/raid1/www/Hosts/bankrupt/TCRLA_Public/140613.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
Thursday, June 13, 2014, Vol. 15, No. 116
Headlines
A R G E N T I N A
ARGENTINA: Delegates to Visit Washington to Discuss Overdue Debt
MASTELLONE HERMANOS: S&P Affirms 'CCC+' CCR; Outlook Negative
B O L I V I A
* BOLIVIA: Borrows $106M From IDB for Transportation Sector Reform
B R A Z I L
BANCO CRUZEIRO: Brazilian Bank's Liquidator Seeks U.S. Recognition
JBS SA: Moody's Rates Unit's $750MM Sr. Unsec. Notes 'Ba3'
OGX PETROLEO: Brazil's Daily Oil Output Falls 2.5% in May
C A Y M A N I S L A N D S
BAKER AIRCRAFT: Shareholders' Final Meeting Set for June 24
BROAD MARKET: Creditors' Proofs of Debt Due July 4
CAPITAL FINANCE: Creditors' Proofs of Debt Due June 23
CLAN INVESTMENTS: Creditors' Proofs of Debt Due June 23
CLARITAS DIVERSIFIED: Shareholders' Final Meeting Set for July 3
FARYNER'S HOUSE: Creditors' Proofs of Debt Due June 30
INTERLEND ENTERPRISES: Creditors' Proofs of Debt Due June 23
LEHMAN BROTHERS: Creditors' Proofs of Debt Due June 23
MINERVA BEEF: Commences Liquidation Proceedings
OXFORD INSURANCE: Shareholders' Final Meeting Set for July 1
WIMBLEDON FINANCING: Placed Under Voluntary Wind-Up
D O M I N I C A N R E P U B L I C
* DOMINICAN REPUBLIC: Central Bank Says May Prices Climb 0.02%
P A R A G U A Y
PARAGUAY: S&P Ups Sovereign Credit Rating to 'BB'; Outlook Stable
T R I N I D A D & T O B A G O
CL FIN'L: Central Bank Hires Actuary for Clico Sale
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Delegates to Visit Washington to Discuss Overdue Debt
----------------------------------------------------------------
American Task Force Argentina Co-chair and former Undersecretary
of Commerce for Economic Affairs Robert J. Shapiro will host a
cocktail reception to honor members of the Argentine Congress, who
travel to Washington, D.C. this week.
News reports state that Argentine delegates will travel to
Washington to discuss the country's overdue debt and the Republic
of Argentina v. NML Capital, LLC court case. Although ATFA
members have on numerous occasions offered to sit down with the
Argentine government and negotiate a settlement, the government
has failed to respond.
This reception offers a unique opportunity for Argentine
congressional officials to hear why ATFA believes good faith
negotiations are the best way for the two parties to resolve the
outstanding debt.
Dr. Shapiro:
"The Argentine Congress' trip to Washington, D.C. could not have
come at a better time. After coming to an agreement with the
Paris Club, the Argentine government has voiced its desire to
return to international financial markets. The best way for
Argentina to return to these markets -- and the only way -- is to
resolve its outstanding debts to private creditors through fair
negotiations."
"Because the point of this trip is to discuss Argentina's
outstanding debt and lawsuit in U.S. courts, American Task Force
Argentina urges these representatives of the Argentine Government
to also meet with its creditors.
"We look forward to meeting with our visitors from Argentina and
are hopeful that we can discuss a fair and reasonable negotiations
and resolution of Argentina's debts to its private creditors,
which should put Argentina on a path toward normalization.
"In hopes of getting the invitation to the appropriate Argentine
delegates, American Task Force Argentina sent the invitation to
the Argentine Embassy in Washington, D.C. and placed
advertisements in a few publications, such as Politico, Roll Call,
The Hill and Wall Street Journal. Please note, the reception is
for invited guests only -- the Argentine delegation, Argentine
Embassy staff and media covering Argentina issues."
About the American Task Force Argentina
The American Task Force Argentina (ATFA) is an alliance of
organizations united for a just and fair reconciliation of the
Argentine government's 2001 debt default and subsequent
restructuring. Its members work with lawmakers, the media, and
other interested parties to encourage the United States government
to vigorously pursue a negotiated settlement with the Argentine
government in the interests of American stakeholders.
MASTELLONE HERMANOS: S&P Affirms 'CCC+' CCR; Outlook Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC+' corporate
credit and issue-level ratings on Mastellone Hermanos S.A.
(Mastellone). At the same time, S&P assigned its 'CCC+' rating to
the company's $200 million proposed seven-year senior unsecured
notes. The outlook remains negative.
The rating affirmation follows Mastellone's announcement of an
offer to exchange its debt due 2018 and buy back its other
outstanding debt due 2015 and 2018 through the issuance of senior
unsecured notes due 2021. In accordance with S&P's criteria, it
don't consider the proposed exchange offer and cash tender offer
as distressed restructuring. In S&P's view, this transaction,
which will be carried out at par and several quarters prior to
final maturities, wouldn't represent a loss of value for current
debt holders. For the new 2021 notes, the company is offering a
coupon rate no lower than 12%, above the original yield, that
somewhat compensates the longer tenor of the new securities.
The 'CCC+' rating on Mastellone reflects S&P's assessment of the
company's "weak" business risk profile, "highly leveraged"
financial risk profile, and "less than adequate" liquidity.
=============
B O L I V I A
=============
* BOLIVIA: Borrows $106M From IDB for Transportation Sector Reform
------------------------------------------------------------------
The Inter-American Development Bank (IDB) approved a $106 million
loan for Bolivia to support transportation sector reform designed
to improve the quality of transportation services and the
country's national and international integration.
This operation is a policy based loan (PBL), which is a fast-
disbursing instrument that provides budget support to countries
undertaking priority programs and reforms.
Bolivia has a dire need to develop its transportation
infrastructure conditions, which have hindered business within its
own borders and trade with other countries.
The Bolivian government is pursuing reforms to put into practice
its new General Transportation Act (Law 165), which seeks to
modernize roads, airports and railroads. The government also seeks
to develop planning policies, establish coordination mechanisms,
raise the quality of transportation services, and improve road
safety and vehicle regulation.
The operation consists of an $84.8 million, 30-year loan from the
IDB's Ordinary Capital, with a 6-year grace period and a fixed
interest rate, plus a $21.2 million, 40-year loan from the IDB's
Fund for Special Operations, with a 40-year grace period and an
annual interest rate of 0.25 percent.
===========
B R A Z I L
===========
BANCO CRUZEIRO: Brazilian Bank's Liquidator Seeks U.S. Recognition
------------------------------------------------------------------
The liquidator of Banco Cruzeiro Do Sul S.A. filed a Chapter 15
bankruptcy petition in Miami, Florida, to seek recognition in the
U.S. of the administrative liquidation proceeding of the bank
pending before the Central Bank of Brazil.
Eduardo Felix Bianchini, the liquidator appointed by the Brazilian
Central Bank and the foreign representative in the U.S. case, says
that in 2012, the Central Bank of Brazil ordered the extrajudicial
liquidation of BCSUL and four of its affiliates after it
determined that the Debtors could no longer return to normal
business operations due to confirmation of a distressed financial
condition and serious violations of regulation of the National
Monetary Council and of the Central Bank of Brazil.
BCSUL's affiliates which are currently in liquidation include:
(a) Cruzeiro do Sul S.A. - Companhia Securitizadora de
Credios Financeiros;
(b) Cruzeiro do Sul S.A. Corretora de Valores e Mercadorias;
(c) CruLeiro do Sul Holding Financcira S.A.; and
(d) Cruzeiro do Sul S.A. Distribuidora de Titulos e Valorcs
Mobiliarios.
U.S. Recognition
The liquidator wants the U.S. court to enter an order recognizing
the Brazilian liquidation as foreign main proceeding and, among
other things, entrusting the distribution of BCSUL's assets in the
U.S. to the liquidator.
Gregory S. Grossman, Esq., at Astigarraga Davis Mullins &
Grossman, PA, avers that the Debtors' Brazilian liquidation
proceeding is a "foreign main proceeding" as that term is defined
in Section 101(23) and 1502(4) of the U.S. Bankruptcy Code,
because it is a (a) collective administrative proceedings
currently pending in Brazil, the "center of main interests" for
the Debtors and (b) under a law relating to insolvency or
adjustment of debt in which the Debtors' assets and affairs are
subject to control and the supervision of the Central
Bank of Brazil for the purpose of liquidation.
The Debtor says that it has assets in the United States in the
form of a retainer on deposit with Astigarraga Davis Mullins &
Grossman and other assets which belong to BCSUL even if they arc
titled in the name of other entities and/or beneficially owned by
other entities, including, but not limited to, an account held in
the name of BCS Asset Management at Sofisa Bank of Florida in
Miami, Florida, as well as claims BCSUL may raise against such
other entities or other third parties related to fraudulent
transfers, preferences and/or fraud.
BCSUL doesn't have any pending litigation in the United States.
Liquidation Proceeding
In 2004, a new law was passed by Brazil's Congress which permitted
the assignment of up to 30% or an individual's salary to a bank to
secure repayment or a loan. This change created a new book or
business for some banks and BCSUL became very prominent and active
in this area.
On June 4, 2012, the Central Bank of Brazil placed BCSUL, along
with its four affiliated companies under Special Temporary
Administration of the Credit Guarantee Fund (i.e., the FGC or
Fundo Garantidor de Creditos). The FGC is responsible for
administering Brazil's deposit insurance program.
When BCSUL was placed under temporary administration, all of its
members sitting on the Board or Directors, the Administrative
Council, the Fiscal Council, and the Audit Committee were removed
and their assets were frozen (together with any other member
within the previous 12 months). In total, the assets or 15
insiders were frozen at that time.
When BCSUL was initially placed, under Special Temporary
Administration, the FGC announced its intention to find a buyer
for BCSUL. On Sept. 14, 2012, however, the Central Bank of Brazil
placed BCSUL into extra-judicial liquidation after the FGC was
unable to find a buyer.
The FGC is owed approximately RS1.95 billion and is the largest
creditor of BCSUL. Initially, the Central Bank or Brazil
appointed Sergio Rodrigues Prates as the Liquidator for BCSU. On
May 24, 2013, Eduardo Felix Bianchini was appointed to replace Mr.
Prates as the liquidator.
About Banco Cruzeiro Do Sul
Banco Cruzeiro Do Sul S.A. ("BCSUL") was first established in
August 1989. In 1993, the bank's shares were acquired by the
Indio Da Costa family, who continued to manage the bank until June
4, 2012, when the assets of the bank and its affiliates were
seized by the Central Bank of Brazil.
Luis Felipe Indio Da Costa is the principal member of the Indio Da
Costa family and was also the principal of the bank although his
son, Luis Octavio, was the president of BCSUL.
According to BCSUL's Web site, the bank provided a variety of
services which included commercial portfolio investments and
credit services.
During the course of its banking operations, BCSUL primarily
operated out of Rio de Janeiro and Sao Paulo where it received
deposits and extending loans to individual customers. BCSUL
operated nationally through a network of salesmen and agents,
promoting the salary-secured loan product offered by the bank.
The total loan book for BCSUL was R$12 billion.
Prior to be placed into liquidation, BCSUL was the 27th largest
bank in Brazil. As of March 31, 2014, the bank's balance sheet
reflected the R$7.75 billion (US$3.47 billion) in assets and
R$10.3 billion (US$4.64 billion) in liabilities.
The liquidator for BCSUL filed a Chapter 15 petition (Bankr. S.D.
Fla. Case No. 14-22974) on June 4, 2014, to seek recognition of
the liquidation proceeding before the Central Bank of Brazil.
According to the Chapter 15 petition, the bank has more than
US$1 billion in assets and debt.
Judge Laurel M Isicoff is assigned to the Chapter 15 case.
Gregory S. Grossman, Esq., at Astigarraga Davis Mullins &
Grossman, PA, in Miami, represents the Debtor.
JBS SA: Moody's Rates Unit's $750MM Sr. Unsec. Notes 'Ba3'
----------------------------------------------------------
Moody's Investor's Service has assigned a Ba3 senior unsecured
debt rating to proposed $750 million senior unsecured notes to be
issued jointly by JBS USA, LLC and JBS USA Finance, Inc. The
rating outlook is negative.
Proceeds from the notes offering will be used to make an
intercompany loan to JBS USA Holdings, Inc., an intermediate
holding company, for further transfer to JBS S.A. the ultimate
parent holding company. JBS S.A. intends to use the loan proceeds
to fund a tender offer launched today for any and all of the JBS
S.A. $300 million 10.500% notes due 2016 and the $350 million
10.250% notes issued by wholly-owned Bertin S.A. Any remaining net
proceeds from the offering will be used by JBS USA LLC for general
corporate purposes. The tender offer announced today by JBS S.A.
is scheduled to expire on July 9, 2014.
Ratings Rationale
JBS USA's ratings are driven primarily by the Corporate Family
Rating of JBS S.A. (Ba3 negative), which controls JBS USA Holdings
and its wholly-owned subsidiary JBS USA LLC in all material
aspects. Thus, we expect any future changes to JBS USA's ratings
to mirror changes to JBS S.A.'s Corporate Family Rating. Refer to
JBS S.A.'s credit opinion on moodys.com for factors that could
cause the rating to change.
Rating assigned:
JBS USA, LLC and JBS USA Finance, Inc.:
$750 million proposed senior unsecured notes due 2024 at Ba3.
The outlook is negative.
The proposed notes will be guaranteed by JBS S.A. and two
intermediate holding companies: JBS Hungary Holdings Kft., and JBS
USA Holdings. The notes will also be guaranteed on a senior
unsecured basis by wholly-owned US restricted subsidiaries,
excluding JBS Five Rivers, JBS US Holdings LLC and JBS USA
Finance, Inc. The non-guarantor subsidiaries represent
approximately 63% of consolidated gross profit of JBS USA. The
notes will rank equally to the existing senior unsecured debt at
JBS USA, LLC including $700 million notes due February 2020,
$1,150 million 7.250% notes due June 2021. The notes will be
effectively subordinated to the existing senior secured debt at
JBS USA, LLC including the $500 million senior secured term loan
due 2020, the $475 million senior secured term loan B due May
2018, and the $850 million asset-backed revolving credit facility
($188 million outstanding as of March 30, 2014) expiring June
2016.
JBS USA, LLC operates the U.S. beef and pork segments and the
Australian beef and lamb operations of JBS S.A., one of the
largest protein operators in the world. JBS USA is owned by an
intermediate holding company, JBS USA Holdings, which also owns a
controlling 76% equity interest in Pilgrim's Pride Corporation,
one of the leading poultry producers in the United States.
Reported sales for JBS S.A. and JBS USA for the twelve months
ended March 30, 2014 were approximately BRL 99.8 billion (USD 44.5
billion) and $20.4 billion, respectively.
JBS USA Finance, Inc., the co-issuer of the notes, is a special
purpose entity wholly-owned by JBS USA LLC. It has no subsidiaries
and no operations or assets other than those incidental to
maintaining its corporate existence.
The principal methodology used in this rating was the Global
Protein and Agriculture Industry Methodology published in May
2013. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
OGX PETROLEO: Brazil's Daily Oil Output Falls 2.5% in May
---------------------------------------------------------
Jonathan Oatis at Reuters reports that average daily oil output at
bankrupt Brazilian oil company Oleo e Gas Participacoes SA fell
2.5% in May compared with April, according to data released by the
company, reducing the volume of oil available to pay for its
restructuring.
Total output from the company's two producing offshore fields east
of Rio de Janeiro was 424,464 barrels, or an average of 13,692
barrels a day (bpd), according to Reuters. That compares with
421,287 barrels, or an average 14,043 bpd, in April.
On June 3, creditors of Brazilian tycoon Eike Batista's Oleo e
Gas, formerly known as OGX Petroleo e Gas Participacoes SA,
approved a restructuring plan for the oil company that could lead
to a quick resolution of the largest bankruptcy in Latin America's
history, Reuters notes.
The report relates that creditors holding 90 percent of the Rio de
Janeiro-based company's nearly BRL12 billion ($5 billion) of
unpaid obligations approved the plan. The plan awaits a judge's
approval. Transfer of control from Brazilian tycoon Eike Batista,
who owns 51 percent, to creditors is expected to occur by October.
Output from Tubarao Martelo and the nearby Tubarao Azul, as well
as future output from the Atlanta and Oliva fields southwest of
Rio, will be the key to keeping the company afloat and allowing it
to expand after restructuring, company officials said, Reuters
notes.
Despite higher total output in May, average daily output was lower
because May has 31 days and April only 30, the report discloses.
Average daily output is the most common way to report oil output
and compare the performance of oil companies, the report notes.
Oleo e Gas only provided total monthly production figures in their
statement. Reuters calculated the average daily production levels
from those monthly totals.
Rio de Janeiro-based Oleo e Gas's Tubarao Martelo field produced
9,712 bpd in May, 1.7 percent less per than the 9,877 bpd recorded
in April, Reuters relates. The field produced a total of 301,062
barrels of oil in May.
Reuters relays that output from Tubarao Azul fell 4.4 percent to
3,981 bpd in May compared with 4,165 bpd in April. Total output
at Tubarao Azul was 123,407 barrels in May, the report adds.
About OGX Petroleo
Based in Rio de Janeiro, Brazil, OGX Petroleo e Gas Participacoes
S.A., now known as Oleo e Gas, is an independent exploration and
production company with operations in Latin America.
OGX filed for bankruptcy in a business tribunal in Rio de Janeiro
on Oct. 30, 2013, case number 0377620-56.2013.8.19.0001. The
bankruptcy filing puts $3.6 billion of dollar bonds into default
in the largest corporate debt debacle on record in Latin America.
The filing by the oil company that transformed Eike Batista into
Brazil's richest man followed a 16-month decline that wiped out
more than $30 billion of his personal fortune.
The filing, which in Brazil is called a judicial recovery, follows
months of negotiations to restructure the dollar bonds, in which
OGX sought to convert debt to equity and secure as much as $500
million in new funds. OGX said Oct. 29 that the talks concluded
without an agreement. The company's cash fell to about $82 million
at the end of September, not enough to sustain operations further
than December.
==========================
C A Y M A N I S L A N D S
==========================
BAKER AIRCRAFT: Shareholders' Final Meeting Set for June 24
-----------------------------------------------------------
The shareholders of Baker Aircraft Leasing Limited will hold their
final meeting on June 24, 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:
Todd Eric Woodward
c/o Barnaby Gowrie
Telephone: +1 (345) 914 6365
BROAD MARKET: Creditors' Proofs of Debt Due July 4
--------------------------------------------------
The creditors of Broad Market XL Holdings Limited are required to
file their proofs of debt by July 4, 2014, to be included in the
company's final dividend distribution.
The company's liquidator is:
Eleanor Fisher
Zolfo Cooper (Cayman) Limited
Canella Court, 2nd Floor
38 Market Street, Camana Bay
Grand Cayman
Cayman Islands, KYI-9006
CAPITAL FINANCE: Creditors' Proofs of Debt Due June 23
------------------------------------------------------
The creditors of Capital Finance Network Ltd. are required to file
their proofs of debt by June 23, 2014, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on May 23, 2014.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
CLAN INVESTMENTS: Creditors' Proofs of Debt Due June 23
-------------------------------------------------------
The creditors of Clan Investments Ltd. are required to file their
proofs of debt by June 23, 2014, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on May 13, 2014.
The company's liquidator is:
Ogier
c/o Jo-Anne Maher
Telephone: (345) 815-1762
Facsimile: (345) 949-9877
89 Nexus Way, Camana Bay
Grand Cayman KY1-9007
Cayman Islands
CLARITAS DIVERSIFIED: Shareholders' Final Meeting Set for July 3
----------------------------------------------------------------
The shareholders of Claritas Diversified Offshore Fund Limited
will hold their final meeting on July 3, 2014, at 10:30 a.m., to
receive the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Baker Tilly (Cayman) Limited
c/o Nathan Stubing
Telephone: (345) 946 7853
P.O. Box 888 Grand Cayman KY1-1102
Cayman Islands
FARYNER'S HOUSE: Creditors' Proofs of Debt Due June 30
------------------------------------------------------
The creditors of Faryner's House Investments Limited are required
to file their proofs of debt by June 30, 2014, to be included in
the company's dividend distribution.
The company commenced liquidation proceedings on May 1, 2014.
The company's liquidator is:
Keiran Hutchison
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
INTERLEND ENTERPRISES: Creditors' Proofs of Debt Due June 23
------------------------------------------------------------
The creditors of Interlend Enterprises, Ltd. are required to file
their proofs of debt by June 23, 2014, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on May 23, 2014.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
LEHMAN BROTHERS: Creditors' Proofs of Debt Due June 23
------------------------------------------------------
The creditors of Lehman Brothers Cayman Limited are required to
file their proofs of debt by June 23, 2014, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on May 23, 2014.
The company's liquidator is:
Carl Gosselin
Wilmington Trust (Cayman), Ltd.
P.O. Box 32322 Grand Cayman KY1-1209
Cayman Islands
Telephone: (345) 640-6712
MINERVA BEEF: Commences Liquidation Proceedings
-----------------------------------------------
On May 23, 2014, the sole shareholder of Minerva Beef Ltd.
resolved to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Juliana Helena Desani Garcia
Avenida Antonio Man‡o Bernardes
Chacara Minerva
Caixa Postal 181
Sao Paulo CEP 14781-545
Brazil
Telephone: +55 11 3074 2444
e-mail: juliana.desani@minervafoods.com
OXFORD INSURANCE: Shareholders' Final Meeting Set for July 1
------------------------------------------------------------
The shareholders of Oxford Insurance SPC, Ltd. will hold their
final meeting on July 1, 2014, at 10:00 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
Mr. Stuart Jessop is the company's liquidator.
WIMBLEDON FINANCING: Placed Under Voluntary Wind-Up
---------------------------------------------------
On May 20, 2014, the Grand Court of Cayman Islands entered an
order to voluntarily wind up the operations of Wimbledon Financing
Fund Ltd.
The company's liquidators are:
Christopher D. Johnson
Russell Homer
Chris Johnson Associates Ltd.
P.O. Box 2499 Grand Cayman KY1-1104
Cayman Islands
Telephone: +1 (345) 946-0820
Facsimile: +1 (345) 946-0864
e-mail: rsh@cjacayman.com
===================================
D O M I N I C A N R E P U B L I C
===================================
* DOMINICAN REPUBLIC: Central Bank Says May Prices Climb 0.02%
--------------------------------------------------------------
Dominican Today reports that the Central Bank said May prices
climbed 0.02% compared to April, and places inflation for the
first five months at 1.55%.
It said annualized inflation "turned out to be lower by more than
one percentage point to the rate of 4.99% posted in May 2013,"
according to Dominican Today.
The report notes that the Central Bank said annualized underlying
inflation stood at 3.39%. "This indicator measures the
inflationary trend of a monetary origin, isolating the effects of
external factors and reducing the volatility of the overall CPI,"
the report quoted the Central Bank as saying.
===============
P A R A G U A Y
===============
PARAGUAY: S&P Ups Sovereign Credit Rating to 'BB'; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term foreign
and local currency sovereign credit ratings on the Republic of
Paraguay to 'BB' from 'BB-'. At the same time, S&P affirmed the
short-term foreign and local currency sovereign credit ratings at
'B'. The outlook on S&P's long-term credit ratings on Paraguay is
stable. S&P raised the T&C assessment to 'BB+' from 'BB'.
RATIONALE
The upgrade of the Republic of Paraguay is based on S&P's
expectation that the government will make progress in implementing
recent legislation designed to boost investment and maintain
cautious macroeconomic policies. The Administration of President
Horatio Cartes has embarked on an ambitious plan to spur
investment, especially in the country's physical infrastructure,
in order to build and sustain long-term GDP growth and modernize
the economy. S&P expects that the Administration will be able to
maintain political consensus for its growth strategy and progress
on the implementation over the coming three years, setting the
stage for gradual economic diversification and reduced economic
volatility.
S&P's ratings on Paraguay reflect its limited monetary
flexibility, low per capita income and shortfalls in physical
infrastructure, and its still-evolving political and public
institutions. They also reflect a relatively strong external
position, low debt burden, and moderate fiscal flexibility.
Paraguay's evolving political institutions limit how quickly it
can achieve its social and economic objectives. Despite many
years of sound macroeconomic performance, which the appointment of
technocrats in key administrative positions supported, the public
sector suffers from weak implementation capacity. The combination
of cumbersome bureaucratic procedures, the influence of interest
groups, and a still-high perception of corruption will continue to
limit the government's ability to move more rapidly with its
policy agenda. As a result, S&P expects sustained, but only
gradual, progress in the various investment projects that the
government has announced.
An extraordinary recovery in agricultural output, after a
difficult 2012, contributed to very strong GDP growth in 2013
(13.6%). S&P expects GDP growth to moderate at 4.5% to 4.8% over
the next three years, reflecting a more balanced growth pattern.
This suggests per capita growth rates close to 3% over the next
three years from the current base of $4,600 estimated for year-end
2014. S&P expects that the government will make progress in
implementing policies that would boost Paraguay's low level of
investment (estimated at 16% of GDP), which restricts the ability
to sustain higher growth rates, but the pace of progress will be
gradual.
S&P expects solid export growth and increasing foreign direct
investments to continue to support Paraguay's strong external
indicators. The country has negative narrow net external debt to
current account receipts and has relatively moderate external
financing requirements. Paraguay's solid external position
provides a buffer against unexpected external shocks, such as a
sharp and prolonged fall in commodity prices.
A track record of low fiscal deficits over a long period has
contributed to low government debt levels. S&P projects net
general government debt to be 6.3% of GDP in 2014. However,
political interference has often limited the effectiveness of
fiscal policy by disproportionally expanding current spending
versus capital spending and leading to a strong correlation
between government spending and the broad election cycle. The
Fiscal Responsibility Law that the legislature recently passed
should moderate this trend.
Going forward, a low tax burden will limit the effectiveness of
fiscal policy. S&P expects recent actions to increase the tax
burden by about 1.5 percentage points of GDP over the next two
years. Nevertheless, additional progress will be gradual and
depend on the ability to reform the politically sensitive customs
department, reduce informality, and gain political support to
increase the low tax contribution from the dynamic and important
agro-business sector. Even if government debt levels remain low,
greater exposure to international capital markets--the government
issued its first external bond in 2013, and S&P expects a new
issuance in 2014--makes it more important to strengthen the
government debt management office.
A relatively high level of dollarization (approaching 44% of
deposits and 46% of loans as of April 2014) restricts Paraguay's
monetary policy flexibility. The recurrence of quasi fiscal
deficits (estimated at 0.5% of GDP for 2014) and a still-narrow
secondary market for government securities are additional
restraints. However, Paraguay has made material progress in
recent years in strengthening monetary policy by introducing an
inflation-targeting regime and by the central government issuing
(in 2012) a perpetual bond to the central bank for $915 million to
compensate for its losses.
OUTLOOK
"Our stable outlook on our ratings on the Republic of Paraguay
assumes continuity in macroeconomic policies that support
stability and continued GDP growth. It also assumes the
government makes gradual progress in implementing its investment
projects. We expect economic growth to average 4%-5% over the
coming three years, subject to volatility from the weather and
global commodity prices, and inflation to remain within the
central bank target of 5% (plus or minus 2.0%) (see table). An
acceleration in the implementation of investment projects could
provide a significant boost to Paraguay's economic prospects over
the next two years. That, along with adherence to recent fiscal
legislation and gradual progress in strengthening the country's
regulatory and legal framework to reduce uncertainties, could
result in an upgrade," S&P said.
Conversely, increasing political polarization could block the
government's reform agenda and disrupt economic policy
implementation. In addition, the government could face material
delays in the implementation of its plans to increase investment
and boost economic development. S&P could lower the rating if the
resulting decline in investor sentiment and economic growth were
to significantly weaken Paraguay's credit profile.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee by
the primary analyst had been distributed in a timely manner and
was sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts. The chair
ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook.
RATINGS LIST
Upgraded; Ratings Affirmed
To From
Paraguay (Republic of)
Sovereign Credit Rating BB/Stable/B BB-
/Stable/B
Upgraded
To From
Paraguay (Republic of)
Transfer & Convertibility Assessment
Local Currency BB+ BB
Senior Unsecured BB BB-
===============================
T R I N I D A D & T O B A G O
===============================
CL FIN'L: Central Bank Hires Actuary for Clico Sale
---------------------------------------------------
Trinidad and Tobago Newsday reports that the Central Bank has
hired actuary Neil Dingwall to advise it on the restructuring and
sale of Colonial Life Insurance Company Ltd. (CLICO).
The report relates that the Central Bank said some of Mr.
Dingwall's key functions include:
-- advising the bank on the review and development of Clico's
operational plan for its restructuring; and
-- advising the bank on the preparations for the offering and
sale of Clico's traditional portfolio including the
selection of appropriate matching assets and splitting of
its liability portfolio.
The report relates that Mr. Dingwall will also advise the Central
Bank on streamlining the operations of Clico, including how it
will go about ceasing to write new business.
The report discloses that Jwala Rambarran reminded the public
about the bank's promise that the sale of Clico's traditional
insurance business would be handled in "an open, transparent"
manner, through a "market-based sale and transfer of its
traditional insurance portfolio to a buyer to be determined." The
Governor said the "resolution strategy" is entering a new and
crucial stage and this was why it had hired Mr. Dingwall as a
special advisor, the report relates.
The report notes that Mr. Dingwall had an "extensive" track record
in the Caribbean insurance sector, having been instrumental in the
sale of Life of Jamaica, one of Jamaica's largest insurance
companies, to the Barbados Mutual Life Assurance Society (now
renamed Sagicor). Mr. Dingwall had worked on more than two dozen
mergers or acquisitions of insurance companies or insurance
portfolio transfers both within the Caribbean and internationally.
About CLICO International
Colonial Life Insurance Company Ltd. (CLICO) is a member of the CL
Financial Group.
About CL Financial
CL Financial Limited is a privately held conglomerate in Trinidad
and Tobago. Founded as an insurance company by Cyril Duprey,
Colonial Life Insurance Company was expanded into a diversified
company by his nephew, Lawrence Duprey. CL Financial is now one
of the largest local conglomerates in the region, encompassing
over 65 companies in 32 countries worldwide with total assets
standing at roughly US$100 billion.
* * *
As reported in the Troubled Company Reporter-Latin America on
Aug. 6, 2013, Caribbean360.com said that over TT$8 billion worth
of Colonial Life Insurance Company Limited's (CLICO) profitable
business will be transferred to Atruis, a new company that will be
owned by the state. CLICO is a subsidiary of CL Financial
Limited. The Trinidad Express said that the Cabinet approved the
transfer as the Finance and General Purposes Committee continues
to discuss a letter of intent hammered out by the Ministry of
Finance and CL Financial's 400 shareholders, which envisions
taxpayers will recover the more than TT$20 billion Government has
injected since 2009 to keep CL subsidiary CLICO and other
companies afloat, according to Caribbean360.com.
Caribbean360.com noted that CLICO financially caved in on itself
at the end of 2008 after the investment instruments of major
policyholders matured and they wanted hundreds of millions of
dollars they were owed.
Caribbean360.com related that at its annual general meeting in
Sept. 2013, CL Financial shareholders voted to extend the
agreement with Government until August 25, 2014, while Cabinet
decides on a new framework accord to recover the debt owed to
Government through divestment of CL subsidiaries, including
Methanol Holdings, Republic Bank, Angostura Holdings, CL World
Brands and Home Construction Ltd.
Proceeds from the divestment of these assets will go toward
Government's recovery of the billions it pumped into CLICO,
Caribbean360.com said.
***********
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 * * *