ratings are limited by the company's high leverage and pressure on profitability given market and competitive conditions. At the beginning of 2013, GCC refinanced the full amount of its existing debt by issuing USD260 million of 2020 Senior Secured Notes and obtaining a USD 250 million syndicated loan with final maturity in 2017. As a result, the company improved its maturity profile and increased its financial flexibility. Key Rating Drivers Construction Activity Driving Profitability A better pricing environment in the fourth quarter of 2013 and in 2014 fueled by higher construction spending in the U.S. as a result of strengthening in the residential construction market and increased public spending in Mexico, will likely improve GCC's operating results and outweigh cost pressures in Mexico in the coming years. In 2013, low public infrastructure spending in both Mexico and the U.S., slow residential construction in Chihuahua, high fuel prices in Mexico and continued competitive pressures in the U.S. resulted in a weak operating environment for GCC. In addition, a volatile Mexican peso which strengthened during the first half of the year and a longer-than-average winter also contributed to lower results from the Company's U.S. operations. During the last twelve months to September, 2013, the company's cement volumes declined 0.5% from the same period a year ago. Business Position Supported by Leading Market Shares GCC is leader in the state of Chihuahua in all product segments and has strong cement market positions in North and South Dakota, Wyoming, Colorado, New Mexico, and the region of El Paso, Texas. The majority of these markets was less affected during the U.S. housing crisis, and has shown above average volume recovery in 2012 and 2013, largely as a result of their exposure to oil & gas and agriculture sectors. GCC's contiguous North American footprint allows for economies of scale, ease of distribution and international trading capabilities. According to the Portland Cement Association (PCA), a majority of the states where GCC has presence have a better-than-average outlook for the medium term. Leverage High but Likely to Improve Fitch expects GCC's total debt-to-EBITDA ratio to be at or below 4.0x by the end of 2014, with significant improvement in 2015 as the company resumes revenue and EBITDA growth and scheduled debt amortizations take place. In addition, Fitch recognizes that operating leverage in the sector is high and margins could improve more than expected as a result of higher volumes or an improved pricing environment. GCC's total debt-to-EBITDA ratio was 4.4x for the LTM ended Sept. 30, 2013, similar to that registered in the same period of 2012. Positive FCF Generation Through the Cycle Fitch expects GCC to generate USD20 million of Free Cash Flow (FCF) in 2013, but to be FCF neutral in 2014, as recovery in its main markets continues and the company invests in deferred maintenance and to a lesser extent in growth initiatives. The company's positive FCF generation history, which in conjunction with asset sales has been used to reduce debt levels, is factored into the ratings. Also factored into the ratings is an expectation that the company will continue to pay dividends conservatively. Liquidity Supported by Cash Generation The company strengthened its liquidity position as a result of its refinancing strategy, and aligned debt maturities to projected cash flows and extended its debt average life. At Sept. 30, 2013, GCC's total debt was USD506 million, cash and marketable securities were USD67 million, and short-term debt was USD14 million. Scheduled maturities are USD20 million in 2014, USD52.5 million in 2015, USD82.5 million in 2016, USD91.3 million in 2017, and USD260 million in 2020. GCC generated USD117 million of EBITDA and USD73 million of Cash Flow from Operations (CFO) during the LTM ended Sept. 30, 2013. Ratings Sensitivity Future developments that may, individually or collectively, lead to a positive rating action include: -- A rating upgrade could derive from improved operating performance that leads to higher operating margins and EBITDA generation, which in conjunction with scheduled debt amortizations, translates into lower leverage. A total debt- to-EBITDA ratio remaining below 4.0x, while maintaining adequate liquidity and a manageable debt maturity profile, could have positive implications. Future developments that may, individually or collectively, lead to a negative rating action include: -- A negative rating action could be triggered by a deterioration of the company's credit metrics and cash position due to weak operational results, reflecting increased price competition or higher costs; deterioration in FCF generation driven by increasing working capital needs and capex; and declining EBITDA margins. A debt-to-EBITDA ratio consistently at or above 5.0x will also likely result in a downgrade. ==================== P U E R T O R I C O ==================== PUERTO RICO: White House Not Considering Bailout, Official Says --------------------------------------------------------------- Mark Felsenthal, writing for Reuters, reported on Jan. 22 that the White House is not considering a financial bailout for Puerto Rico, where chronic fiscal challenges have raised the specter of a Detroit-like bankruptcy, an Obama administration official said on Jan. 22. Michael Corkery, writing for The New York Times, reported on Jan. 21 that a group of hedge funds and private equity firms may help Puerto Rico battle a financial crisis of high unemployment and a crushing debt. The NY Times, citing people briefed on the discussions, bankers at Morgan Stanley have been reaching out to about a dozen hedge funds, private equity firms and other large investors to gauge their interests in providing up to $2 billion in financing to Puerto Rico. The island's woes have led credit rating agencies to say they are considering labeling the U.S. territory's general obligation debt as junk bonds, Reuters said. Puerto Rico already pays the highest interest rates of any big municipal bond issuer, Reuters noted. "The President's Task Force continues to partner with the Commonwealth to strengthen Puerto Rico's economic outlook and to ensure that it is taking advantage of all existing federal resources available to the Commonwealth," White House spokeswoman Katherine Vargas told Reuters in an email. "There is no deep federal assistance being contemplated at this time," she said, Reuters cited. With regards to the proposed financing from hedge funds and private equity firms, one of those people briefed in the discussions told the NY Times that the talks are fluid but the debt could carry yield as high as 10 percent, more than double what a highly rated city or state pays to borrow in the current municipal market. The proposed finacing shows just how dire Puerto Rico's situation has become, the NY Times said. "It's unprecedented," Robert Donahue, managing director at Municipal Market Advisors, told NY Times. "It's a reflection of the increasing realization that Puerto Rico has exceeded the risk appetite of the traditional municipal bond market." ============= U R U G U A Y ============= BANQUE HERITAGE: Moody's Affirms 'B3/Not Prime' Deposit Ratings --------------------------------------------------------------- Moody's Investors Service affirmed Banque Heritage (Uruguay) S.A. (Heritage Uruguay)'s bank financial strength rating (BFSR) of E+, mapping to a baseline credit assessment (BCA) of b3, as well as its B3/Not Prime long- and short-term global local and foreign currency deposit ratings, and Baa3.uy local and foreign currency deposit ratings in the Uruguayan national scale. The outlook on all ratings is stable. In addition, Moody's concluded the review for downgrade and confirmed the deposit ratings of Lloyds TSB Bank plc (Uruguay) (Lloyds Uruguay) following the Uruguayan central bank's approval of the acquisition by Heritage Uruguay of Lloyds Uruguay's operations. The ratings confirmed include Lloyds Uruguay's Baa1/Prime-2 long- and short-term global local currency deposit ratings and Aaa.uy local currency deposit ratings on the Uruguayan national scale, and Baa3/Prime-3 and Aa1.uy foreign currency deposit ratings. The following ratings of Heritage Uruguay were affirmed: -- Bank Financial Strength Rating: E+, stable outlook -- Standalone baseline credit assessment: b3 -- Global Local Currency Deposits, long term: B3/Not Prime, stable outlook -- Global Foreign Currency deposits, long term: B3/Not Prime, stable outlook -- National Scale Rating Local Currency Deposit Rating: Baa3.uy -- National Scale Rating Foreign Currency Deposit Rating: Baa3.uy The following ratings of Lloyds TSB Bank plc (Uruguay) were confirmed: -- Long- and short-term global local currency deposit rating of Baa1/Prime-2, stable outlook -- Long term national scale local currency deposit rating of Aaa.uy, -- Long- and short-term global foreign currency deposit rating of Baa3/Prime-3 stable outlook -- Long term national scale foreign currency deposit rating of Aa1.uy, RATINGS RATIONALE In affirming Banque Heritage's ratings Moody's took into account the bank's modest business franchise in the Uruguayan banking system and modest earnings generation, which reflect its developing operations as a private bank and asset manager, as well as modest business volume. The ratings also capture the bank's acquisition of the retail and corporate banking businesses of Lloyds Uruguay, with its 101 employees and two branches, which has just been approved by the Uruguayan central bank. Heritage Uruguay's market share will increase to 3,2% of the system's private bank deposits and 1,8% of private bank loans, but it remains a relatively small player in the local market, ranking ninth among 14 banks. The predominantly retail-deposit base it acquires from Lloyds' Uruguay should boost its presence in the corporate lending market, where Heritage plans to grow, leveraging Lloyd's corporate banking expertise and its own private banking and wealth management businesses, while also providing a more diversified deposits base. Nevertheless, Heritage Uruguay's earnings remain modest, reflecting the limited franchise and high operating cost, although revenues from fees and loans have improved over the last quarters in line with the bank's business plan. Moody's recognizes that. Lloyds Uruguay's acquisition generated an extraordinary gain, which bolstered Heritage Uruguay's $13,7 million bottom line as of YE2013. The ratings, therefore, incorporate the challenges Heritage faces to demonstrate its ability to generate recurrent earnings within the country's highly competitive banking environment. The bank's funding sources are largely driven by deposits, chiefly by non-resident clients. Additionally, the bank's assets and liabilities are highly dollarized, a profile in line with other Uruguayan banks, and which fits its predominantly non-resident business strategy. The ratings also capture Heritage Uruguay's adequate capitalization with a Tier 1 ratio of 13,6% as of YE2013, which may allow further loan growth, as well as its business and risk management practices that are aligned to those of its ultimate parent, Banque Heritage of Switzerland (unrated). Moody's B3 global local-currency deposit rating derives from Heritage's unsupported baseline credit assessment of b3. Moody's also concluded the review for downgrade and confirmed Lloyds Uruguay's deposit ratings, to reflect the UK bank's decision to sell its entire Uruguayan operation to Heritage. At the time of the sale announcement, in September 2012, Lloyd's had considered the possibility of retaining an small balance sheet, which could have meant less support from the parent company. *********** 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, and Peter A. Chapman, Editors. Copyright 2014. 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. 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