TCRLA_Public/140411.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, April 11, 2014, Vol. 15, No. 72



ICBC PRENDARIOS I: Moody's Rates ARS22.1MM Certs. 'Caa1'
YPF SA: Chevron to Invest US$1.6 Billion in Argentina Shale Wells


OAS SA: Fitch Affirms LT Local Currency IDR at 'B+'
PARANAPANEMA SA: Hires BB Securities, Bradesco BBI and Deutsche
PARANAPANEMA SA: S&P Assigns 'B+' CCR; Outlook Stable

C A Y M A N  I S L A N D S

AURIUM REAL: Shareholders' Final Meeting Set for April 22
CHIASCA INTERNATIONAL: Shareholders' Final Meeting Set for Apr. 30
CIHC LIMITED: Shareholder to Hear Wind-Up Report on April 25
DEMI CORPORATE: Shareholder to Hear Wind-Up Report on April 25
KHALID MOHAMMED: Shareholders Receive Wind-Up Report

LANCELOT FUND: Shareholders' Final Meeting Set for May 6


* CHILE: Assesses Damage From 8.2 Magnitude Earthquake


* HONDURAS: IMF's Statement at Conclusion of Article IV Mission


ZACATECAS: Moody's Assigns B3 Global Scale Rating; Outlook Stable

P U E R T O   R I C O

PUERTO RICO: Big Hedge Funds Roll Dice on Debt
PUERTO RICO: Hires Third U.S. Restructuring Firm
PUERTO RICO: S&P Removes Neg. Watch Implications on BB+ Rating


LATAM: Likely to Embark on Needed Reforms, IADB Says

                            - - - - -


ICBC PRENDARIOS I: Moody's Rates ARS22.1MM Certs. 'Caa1'
Moody's Latin America Agente de Calificacion de Riesgo rates
Fideicomiso Financiero ICBC Prendarios I, a transaction that will
be issued by TMF Trust (Argentina) S.A. -- acting solely in its
capacity as Issuer and Trustee.

The securities for this transaction have not yet been placed in
the market. Moreover, the transaction is pending approval from the
"Comision Nacional de Valores." If any assumption or factor
Moody's considers when assigning the ratings change before
closing, the ratings may also change.

ARS 157,176,089 in Class A Floating Rate Debt Securities of
"Fideicomiso Financiero ICBC Prendarios I", rated (sf)
(Argentine National Scale) and B1 (sf) (Global Scale, Local

ARS 22,165,859 in Class B Floating Rate Debt Securities of
"Fideicomiso Financiero ICBC Prendarios I", rated (sf)
(Argentine National Scale) and B2 (sf) (Global Scale, Local

ARS 22,165,859 in Certificates of "Fideicomiso Financiero ICBC
Prendarios I", rated (sf) (Argentine National Scale) and
Caa1 (sf) (Global Scale, Local Currency)

Ratings Rationale

The rated securities are payable from the cash flow coming from
the assets of the trust, which is an amortizing pool of 8,956
eligible auto loans denominated in Argentine pesos, with a fixed
interest rate, originated by the Industrial and Commercial Bank of
China (Argentina) S.A. "ICBC (Argentina)", in an aggregate amount
of ARS 201,507,807.

These auto loans are granted to ICBC (Argentina) clients. The
monthly loan installment is deducted directly from the borrower's
bank account.

Overall credit enhancement is comprised of 22% of subordination
for the Class A Floating Rate Debt Securities and 11% for the
Class B Floating Rate Debt Securities. In addition the transaction
has various reserve funds and excess spread.

Factors that would lead to an upgrade or downgrade of the rating:

Factors that may lead to a downgrade of the ratings include an
increase in delinquency levels beyond the level Moody's assumed
when rating this transaction.

Factors that may lead to an upgrade of the ratings include the
building of credit enhancement over time due to the turbo
sequential payment structure, when compared with the level of
projected losses in the securitized pool.

Loss and Cash Flow Analysis:

Moody's considered the credit enhancement provided in this
transaction through the initial subordination levels for each
rated class, as well as the historical performance of ICBC
(Argentina)'s portfolio. In addition, Moody's considered factors
common to auto loans securitizations such as delinquencies, LTVs,
prepayments and losses; as well as specific factors related to the
Argentine market, such as the probability of an increase in losses
if there are changes in the macroeconomic scenario in Argentina.
These factors were incorporated in a cash flow model in order to
determine the expected loss for the rated securities.

In assigning the rating to this transaction, Moody's assumed a
lognormal distribution for defaults on the pool with a mean of 4%
and a coefficient of variation of 50%. Also, Moody's assumed a
lognormal distribution for prepayments with a mean of 15% and a
coefficient of variation of 70%. These assumptions are derived
from the historical performance to date of ICBC (Argentina)'s
pools. Servicer default was modeled by simulating the default of
the ICBC (Argentina) as the servicer consistent with its current
rating of B1/ In the scenarios where the servicer defaults,
Moody's assumed that the defaults on the pool would increase by 20
percentage points.

The model results showed 0.00% expected loss for the Class A
Floating Rate Debt Securities, 4.53% for the Class B Floating Rate
Debt Securities and 9.99% for the Certificates.

Finally, Moody's also evaluated the back-up servicing arrangements
in the transaction. If ICBC (Argentina) is removed as servicer,
TMF Trust Company (Argentina) S.A. will be appointed as the back-
up servicer.

Stress Scenarios:

Moody's ran several stress scenarios, including increases in the
default rate assumptions. If default rates increased 4% from the
base case scenario for the pool (i.e., mean of 8% and a
coefficient of variation of 50%), the ratings of the Class B
Floating Rate debt securities and the Certificates would likely be
downgraded to B3 (sf) and Caa3 (sf) respectively. The ratings of
the Class A Floating Rate Debt Securities would likely be

The principal methodology used in this rating was "Moody's
Approach to Rating Auto Loan-Backed ABS " published in May 2013.

Potential Mapping Recalibration From Global Scale To National
Scale Ratings

With the recent downgrade of the government of Argentina on the
global rating scale and other issuers whose risk profiles are
affected by related credit considerations, the distribution of
ratings among issuers in Argentina has become compressed within
the bottom half of the national rating scale. As a result, the
current mapping of global scale ratings to national scale ratings
may no longer be adequately serving one of its intended purposes,
which is to provide substantially greater potential credit
differentiation among issuers in Argentina than is possible on the
global rating scale. Moody's is therefore assessing the
opportunity to revise its mapping from global scale ratings to
national scale ratings for Argentina. If the mapping is revised,
the new scale would likely imply that higher rated Argentine
issuers would be remapped to higher ratings on the national scale.

Moody's National Scale Credit 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 credit 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 credit ratings, please refer
to Moody's Credit rating Methodology published in October 2012
entitled "Mapping Moody's National Scale Ratings to Global Scale

YPF SA: Chevron to Invest US$1.6 Billion in Argentina Shale Wells
Pablo Gonzalez at Bloomberg News reports that Chevron Corp. signed
an accord with Argentina's YPF SA to invest US$1.6 billion this
year in shale development and become the country's largest foreign
producer of shale oil and natural gas.

Chevron and state-run YPF SA plan to drill 170 wells in a 96,000-
acre area this year in Argentina's Vaca Muerta formation, the
world's second-largest shale gas deposit and fourth-largest shale
oil reservoir, both companies said in separate statements,
according to Bloomberg News.

Argentine President Cristina Fernandez de Kirchner's government
expropriated a 51 percent stake in YPF from Spain's Repsol SA
(REP) in April 2012 after saying the Spanish oil company hadn't
invested enough in exploration, Bloomberg News recalls.  Repsol's
board agreed in February to accept $5 billion in compensation for
Argentina's expropriation of the unit. Ending the two-year
international dispute may help attract investors to the country,
Bloomberg News notes.

Chevron is the third most valuable oil producer after Exxon Mobil
Corp., and Royal Dutch Shell Plc.

YPF SA is an energy company, operating a fully integrated oil and
gas chain with leading market positions across the domestic
upstream and downstream segments.

                         *     *     *

As reported in the Troubled Company Reporter-Latin America on
April 1, 2014, Fitch Ratings expects to assign a rating of 'B-
/RR4' to YPF S.A.'s (YPF) proposed senior unsecured debt issuance
for up to US$1 billion with a 10-year maturity and amortizations
in years eight (30%), nine (30%) and 10 (40%).


OAS SA: Fitch Affirms LT Local Currency IDR at 'B+'
Fitch Ratings has affirmed the ratings of OAS group as follows:


--Long-Term Foreign Currency Issuer Default Ratings (IDR) at 'B+';
--Long-Term Local Currency IDR at 'B+';
--Long-Term National Rating at 'BBB+(bra)';
--3rd Debenture Issue, BRL300 million, maturity in December 2016,
  Long-term National Rating at 'BBB+(bra)';
--4th Debenture Issue, BRL250 million, maturity in January 2027,
  Long-term National Rating at 'BBB+(bra)';
--5th Debenture Issue, BRL300 million, maturity in May 2015, Long-
  term National Rating at 'BBB+(bra)'.

Construtora OAS S.A. (Construtora OAS):

--Long-term Foreign Currency IDR at 'B+';
--Long-term Local Currency IDR at 'B+';
--Long-term National Rating at 'BBB+(bra)'.

OAS Investments GmbH:

--Long-term Foreign Currency IDR at 'B+';
--Senior Notes Issue, USD850 million, maturity October 2019 at

OAS Empreendimentos S.A. (OAS Empreendimentos)

--Long Term National Rating at 'BBB-(bra)';
--2nd Debenture Issue, BRL60 million, maturity in July 2014,
  guaranteed by OAS S.A., Long-term National Rating at

OAS Finance Ltd.:

--Senior Notes Issue, USD500 million, Perpetual Bonds,
  unconditionally guaranteed by OAS,Construtora OAS and OAS
  Investimentos (OASI) at 'B+'/'RR4'.

The Outlook for the corporate ratings is Stable.


The ratings reflect OAS' high leverage and the necessity of
deleveraging its capital structure on a consolidated basis in the
next three years.  In addition, the group's heavy construction
company has a strong financial profile and is the main cash
generator for OAS, which supports the group's aggressive growth
strategy. OAS' strong liquidity and extended debt amortization
profile were also factored in the analysis.

Fitch expects OAS to preserve conservative cash cushion to support
the group's growth strategy and debt maturities.  The group's
consolidated leverage is high due to its expansion in the
infrastructure concession segment.  However, Fitch believes that
most of these investments are funded through project finance lines
(with limited recourse to OAS) and that the companies should
generate cash flow in the medium term to meet their obligations.
A faster than expected deleveraging would predominately involve a
partial divestiture of OASI's projects.

The ratings incorporate the strong expertise and the position of
the OAS group as one of the five largest contractors in the
Brazilian civil construction sector by revenues, and its long
track record in the domestic engineering and heavy construction.
OAS pursues to benefit from the growth potential in the
international market, mainly in Latin America and Africa.  The
ratings also factor the backlog concentration in some large works;
the volatility inherent to the construction sector; the support
required for the homebuilding company of the group; and the
group's high investments over the next three years on the pre-
operational projects underneath OASI.

Construtora OAS has the same ratings of its controller OAS, since
it has historically been the group's main operating company and
cash generator.  The company is 100% controlled by and
operationally integrated to OAS, besides being the guarantor of
77% of the consolidated corporate debt, net of project finance

Strong Financial Profile of Construtora OAS

Construtora OAS' credit metrics should continue to improve, as the
company's cash flow generation capacity improves.  In 2013,
Construtora OAS generated EBITDA of BRL574 million and funds of
operations of BRL393 million. EBITDA margin was 9.3% and Fitch
expects to remain around 9.5% in 2014.  OAS group consolidated
cash generation capacity remains pressured by the negative EBITDA
of OASI and OAS Empreendimentos.  In 2013, Construtora OAS
represented 85% of the group's consolidated net revenue and 82% of
group's consolidated EBITDA generation.

Strong Liquidity

OAS group's liquidity remains strong and supports the ratings.
OAS' relevant cash position partially mitigates the group's high
leverage, and limits the risks associated to the still weak
operating performance of OASI and the volatility inherent to the
construction activities.  Fitch expects OAS to preserve strong
cash reserves to support the growth phase of its backlog and
investments in the pre-operating companies and to maintain an
extended consolidated debt amortization profile.

OAS has an extended debt amortization profile.  As of Dec. 31,
2013, consolidated cash and marketable securities were BRL3.5
billion and covered 2,3x its consolidated short term debt of
BRL1.5 billion.  OAS has BRL2.2 million of debt maturing before
2015.  The group's liquidity is further reinforced by a four-year
BRL600 million stand-by credit line closed at the end of 2013.
Excluding limited-recourse debt related to project financing, cash
to short-term debt coverage improved to 2.9 in 2013 from 2.7x in

Leverage Should Remain High

OAS' leverage is high and expected to gradually reduce during the
next three years, as EBITDA generation should grow due to the
startup of activities of subsidiaries of OASI that are still in
pre-operational phase and growing cash generation from Construtora
OAS.  The expansion of the infrastructure concessions segment of
the group resulted in a significant increase in consolidated total
debt.  As of Dec. 31, 2013, total consolidated debt was BRL6.8
billion and included about BRL1.5 billion limited -recourse debt,
related to investments funded with project finance lines.

In 2013, total leverage adjusted by limited-recourse debt and
restricted cash was 6.9x, according to Fitch criteria, in line
with 7.0x registered in 2012.  At the same time, net adjusted
leverage reached 3.2x in 2013, increasing from 2.4x in 2012.
Leverage should gradually decline, more intensively after 2018
following the startup of great part of current projects in pre-
operational phase.  OASI's potential EBITDA generation, of above
BRL400 million by 2018, combined with lower expected equity
commitments for the current portfolio, should contribute to reduce
the group's leverage.

Divestures of group's subsidiaries shares could result in faster
than expected deleveraging and should also reduce the group's
equity commitments for the next few years.  During 2013, the group
has successfully sold 39% of OAS Oleo e Gas to FI-FGTS for BRL800
million and 20% of OAS Empreendimentos to Funcef for BRL400
million. Proceeds from the sale of assets should be used to
support these companies operations and eased the pressured on
group's leverage.

Strong Backlog Supports Growth

Construtora OAS' backlog was BRL19.5 billion at the end of 2013
and equivalent to 2.2 years of operations.  Domestic works were
responsible for 70% of the backlog, while the public sector
contributed with 53%.  The company's international projects,
mainly in Africa and Latin America, accounts for 30% of its total
backlog and counts on client advanced payment and funding
guarantees structure.  The backlog is, however, concentrated with
ten largest projects representing 49% of the total, excluding
paralyzed works.  The current backlog should support the group's
growth in the next periods, both in its activities as
subcontractor and in the concession area.

Rating Sensitivities

Future developments that may, individually or collectively, lead
to a negative rating action include:

--Reduction of operating margins and deterioration of credit
metrics due to downturns in the heavy construction activities or
increase in execution costs. Such scenarios would further pressure
margins and reduce the group's capacity to generate operating cash
--A weaker liquidity and higher leverage to support increased
investments could also result in a rating downgrade.
Future developments that may, individually or collectively, lead
to a positive rating action include:
--A consistent reduction in net leverage adjusted by limited-
recourse debt and restricted cash to levels below 4.0x and
evolution of operational cash flow generation, combined with
maintenance of strong liquidity position, and lengthened schedule
of debt amortization.

PARANAPANEMA SA: Hires BB Securities, Bradesco BBI and Deutsche
Reuters reports that Paranapanema SA hired BB Securities, Bradesco
BBI and Deutsche Bank AG to arrange a series of fixed income
investor meetings in the United States, Asia and Europe, said a
source with direct knowledge of the transaction.

A dollar-denominated bond offering could follow, pending market
conditions, said the source, who requested anonymity because the
deal is in the works, according to Reuters.

Terms of the deal, such as the size of the offering, are not
immediately available.

Paranapanema owns and operates the only copper smelter in Brazil,
and currently produces 94 percent of the nation's cathode output.

PARANAPANEMA SA: S&P Assigns 'B+' CCR; Outlook Stable
Standard & Poor's Ratings Services assigned its 'B+' global scale
and 'brBBB' national scale corporate credit ratings on
Paranapanema S.A.  The outlook is stable.

"Our assessment of Paranapanema's "weak" business risk profile
reflects the company's limited scale, scope, and diversification,
its exposure to a cyclical and capital-intensive industry, very
tight and volatile operating margins, and the aggressive
competition from importers and local manufacturers of semi-
manufactured copper products.  We view Paranapanema's limited
scale and concentration on a single asset and market as a
weakness.  The company's operations rely on its main plant, Dias
D'Avila, located in Bahia, which represents more than 90% of total
volume and revenues.  Additionally, Paranapanema has geographical
concentration, as it generates 60%-70% of its revenues from the
Brazilian market.  Also, the company's volatile profitability and
operating cash generation is mainly due to its exposure to
volatile copper prices and aggressive competition.  Furthermore,
Paranapanema has limited ability to impose price conditions on all
of its product portfolio.  Moreover, several Brazilian states' tax
incentives in the past hurt the company's EBITDA, as they fostered
imports.  Although those incentives were dropped in early 2013 and
improved Paranapanema's profitability, there is still some
controversy over the long-term dynamics of the market," S&P said.
Those factors lead S&P to categorize volatility of profitability
as "very high."

The offsetting factors are the company's strategic assets, such as
the only smelter plant in Brazil, and its leading position in the
domestic refined copper segment.  S&P expects Paranapanema's
recent investments in modernizing its plants and increasing
capacity in new value-added products (tubes) will improve the
company's operating margins.

"Although our base case points to stronger core ratios than the
ones for the "aggressive" financial risk category, we took a more
conservative approach as we deem cash flow volatility as
significantly higher than average.  This is mainly due to the
company's exposure to commodity-type products and raw materials
which affect profitability and working capital needs.  This was
evident in 2011, when EBITDA declined by about 50% year-over-year
due to the stronger competition from imports," S&P noted.

C A Y M A N  I S L A N D S

AURIUM REAL: Shareholders' Final Meeting Set for April 22
The shareholders of Aurium Real Estate Holdings Limited will hold
their final meeting on April 22, 2014, 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:

          Reverio Capital Limited
          Intertrust Corporate Services (Cayman) Limited
          190 Elgin Avenue, George Town
          Grand Cayman KY1-9005
          Cayman Islands

CHIASCA INTERNATIONAL: Shareholders' Final Meeting Set for Apr. 30
The shareholders of Chiasca International Ltd. will hold their
final meeting on April 30, 2014, at 12:00 noon to receive 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

CIHC LIMITED: Shareholder to Hear Wind-Up Report on April 25
The shareholder of CIHC Limited will receive on April 25, 2014, at
10:00 a.m., the liquidator's report on the company's wind-up
proceedings and property disposal.

The company's liquidators are:

          Benjamin Booker
          Jill Nelson
          c/o Caledonian House
          P.O. Box 1043 Grand Cayman KY1-1102
          Cayman Islands
          Telephone: (345) 949-0050

DEMI CORPORATE: Shareholder to Hear Wind-Up Report on April 25
The shareholder of Demi Corporate Investments Ltd will receive on
April 25, 2014, at 10:00 a.m., the liquidator's report on the
company's wind-up proceedings and property disposal.

The company's liquidators are:

          Company Managers Ltd.
          Rue du Rhone 59
          1204 Geneva

KHALID MOHAMMED: Shareholders Receive Wind-Up Report
The shareholders of Khalid Mohammed Salim Al Enazi Company LLC
received on April 8, 2014, the liquidator's report on the
company's wind-up proceedings and property disposal.

The company's liquidator is:

          Tarek M. Galal Amer
          c/o Maples and Calder, Attorneys-at-law
          P.O. Box 309, Ugland House
          Grand Cayman KY1-1104
          Cayman Islands

LANCELOT FUND: Shareholders' Final Meeting Set for May 6
The shareholders of The Lancelot Fund will hold their final
meeting on May 6, 2014, to receive the liquidator's report on the
company's wind-up proceedings and property disposal.

The company's liquidator is:

          Commerce Corporate Services Limited
          P.O. Box 694 Grand Cayman
          Cayman Islands
          Telephone: 949 8666
          Facsimile: 949 0626


* CHILE: Assesses Damage From 8.2 Magnitude Earthquake
Robert Kozak at The Wall Street Journal reports that the Chilean
government has began to tally the damage from the powerful
earthquake and the aftershocks that hit northern Chile, promising
aid for the agricultural and fishing sectors amid relief that the
economic fallout has been limited.

Chilean President Michelle Bachelet promised that her government
will help communities rebuild, according to The Wall Street

"When we are faced with a disaster there are various stages, such
as the emergency measures and protection of lives. That is where
we are now.  After that will come the reconstruction," the
President Bachelet said in a radio broadcast from the northern
city of Arica, the report notes.

The WSJ relates that Chile's Agriculture Ministry declared a state
of emergency in two regions in the north.  President Bachelet said
the government will help provide funds for the farming sector,
especially to repair damaged irrigation canals, the report relays.

The WSJ discloses that Finance Minister Alberto Arenas said in a
statement that the government has "the resources to confront
emergency situations like this."  The report notes that the
emergency funding plans come as the country is bracing for an
economic slowdown amid a drop in global demand for the commodities
it exports.  The central bank this week lowered its forecast for
growth this year to between 3.0% and 4.0% from a previous
projection of 3.75% to 4.75%, the report says.

About 70% of the fishing fleet in Iquique was damaged by the
tsunami that followed the earthquake, according to Luis Felipe
Cespedes, Minister of Economics, Development and Tourism, the
report relays.  The earthquake also cut electricity in some parts
of northern Chile, and led to landslides that blocked some roads,
the report notes.

However, the report discloses that the tremor spared the key
mining sector.  Chile is the world's largest exporter of copper.

The report says that economists said that overall, the economic
fallout of the 8.2 magnitude temblor has been limited, unlike the
8.8 magnitude earthquake in 2010 that led to widespread damage and

"We think the impact of the earthquake on Chile's economy will be
negligible," the report quoted Edward Glossop, an economist with
Capital Economics, as saying.  "Most of the key ports and major
mining companies have reported no damage and so disruption to
output is likely to be minimal," the report notes.

Government officials said they would crack down on stores after
reports that some had sharply increased their prices for basic
goods, the report relays.

The report says that hundreds of thousands of people were
evacuated to higher ground from homes near the coast following the
earthquake, although the government later canceled its tsunami
warnings.  Government officials said that six people died due to
the earthquake.


* HONDURAS: IMF's Statement at Conclusion of Article IV Mission
An International Monetary Fund mission visited Honduras during
March 26-April 8, 2014 to conduct the 2014 Article IV
consultation.  During the visit the mission met with President
Juan Orlando Hernandez, Minister Coordinator of the Government
Jorge Hernandez Alcerro, Central Bank Governor and Head of the
Economic Cabinet Marlon Tabora, Minister of Finance Wilfredo
Cerrato, other senior government officials and representatives of
the private sector.

At the conclusion of the visit, mission chief Lisandro Abrego
issued the following statement in Tegucigalpa:

"The mission reviewed recent economic developments in Honduras and
discussed the macroeconomic outlook and economic policies.  In
2013, economic growth decelerated to 2.6 percent, reflecting
mainly weaker trading partner growth, a drop in coffee production
due to the royal disease, and lower private investment related
largely to political uncertainty due to the election process. At
the same time, inflation declined to about 5 percent.  The
combined public sector (CPS) deficit rose to 7.6 percent of GDP,
driven by higher primary expenditures and interest payments, and
an increase in the deficit of the state-owned electricity company
(ENEE). In the external sector, the current account deficit
increased slightly as lower coffee exports offset a significant
increase in remittances.  However, international reserves rose
notably, reflecting mainly the placement of US$1 billion in global

"In 2014, economic growth is expected to rise to 3 percent, driven
by more favorable external conditions, the dissipation of
political uncertainty and an improvement in private sector
confidence.  Inflationary pressures are projected to increase
temporarily this year, but should remain under control and decline
next year.  The implementation of fiscal measures aimed at
strengthening the public finances is expected to lower the CPS
deficit in 2014.  At the same time, more favorable terms of trade,
a recovering coffee sector, and higher growth in Honduras' key
trading partners are expected to help lower the external current
account deficit.  The government's debt management strategy, which
will imply lower private external financing, is expected to lead
to a modest decline in international reserves.

"The mission welcomes the revenue measures adopted recently, and
ongoing efforts to rein in primary expenditure growth and
strengthen tax administration, all of which is needed to bolster
the country's public finances.  The mission also supports
continued pension system reform and plans to reform the
electricity sector. The staff team considers that additional
measures to control expenditure and implementation of the
electricity sector reform to substantially reduce the ENEE deficit
will be key to sustaining the ongoing process of restoring the
health of the public finances in Honduras.  Strengthening the
framework for public-private partnerships is also necessary to
limit contingencies and the fiscal impact from these operations.
"On the monetary policy front, it is important that the central
bank remain vigilant of monetary developments to ensure that
credit expands at a moderate rate, which would help protect
international reserves and keep inflation under control.  The
mission welcomes plans to implement the recapitalization of the
central bank, which is necessary to cover the costs of monetary

"Finally, the mission thanks the authorities and private sector
representatives of Honduras for a very open and fruitful dialogue,
which we expect will continue in the future, as well as for their
excellent cooperation and hospitality."


ZACATECAS: Moody's Assigns B3 Global Scale Rating; Outlook Stable
Moody's de Mexico assigned first-time issuer ratings of
(Mexico National Scale) and Ba3 (Global Scale, local currency)
with stable outlook, to the municipality of Zacatecas.

Ratings Rationale

The Ba3/ ratings assigned to the municipality of Zacatecas
reflect a track record of positive gross operating margins and
volatile financial results. The municipality also shows a negative
liquidity position that is expected to improve on the back of an
increase of debt levels in 2014.

The municipality of Zacatecas registered strong gross operating
balances equivalent to 13% of operating revenues between 2009-2013
that have covered a portion of capital expenditures. The positive
operating margins reflect revenue growth outpacing current
expenditures. Moody's expects positive margins to continue to be
supported by the cost control measures that the new administration
has implemented.

The municipality's volatile cash financing results, averaging -
4.2% of total revenues over the last five years, result from
Zacatecas' relatively large capital investment needs. Cash
financing deficits peaked in 2009 reaching -15.8% of total

The municipality has traditionally covered its financial deficits
through current liabilities. As a result, the municipality
recurrently posts a negative net working capital position (current
assets less current liabilities), which has averaged -12.5% of
total expenditures during the 2009-2013 period. At the end of
2013, Zacatecas registered a net working capital of -19.1%, a weak
level compared to national peers.

For the past five years, the municipality has maintained a debt-
free position. The current administration has received local
congress approval to borrow MXN 150 million in 2014. Moody's
expects that the municipality's debt levels will increase to reach
40% of operating revenues in 2014, a level comparable to national
peers rated Ba3.

What Could Change The Rating Up/Down

Balanced cash financing results, a substantial improvement of
liquidity, and the maintenance of relatively low debt levels could
exert upward pressure on the ratings. Failure to address its poor
liquidity, a deterioration of operating performance, leading to
higher cash financing deficits and higher than expected debt
levels would exert downward pressure on the ratings.

The principal methodology used in this rating was Regional and
Local Governments published in January 2013.

The period of time covered in the financial information used to
determine municipality of Zacatecas' rating is between January 1,
2009 and December 31, 2013.

P U E R T O   R I C O

PUERTO RICO: Big Hedge Funds Roll Dice on Debt
Matt Wirz, writing for The Wall Street Journal, reported that
several large hedge funds doubled down on Puerto Rico in last
month's giant bond sale despite the U.S. territory's financial
struggles, according to confidential documents reviewed by The
Wall Street Journal.

Och-Ziff Capital Management LLC, Fir Tree Partners, Perry Capital
LLC and Brigade Capital Management each bought more than $100
million of the bonds, the report said, citing a list of buyers of
the $3.5 billion deal. The list doesn't show whether the firms
continue to hold the bonds, which carried junk credit ratings, or
whether they sold some or all of their purchases afterward.

John Paulson's Paulson & Co. also purchased more than $100 million
of the deal, the report related.  It isn't clear whether Mr.
Paulson owned Puerto Rico debt before. His firm invested in a
Puerto Rico hotel earlier this year.

Hedge funds and other nontraditional buyers of municipal bonds
bought around 70% of the deal when it was offered, according to
calculations based on the document -- an atypically high level for
municipal-bond offerings, the report further related.  Many
investors said they were drawn by the high yields and discounted
price, though market participants said another major draw for
buyers was the prospect of boosting the value of their existing
investments in the island.

Junk-rated municipal debt is rare and most municipal debt is
bought by mutual funds and individual investors, according to the
report.  Many mutual funds can't buy debt rated below investment

PUERTO RICO: Hires Third U.S. Restructuring Firm
Reuters reports that Puerto Rico's Government Development Bank,
the U.S. commonwealth's financing arm, has hired a third company
with restructuring expertise as the island tries to balance its
budget while also jump-starting its struggling economy.

The bank has hired West Palm Beach, Florida-based FTI Consulting,
a global advisory firm that includes restructuring and turnaround
experts, according to Reuters.

"In keeping with its commitment to the people of Puerto Rico and
all of its stakeholders, the GDB frequently engages leading
advisors to support its due diligence and decision making
processes," a bank spokesman said in an emailed statement to
Reuters.  "To that end, the GDB has engaged FTI Consulting to
advise on its ongoing and previously disclosed efforts to ensure
that the Island's public corporations improve their operational
and financial performance," the e-mailed statement added.

As reported in the Troubled Company Reporter-Latin America on
April 8, 2014, Michael Corkery, writing for The New York Times'
DealBook, said that Puerto Rico's fiscal agent has hired another
well-known restructuring law firm, raising the specter that the
financially troubled island is preparing to revamp its finances.
According to the report, the Government Development Bank for
Puerto Rico, which oversees all of the commonwealth's debt deals,
said it had hired Cleary Gottlieb Steen & Hamilton.  The
development bank declined to say whether Cleary had been hired as
part of an effort to restructure the commonwealth's debt, the
DealBook related.

Reuters relates that Puerto Rico is struggling with an economy in
or near recession for eight years as well as a budget full of

All three major rating agencies cut the territory's debt to junk
earlier this year, another blow as the administration of Gov.
Alejandro Garcia Padilla tries to restart growth while also
balancing the budget, Reuters relates.

Gov. Padilla, the report discloses, has raised taxes, overhauled
retirement programs and pledged to end years of operating
deficits.  The administration is also working to bring the large
underground economy out of the shadows and onto the tax rolls, the
report relays.

While a US$3.5 billion bond sale in March was heavily
oversubscribed, the bonds nonetheless fetched a yield above 8
percent, the report says.

The sale spared Puerto Rico from the threat of imminent default,
but few who have followed the Caribbean island's financial
troubles doubt that a massive restructuring is in its future, the
report adds.

PUERTO RICO: S&P Removes Neg. Watch Implications on BB+ Rating
Standard & Poor's Ratings Services has corrected by removing from
CreditWatch with negative implications its 'BB+' underlying
ratings on the Commonwealth of Puerto Rico's series 1996 public
improvement bonds due in 2015; series 1998 general obligation (GO)
bonds due in 2014 through 2018 and 2023; series 1999 GO public
improvement bonds due in 2014, 2015, 2017, 2018, 2023 and 2028;
series 2002A public improvement bonds due in 2015; series 2005A
public improvement bonds due in 2021 and 2022; and series 2007A
public improvement refunding bonds due in 2018.  The ratings had
been placed on CreditWatch Feb. 4, 2014.  The outlook is negative.


LATAM: Likely to Embark on Needed Reforms, IADB Says
Alonso Soto at Reuters reports that the volatility in global
markets buffeting emerging economies could push Latin American
nations to move ahead with deep reforms needed to restore their
dynamism, the head of Inter-American Development Bank, Luis
Alberto Moreno, said.

Mr. Moreno said most countries understand that reforms to improve
productivity are crucial for the region to return to the annual
growth rates of 5 percent over the last decade, according to

"Historically Latin America has been better at dealing with crises
than managing the good times," Moreno told Reuters.   "Everybody
understands that you need to evolve. Precisely because of the
volatility, which will likely drag on for the next 18 months,
reforms become even more important," Mr. Moreno said, the report

Reuters, citing a data from the International Monetary Fund, notes
that Latin America's economy is expected to grow only 3 percent
this year after expanding a staggering 6 percent four years ago.

The withdrawal of monetary stimulus in the United States and a
slowdown of the Chinese economy has sparked an exodus of foreign
investors from the region, which a few years ago was struggling to
contain an avalanche of capital flows, the report relates.

However, Mr. Moreno said that the slowdown in commodity-hungry
China could also be an opportunity for Latin America to strengthen
regional trade, which remains very low compared with Europe and
Asia, the report relays.

                          Reform Agenda

Reuters discloses that trade partners Chile, Peru, Colombia and
Mexico are leading the region with a series of energy, tax and
labor reforms that economists believe will help them grow more
after the market turbulence subsides.

On the other hand, regional heavyweights like Argentina, Venezuela
and Brazil are struggling to carry out reforms to make their
commodity-driven economies more competitive, the report notes.

Standard and Poor's cited the lack of reforms in Brazil to bolster
economic growth as one of the reasons why it cut the country's
debt rating, the report relates.

Brazil has repeatedly failed to approve reforms that simplify its
tax system, one of the most complex and burdensome in the world.
An average company in Brazil spends 2,600 hours per year
calculating what it owes to the government, according to the World
Bank's Doing Business ranking, the report says.

Pessimistic views on Latin America will dissolve as countries pass
laws to lower output costs and increase investment levels, Mr.
Moreno said, the report adds.


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


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.

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

                   * * * End of Transmission * * *