/raid1/www/Hosts/bankrupt/TCRLA_Public/140822.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Friday, August 22, 2014, Vol. 15, No. 166
Headlines
A R G E N T I N A
ARGENTINA: Proposes End Run Around U.S. Court in Bond Dispute
ARGENTINA: Cheapest Bonds Are Most Resilient in Default
ARGENTINA: Aurelius Pans Settlement Chances in Debt Crisis
BANCO SANTANDER RIO: Moody's Assigns B1 Global Senior Debt Rating
BUENOS AIRES: Moody's Assigns 'Caa1' Debt Rating to $85MM Notes
BUENOS AIRES: S&P Lowers Local Currency Rating to 'CCC-'
FIDEICOMISO FINANCIERO: Moody's Rates ARS9.9MM Certs. 'B1.ar'
MENDOZA: S&P Lowers Local Currency Rating to 'CCC-'
B R A Z I L
MMX MINERACAO: To Halt Work at Mine as Iron-Ore Falls
* BRAZIL: Banks to Sell Covered Bond to Fund Housing Market
C A Y M A N I S L A N D S
ASUKA FIXED: Shareholder to Hear Wind-Up Report on Sept. 11
DUNVEGAN INVESTMENTS: Shareholders' Final Meeting Set for Sept. 5
G CAPITAL: Member to Hear Wind-Up Report on Sept. 16
G CAPITAL MASTER: Member to Hear Wind-Up Report on Sept. 16
MAYERCAP HIGH: Shareholder to Hear Wind-Up Report on Sept. 3
MULBERRY CAPITAL: Shareholders' Final Meeting Set for Sept. 2
MYRTLE LTD: Shareholder to Hear Wind-Up Report on Sept. 10
SOUTHERN CAPITAL: Shareholders' Final Meeting Set for Sept. 2
TROIKA RUSSIA: Shareholders' Final Meeting Set for Sept. 12
TROIKA RUSSIA GENERAL: Shareholders' Meeting Set for Sept. 12
C H I L E
INVERSIONES ALSACIA: Fitch Cuts Rating on US$464MM Sr. Bonds to D
INVERSIONES ALSACIA: Moody's Lowers Senior Secured Rating to Caa3
D O M I N I C A N R E P U B L I C
* DOMINICAN REPUBLIC: Web Shopping Tax Rams Into Legal Wall
E C U A D O R
ECUADOR: S&P Raises Long Term Sovereign Credit Ratings to 'B+'
P A R A G U A Y
VISION BANCO: S&P Revises Outlook to Neg. & Affirms 'BB-' Rating
P E R U
VOLCAN COMPANIA: S&P Affirms 'BB+' CCR; Outlook Stable
T R I N I D A D & T O B A G O
TRINIDAD CEMENT: Fails in Bid to Block Shareholders Meeting
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Proposes End Run Around U.S. Court in Bond Dispute
-------------------------------------------------------------
Alexandra Stevenson and Jonathan Gilbert, writing for The New York
Times' DealBook, reported that Argentina has proposed a way to pay
its bondholders in a move that would bypass a United States court
ruling that has blocked its payments and sent the country
spiraling into default last month. According to the report, the
Argentine government said that it had sent a draft bill to
Congress that would allow foreign investors holding Argentine debt
to swap their defaulted bonds for new ones subject to local law.
Argentine President Cristina Fernandez de Kirchner said the
government plans to pay its foreign debt locally, to avoid
complying with orders by U.S. District Judge Thomas Griesa in
Manhattan that require it to pay Paul Singer's NML Capital and the
other holdouts more than $1.5 billion before it can pay holders of
its restructured debt, according to Bob Van Voris at Bloomberg
News.
Holdouts Call Plan 'Affront' to Court
Holders of defaulted Argentine bonds asked Judge Griesa to
consider contempt sanctions against the South American nation
after it announced its plan to pay its performing debt outside his
jurisdiction, calling it a "grave affront" to the court.
"This plan makes no pretense that Argentina will honor its
obligations under plaintiffs' bonds," Robert A. Cohen, a lawyer
for the holdouts, said in a letter to Judge Griesa, Bloomberg News
notes.
Bloomberg News relays that the defaulted bondholders asked Judge
Griesa to hold an emergency hearing to consider Argentina's
violation of his orders and whether to hold the nation in
contempt. Judge Griesa has made clear that a plan to exchange the
debt for bonds paid in Argentina would be illegal.
Argentina defaulted on a record $95 billion of debt in 2001.
Bloomberg News disclose that holders of about 92 percent of the
debt agreed to exchange their bonds for new ones, at a loss of
about 70 percent, in debt restructurings in 2005 and 2010.
Holdouts including NML Capital sued, seeking full payment.
BNY Blocked
In June, Judge Griesa blocked Bank of New York Mellon Corp., the
indenture trustee for Argentina's restructured debt, and other
intermediaries from distributing $539 million Argentina intended
for bondholders, Bloomberg News relays.
Standard & Poor's declared Argentina in default on the
restructured bonds on July 30 after the government failed to make
an interest payment as a result of Judge Griesa's order, Bloomberg
News notes.
The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-
06978, U.S. District Court, Southern District of New York
(Manhattan).
* * *
The Troubled Company Reporter-Latin America, on Aug. 1, 2014,
reported that Argentina defaulted on some of its debt late July 30
after expiration of a 30-day grace period on a $539 million
interest payment. Earlier that day, talks with a court-
appointed mediator ended without resolving a standoff between the
country and a group of hedge funds seeking full payment on bonds
that the country had defaulted on in 2001. A U.S. judge had ruled
that the interest payment couldn't be made unless the hedge funds
led by Elliott Management Corp., got the $1.5 billion they
claimed. The country hasn't been able to access international
credit markets since its $95 billion default 13 years ago.
As a result, reported the TCR-LA on Aug. 1, Standard & Poor's
Ratings Services lowered its unsolicited long-and short-term
foreign currency sovereign credit ratings on the Republic of
Argentina to selective default ('SD') from 'CCC-/C'.
The TCR-LA, on Aug. 4, 2014, also reported that Fitch Ratings
downgraded Argentina's Foreign Currency Issuer Default Rating
(IDR) to 'RD' from 'CC', and its Short-Term Foreign Currency
Issuer Default Rating to 'RD' from 'C'.
Meanwhile, Moody's Investors Service affirmed Argentina's Caa1
issuer rating, which also applies to domestic law bonds, confirmed
the (P)Caa2 rating for its foreign law bonds, and affirmed the Ca
rating on the original defaulted bonds. The long-term issuer
rating was placed on negative outlook, reported the TCR-LA on Aug.
5, 2014.
On Aug. 8, 2014, the TCR-LA reported that Moody's Latin America
Agente de Calificacion de Riesgo affirmed the deposit, debt,
issuer and corporate family ratings on Argentina's banks and
financial institutions, both on the global and national scales.
The outlook on these ratings has been changed to negative from
stable. At the same time, the rating agency has affirmed the
banks' Caa2 foreign-currency deposit ratings and Not-
Prime short-term ratings. The banks' standalone E financial
strength ratings corresponding to caa1 baseline credit assessments
(BCA) have also been affirmed.
The TCR-LA, On Aug. 6, 2014, also reported that DBRS Inc. has
downgraded Argentina's long-term foreign currency issuer rating
from CC to Selective Default (SD). The short-term foreign
currency rating has been downgraded to Default (D), from R-5. The
long-term and short-term local currency issuer ratings have been
confirmed at B (low) and R-5, respectively. The trend on the
long-term local currency rating is Negative, and the trend on the
short-term local currency rating is Stable.
ARGENTINA: Cheapest Bonds Are Most Resilient in Default
-------------------------------------------------------
Camila Russo, writing for Bloomberg News, reported that
Argentina's lowest-priced bonds are holding up the best following
the country's default last month. According to the report,
Argentina's notes maturing in 2038, known as Par bonds, have lost
6.5 percent to 52.88 cents on the dollar since the government was
blocked from making a payment on its debt last month, compared to
a 11.6 percent plunge on its notes due in 2033 and an 8.3 percent
rout on securities that mature in 2017.
* * *
The Troubled Company Reporter-Latin America, on Aug. 1, 2014,
reported that Argentina defaulted on some of its debt late July 30
after expiration of a 30-day grace period on a $539 million
interest payment. Earlier that day, talks with a court-
appointed mediator ended without resolving a standoff between the
country and a group of hedge funds seeking full payment on bonds
that the country had defaulted on in 2001. A U.S. judge had ruled
that the interest payment couldn't be made unless the hedge funds
led by Elliott Management Corp., got the $1.5 billion they
claimed. The country hasn't been able to access international
credit markets since its $95 billion default 13 years ago.
As a result, reported the TCR-LA on Aug. 1, Standard & Poor's
Ratings Services lowered its unsolicited long-and short-term
foreign currency sovereign credit ratings on the Republic of
Argentina to selective default ('SD') from 'CCC-/C'.
The TCR-LA, on Aug. 4, 2014, also reported that Fitch Ratings
downgraded Argentina's Foreign Currency Issuer Default Rating
(IDR) to 'RD' from 'CC', and its Short-Term Foreign Currency
Issuer Default Rating to 'RD' from 'C'.
Meanwhile, Moody's Investors Service affirmed Argentina's Caa1
issuer rating, which also applies to domestic law bonds, confirmed
the (P)Caa2 rating for its foreign law bonds, and affirmed the Ca
rating on the original defaulted bonds. The long-term issuer
rating was placed on negative outlook, reported the TCR-LA on Aug.
5, 2014.
On Aug. 8, 2014, the TCR-LA reported that Moody's Latin America
Agente de Calificacion de Riesgo affirmed the deposit, debt,
issuer and corporate family ratings on Argentina's banks and
financial institutions, both on the global and national scales.
The outlook on these ratings has been changed to negative from
stable. At the same time, the rating agency has affirmed the
banks' Caa2 foreign-currency deposit ratings and Not-
Prime short-term ratings. The banks' standalone E financial
strength ratings corresponding to caa1 baseline credit assessments
(BCA) have also been affirmed.
The TCR-LA, On Aug. 6, 2014, also reported that DBRS Inc. has
downgraded Argentina's long-term foreign currency issuer rating
from CC to Selective Default (SD). The short-term foreign
currency rating has been downgraded to Default (D), from R-5. The
long-term and short-term local currency issuer ratings have been
confirmed at B (low) and R-5, respectively. The trend on the
long-term local currency rating is Negative, and the trend on the
short-term local currency rating is Stable.
ARGENTINA: Aurelius Pans Settlement Chances in Debt Crisis
----------------------------------------------------------
Law360 reported that Aurelius Capital Management LP threw cold
water on speculation that the private sector might find a solution
to its sovereign-debt dispute with Argentina, reporting that it
had not received any "remotely acceptable" proposals to buy up its
defaulted bonds. According to the report, the Manhattan-based
hedge fund said that recent engagements with unnamed private-
sector financiers about curing the default have convinced it there
is "no realistic prospect of a private solution."
Along with Elliott Management Corp. unit NML Capital Ltd.,
Aurelius affiliates hold about $1.5 billion in bonds they
purchased on the cheap following Argentina's 2001 default and
refused to swap out for 30 cents on the dollar in restructurings
in 2005 and 2010, instead suing in New York for full repayment,
the report related.
Law360 also reported that a federal magistrate judge granted NML
Capital Ltd.'s request to wrest information from numerous
companies that the hedge fund says are hiding $65 million
embezzled from Argentina's coffers, ruling against 123 Nevada
entities the judge described as shell companies. According to the
report, U.S. Magistrate Judge Cam Ferenbach said the companies
must hand over information on their finances, or provide a
deponent, so that NML can try to find out the location of money
that was allegedly embezzled by current Argentine President
Cristina Fernandez de Kirchner, her husband, among others.
* * *
The Troubled Company Reporter-Latin America, on Aug. 1, 2014,
reported that Argentina defaulted on some of its debt late July 30
after expiration of a 30-day grace period on a $539 million
interest payment. Earlier that day, talks with a court-
appointed mediator ended without resolving a standoff between the
country and a group of hedge funds seeking full payment on bonds
that the country had defaulted on in 2001. A U.S. judge had ruled
that the interest payment couldn't be made unless the hedge funds
led by Elliott Management Corp., got the $1.5 billion they
claimed. The country hasn't been able to access international
credit markets since its $95 billion default 13 years ago.
As a result, reported the TCR-LA on Aug. 1, Standard & Poor's
Ratings Services lowered its unsolicited long-and short-term
foreign currency sovereign credit ratings on the Republic of
Argentina to selective default ('SD') from 'CCC-/C'.
The TCR-LA, on Aug. 4, 2014, also reported that Fitch Ratings
downgraded Argentina's Foreign Currency Issuer Default Rating
(IDR) to 'RD' from 'CC', and its Short-Term Foreign Currency
Issuer Default Rating to 'RD' from 'C'.
Meanwhile, Moody's Investors Service affirmed Argentina's Caa1
issuer rating, which also applies to domestic law bonds, confirmed
the (P)Caa2 rating for its foreign law bonds, and affirmed the Ca
rating on the original defaulted bonds. The long-term issuer
rating was placed on negative outlook, reported the TCR-LA on Aug.
5, 2014.
On Aug. 8, 2014, the TCR-LA reported that Moody's Latin America
Agente de Calificacion de Riesgo affirmed the deposit, debt,
issuer and corporate family ratings on Argentina's banks and
financial institutions, both on the global and national scales.
The outlook on these ratings has been changed to negative from
stable. At the same time, the rating agency has affirmed the
banks' Caa2 foreign-currency deposit ratings and Not-
Prime short-term ratings. The banks' standalone E financial
strength ratings corresponding to caa1 baseline credit assessments
(BCA) have also been affirmed.
The TCR-LA, On Aug. 6, 2014, also reported that DBRS Inc. has
downgraded Argentina's long-term foreign currency issuer rating
from CC to Selective Default (SD). The short-term foreign
currency rating has been downgraded to Default (D), from R-5. The
long-term and short-term local currency issuer ratings have been
confirmed at B (low) and R-5, respectively. The trend on the
long-term local currency rating is Negative, and the trend on the
short-term local currency rating is Stable.
BANCO SANTANDER RIO: Moody's Assigns B1 Global Senior Debt Rating
-----------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo S.A.
assigned a B1 global local currency senior debt rating to Banco
Santander Rio S.A.'s (Santander Rio) sixth expected issuance of up
to ARS 500 million, which will be due in 18 months, and to the
seventh expected issuance up to ARS 500 million, which will be due
in 36 months, both under the bank's $500 million medium-term note
program. Both expected issuances must not exceed ARS 500 million.
At the same time, Moody's Latin America assigned a Aaa.ar national
scale local currency debt rating to both expected issuances.
The outlook for all ratings is negative.
The following ratings were assigned to Banco Santander Rio S.A.'s
expected issuances under the debt program:
Sixth Issuance up to ARS 500 million:
B1 Global Local Currency Debt Rating
Aaa.ar Argentina National Scale Local Currency Debt Rating
Seventh Issuance up to ARS 500 million:
B1 Global Local Currency Debt Rating
Aaa.ar Argentina National Scale Local Currency Debt Rating
Ratings Rationale
Moody's explained that the local currency senior unsecured debt
rating derives from the bank's B1 global local currency deposit
rating, Moody's also noted that seniority was taken into
consideration in the assignment of the debt ratings. The B1 global
local currency deposit rating of Santander R¡o derives from the
bank's caa1 BCA and Moody's assessment of the moderate probability
of parental support to be provided by its shareholder Santander
Spain, rated Baa1. The standalone rating captures Santander's well
established franchise as the largest private bank in the
Argentinean banking system, as well as its diversified earnings
that results from a broad range of business activities and
customer base. The bank's well-defined footprint in the corporate
and consumer lending segment ensures good asset quality.
Santander's rating also incorporates its significant payroll
accounts base, which provides not only a significant client base
for cross selling, but supports asset quality because of the low
risk nature of the product, while ensuring a significant share of
core, inexpensive deposits, which lowers its cost of funding.
The negative outlook on the bank's ratings is in line with the
negative outlook on the Caa1 rating for Argentina's government
bond rating and incorporates the deteriorating operating
environment in the country, including economic deceleration and
high inflation, that is negatively affecting the business and
earnings prospects of financial companies and banks in Argentina.
Banco Santander Rio S.A. is headquartered in Buenos Aires, with
assets of ARS 83.3 billion and equity of ARS 10.3 billion as of
June 2014.
BUENOS AIRES: Moody's Assigns 'Caa1' Debt Rating to $85MM Notes
---------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo has
assigned Caa1 global scale local currency debt rating and Baa1.ar
Argentina national scale rating in local currency to Class 10 and
Class 11 notes for a total amount of USD85 million to be issued by
the City of Buenos Aires under their Local Financing Program.
Ratings Rationale
The creation of the Local Financing Program was authorized by Laws
4315, 4431 and 4472 of 2012, Laws 4810 and 4885 of 2013 and by Law
4949 of 2014. The notes to be issued under the program constitute
direct, unconditional, unsecured and unsubordinated obligations of
the city, ranking at all times pari passu without any preference
among themselves.
The assigned ratings are in line with the city's Caa1 (global
scale) and Baa1.ar (Argentina's national scale) local currency
debt ratings. The Class 10 notes to be issued under the program,
will be denominated in US dollars but subscribed and payable in
Argentine pesos at the specified exchange rate and sold in the
local capital market. As a result, the US dollar will be a
currency of reference and not a means of payment. For that reason,
the transaction is considered to be denominated in local currency.
On the other hand Class 11 will be both denominated and payable in
ARG Pesos.
According to the term sheet reviewed by Moody's, Classes 10 and
11, will reach up to USD85 million, approximately 1% of the City's
total revenues budgeted for 2014. Class 10 will pay interest at a
fixed rate and will mature in 27 months whereas Class 11 will bear
variable interest and will have a maturity of 2 years. After the
issuance of these 2 classes, Moody's anticipates that the City of
Buenos Aires' total debt will reach approximately 30% of total
expected revenues for 2014 fiscal year from 25% at the end of
fiscal year 2013.
The assigned ratings are based on preliminary documentation
received by Moody's as of the rating assignment date. Moody's does
not expect changes to the documentation reviewed over this period
or anticipates changes in the main conditions that the notes will
carry. Should issuance conditions and/or final documentation of
any of the series under this program deviate from the original
ones submitted and reviewed by the rating agency, Moody's will
assess the impact that these differences may have on the ratings
and act accordingly.
What Could Change The Rating Up/Down
Given the negative outlook on the City, Moody's does not expect
upward pressures in the ratings assigned in the near to medium
term. A downgrade in Argentina's bond ratings and/or further
systemic deterioration or idiosyncratic risks arising in this City
--especially a sharp increase in the debt to revenues ratio--
could continue to exert downward pressure on the ratings assigned
and could translate in to a downgrade in the near to medium term.
BUENOS AIRES: S&P Lowers Local Currency Rating to 'CCC-'
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its local currency
global scale ratings on the provinces of Buenos Aires, Cordoba,
and Mendoza and the city of Buenos Aires to 'CCC-' from 'CCC+',
and removed the ratings from Creditwatch with negative
implications. At the same time, S&P affirmed its 'CCC-' global
scale foreign currency rating on these four entities. The
outlooks are negative.
RATIONALE
"The downgrade follows our review of the entities' financial
flexibility and liquidity position. We considered cross-default
clauses included in each LRG's debt obligations in a scenario of
worsening macroeconomic conditions and limited external financing
after we lowered Argentina to selective default on July 30, 2014,"
said Standard & Poor's credit analyst Delfina Cavanagh. "We
expect the sovereign's selective default to weaken the overall
macroeconomic environment in Argentina in the next 12 months
through lower economic growth, increasing difficulties for
nonsovereign entities to access external debt markets, higher
inflation, and increased pressure on the exchange rate. We have
incorporated these risks in our forecasts, including the
assumption that local and/or foreign currency debt payments with
cross-default clauses would accelerate upon each rated LRG's first
material foreign currency default. We believe none of the rated
LRGs would have sufficient liquidity to meet its foreign currency
and local currency obligations. Consequently, we are lowering our
local currency ratings on these entities to 'CCC-' from 'CCC+',
which is the same as our foreign currency ratings on them and T&C
assessment on Argentina".
Under S&P's criteria, the local currency ratings on all
nonsovereign entities, including LRGs, reflect S&P's opinion of
the entity's creditworthiness, specifically, its willingness and
ability to service its financial obligations in local and foreign
currency in the absence of restrictions on access to foreign
exchange for debt service. S&P's T&C assessment on the sovereign
reflects the likelihood of its restricting nonsovereign entities'
access to foreign exchange for debt service.
The foreign currency ratings on the provinces of Buenos Aires,
Cordoba and Mendoza, and the city of Buenos Aires are capped at
the 'CCC-' T&C on Argentina, according to S&P's criteria. The
foreign currency ratings reflect the risks that Argentinian LRGs
face to continue timely service of their foreign currency debt
obligations due to extremely limited access to foreign currency.
OUTLOOK
The negative outlook on the global scale ratings reflects the
risks that LRGs will continue to face given deteriorated economic
conditions, including potentially more restricted access to
foreign currency in a scenario of limited external financing due
to the recent sovereign default. S&P could lower the ratings if
it perceives the central government might further tighten its
exchange control regime, which could impair its ability to service
foreign currency debt. S&P could raise its ratings if the risks
of the sovereign limiting access to foreign currency diminish and
overall economic and fiscal conditions improve.
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
Ratings Lowered, Outlook Action
To From
Province of Mendoza
Province of Buenos Aires
City of Buenos Aires
Province of Cordoba
Local currency long term CCC-\Negative\-- CCC+\Watch Neg\--
Ratings Affirmed
Province of Mendoza
Province of Buenos Aires
City of Buenos Aires
Province of Cordoba
Foreign currency long term CCC-\Negative\--
FIDEICOMISO FINANCIERO: Moody's Rates ARS9.9MM Certs. 'B1.ar'
-------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo has rated
the debt securities and certificates of Fideicomiso Financiero
Bancor Personales III, to be issued by Deutsche Bank S.A. --
acting solely in its capacity as issuer and trustee.
The securities contemplated by this transaction have not yet
settled. If any assumptions or factors considered by Moody's in
assigning the ratings change before closing, Moody's could change
the ratings assigned to the notes.
ARS 36,000,000 in Class A Debt Securities (VRDA) of "Fideicomiso
Financiero Bancor Personales III", rated Aaa.ar (sf) (Argentine
National Scale) and B1 (sf) (Global Scale, Local Currency)
ARS 4,000,000 in Class B Debt Securities (VRDB) of "Fideicomiso
Financiero Bancor Personales III", rated A2.ar (sf) (Argentine
National Scale) and B3 (sf) (Global Scale, Local Currency)
ARS 9,950,000 in Certificates (CP) of "Fideicomiso Financiero
Bancor Personales III", rated B1.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 6,002 eligible personal loans denominated in
Argentine pesos, originated by Banco de la Provincia de Cordoba
S.A., in an aggregate amount of ARS 49,992,901.54.
These personal loans are granted to pensioners, employees of the
Government of the Province of Cordoba in Argentina or employees of
private companies that have an agreement with Banco de la
Provincia de Cordoba. Approximately 43% of the securitized
portfolio benefits from a "codigo de descuento" or discount code
that allows to deduct the loan's installment directly from the
employee's paycheck. In turn, the Government of Province of
Cordoba will transfer any deducted amounts to the Banco de la
Provincia de Cordoba, the servicer in the transaction. For the
remaining part of the securitized pool, the loan's installment is
deducted automatically from the borrower's account at Banco de la
Provincia de Cordoba.
Overall credit enhancement is comprised of subordination: 27.99%
for the VRDA and 19.99% for the VRDB. 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 the Government of Cordoba 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 Banco de
Cordoba'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 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 underlying pool with a
mean 2.5% and a coefficient of variation of 50%. Also, Moody's
assumed a lognormal distribution for the prepayments with a mean
35% and a coefficient of variation of 70%.
These assumptions are derived from the historical performance to
date of the Banco de Cordoba's pools. Servicer default was modeled
by simulating the default of the Banco de Cordoba as the servicer
consistent with its current rating of Caa1/Baa3.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 0.00% expected loss for VRDA, 7.67% for
VRDB and 16.94% for the Certificates.
Moody's also considered the risk that a disruption in the flow of
payments from the Government of Cordoba to pensioners and
employees respectively, could severely affect the performance of
the pool. Moody's believes that the ratings assigned are
consistent with this risk.
Finally, Moody's also evaluated the back-up servicing arrangements
in the transaction. If Banco de Cordoba is removed as servicer,
Deutsche Bank 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 the mean default rate were increased
to 8.5%, the ratings of the VRDA would remain the same. The
ratings for and VRDB and the Certificates would be likely
downgraded to Caa2 (sf) and Ca (sf) respectively.
The main source of uncertainty for this transaction is the
regulatory and legal framework for the automatic deduction loans
in Argentina.
The principal methodology used in this rating was "Moody's
Approach to Rating Consumer Loan ABS Transactions" published in
May 2013.
MENDOZA: S&P Lowers Local Currency Rating to 'CCC-'
---------------------------------------------------
Standard & Poor's Ratings Services lowered its local currency
ratings on the province of Mendoza to 'CCC-' from 'CCC+'. At the
same time, S&P removed the ratings from CreditWatch with negative
implications where it had placed them on June 18, 2014. S&P also
affirmed its 'CCC-' foreign currency rating on the province. The
outlook is negative.
RATIONALE
"The downgrade on the province of Mendoza follows our review of
the cross-default clauses included in some of the province's debt
obligations in a scenario of worsening macroeconomic conditions
and limited external financing after we lowered the ratings on
Argentina to selective default on July 30, 2014," said Standard &
Poor's credit analyst Delfina Cavanagh. S&P expects the
sovereign's selective default to weaken the overall macroeconomic
environment in Argentina through lower economic growth, the
closing of external debt markets, likely further exchange rate
devaluation, and higher inflation. S&P has incorporated these
assumptions in its forecast and assuming that local and/or foreign
currency debt payment with cross-default clauses would accelerate
upon Mendoza's first material foreign currency default, S&P
believes Mendoza would not have sufficient liquidity to meet its
foreign currency and local currency obligations. Consequently,
S&P is lowering its local currency ratings on Mendoza to 'CCC-'
from 'CCC+', which is the same as its foreign currency rating on
the province.
Under S&P's criteria, the local currency ratings on all
nonsovereign entities, including LRGs, reflect its opinion of the
entity's creditworthiness, specifically its willingness and
ability to service its financial obligations in both local and
foreign currency in the absence of restrictions on access to
foreign exchange for debt service. S&P's T&C assessment on the
sovereign reflects likelihood of its restricting nonsovereign
entities' access to foreign exchange for debt service.
The foreign currency rating on the province of Mendoza is capped
at the 'CCC-' T&C on Argentina, according to S&P's criteria. The
foreign currency ratings reflect the increasing risks that
Argentinian LRGs face to continue to timely service their foreign
currency debt obligations due to extremely limited access to
foreign currency.
S&P views the institutional framework in which Argentinian LRGs
operate as "volatile and underfunded." The assessment reflects
S&P's perception of Argentina's unpredictable and volatile
intergovernmental system. Ongoing modifications to fiscal
regulations and restrictions on the LRGs' access to foreign
currency jeopardize their financial planning, and consequently,
their credit quality. S&P also believes the system is
increasingly vulnerable to political risk, resulting in revenue
and expenditure uncertainties and fiscal pressure at the LRG
level.
Mendoza's budgetary performance is very weak and exhibits certain
volatility due to high inflation in Argentina. Still, in 2013,
the province maintained relatively stable budgetary performance,
despite the deteriorating macroeconomic scenario of high inflation
and economic deceleration. S&P expects it to continue posting
operating and fiscal deficits in the next two years. In fiscal
2013, Mendoza obtained an operating deficit of Argentine peso
(ARP) 147 million, equivalent to 0.8% of operating revenues, which
is similar to the 2012 operating deficit. The balance after
capital revenues and expenses was negative ARP867 million, or 4.3%
of total revenues in 2013, which is similar to 2012 figures.
S&P expects the province to post an operating deficit of less than
5% of operating revenues for 2014. S&P bases its projection on
high inflation spurring revenue growth despite a likely decline in
economic growth. Also, a higher exchange rate could favor
revenues from royalties because royalties are denominated in
dollars but paid in Argentine pesos. At the same time, S&P
expects expenses to rise, especially costs associated with wages,
as it expects inflation of 35%-40% by year-end 2014. S&P expects
the deficit after capital revenues and expenses to be less than 5%
of total revenues for 2014, as the province continues to limit
capital expenses (capex). S&P expects capex to remain at about 6%
of total expenses, which is similar to that of 2013.
Mendoza has very weak budgetary flexibility on the revenue and
expenditure side. Own-source revenues account for 49% of total
revenues, which is better than most local peers. However, those
of regional peers, like those in Brazil, are higher. Still, S&P
believes Mendoza faces significant constraints to adjust own-
source revenues. It also has limited expenses flexibility as
rigid operating expenditures (including employee salaries and
interest payments) represented 62% of total expenses in 2013,
highlighting its limited ability to cut expenses. Due to high
inflation, which the government estimated at 10.9% in 2013 but
private sources estimated at 25%, the province granted a 30%
salary increase for most public-sector employees in March 2014.
Increasing wage demands amid rising inflation will continue
stressing Mendoza's finances as the flexibility to cut expenses is
low. Capex accounted for 5.6% of total expenses in 2013, down
from 6.7% in 2012. S&P expects capex to continue to be about 6%
in the next two years.
Mendoza's debt represented 35% of its operating revenues at year-
end 2013, compared to 48% at the end of 2011, however, it's highly
exposed to currency risk because 50% of its debt is dollar
denominated. This debt level is lower than those of most of its
local peers such as Buenos Aires (70%), Cordoba (40%), and Neuquen
(38%), and is much lower than Brazilian peers' such as Sao
Paulo(142%), Parana (68%), and Rio de Janeiro (64%).
Mendoza showed a nominal debt of ARP6.9 billion at the of end 2013
up from ARP5.89 billion at the end of 2012 due to exchange rate
movements and only minor new net borrowings. Despite this
increase, debt in terms of operating revenues has consistently
declined because operating revenues have been increasing at an
average 35% in the past two years amid high inflation.
S&P expects debt levels to increase slightly in the next two years
in nominal terms but to continue declining compared to operating
revenues, which S&P expects to grow at about 30% annually. Still,
further depreciation of the exchange rate could boost debt
significantly as 50% of it is dollar denominated.
Liquidity
Mendoza has a weak liquidity position with no cash reserves and an
estimated debt service for 2014 of ARP1.8 billion (including about
ARP350 million in debt service to the central government under the
Programa Federal de Desendeudamiento and using an exchange rate of
ARP8.2 to the dollar). Because about 55% of its 2014 debt service
is denominated in foreign currency, further depreciations of the
local currency would raise the amount to be paid. Still, 6% of
its operating revenues are in dollars, which mitigates this risk
somewhat.
OUTLOOK
The negative outlook on the ratings on the province of Mendoza
reflects the potential implications if Mendoza has restricted
access to foreign currency in a scenario of limited external
financing due to the recent sovereign default. S&P could lower
the ratings on the province if it perceives the central government
might further tighten its exchange control regime, which could
impair its ability to service foreign currency debt. On the other
hand, S&P could raise its ratings if the risks of the sovereign
limiting access to foreign currency diminish.
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
Downgraded; Outlook Action
To From
Mendoza (Province of)
Issuer Credit Rating
Local Currency CCC-/Negative/--
CCC+/Watch Neg/--
Ratings Affirmed
Mendoza (Province of)
Issuer Credit Rating
Foreign Currency CCC-/Negative/--
Senior Unsecured CCC-
===========
B R A Z I L
===========
MMX MINERACAO: To Halt Work at Mine as Iron-Ore Falls
-----------------------------------------------------
Juan Pablo Spinetto at Bloomberg News reports that MMX Mineracao &
Metalicos SA, the mining unit of former billionaire Eike Batista,
will temporarily stop operations at its only producing mine as it
seeks to avoid bankruptcy protection amid lower metal prices.
The Brazilian iron-ore producer will give workers at its Serra
Azul unit in Minas Gerais state a 30-day "collective vacation,"
MMX said in a statement obtained by Bloomberg News. The furlough
will begin during the first week of September.
"The necessity of the collective vacation and temporary stop of
the production activities at the Serra Azul Unit is a consequence
of the significant and prolonged decline of the iron-ore price,"
MMX said in the statement, Bloomberg News notes. The measure also
stems from "the operating restrictions imposed by the
environmental authorities of the state of Minas Gerais," Bloomberg
News relates.
Bloomberg News discloses that MMX is reviewing its business plan
to bolster cash as iron-ore prices decline. The company will pay
workers during the furlough, MMX said in an e-mailed reply to
questions.
Bankruptcy Protection
Bloomberg News relates that MMX fell to the lowest Aug. 20 since
its 2006 listing, after Veja magazine columnist Lauro Jardim wrote
Aug. 18 that the company will seek bankruptcy protection by the
end of August. While MMX has no immediate plans to seek court
protection from creditors, it remains an option, a person familiar
with the strategy told Bloomberg News, asking not to be named
because the process is private.
The Rio de Janeiro-based company is seeking to sell or lease its
remaining assets, the person said, Bloomberg News relays.
"There is no deliberation under way" on a bankruptcy protection
filing, the company said in a regulatory filing, Bloomberg News
discloses.
MMX had record losses last year after putting on hold an expansion
of Serra Azul and writing down the value of its assets, Bloomberg
News notes. In February, the company sold a controlling stake in
a key iron-ore port project in Rio and last month agreed to lease
its Corumba mine to Vetria Mineracao SA, Bloomberg News adds.
MMX Mineracao e Metalicos S.A., together with its subsidiaries,
engages in the extraction, processing, research, and development
of minerals; and sale of iron ore in Brazil.
* BRAZIL: Banks to Sell Covered Bond to Fund Housing Market
-----------------------------------------------------------
Carla Simoes and Matthew Malinowski at Bloomberg News report that
Brazilian banks will sell covered bonds as part of a government
push to stimulate the housing market and free up credit, Finance
Minister Guido Mantega said. Real-estate stocks rallied.
The loans probably will attract foreign investors and will be
exempt from income taxes when they have average maturity exceeding
two years, Mr. Mantega told reporters in Brasilia, according to
Bloomberg News.
Bloomberg News relates that Deputy Finance Minister Paulo
Caffarelli said Brazil plans to publish rules allowing covered
bonds before the weekend.
Bloomberg News says the measure is part of a government push to
increase the availability of credit as the economy slows less than
seven weeks before presidential elections. The central bank on
Aug 20, reduced capital requirements and created other incentives
for banks to boost lending by as much as BRL150 billion ($66
billion), Bloomberg News discloses.
"There was a shortage of credit given the rather tough measures
that the central bank took to fight inflation," Bloomberg News
quoted Mr. Mantega as saying. "The measures were very successful
and inflation is under control while food prices have been falling
for several months. The central bank correctly thought it time to
increase liquidity in the economy," Mr. Mantega said.
Other Measures
Bloomberg News notes that the government is introducing other
measures to reduce the cost of credit, Mr. Mantega said. If
authorized by customers, banks will have the right to take loan
payments directly from paychecks in a move that could reduce the
risk of default, Mr. Mantega said, Bloomberg News relates. The
government is creating incentives to use homes as collateral and
making it easier for banks to reposes cars in case of default, Mr.
Mantega added.
Inflation will end this year and next at 6.25 percent, exceeding
the official target of 4.5 percent, according to analysts surveyed
by the central bank on Aug. 15, Bloomberg News discloses. The
economy will expand 0.79 percent in 2014, which would mark a
slowdown from 2.5 percent in 2013 and would be the worst
performance since the recession of 2009, according to the
analysts, Bloomberg News relays.
Bloomberg News says that covered bonds generally receive higher
ratings than notes sold by banks and pay less in interest because
they augment the issuer's repayment pledge with assets that can be
sold in a default. They differ from asset-backed securities in
that the mortgages remain on the borrower's balance sheet and the
borrower is liable for the debt if the assets aren't sufficient,
Bloomberg News notes.
The securities have grown in popularity among regulators since the
global financial crisis tarnished mortgage-backed bond markets,
Bloomberg News adds.
==========================
C A Y M A N I S L A N D S
==========================
ASUKA FIXED: Shareholder to Hear Wind-Up Report on Sept. 11
-----------------------------------------------------------
The shareholder of Asuka Fixed Income Ltd will hear on Sept. 11,
2014, at 6:30 p.m., the liquidator's report on the company's wind-
up proceedings and property disposal.
The company's liquidator is:
Ogier
c/o Jonathan Turnham
Telephone: +1 (345) 815 1839
Facsimile: +1 (345) 949 9877
DUNVEGAN INVESTMENTS: Shareholders' Final Meeting Set for Sept. 5
-----------------------------------------------------------------
The shareholders of Dunvegan Investments Limited will hold their
final meeting on Sept. 5, 2014, at 11:45 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Mourant Ozannes Cayman Liquidators Limited
94 Solaris Avenue
Camana Bay
P.O. Box 1348 Grand Cayman KY1-1108
Cayman Islands
G CAPITAL: Member to Hear Wind-Up Report on Sept. 16
----------------------------------------------------
The member of G Capital Systematic Fund, Ltd will hear on
Sept. 16, 2014, at 8:30 a.m., the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Ogier
c/o Jonathan Turnham
Telephone: (345) 815 1839
Facsimile: (345) 949-9877
G CAPITAL MASTER: Member to Hear Wind-Up Report on Sept. 16
-----------------------------------------------------------
The member of G Capital Systematic Master Fund, Ltd will hear on
Sept. 16, 2014, at 8:50 a.m., the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Ogier
c/o Jonathan Turnham
Telephone: (345) 815 1839
Facsimile: (345) 949-9877
MAYERCAP HIGH: Shareholder to Hear Wind-Up Report on Sept. 3
------------------------------------------------------------
The shareholder of Mayercap High Alpha Fund, Ltd. will hear on
Sept. 3, 2014, at 10:00 a.m., the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Ogier
c/o Daniella Scotnicki
Telephone: (345) 815-1861
Facsimile: (345) 949-9877
MULBERRY CAPITAL: Shareholders' Final Meeting Set for Sept. 2
-------------------------------------------------------------
The shareholders of Mulberry Capital Partners Limited will hold
their final meeting on Sept. 2, 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:
Richard Fear
c/o Daniel Woolston
Telephone: (345) 814 7782
Facsimile: (345) 945 3902
P.O. Box 2681 Grand Cayman KY1-1111
Cayman Islands
MYRTLE LTD: Shareholder to Hear Wind-Up Report on Sept. 10
----------------------------------------------------------
The shareholder of Myrtle Ltd. will hear on Sept. 10, 2014, at
10:00 a.m., the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Ogier
c/o Jonathan Turnham
Telephone: (345) 815 1839
Facsimile: (345) 949-9877
SOUTHERN CAPITAL: Shareholders' Final Meeting Set for Sept. 2
-------------------------------------------------------------
The shareholders of Southern Capital Partners Limited will hold
their final meeting on Sept. 2, 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:
Richard Fear
c/o Daniel Woolston
Telephone: (345) 814 7782
Facsimile: (345) 945 3902
P.O. Box 2681 Grand Cayman KY1-1111
Cayman Islands
TROIKA RUSSIA: Shareholders' Final Meeting Set for Sept. 12
-----------------------------------------------------------
The shareholders of Troika Russia Fund Inc. will hold their final
meeting on Sept. 12, 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:
Alric Lindsay
Artillery Court
Shedden Road
P.O. Box 11371 George Town
Grand Cayman KY1-1008
Cayman Islands
TROIKA RUSSIA GENERAL: Shareholders' Meeting Set for Sept. 12
-------------------------------------------------------------
The shareholders of Troika Russia Fund General Partner Limited
will hold their final meeting on Sept. 12, 2014, at 11:30 a.m., to
receive the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Alric Lindsay
Artillery Court
Shedden Road
P.O. Box 11371 George Town
Grand Cayman KY1-1008
Cayman Islands
=========
C H I L E
=========
INVERSIONES ALSACIA: Fitch Cuts Rating on US$464MM Sr. Bonds to D
-----------------------------------------------------------------
Fitch Ratings has downgraded to 'D' from 'CC' the rating of
Inversiones Alsacia, S.A.'s US$464 million senior secured bonds
due in 2018. Currently, US$347 million of bonds are outstanding.
The rating downgrade reflects Alsacia's lack of payment of the
debt service obligations due Aug. 18, 2014, which constitutes an
Event of Default upon the notes' indenture, with no cure period or
possibility for a waiver.
The concessionaire announced an agreement was achieved with a
group of bondholders that collectively hold over 60% of the
outstanding debt to restructure the notes and to forbear from
pursuing any remedies under the indenture in connection with the
default, for a four-day period that may be extended.
The latter, however, reflects the position of the bondholders of
only a portion of the debt. As Fitch did not receive any further
information but the concessionaire's notice published on Aug. 18,
2014, the agency ignores the position of those who hold the
remaining 40% of the notes' balance.
Alsacia also received termination notices regarding the hedging
agreements entered into with Merrill Lynch Capital Services Inc.
and Credit Suisse International as a result of the
concessionaire's failure to pay the respective fees.
In Fitch's view, the concessionaire's credit quality and
performance was largely affected by the restatement of concession
effective since May 2012. The restatement resulted in higher
sensitivity to a declining passenger demand, insufficient
compensation payments, tighter operational requirements and higher
expenses. The combination of all these factors has significantly
deteriorated Alsacia's liquidity and financial position.
Alsacia and Express are two bus concessionaires of the
Transantiago System, which provides mass urban bus/metro
transportation services to the City of Santiago, in Chile since
2005, and is regulated by the MTT. The transaction consisted of
the acquisition by Alsacia of the remaining shares of Express, and
the refinancing of all the existing debt of both concessionaires.
The notes are secured by a first lien interest of total revenues
and contract rights, as well as all assets owned by Alsacia and
Express, excluding a bus terminal located in Huachuraba.
INVERSIONES ALSACIA: Moody's Lowers Senior Secured Rating to Caa3
-----------------------------------------------------------------
Moody's Investors Service downgraded the senior secured rating of
Inversiones Alsacia S.A. ("Alsacia") to Caa3 from Caa2. The rating
was also placed under review for downgrade.
Ratings Rationale
The rating downgrade reflects Alsacia's default on the required
interest and principal payment due on August 18 and our
understanding that the issuer plans to commence a restructuring
process on the outstanding senior secured notes.
Alsacia announced that it has agreed with a group of investors
that account for 60% of the outstanding notes to issue "New Notes"
with a principal amount equivalent to the current outstanding
notes. Among other modifications, the New Notes will have lower
scheduled mandatory payments than the current amortization
schedule and will extend the maturity of the debt by three years,
contingent upon obtaining an extension of the concession for up to
3 years (through October 2021) in order to provide the company
with more financial flexibility. Excess cash flow generated over
the term of the New Notes, after payment of mandatory principal
and interest, will be used to further reduce outstanding under the
New Notes. The restructuring contemplates Alsacia filing a pre-
packaged bankruptcy to effectuate the restructuring.
Alascia's financial deterioration is mainly due to: a) increased
revenue volatility as a consequence of the 2012 concession
amendment, b) lower than expected ridership, c) absence of
adequate road infrastructure to compete with other means of
transportation, d) increasing fare evasion, and e) revenue
discounts related to service quality indicators.
The review for further downgrade will assess the expected recovery
for existing bondholders based upon our understanding of the
current restructuring proposal, including our assessment of the
likelihood of the restructuring being implemented.
In light of the review for possible downgrade, we do not expect
upward pressure on the ratings in the near to medium term. The
review could, however, conclude with a confirmation of the rating
if we believe that recovery prospects for existing bondholders
exceed 65%.
The review could be downgraded if Moody's analysis indicates
diminished prospects for recovery consistent with the Caa3 rating.
The principal methodology used in this rating was Generic Project
Finance Methodology published in December 2010.
===================================
D O M I N I C A N R E P U B L I C
===================================
* DOMINICAN REPUBLIC: Web Shopping Tax Rams Into Legal Wall
-----------------------------------------------------------
Dominican Today reports that the Superior Arbitration Court is
holding a hearing Aug. 16, on three requests for restraining
orders filed by various civil society entities against the Custom
Agency's pending tax on online purchases of less than US$200.
Judge Federico Fernandez heard the requests.
During the recess, the more than 16 organizations and
personalities that requested the injunction discussed the
potential reaches of the ruling, according to Dominican Today.
"We're going to demand that this Arbitration Court upholds its
ruling permanently since it would violate the sacred right we all
Dominicans have of good governance, that all acts of the public
administration must be oriented, must be subject to the
institutional system," Justice and Transparency Foundation
President Trajan Vidal told reporters, the report notes.
The court action comes in the heels of previous legal challenges
staring Aug. 11, against the Government's announced tax on Web
shopping, the report discloses.
=============
E C U A D O R
=============
ECUADOR: S&P Raises Long Term Sovereign Credit Ratings to 'B+'
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term sovereign
credit ratings on Ecuador to 'B+' from 'B'. The outlook is
stable. At the same time, S&P affirmed its 'B' short-term issuer
credit ratings on Ecuador and raised its transfer and
convertibility (T&C) assessment to 'B+' from 'B'.
RATIONALE
S&P raised the long-term ratings on Ecuador as a result of the
government's greater fiscal flexibility, better external liquidity
position, and the improving investment climate in the country. In
June 2014, the government issued a $2 billion international bond,
which helped diversify its funding sources as well as boost its
external liquidity. Over the past two years, the government has
shown greater signs of pragmatism with efforts to attract foreign
direct investment in the oil and mining sectors, re-engage
multilateral institutions such as the International Monetary Fund
and World Bank, and boost public investment to try to stimulate
economic growth and increase its renewable energy sources,
especially hydroelectric projects. These efforts are likely to
improve the government's balance of payments position as well as
underpin economic growth prospects.
Ecuador's poor payment history remains one of the key constraints
on S&P's ratings, most recently in 2008-2009 with the default on
its 2012 and 2030 bonds. Furthermore, President Rafael Correa's
Administration continues to centralize authority over the
government and take measures to curb the media, which limits
checks and balances, limits policy debate, and reduces
transparency. However, over the past two years, the government
has actively pursued agreements with investors that did not
participate in the 2009 bond exchange. As a result, less than
$100 million of the repudiated 2012 and 2030 bonds remain
outstanding, and these holdings are atomized across many
bondholders. Thus, S&P believes that the risks from a negative
court ruling from the holdouts are low; there are currently no
cases in the courts pertaining to these defaulted bonds. (There
are, however, a number of court cases related to commercial
disputes, largely pertaining to breaches of contract in the
resource sectors.)
Economic growth is solid on the back of a decade of monetary
stability and the government's large infrastructure program, which
totaled 12% of GDP in 2013. S&P expects real per capita GDP
growth of 2%-3% per year over 2014-2017, largely because of
investment, especially public-sector investment.
While the road, airport, and hydroelectric projects will improve
Ecuador's productivity, the government's significant capital
spending has contributed to a large general government deficit,
which reached 4.7% of GDP last year. The government debt and
interest burdens, while low, are rising quickly, fueled by large
general government deficits. S&P expects net general government
debt to rise to a 27% of GDP in 2014, up sharply from 16% of GDP
in 2009. The government debt stocks appear low due to the
government's repudiation of the two bonds. S&P projects the
general government interest burden will rise to 5% of revenues by
2017 from 2.6% in 2013.
Since adopting the U.S. dollar as legal tender in 2000, the
Central Bank of Ecuador has forfeited its monetary policy
flexibility and its ability to act as a lender of last resort. In
part to maintain a buffer against external shocks, the central
bank requires a reserve requirement of 5% of deposits, which
totaled more than $1.6 billion as of Dec. 2013. S&P deducts this
amount from the central bank's gross international reserves when
calculating usable reserves.
S&P's 'B+' T&C assessment is the same as the long-term foreign-
currency rating, reflecting its opinion that the likelihood of the
sovereign restricting access to foreign exchange that Ecuador-
based nonsovereign issuers need for debt service is similar to the
likelihood of the sovereign defaulting on its foreign currency
obligations. In a downside scenario, the government of Ecuador
could decide to stop using the U.S. dollar and instead re-
introduce its own local currency. The T&C assessment reflects
S&P's belief that there is a moderate risk of de-dollarization.
OUTLOOK
The stable outlook balances the improved external financing
options, solid growth prospects, and low debt and interest burdens
with the government's poor debt payment culture and lack of
monetary policy flexibility. The outlook also signals that S&P do
not expect to change its ratings on Ecuador in the next year.
Further out, S&P could raise the ratings if the government's
fiscal profile and the country's external liquidity improve
markedly. Two large new hydroelectric projects are likely to
start operations in 2016 that would cut Ecuador's refined fuel
imports and boost oil exports by 2017. Additionally, the
government has pledged to reduce fuel subsidies, which could
significantly lower its fiscal deficits.
Conversely, S&P could lower the ratings if the political
environment weakens or higher-than-expected fiscal deficits lead
to external pressures. A weakening commitment to dollarization
could also lead to a downgrade. S&P's stable outlook incorporates
its judgment that it do not expect the new Monetary and Financial
Code, which is expected to become law this year, to diminish the
credibility of dollarization.
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; Outlook Stable; Ratings Affirmed
To From
Ecuador (Republic of)
Sovereign Credit Rating B+/Stable/B
B/Positive/B
Upgraded
To From
Ecuador (Republic of)
Senior Unsecured B+ B
Transfer & Convertibility Assessment B+ B
===============
P A R A G U A Y
===============
VISION BANCO: S&P Revises Outlook to Neg. & Affirms 'BB-' Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Vision
Banco S.A.E.C.A. (Vision). At the same time, S&P affirmed its
'BB-' long-term counterparty credit rating on the bank.
The negative outlook reflects the fact that the ratings on Vision
could be negatively impacted if S&P revises the bank's liquidity
position to "adequate" from "strong" if metrics such as broad
liquid assets over short-term wholesale funding do not improve to
the 2.5x-3x range over the next 12 to 18 months and if all other
credit factors remain unchanged. S&P could revise the outlook to
stable if it exhibits improvements in liquidity ratios and/or if
it improves capital metrics to moderate levels with RAC ratios
consistently over 5%. In addition, S&P expects the bank's
adjustments in strategy would allow it to maintain an adequate
risk profile with stabilization in asset quality in 2014 and
gradual improvements as from 2015.
=======
P E R U
=======
VOLCAN COMPANIA: S&P Affirms 'BB+' CCR; Outlook Stable
------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+' corporate
credit and senior unsecured ratings on Volcan Compania Minera
S.A.A. Outlook remains stable.
The rating affirmation reflects S&P's expectations that Volcan's
financial performance will recover in the next 12 months thanks to
higher silver and zinc output, lower cash production costs, and
lower capital spending. The company's credit metrics
significantly weakened during the first half of 2014 mainly due to
delays in the start-up of both its projects--Alpamarca Rio-
Pallanga (3.5 million ounces of silver, started production in
April 2014) and Oxides (4 million ounces of silver in a ramp-up
phase, to be at 100% capacity in December 2014) - and related cost
overruns.
Volcan's "fair" business risk profile benefits from a reasonable
reserve life (8 years) with relatively high silver and zinc
content that result in adequate operating efficiency levels.
However, volatile metal prices, asset concentration in a few mines
in Peru, and limited business scale result in more volatile
profits compared to those of Volcan's peers.
In S&P's opinion, Volcan's financial risk profile remains
"intermediate" due to its expectation that the leverage ratios
will strengthen materially in 2015 and 2016.
===============================
T R I N I D A D & T O B A G O
===============================
TRINIDAD CEMENT: Fails in Bid to Block Shareholders Meeting
-----------------------------------------------------------
RJR News reports that Trinidad Cement Limited has lost its bid to
block a special meeting of shareholders. The meeting will
therefore proceed as scheduled Aug. 19.
The shareholders got the green light to meet after a High Court
judge dismissed an injunction application by TCL directors, which
sought to bar the meeting, according to RJR News. The report
notes that the injunction was specifically filed against one of
the group's shareholders, Kamal Ali, who issued the notice for the
meeting last month.
The report discloses that Justice Nadia Kangaloo noted that an
injunction could not be granted to TCL as it would prolong the
hardship suffered by the shareholders including not having their
rightful say in the business and affairs of the company.
During the meeting, the shareholders are proposing to remove TCL's
six directors and replace with seven new members.
Meanwhile, the report notes, TCL's General Manager, Satnarine
Bachew, has indicated that the company will be appealing the
ruling.
When the matter came up for hearing on Aug. 15, TCL's attorneys
argued that if the meeting was allowed to occur it would have
violated an injunction granted by a High Court judge last year,
reports RJR News. It prevented TCL from holding its annual
general meeting to report on its 2012 results, the report relays.
About Trinidad Cement
Trinidad Cement Limited is a cement company and is the parent
company of Caribbean Cement Company Limited.
* * *
As reported in the Troubled Company Reporter-Latin America on
May 8, 2014, Fitch Ratings assigned the following initial ratings
to Trinidad Cement Limited Group (TCL Group):
--Foreign currency Issuer Default Rating (IDR) 'B-';
--Local currency IDR 'B-';
--Expected senior secured note issuance of up to USD325 million
'B-/RR4'.
***********
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.
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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
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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 * * *