/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/140507.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 Wednesday, May 7, 2014, Vol. 15, No. 89 Headlines A R G E N T I N A ALTO PARANA: S&P Affirms 'CCC+' Rating; Outlook Negative DISTRIBUIDORA DE GAS: Moody's Assigns Caa1/Ba1.ar CFR FIDEICOMISO FINANCIERO 10: Moody's Rates ARS63.3MM Certs. 'Ca' FIDEICOMISO FINANCIERO 79: Moody's Rates ARS17.5MM Certs. 'B2.ar' B R A Z I L ARALCO SA: Bondholders Said Preparing Bid to Avert Chapter 11 BANCO BMG: Moody's Affirms B1 Deposit Rating; Outlook Stable COMPANHIA DE SANEAMENTO: S&P Revises Outlook & Affirms BB+ Rating USINA CAETE: S&P Revises Outlook to Neg. & Affirms 'BB-' CCR C A Y M A N I S L A N D S ASIAN CENTURY: Members' Meeting Postponed Sine Die ASIAN CENTURY MASTER: Members' Meeting Postponed Sine Die ASIAN CENTURY SMALLER: Members' Meeting Postponed Sine Die BCDX BRAZIL: Shareholders' Final Meeting Set for May 13 CAC CENTURY: Members' Final Meeting Set for June 4 CIS EQUITY: Members' Final Meeting Set for May 20 HSBC MASTER: Shareholder to Receive Wind-Up Report on May 20 MAOMING FUND: Shareholders' Final Meeting Set for May 14 MLR CAPITAL: Shareholders' Final Meeting Set for May 16 PELOTON ABS: Members' Final Meeting Set for May 13 RESAT LIMITED: Members Receive Wind-Up Report C H I L E LATAM AIRLINES: Group's 1Q14 Conference Call Set May 14 LATAM AIRLINES: Posts Preliminary Monthly Statistics for March LATAM AIRLINES: Fitch Affirms Issuer Default Rating at 'BB' D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Free Trade Pact Brings Disadvantages E C U A D O R ECUADOR: Said to Step Up Offers to Buy Back Defaulted Bonds M E X I C O MEXICO: Fitch Publishes 2013 Performance and Outlook TV AZTECA: Posts Ps.2,541 Million in First Quarter 2014 TV AZTECA: Fitch Affirms 'BB-' IDR; Outlook Stable P A N A M A PANAMA: Fitch Says Spending Control a Key Challenge for Next Gov't P U E R T O R I C O DORAL FINANCIAL: Fitch Cuts Issuer Default Rating to 'C' - - - - - ================= A R G E N T I N A ================= ALTO PARANA: S&P Affirms 'CCC+' Rating; Outlook Negative -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC+' foreign currency and 'B-' local currency ratings on Alto Parana S.A. (APSA). The outlook remains negative. The rating affirmation follows S&P's ordinary annual review. The 'BBB-' issue-level rating on APSA's $270 million 2017 bond is the same as the corporate credit rating on the parent, Celulosa Arauco y Constitucion S.A. (ARAUCO) due to its full and unconditional payment guarantee. S&P's 'CCC+' foreign currency rating on APSA derives from its 'CCC+' transfer and convertibility (T&C) assessment on Argentina and the absence of enough mitigants to be rated above the T&C, as the company's assets are 100% exposed to Argentina. "Absent of T&C risk, our 'B-' local currency rating derives from our belief that the company could generate operating cash flow to serve its financial obligations under a sovereign stress scenario," said Standard & Poor's credit analyst Francisco Serra. The negative outlook mirrors that on Argentina. It also reflects S&P's view of difficult refinancing, due to high interest rates and a weak operating environment. DISTRIBUIDORA DE GAS: Moody's Assigns Caa1/Ba1.ar CFR ----------------------------------------------------- Moody's Latin America has assigned Caa1/Ba1.ar first time corporate family ratings to Distribuidora de Gas Cuyana S.A. ("DGCU"). The rating outlook is stable. Ratings Rationale DGCU's Caa1/Ba1.ar ratings primarily reflect DGCU's very solid credit metrics derived from its unleveraged operations, its historically strong cash position and fair cash flow generation. Offsetting factors of these strengths are the unfavorable and unpredictable regulatory framework in Argentina despite the recent tariff increase that Moody's expect will be positive for the gas distribution sector. Last April 7, Argentina's gas regulator announced that it had raised the tariff that Argentine gas distribution utilities can charge their customers, effective April 1. The higher tariff comprises a higher gas price and a higher distribution margin that the utilities can charge above a higher gas price based upon consumption to their residential customers. Despite the material impact of inflationary cost increases, the distribution margin has been the same for more than 12 years. In spite of the frozen tariffs, DGCU has managed to keep operating margins positive through effective cost control measures and higher sales mainly due to dynamic growth in its client base, which substantially mitigated operating cost increases. The company's high cash balances have also contributed to strengthen DGCU's EBITDA margin through the resulting interest income. The fixed charge that the company is currently charging to end consumers (FOCEGAS) since it was introduced at the end of 2012 by the regulatory authorities (Resolution ENARGAS 2407/12) has also contributed to alleviating the declining trend in DGCU's operating margin. As a result of a very conservative financial policy, DGCU has been able to keep its balance sheet without debt for many years, helping to maintain very strong credit metrics despite the company's declining margins and cash flow generation. The absence of any debt burden coupled with elevated cash balances has enabled DGCU to consistently pay dividends to its shareholders which is unusual when compared to most of the other companies operating in the gas distribution sector. The stable outlook for DGCU mainly reflects Moody's stable outlook for Argentina's government bond rating and Moody's view that DGCU's credit rating is highly dependent on the credit quality of the Argentine government. Because DGCU is a local regulated gas utility and therefore fully exposed to the domestic market and regulations its ratings are capped by the sovereign bond rating. As a result, a positive rating action at the sovereign level could prompt an upgrade on DGCU's rating. The stable outlook also reflects Moody's expectation of DGCU maintaining adequate levels of cash to sustain its operations and positive operating margins. A rating downgrade could materialize if margins and cash generation deteriorate, and if the company's financial strategy becomes more aggressive, such as a negative RCF or a debt to EBITDA ratio higher than 2.0 times. Any negative rating action at the sovereign level could also add downward rating pressure for DGCU. DGCU was created in 1992 as a result of the privatization of the estate-owned Gas Company, Gas del Estado. It is one of the 9 gas distribution companies in the country with operations in three western provinces of Argentina, Mendoza, San Juan and San Luis. The area of service has 2.85 million inhabitants and DGCU has over half a million clients and revenues of approximately AR$ 350 million (USD 55 million) for the fiscal year 2013. DGCU is controlled by Inversora de Gas Cuyana S.A. (51%), a holding company that is 76% owned by ENI S.p.A. (A3, negative) and 24% by E.ON Espa¤a, which is controlled by E.ON SE ((P)A3, negative). FIDEICOMISO FINANCIERO 10: Moody's Rates ARS63.3MM Certs. 'Ca' -------------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo has rated Fideicomiso Financiero Supervielle Leasing 10, a lease-backed transaction that will be issued by TMF Trust Company (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. 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 147,833,000 in Floating Rate Debt Securities of "Fideicomiso Financiero Supervielle Leasing 10", rated Aa2.ar (sf) (Argentine National Scale) and B1 (sf) (Global Scale, Local Currency) ARS 63,357,000 in Certificates of "Fideicomiso Financiero Supervielle Leasing 10", rated Ca.ar (sf) (Argentine National Scale) and Ca (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 approximately 626 eligible lease contracts denominated in Argentine pesos, bearing fixed, mixed and floating interest rates, originated by Banco Supervielle, in an aggregate amount of ARS 211,199,820.03. Approximately 10.23% of the securitized leases will bear a floating rate (Corrected BADLAR plus a spread). These loans have an average minimum interest rate of 14.02% plus spread of 813 basis points on average, and they have no maximum interest rate. Fixed rate leases (approximately 18.98% of the pool) will bear an average interest rate of 18.33%. Finally, about 70.79% of the pool will bear a mixed interest rate (a fixed average of 15.20% interest rate during the first 28 months of the loans, and then a floating interest rate of BADLAR Total plus an average spread of 400 basis points until the loan's final maturity). The Floating Rate Debt Securities represent 70% of the total issuance balance and will bear a BADLAR Privada interest rate plus a spread with a minimum of 15% and a cap of 28%. BADLAR Corregida has been historically 200 basis points higher than BADLAR Privada. Moreover, BADLAR Total has been historically 125 basis points lower than BADLAR Privada. These lease contracts were originated by Banco Supervielle and were granted to large companies, SMEs and high income individuals. Supervielle's risk department underwrote all the securitized leases. Overall credit enhancement is comprised of 30% subordination for the Floating Rate Debt Securities. In addition, the transaction has various reserve funds and benefits from 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. Although Moody's analyzed the historical performance data of previous transactions and similar receivables originated by Supervielle, the actual performance of the securitized pool may be affected, among others, by the economic activity. 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 Supervielle's portfolio. In addition, Moody's considered factors common to lease securitizations such as delinquencies, 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. Finally, Moody's also evaluated the back-up servicing arrangements in the transaction. These factors were incorporated in a cash flow model that takes into account all the relevant features of the transaction's assets and liabilities. Monte Carlo simulations were run, which determines the expected loss for the rated securities. In assigning the rating to this transaction, Moody's assumed a lognormal distribution for defaults on the main pool with a 5% mean and a coefficient of variation of 70%. Also, Moody's assumed a lognormal distribution for prepayments with a 5% mean and 70% coefficient of variation .These assumptions are derived from the historical performance to date of previous lease-backed securitizations of Banco Supervielle and by Moody's qualitative judgment. Servicer default was modeled by simulating the default of the Banco Supervielle as the servicer consistent with its current rating of Caa1/Ba1.ar. 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 2.53% expected loss for the Floating Rate Debt Securities and 65.34% for the Certificates. Finally, Moody's also evaluated the back-up servicing arrangements in the transaction. If Banco Supervielle 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 were increased 3% from the base case scenario (that is, if we assume a mean default rate of 8%), the ratings of the Floating Rate debt securities would be unchanged. The global ratings for the Certificates would likely be downgraded to C (sf). The principal methodology used in this rating was "Moody's Approach to Rating ABS Backed by Equipment Leases and Loans" published December 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. FIDEICOMISO FINANCIERO 79: Moody's Rates ARS17.5MM Certs. 'B2.ar' ----------------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo rates Fideicomiso Financiero Supervielle Creditos 79, a transaction that will be issued by TMF Trust Company (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. 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 232,500,000 in Floating Rate Debt Securities of "Fideicomiso Financiero Supervielle Creditos 79", rated Aa2.ar (sf) (Argentine National Scale) and B1 (sf) (Global Scale, Local Currency) ARS 17,500,000 in Certificates of "Fideicomiso Financiero Supervielle Creditos 79", rated B2.ar (sf) (Argentine National Scale) and Caa2 (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 approximately 26,662 eligible personal loans denominated in Argentine pesos, with a fixed interest rate, originated by Banco Supervielle, in an aggregate amount of ARS 250,002,225.38. These personal loans are granted to pensioners that receive their monthly pensions from ANSES (Argentina's National Governmental Agency of Social Security - Administracion Nacional de la Seguridad Social). The pool is also constituted by loans granted to government employees of the Province of San Luis. Banco Supervielle is the payment agent entity and automatically deducts the monthly loan installment directly from the employee's paycheck and pensioner's payment. Overall credit enhancement is comprised of 7% of subordination for the Class A 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, and a disruption in the flow of payments from ANSES or the Government of San Luis to pensioners and employees respectively. 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 Supervielle's portfolio. In addition, Moody's considered factors common to consumer loans securitizations such as delinquencies, 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. Finally, Moody's also evaluated the back-up servicing arrangements in the transaction. In assigning the rating to this transaction, Moody's assumed a lognormal distribution for defaults on the main pool with a mean of 2.5% and a coefficient of variation of 50%. Also, Moody's assumed a lognormal distribution for prepayments with a mean of 25% and a coefficient of variation of 70%. These assumptions are derived from the historical performance to date of the Supervielle's pools. Servicer default was modeled by simulating the default of the Banco Supervielle as the servicer consistent with its current rating of Caa1/Ba1.ar. 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 2.40% expected loss for the Floating Rate Debt Securities and 17.88% for the Certificates. Finally, Moody's also evaluated the back-up servicing arrangements in the transaction. If Banco Supervielle 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 were increased 6% from the base case scenario for the pool (i.e., mean of 8.5% and a coefficient of variation of 50%), the ratings of the Floating Rate debt securities and of the Certificates would likely be downgraded to B2 (sf) and Ca (sf) respectively. The principal methodology used in this rating was "Moody's Approach to Rating Consumer Loan ABS Transactions" 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. =========== B R A Z I L =========== ARALCO SA: Bondholders Said Preparing Bid to Avert Chapter 11 ------------------------------------------------------------- Gerson Freitas Jr. at Bloomberg News reports that Aralco SA-Acucar & Alcool will negotiate new debt terms directly with bondholders in a bid to cancel the judicial restructuring request, according to two people with knowledge of the talks. A group representing about 80 percent of bonds will present the Aracatuba, Brazil-based company a proposal to forgo or delay some payments, or a combination of both, the people said, asking not to be named because the extra-judicial process is confidential and may not lead to a binding accord, according to Bloomberg News. Bloomberg News notes that Bondholders are also negotiating a standstill agreement with creditor banks, one of the people said. To nullify the bankruptcy protection process, an accord would have to be reached before the Brazilian court accepts the filing. Sugar-producer bonds have plummeted after a glut of the sweetener pushed prices to the lowest in almost four years while Brazil's inflation-fighting gasoline price caps also serve to contain domestic ethanol prices, Bloomberg News relates. Bloomberg News notes that the company, which has cut about 2,000 jobs and shut one of its units, needs to skip interest payments to keep crushing and invest in planting, said one of the people. Aralco SA-Acucar & Alcool is a Brazilian sugar and ethanol producer. BANCO BMG: Moody's Affirms B1 Deposit Rating; Outlook Stable ------------------------------------------------------------ Moody's Investors Service affirmed all ratings assigned to Banco BMG S.A. (BMG) including the E+ BFSR, which maps to a b1 baseline credit assessment, B1 long-term global local and foreign currency deposit ratings and foreign currency senior and subordinated bond ratings of B1 and B2, respectively. The foreign currency senior unsecured debt rating assigned to the outstanding November 2016 Tier 2 notes issued by Banco de Cr‚dito e Varejo S.A. (BMG's wholly-owned subsidiary) was also affirmed. All ratings remain with a stable outlook. This rating action follows the announcement of the agreement with Itau Unibanco S.A. to consolidate the payroll lending activities at the joint-venture Banco Itau BMG Consignado S.A. released on April 29th 2014.The transaction is subject to regulatory approval. The following ratings assigned to Banco BMG were affirmed: Bank financial strength of E+, which maps to a b1 baseline credit assessment Long-term global local currency deposit rating: B1, stable outlook Short-term global local currency deposit rating: Not Prime Long-term foreign currency deposit rating: B1, stable outlook Short-term foreign currency deposit rating: Not Prime Long-term foreign currency senior unsecured debt rating: B1, stable outlook Long-term Foreign currency senior unsecured debt rating assigned to GMTN program: (P)B1, stable outlook Foreign currency subordinated debt rating: B2, stable outlook Long-term Brazilian national scale deposit rating: Baa3.br Short-term Brazilian national scale deposit rating: BR-3 Ratings Rationale In affirming BMG's ratings, Moody's acknowledges the positive impact of the transaction entered into with Itau Unibanco S.A. ("Itau") on BMG's credit profile. Under the terms of the transaction, BMG will cede 100% of its payroll lending business to Banco Itau BMG Consignado, the payroll-joint-venture established with Itau in 2012, and increase its ownership stake to 40% from 30%. The deal will have positive effects on BMG's liquidity structure and funding costs through the repayment of high cost long-term funding lines, as well as on the bank's high operating costs, largely related to this business. At the same time, BMG's capitalization will also improve because the transfer of its payroll loans will release substantial regulatory capital. In addition, the increase of BMG's ownership in the joint-venture will also boost gains on equity participation in this high-growth business, supported by Itau Unibanco's funding capacity and scalability. Moody's notes, however, that BMG will become a far smaller bank following the completion of the transaction, because its loan book will decline to approximately BRL4 billion based on latest available financials as of December 2013. The management plans to reposition the bank's franchise as a lender to small and mid size companies, auto finance and payroll credit card businesses. Because of the riskier and slow growth nature of these businesses, the bank's earnings and asset quality may weaken particularly in a scenario of modest economic growth that constrains credit demand, and competition that pressures margins. Future profitability dynamics will also rely on the bank's ability to grow its modest interest-earning assets to reinforce recurring revenues generation over the course of the next two years, and thus, generating sufficient cash flow to repay remaining expensive third-party liabilities with medium term maturity. The local currency deposit rating is B1, directly maps from the bank's standalone credit assessment in the global long-term scale, and does not benefit from support uplift given the light footprint of the bank in the deposit market. Moody's also assigns a long- term deposit rating on the national scale for Brazil of Baa3.br. The last rating action on Banco BMG and Banco Credito e Varejo occurred on 20 June 2013, when Moody's affirmed all ratings including the E+ BFSR, the local and foreign currency deposit ratings as well as all foreign currency debt ratings and national scale deposit ratings. The short-term ratings remained unchanged and outlook was changed to stable from negative for all the ratings. Banco BMG S.A. is headquartered in Belo Horizonte, Brazil and had consolidated assets of R$28.1 billion (US$11.9 billion) and equity of R$3.4 billion (US$1.4 billion) as of December 31, 2013. COMPANHIA DE SANEAMENTO: S&P Revises Outlook & Affirms BB+ Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP) to stable from positive. At the same time, S&P affirmed its 'BB+' global scale and 'brAA+' Brazilian national scale corporate credit ratings on the company. Its stand-alone credit profile (SACP) is 'bb+'. "The outlook revision reflects our belief that SABESP's EBITDA will weaken as a result of the measure to manage the severe drought in the region. Levels at SABESP's main water reservoir, Cantareira, have dropped to 10% as of May 2, 2014, from 27% as of Jan. 10, 2014," said Standard & Poor's credit analyst Julyana Yokota. The levels were 48.78% and 62.73%, respectively, for the same dates in 2013. In February 2014, SABESP and the state government implemented a program to encourage lower water usage by its customers by giving a 30% discount to the bills of the clients who reduced their consumption by 20%. The ratings on SABESP reflect its 'bb+' SACP and incorporate S&P's view that there is a "moderately high" likelihood of extraordinary support from the stateof Sao Paulo (BBB-/Stable/--). S&P's assessment of SABESP's SACP reflects its "satisfactory" business risk profile and "significant" financial risk profile, as S&P's criteria define these terms. "We apply our criteria for government-related entities (GREs) in our analysis of SABESP, because the state of Sao Paulo owns 50.3% of SABESP. The remaining shares are publicly traded, both locally and on the NYSE through ADRs. Our belief of a "moderately high" likelihood of extraordinary support stems from our view of SABESP's "important" role because it provides essential services to the state's population and that it has a "strong" link with the state based on its majority equity stake in the company. For entities we view as benefiting from supportive government policies, possibly through direct assistance or extraordinary intervention, but the likelihood of the latter is lower, the ratings are usually more closely aligned with the SACP," S&P noted. USINA CAETE: S&P Revises Outlook to Neg. & Affirms 'BB-' CCR ------------------------------------------------------------ Standard and Poor's Ratings Services revised the outlook on Usina Caete S.A. - NE (Caete) to negative from stable. At the same time, S&P affirmed its 'BB-' global scale and 'brA-' national scale corporate credit and issue-level ratings on the company. "The negative outlook reflects our expectation that Caete will continue to post weaker than expected cash flow generation amid still low, but improving, utilization capacity and sugar prices," said Standard & Poor's credit analyst Flavia Bedran. In 2013, a severe drought in northeastern Brazil weakened Caete's productivity, requiring it to purchase more sugarcane from third parties and exposing it to non-recurring, higher irrigation costs, which drove down its profitability. Caete reported an EBITDA margin of 35.9% in 2013, compared to 37.6% in 2012. Moreover, the related high working capital and capital expenditures (capex) needs required the company to raise more debt, increasing its short-term maturities, which weakened its liquidity position and metrics. We now view the company's liquidity as "less than adequate." On the other hand, a weaker Brazilian real, higher utilization capacity compared to 2012, and somewhat better ethanol prices partially mitigated low sugar prices. ========================== C A Y M A N I S L A N D S ========================== ASIAN CENTURY: Members' Meeting Postponed Sine Die -------------------------------------------------- The members' meeting of Asian Century Quest Offshore Fund, Ltd on March 4, 2014, was postponed until further notice. The company's liquidator is: Ogier c/o Desiree Jacob Telephone: (345) 815 1779 Facsimile: (345) 949 9877 ASIAN CENTURY MASTER: Members' Meeting Postponed Sine Die --------------------------------------------------------- The members' meeting of Asian Century Quest Smaller Companies Master Fund, Ltd. on March 4, 2014, was postponed until further notice. The company's liquidator is: Ogier c/o Desiree Jacob Telephone: (345) 815 1779 Facsimile: (345) 949 9877 ASIAN CENTURY SMALLER: Members' Meeting Postponed Sine Die ---------------------------------------------------------- The members' meeting of Asian Century Quest Smaller Companies Offshore Fund, Ltd. on March 4, 2014, was postponed until further notice. The company's liquidator is: Ogier c/o Desiree Jacob Telephone: (345) 815 1779 Facsimile: (345) 949 9877 BCDX BRAZIL: Shareholders' Final Meeting Set for May 13 ------------------------------------------------------- The shareholders of BCDX Brazil Fund will hold their final meeting on May 13, 2014, at 11:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mr. Robin Lee Mcmahon c/o Barry MacManus Telephone: (345) 814 8997 Facsimile: (345) 814 8529 Ernst & Young Ltd. 62 Forum Lane, Camana Bay P.O. Box 510 Grand Cayman KY1-1106 Cayman Islands CAC CENTURY: Members' Final Meeting Set for June 4 -------------------------------------------------- The members of CAC Century Holdings Ltd will hold their final meeting on June 4, 2014, at 9:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Ian D. Stokoe c/o Sarah Moxam Telephone: (345) 914 8634 Facsimile: (345) 945 4237 P.O. Box 258 Grand Cayman KY1-1104 Cayman Islands CIS EQUITY: Members' Final Meeting Set for May 20 ------------------------------------------------- The members of CIS Equity will hold their final meeting on May 20, 2014, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 HSBC MASTER: Shareholder to Receive Wind-Up Report on May 20 ------------------------------------------------------------ The shareholder of HSBC Master India Fund, Ltd. will receive on May 20, 2014, at 11:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Ogier c/o Madeleine Welham Telephone: (345) 815-1750 Facsimile: (345) 949-9877 MAOMING FUND: Shareholders' Final Meeting Set for May 14 -------------------------------------------------------- The shareholders of Maoming Fund will hold their final meeting on May 14, 2014, at 9:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Julien Moulin c/o George Bashforth Telephone: +1 (345) 949 4900 c/o Appleby Trust (Cayman) Ltd. 75 Fort Street P.O. Box 1350, George Town Grand Cayman KY1-1108 Cayman Islands MLR CAPITAL: Shareholders' Final Meeting Set for May 16 ------------------------------------------------------- The shareholders of MLR Capital Offshore Fund, Ltd will hold their final meeting on May 16, 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: MLR Capital Management, LLC c/o Michael Layden 49 Engert Avenue, #3 Brooklyn, New York 11222 United States of America Telephone: +1 (917) 450 9221 e-mail: mlayden.mlr@gmail.com PELOTON ABS: Members' Final Meeting Set for May 13 -------------------------------------------------- The members of Peloton ABS Fund will hold their final meeting on May 13, 2014, at 11:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Patrick Joseph Brazzill Elizabeth Anne Bingham c/o Maples and Calder, Attorneys-at-law P.O. Box 309, Ugland House Grand Cayman KY1-1104 Cayman Islands RESAT LIMITED: Members Receive Wind-Up Report --------------------------------------------- The members of Resat Limited received on April 25, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Eagle Holdings Ltd. c/o Barclays Private Bank & Trust (Cayman) Limited FirstCaribbean House, 4th Floor P.O. Box 487 Grand Cayman KY1-1106 Cayman Islands ========= C H I L E ========= LATAM AIRLINES: Group's 1Q14 Conference Call Set May 14 ------------------------------------------------------- LATAM Airlines Group S.A. will hold its First Quarter 2014 Results Conference Call on Wednesday, May 14, 2014. To access the call, please dial: (866) 2706057 from within the U.S. (617) 2138891 from outside the U.S. Participant Passcode: 96626138 There will also be a webcast and an accompanying presentation available at: http://edge.media-server.com/m/p/c2a4d4hz/lan/en The Company's 1Q14 Results will be released May 13, 2014 after the market close. Headquartered in Santiago, Chile, LATAM Airlines Group S.A., -- http://www.latamairlinesgroup.net/-- together with its subsidiaries, provides passenger and cargo air transportation services in South America. It provides domestic and international passenger transport services to approximately 134 destinations in 22 countries and cargo services to approximately 143 destinations in 27 countries. LATAM AIRLINES: Posts Preliminary Monthly Statistics for March -------------------------------------------------------------- LATAM Airlines Group S.A. and its subsidiaries, reported its preliminary monthly traffic statistics for March 2014 compared to March 2013. System passenger traffic increased by 1.6% while capacity decreased by 3.8%. As a result, the Company's load factor for the month increased 4.3 points to 81.7%. International passenger traffic accounted for approximately 53% of the month's total passenger traffic. Domestic passenger traffic in LATAM Airlines Group's Spanish speaking operations (Chile, Argentina, Peru, Ecuador and Colombia) rose 5.4%, as capacity increased 4.5%. As a consequence, the domestic passenger load factor increased 0.7 points to 79.0%. Domestic passenger traffic in Brazil increased by 6.5%, while capacity decreased by 0.4%. As a consequence, the domestic Brazil passenger load factor increased 5.1 points to 78.8%. International passenger traffic decreased by 2.2%, while capacity decreased by 8.1%. Accordingly, the international passenger load factor for the month increased 5.0 points to 84.4%. International traffic includes international operations of both LAN and TAM on regional and long haul routes. Cargo traffic for LATAM decreased 6.6% as capacity decreased 9.2%. As a consequence, the cargo load factor increased 1.7 points to 61.8%. The decrease in cargo capacity is a result of a decreased availability in the bellies of passenger aircraft in addition to a reduced freighter operation. Cargo traffic decrease was driven by weaker seasonal products from Latin America. Headquartered in Santiago, Chile, LATAM Airlines Group S.A., -- http://www.latamairlinesgroup.net/-- together with its subsidiaries, provides passenger and cargo air transportation services in South America. It provides domestic and international passenger transport services to approximately 134 destinations in 22 countries and cargo services to approximately 143 destinations in 27 countries. LATAM AIRLINES: Fitch Affirms Issuer Default Rating at 'BB' ----------------------------------------------------------- Fitch Ratings has affirmed the classification IDR (Issuer Default Rating) foreign and local currency 'BB' of Latam Airlines Group SA (LATAM), TAM SA (TAM) and TAM Linhas Aereas SA. Fitch also affirms the classification of shares in LATAM local 'Level 2 (cl)', and the classification of long-term national scale TAM and TAM Linhas Aereas SA at 'A + (bra)'. Fitch reviewed the Outlook for the classification of LATAM, TAM SA and TAM Linhas Aereas SA from Stable to Negative. The revision of the Outlook reflects the high level of indebtedness of LATAM versus global peers within the category of classification, as well as the weak economic conditions in the region that will make it more difficult for the company to reduce its level of debt as quickly as expected. Classifications LATAM and TAM and its subsidiaries take into account the credit entailment between the two companies, which is derived from the operational and strategic ties. These links are reflected in the existence of cross-guarantees and cross default clauses related to finance purchases of ships for both companies. Key Factors Of Qualification Regional Leadership Position Market Incorporated Fitch sees strong business position as LATAM sustainable in the medium term based on the diversification of its business as well as its extremely strong business position both within Latin America and on international routes between this and North America or Europe. The International business segments, domestic passengers Brazilian Spanish speaking countries and load segment accounted for 39%, 30%, 14% and 14%, respectively, of total revenues of the company in 2013.'s Ratings incorporate the leadership position of the company in the domestic and international markets of Brazil, also the volatility in operating results related to these markets through the economic cycle. Today, economic conditions in Brazil remain relatively weak. LATAM also holds the leading position in the domestic markets of Chile and Peru and is one of the major players in Colombia. Adequate Liquidity LATAM improved its liquidity during 2013, increasing its cash and marketable securities from USD1, one billion at end-2012 to USD2, 6 billion at December 31, 2013. This level of cash and marketable securities is equivalent to 19% income of the company in 2013.'s strong improvement in the liquidity position of LATAM was primarily the result of increased capital of USD1, 0 billion made during 2013. Additionally to the above, LATAM has committed lines of credit unused by USD185 million. Expose the company's cash in Venezuela and Argentina is approximately USD 163 million and USD 59 million respectively, representing so combined 10% of liquidity and is not expected that this exposure increases during 2014. High Debt Adjusted Gross Fitch believes that the company's debt is high for the rating category. The indicator adjusted gross debt, measured as total adjusted debt to EBITDAR was 6.1 times (x) for 2013, while the ratio of net debt adjusted cash was 4.9 x, and its ratio of debt to Adjusted FFO was 5.5 x. Income and EBITDAR of LATAM in 2013 were USD13, 3 billion and USD2, 2 billion, respectively, while its EBITDAR margin grew to 16% from 12%. The adjusted total debt was approximately USD12 LATAM, 8 billion dollars by the end of December 2013. This debt includes U.S. $ 9, 9 billion in debt and balance USD3 billion in off-balance sheet obligations related to operating leases with combined rental payments around USD441 million for 2013. Limited Generation of Free Cash Flow Capex plan LATAM remains relatively aggressive though has revised downwards for 2014 to 2015 for USD1 billion. These coupled with weak macroeconomic conditions in the region previously projected by Fitch, investments should limit FCF generation capacity of the company during 2014 and 2015. LATAM initiated a restructuring plan fleet during 2013 with the intention to phase out the models less efficient and reassign aircraft along its markets to better optimize the use of its fleet. Capex is expected to LATAM related to acquisitions of vessels for 2014 and 2015 to reach levels of USD738 million and USD968 million, respectively. The total capex of the company for the period-including spares, engines and other items-should reach approximately USD2, 5 billion. During 2013, the free cash flow (FCF) of LATAM was negative and reached a value of USD364 million, representing a margin FCF (FCF Ratio / Income) 2.7% negative. Modest improvements to Null Projected 2014-2015 Fitch base case results in an improvement of FCF USD100 million due to improved USD300 million in operating cash flow (CFFO). This level of FCF would not be enough material to reduce debt significantly in the absence of asset sales or issuance of additional capital of the company. A key factor in the improvement CFFO is a strong reduction of the outflow of working capital, whereas flow is projected Generated from Operations (FFO) remains relatively unchanged at around USD 1.4 billion. For 2014, Fitch projects an increase in EBITDAR of LATAM to USD2, 3 billion from USD2, 1 billion. It expects consolidated capacity LATAM remain stable during 2014. In 2014, LATAM plans to increase capacity in the international segment between 0% and 2%; 0% in the domestic segment in Brazil; between 6% and 8% in the Spanish-speaking countries; and an increase of 0% to 2% in the load segment. At December 31, 2013, the fleet totaled 339 aircraft LATAM (201 property), including 323 passengers and 16 dedicated cargo (10 owned). The company maintains the flexibility to adjust the physical size of its fleet whereas between 2014 and 2016, has 25 operating leases that expire on its fleet of wide-body passenger (wide- body), which can be completed at no cost. Sensitivity Classification classification Shares negative: Fitch would consider lowering the ratings if not LATAM expecting its net debt / EBITDAR and / or succeed in FGO adjusted debt to be reduced to around 4.5x in the first half of 2016. A ratio of total debt / EBITDAR of 5.0x up during this time period could also lead to negative actions classification. Positive actions classification: An improvement in the classification is not foreseen in the short term. The Company Outlook could be revised to stable if it achieves some of the above objectives. Fitch has taken the following rating actions: LATAM Airlines Group SA: - IDR (Long Term IDR) affirmed at 'BB'; - Classification of equity securities, ratified in First Class Level 2 (cl). TAM SA - Foreign currency IDR affirmed at 'BB'; - Local currency IDR affirmed at 'BB'; - Classification of National scale long term affirmed at 'A + (bra)'. Tam Linhas Aereas SA - Foreign currency IDR affirmed at 'BB'; - Local currency IDR affirmed at 'BB'; - Classification of long-term national scale rating affirmed at 'A + (bra)'. Tam Capital Inc. - Foreign currency IDR affirmed at 'BB'; - Local Currency IDR affirmed at 'BB'; - USD300 million senior Debt, due 2017, affirmed at 'BB'. Tam Capital Inc. 2 - Foreign currency IDR affirmed at 'BB'; - Local currency IDR affirmed at 'BB'; - USD300 million senior Debt, due 2020, affirmed at 'BB'. Tam Capital Inc. 3 - Foreign currency IDR affirmed at 'BB'; - Local Currency IDR affirmed at 'BB'; - USD500 million senior debt, due 2020, affirmed at 'BB'. The Outlook is Stable to Negative amended. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Free Trade Pact Brings Disadvantages -------------------------------------------------------- Dominican Today reports that National Business Council (Conep) President Manuel Diez listed several factors he affirms hinder his sector's competitiveness and placed them at a disadvantage with the implementation of the U.S.-Central America-Dominican Republic free trade agreement (Cafta-Dr), which provides for 97% of the products covered by the pact will enter the country duty free starting January 1, 2015. Speaking at a Senate hearing to comply with the agreement's provision to update, adjust, and articulate its legal framework, the head of the Conep warned of the need to find solutions to his sector's concerns, according to Dominican Today. "We've identified several points that currently need to be reformed in order to cut costs affecting competitiveness levels," the report quoted Mr. Diez as saying. Mr. Diez, the report notes, said exports need to be promoted while exporters need a fairer tax system; the electricity problems must be solved and freight and passenger transport improved. Mr. Diez also noted "disadvantages in terms of cost and access to financing" and called for an overall facilitation of trade, especially permits issued efficiently, the report relates. In addition to the CONEP president, the hearing also included statements by National Free Zone Association president Aquiles Bermudez, and Industries Association president Ligia Bonetti, the report adds. ============= E C U A D O R ============= ECUADOR: Said to Step Up Offers to Buy Back Defaulted Bonds ----------------------------------------------------------- Nathan Gill and Katia Porzecanski at Bloomberg News report that Ecuador is stepping up efforts to repurchase its defaulted bonds and pave the way for a new foreign debt sale, offering creditors more than it paid in a 2009 buyback, three people with knowledge of the terms said. Ecuador is approaching holders on a one-by-one basis with offers to pay at least 50 cents on the dollar for the notes, according to two of the people, who asked not to be identified because the information is private, according to Bloomberg News. In February, Bloomberg News notes, the government offered creditors 40 cents on the dollar, according to another person who wasn't authorized to talk about the offer. Ecuador bought back more than 90 percent of its defaulted bonds in 2009 at 35 cents on the dollar, months after defaulting on $3.2 billion of securities, Bloomberg News discloses. Faced with a swelling budget deficit, President Rafael Correa said last month that he's looking to sell bonds to international investors this year, the first time since the default, after relying mostly on China for financing during the past several years, Bloomberg News relates. Retiring the securities still in creditors' hands -- about $120 million of face value as of March -- would help protect a new bond sale from any possible legal wrangling stemming from the default, according to Moody's Investors Service, Bloomberg News notes. "It's certainly proactive and I think the markets will welcome the transaction," Siobhan Morden, the head of Latin America fixed- income strategy at Jefferies Group LLC, told Bloomberg News in a telephone interview from New York. "I don't think it necessarily changes a history of serial default," Mr. Morden said, Bloomberg News relays. Bonds Rallying The government's conversations with holdout creditors may have helped push the value of the defaulted bonds up over the past several months, Bloomberg News quoted Mr. Morden as saying. The price on the defaulted dollar-denominated bonds due 2030 has surged 11 cents over the past month to 52.13 cents, according to data compiled by Bloomberg. Defaulted bonds that were due in 2012 have jumped 8.25 cents to 47.88 cents over the period. The government has repurchased about $210 million of the debt since the end of last year, Sarah Glendon, a Moody's analyst, said April 14, Bloomberg News recalls. The default was the country's third on its foreign debt since the 1980s. The South American country hasn't publicly disclosed how much of the defaulted bonds remain in investors' hands and didn't respond to information requests made through the Finance Ministry's press office, Bloomberg News relays. Correa, a 51-year-old former economics professor, called the bonds "illegitimate" when he halted payments in 2008 after a commission he formed the year before said the debt showed "serious signs of illegality," Bloomberg News discloses. The government kept making payments on bonds due in 2015, which Correa helped structure during his time as finance minister in 2005. =========== M E X I C O =========== MEXICO: Fitch Publishes 2013 Performance and Outlook ---------------------------------------------------- Fitch Ratings has published a special report entitled "Performance 2013 and Outlook for the Insurance Sector in Mexico." The insurance sector reached a growth of 10% premium to the closing of December 2013; partly benefited from the multi-renewal of the policy of Petroleos Mexicanos (Pemex) in June 2013. Discounting this effect, the sector's growth reached 8% on the same date. Fitch estimates that premiums will grow about 13% in 2014; time reflecting the strong demand for insurance as a result of the expected economic recovery in 2014, and good prospects in bancassurance products. The combined ratio for the sector, excluding adjustments for constitution of catastrophic reserves recorded a slight improvement and became 104.5% 105.2% dic.13/dic.12 thanks to a controlled both operating costs management and stable levels of accidents, which accounted for 32.2% and 74.5% of earned premiums retained, respectively. Similarly, the sector benefited from the absence of major catastrophes and increased prices in some lines damage. The combined ratio could record any impairment in 2014 due to initial costs of new regulation and possible catastrophic less benign environment. Most dynamic raw against the asset base was evidenced by a higher level of operating leverage, measured as premiums written to equity-which retained indicator stood at 1.6 x 1.4 x Dic.2013 in December 2012. A From 2015, Fitch expects further strengthening capital levels and lower leverage ratios with the effective date of the New Law of Insurance Institutions, which requires a process of calculating risk-based capital. Historically the frequency and severity of natural disasters in the sector has been higher than the level recorded in other markets. While these disasters could affect to some extent the technical results broadly recognize that Mexican insurers mitigate its catastrophe exposure through adequate reinsurance recruitment and accumulation of reserves, although it is important that these protections remain conservative in time. At the end of 2013, financial income generated by the investment portfolio recorded a moderate decline, Dec.14 -7%, contrasted with the fact that dynamic raw +10% +12.1% and reserves; was severely affected by an environment of persistently low interest rates. By 2014, the contribution of investment in industry profits continue challenged by the relatively large investment position in equities for some large insurers as well as the environment of low interest rates. The implementation of Solvency II will have a significant impact on the capital requirements as well as internal processes and platform for companies to comply with the new requirements and information modeling. Fitch anticipates that, in addition to the possible consolidation that could encourage the market could also address the new requirement optimizing their book of business through increased use of reinsurance or through changes in the risk profile of its assets among other options, to enable them to minimize the increase in the capital required. TV AZTECA: Posts Ps.2,541 Million in First Quarter 2014 ------------------------------------------------------- TV Azteca, S.A.B. de C.V. disclosed financial results for the first quarter of 2014. First quarter results Net sales for the quarter were Ps.2,541 million, 5% above the Ps.2,417 million for the same quarter of last year. Total costs and expenses were Ps.2,013 million, compared to Ps.1,803 million from the same period last year. As a result, Azteca reported EBITDA of Ps.528 million, compared to Ps.614 million from last year; EBITDA margin for the quarter was 21%. The company registered a net loss of Ps.178 million, compared to a net profit of Ps.152 million for the same quarter of 2013. A full text copy of the company's financial results is available free at: http://is.gd/sPswOb Based in Mexico City, Mexico, TV Azteca, S.A.B. de C.V. -- http://www.tvazteca.com.mx-- produces Spanish-language television programming. The company operates 2 national television networks, Azteca 13 and Azteca 7, through approximately 321 owned stations in Mexico; and Project 40, a cultural channel that broadcasts newscasts, opinion, research, and debate. TV AZTECA: Fitch Affirms 'BB-' IDR; Outlook Stable --------------------------------------------------- Fitch Ratings has affirmed TV Azteca, S.A.B. de CV's (TV Azteca) Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings (IDR) at 'BB-' with a Stable Outlook. Fitch has also affirmed the company's senior unsecured debt at 'BB-'. Key Rating Drivers TV Azteca's ratings reflect its business position as the second largest TV broadcaster in Mexico, with an over 30% market share, and one of the two largest Spanish-language contents producers in the world. The ratings also reflect the company's moderate financial leverage for the rating level, as well as its large cash balance which fully supports its strategic investments. The ratings also take into consideration the controlling ownership by the Salinas family and track record of transactions with related entities. The company's ratings are tempered by the increasing competitive pressure from alternative advertisement platforms and the potential new entrants to the market amid the industry maturity, all of which have and will continue to erode its operating margins and to increase leverage, and the lack of revenue diversification. Slow Growth Ahead: TV Azteca's mid- to long-term advertisement revenue growth will become slow as the Mexican broadcasting industry matures and other platforms, such as internet, continue to attract advertisers. Although the over-the-air broadcasting still remains the most effective advertising platform given the high penetrations of TV in the Mexican households, its revenue portion out of the total advertisement industry has gradually declined to 53% from over 60% in the past. Fitch forecasts the company's revenue growth in 2014 will be high, in the low-teens, due to Brazil World Cup; however, the growth will become weaker for the medium term in the absence of any special event. In 2013, the company's sales contracted by 4% mainly as the government's advertisement spending fell following the presidential election year in 2012. Negative Long-term Reform Impact: Fitch believes that the media sector reform will be negative for TV Azteca in the long term as the competitive pressure increases from the two new entrants. This will add pressure to the company's revenue growth and operating margins. However, Fitch does not foresee any material short-term negative impact as TV Azteca was not declared as 'preponderant' by the regulator and the unfavorable asymmetrical regulations were mostly imposed on the largest broadcaster, Grupo Televisa. In addition, the advertisers will prefer to buy advertisement slots from TV Azteca than from the new broadcasters as its quality contents producing ability remains intact. Fitch believes that it will take significant time and resources for the new entrants to be competitive against TV Azteca and Grupo Televisa. Therefore, any significant loss in TV Azteca's market share is unlikely over the medium term. Margin Erosion: Fitch forecasts the company's EBITDA margin to remain below 30% without any meaningful recovery in 2014 and 2015. The contents cost, including both in-house production and purchased rights, has been steadily increasing accounting for almost 57% of the total sales in 2013 from less than 50% in 2011. The cost structure is likely to be pressured should the new entrants compete over production talents. Also, the increasing revenue contribution from the lower margin Colombian telecom operation will negatively impact the margins. In 2013, the company's EBITDA margin, calculated by Fitch, fell to 29% from 33% in 2012. The downward trend continued in the first quarter of 2014, the slowest quarter of the year, as the margin fell to 21% from 25% a year ago. Heightened but Moderate Leverage: TV Azteca's financial net leverage is likely to increase towards 2x over the medium term due to a high level of investment cash outflows related with the digitalization, Colombian fiber optic project, as well as investments into Azteca America. These investments will be funded with the company's free cash flow generations and cash on hand without any external financing. Fitch believes that the projected increase in the leverage ratio is still in line with its rating level. At Dec. 31, 2013, the company's financial net leverage, measured by net debt to EBTIDA, was 1.8x, up from 0.8x in 2012, due to the significant increase in the working capital, mainly exhibition right purchases. Positive Service/Geographical Diversification: TV Azteca will benefit from cash flow diversification with its fiber optic network projects in Colombia and Peru with the support from their governments. The overseas expansion into the fixed-line telecom operations can help mitigate the risk stemming from the increasing competitive pressure in its domestic broadcasting operations to a certain extent although the contribution will remain small for the medium term. The company plans to increase the revenue portion from this segment to 10% in the long term. Good Liquidity: The company's liquidity profile is sound in light of its MXN6 billion cash balance without any short-term debt as of March 31, 2014. The company does not face any debt maturity until 2018, which provides comfort even as the company uses its cash balance to support the strategic investments in the short to medium term. Fitch also expects the company to maintain robust cash balances supporting its financial flexibility. Rating Sensitivities A Negative rating action could be considered in the case of any material market share loss and margin erosion, as well as weaker cash generation due to aggressive strategic investments and/or shareholder returns. A negative rating action could also be considered if the likelihood of a breach of the financial covenant breach that limits the company's debt to EBITDA below 3.0x increases. Also, any related party transactions that can lead to a material deterioration in the company's financial profile can result in a negative rating action. Factors that could lead to a positive rating action include a combination of the following: additional profitable business lines contributing to improvement in cash flow generation, consistently low leverage through the cycle, sustained increase in market share that would lead to higher cash generation allowing the company to withstand its large working capital requirement. =========== P A N A M A =========== PANAMA: Fitch Says Spending Control a Key Challenge for Next Gov't ------------------------------------------------------------------ Slowing growth will make reining in fiscal spending a key challenge for the next Panamanian government, Fitch Ratings says. "We expect broad economic policy continuity following Sunday's elections, which saw Juan Carlos Varela win with approximately 39% of the vote," Fitch said. He called for a unity government and pledged to fight inequality and corruption. The runner-up candidate from the ruling party trailed with 32%. The outgoing administration has focused on leveraging the expansion of the Panama Canal to position the country as a regional logistics hub, resulting in strong, investment-led growth that has largely protected the country from external shocks. In light of this, the opposition candidates did not seek to materially differentiate their economic policies from the incumbent. Vigorous growth has helped the country improve its credit profile relative to ratings peers, but it has not led to significant fiscal consolidation in recent years, with the country posting persistently higher primary fiscal deficits. Public debt reduction has been driven largely by growth, and last year's growth was the smallest since 2006 (apart from 2009's growth in the aftermath of the global financial crisis), and was partly due to the outgoing government's attempts to complete its investment plan. The completion of investment projects means we expect growth to drop to a more sustainable 6% by 2015 (from an estimated 8.5% last year). A probable fall in public investment from 2013's record high of 10% of GDP will create some fiscal space. But as growth slows, and with current spending likely to rise as some capital projects are completed, improved spending control and prioritization would boost fiscal consolidation, especially in the absence of further tax-enhancing reforms. The next government's fiscal intentions will become clearer with the 2015 budget. "We think tighter spending controls will be needed to meet targets set under the current fiscal responsibility law (FRL). Persistent use of FRL waivers, for example to allow the authorities to meet the cost of flood-related damage last year while maintaining high investment, saw the non-financial public sector deficit increase to 3% of GDP in 2013. We expect public debt to continue to fall, albeit slowly, in 2014-2015, but slowing growth and further delays to new locks on the Canal are among the downside risks to our projections," Fitch said "We rate Panama 'BBB'/Stable," Fitch said. ===================== P U E R T O R I C O ===================== DORAL FINANCIAL: Fitch Cuts Issuer Default Rating to 'C' -------------------------------------------------------- Fitch Ratings has downgraded Doral Financial Corp.'s (DRL) Issuer Default Rating (IDR) to 'C' from 'CCC' and Viability Rating (VR) to 'c' from 'ccc', respectively. Long-term IDRs of 'C' and VRs of 'c' indicate that default appears imminent or inevitable. Key Rating Drivers - IDRs, VR and Senior Debt DRL's downgrade follows the company's recent announcements that it will not meet the minimum capital requirements outlined in the company's current Consent Order and Written Agreements with regulators. Further, Fitch believes that DRL's liquidity position may be pressured since the company also announced that the Federal Deposit Insurance Corporation (FDIC) would no longer consider granting certain waivers that allowed the company to continue the use of brokered deposits for funding until DRL submits a revised capital calculation plan. On May 1, 2014, the company was advised by the FDIC and Office of Financial Commissions (the local Puerto Rico bank regulator) that it could no longer include some or all of certain tax receivables due from the Government of Puerto Rico as part of its Tier 1 capital calculation. The tax receivables, which total $289 million, account for roughly 43% of DRL's current Tier 1 capital ($679 million). Given the exclusion of these receivables, DRL is no longer in compliance with its minimum regulatory capital requirement. The regulatory order requires Doral Bank to maintain a minimum Leverage Ratio of 8%, Tier 1 RBC of 10% and Total RBC of 12%. Furthermore, in the consent order, Doral Bank is not permitted to accept, renew or rollover any brokered deposits unless a waiver is granted by the FDIC. The FDIC had previously granted such waivers. As of Dec. 31, 2013, DRL had a total of $1.4 billion in brokered deposits accounting for 28% of total deposits and 18% of total funding. Given these changed circumstances, Fitch believes that it is unlikely that DRL would be able to address the capital shortfall in a timely manner. Moreover, the inability to access the brokered deposit market will further pressure DRL's weak funding profile. DRL's ratings have incorporated many of the company's on- going challenges such as longer-term strategic plans, geographic and product concentration in Puerto Rico with a limited franchise, high levels of non-performers, weak capital and liquidity profile. This development further adds to these already significant issues. Fitch had previously assigned a recovery rating to DRL's uninsured deposits, in accordance with its 'Recovery Ratings for Financial Institutions Criteria', however, in light of DRL's changed circumstances, Fitch does not believe it has adequate information on which to base a recovery analysis. In the event information becomes available, Fitch will assess potential recovery. Key Rating Sensitivities - IDRs, Senior Debt and VR DRL's ratings are the lowest rating category. In previous ratings actions Fitch noted that the company's ratings are highly sensitive to compliance with its regulatory agreement. Additionally, DRL's ratings remain sensitive to its ability to access funding markets. Key Rating Drivers and Sensitivities - Long- And Short-Term Deposit Ratings DRL's uninsured deposit ratings are rated one notch higher than the company's IDR and senior unsecured debt because U.S. uninsured deposits benefit from depositor preference. U.S. depositor preference gives deposit liabilities superior recovery prospects in the event of default. The ratings of long and short-term deposits issued by DRL and its subsidiary are primarily sensitive to any change in DRL's IDR. Key Rating Drivers and Sensitivities - Support and Support Rating Floors DRL has a Support Rating of '5' and Support Rating Floor of 'NF'. In Fitch's view, DRL is not systemically important and therefore, Fitch believes the probability of support is unlikely. IDRs and VRs do not incorporate any support. Rating Drivers and Sensitivities - Holding Company DRL has a bank holding company (BHC) structure with the bank as the main subsidiary. The subsidiary is considered core to the parent holding company supporting equalized ratings between the bank subsidiary and the BHC. IDRs and VRs are equalized with those of DRL's operating company and bank reflecting its role as the bank holding company, which is mandated in the U.S. to act as a source of strength for its bank subsidiaries. Fitch has downgraded the following ratings: Doral Financial Corporation -- Long-term IDR to 'C' from 'CCC'; -- Viability rating to 'c' from 'ccc'. Doral Bank -- Long-term IDR to 'C' from 'CCC'; -- Long-term deposits to 'CC' from 'B-/RR3'; -- Viability rating to 'c' from 'ccc'. Fitch has affirmed the following ratings: Doral Financial Corporation -- Preferred stock at 'C/RR6'; -- Senior debt at 'C/RR6'; -- Short-term IDR at 'C'; -- Support at '5'; -- Support Floor at 'NF'; Doral Bank -- Short-term IDR at 'C'; -- Short-term deposit at 'C'. -- Support at '5'; -- Support Floor at 'NF'. *********** 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. 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 * * *