/raid1/www/Hosts/bankrupt/TCRLA_Public/140919.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, September 19, 2014, Vol. 15, No. 186
Headlines
A R G E N T I N A
ARGENTINA: Blames Holdouts as Black Market Peso Plunges to Record
CLISA-COMPANIA: Fitch Expects to Rate USD120MM Offering 'CCC/RR4'
PESCARMONA GROUP: Argentina Seeks Pari Passu With Creditors
SBS DESARROLLO: Moody's Withdraws Caa-bf Global Scale Rating
B E R M U D A
LOVIT BOUTIQUE: To Close Queen Street Store
B R A Z I L
CAMARGO CORREA: S&P Affirms 'BB' Rating; Outlook Positive
JALLES MACHADO: S&P Assigns 'BB-' Global Scale CCR; Outlook Stable
MARANHAO, BRAZIL: Moody's Affirms Ba1 Global Scale Currency Rating
OGX PETROLEO: Owner Has US$50 Million Frozen by Judge
SUZANO PAPEL: Posts BRL97.2 Million Net Income in 2Q 2014
SUZANO PAPEL: S&P Revises Outlook to Stable & Affirms 'BB' Rating
C A Y M A N I S L A N D S
AGATE CAPITAL: Shareholders' Final Meeting Set for Sept. 26
AGATE GLOBAL: Shareholders' Final Meeting Set for Sept. 26
KOREA ACE: Commences Liquidation Proceedings
NOBLE SOVEREIGN: S&P Assigns Prelim. 'B+' Rating on $1BB Notes
RIPPLEWOOD INVESTORS: Commences Liquidation Proceedings
SHILEY TANKER: High Court Enters Modification Orders
SOCKS INVESTMENTS: Creditors' Proofs of Debt Due Oct. 7
TST OPPORTUNITY: Commences Liquidation Proceedings
TYG CAPITAL: Commences Liquidation Proceedings
UNIVERSA ASYMMETRY: Members' Final Meeting Set for Sept. 22
UNIVERSA BLACK I: Members' Final Meeting Set for Sept. 22
UNIVERSA BLACK V: Members' Final Meeting Set for Sept. 22
C H I L E
AUTOMOTORES GILDEMEISTER: Moody's Cuts Corp. Family Rating to B2
C O L O M B I A
PACIFIC RUBIALES: S&P Assigns 'BB+' Rating to $500MM Sr. Notes
C O S T A R I C A
BANCO DE COSTA RICA: Moody's Downgrades Deposit Ratings to Ba1
COSTA RICA: Moody's Cuts Gov't Bond Rating to B1; Outlook Stable
INSTITUTO COSTARRICENSE: Moody's Lowers Sr. Unsec. Rating to Ba1
J A M A I C A
NATIONAL COMMERCIAL BANK: Names Angus Young as New CEO
M E X I C O
GRUPO MEXICO: Spill Sparks Scrutiny of US$150 Million Cleanup
P E R U
MAESTRO PERU: Fitch Puts 'B' Currency IDRs on Watch Positive
* PERU: Seeks Private Funding for US$19 Billion of Water Works
P U E R T O R I C O
PUERTO RICO ELECTRIC: Moody's Cuts Rating on $8.8BB Bonds to Caa3
PUERTO RICO HIGHWAY: Moody's Confirms Caa2 Rating on Lien Bonds
T R I N I D A D & T O B A G O
SAN JUAN/LAVENTILLE: Transportation Workers Demand Back Pay
V E N E Z U E L A
PETROLEOS DE VENEZUELA: S&P Lowers CCR to 'CCC+'; Outlook Neg.
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A R G E N T I N A
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ARGENTINA: Blames Holdouts as Black Market Peso Plunges to Record
-----------------------------------------------------------------
Charlie Devereux at Bloomberg News reports that Argentina Economy
Minister Axel Kicillof blamed speculative attacks orchestrated by
holdout creditors locked in a legal battle with Argentina for a
plunge in the black market peso.
The exchange rate on the illegal street market that Argentines
turn to when they can't obtain dollars through official channels
weakened 2.6 percent to 15.1 pesos per dollar, widening the gap
with the official exchange rate to 79 percent, according to
Bloomberg News. The peso's value in blue-chip swap market, where
traders buy peso securities and sell their dollar equivalents to
skirt Argentina's currency controls, reached an all-time low of
13.6569 on Sept. 18, Bloomberg News notes.
Hedge funds led by billionaire Paul Singer's NML Capital Ltd. have
a five-point plan to destabilize Argentina that includes an attack
on the currency to force a devaluation, Minister Kicillof said in
a radio interview, Bloomberg News relays.
The funds are litigants in a case in which U.S. District Judge
Thomas Griesa blocked an interest payment due June 30 after
Argentina refused to comply with an order to pay them in full at
the same time it pays bondholders that accepted restructurings in
2005 and 2010, Bloomberg News discloses.
"The intention is to cause panic," Minister Kicillof said in an
interview on Radio La Plata, Bloomberg News discloses. "People
shouldn't get spooked because what they want to do is scare
people," Minister Kicillof added.
The holdouts don't want to negotiate because they believe that
some candidates running for the presidency in next year's election
will offer them more favorable terms, Minister Kicillof said,
Bloomberg News adds.
* * *
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 US$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 US$1.5 billion they
claimed. The country hasn't been able to access international
credit markets since its US$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.
CLISA-COMPANIA: Fitch Expects to Rate USD120MM Offering 'CCC/RR4'
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Fitch Ratings expects to rate CLISA-Compania Latinoamericana de
Infraestructura y Servicios S.A.'s (CLISA) proposed bond offering
of up to USD120 million 'CCC/RR4'. The bullet bond is expected to
mature in January 2017. CLISA proposed an exchange offering for
its USD120 million ON Clase 3 notes due in 2016. The ON Clase 3
notes are scheduled to have three equal amortizations in 2014-
2016, so the exchange offering is seeking to improve the company's
maturity profile.
KEY RATING DRIVERS
The 'CCC' ratings of CLISA are constrained by the sovereign rating
of Argentina, which has an 'RD' foreign/local currency IDR rating.
Fitch has assigned a country ceiling of 'CCC' to the Republic of
Argentina, which limits the foreign currency rating of most
Argentine corporates, including CLISA to 'CCC'. Country ceilings
are designed to reflect the risks associated with sovereigns
placing restrictions upon private sector corporates that may
prevent them from converting local currency (LC) to any foreign
currency (FC) under a stress scenario, and/or may not allow the
transfer of FC abroad to service FC debt obligations. Key
concerns of corporates domiciled in Argentina include high
inflation, government meddling, economic uncertainty, and limited
access to debt markets especially after the country's recent
default.
STRONG MARKET POSITION
CLISA has a strong market position as one of Argentina's largest
privately owned industrial conglomerates and would be rated higher
if its ratings were not constrained by Argentina's country
ceiling. CLISA operates in four main businesses: construction and
toll road concessions (through Benito Roggio e Hijos [BRH]), water
treatment, waste management (CLIBA), and transportation. Over the
last five years, CLISA's cash flow generation has held up
relatively well despite political and economic instability and
following positive trends for construction, which is primarily
driven by public works.
FINANCIAL RESULTS HOLDING UP
During the last 12 months (LTM) ended June 30, 2014, the company
reported sales and EBITDA of USD918 million and USD164 million,
respectively. This compares negatively with 2013 results on a
dollar basis, as revenues and EBITDA declined by 16% and 5% versus
full-year 2013 results. The decline can be attributed to a 20%
currency depreciation of the Argentinian Peso versus the US Dollar
during the first six months of 2014. On a peso basis, the
company's revenues and EBITDA grew by 4% and 18% respectively
during this same period.
LEVERAGE AND LIQUIDITY IMPROVING
On a dollar basis, the company's total debt as of June 2014
totaled USD282 million which is 1.7x EBITDA, which is an
improvement versus leverage levels of 1.9x in 2013 and 2.3x in
2012. The company reported USD127 million in cash and equivalents
for the latest period, which represents 0.8x short-term debt of
USD155 million. Forty-four million dollars of reported cash and
equivalents are tied for use to specific government projects.
Adjusting for this amount, pro-forma cash and equivalents would
still be a relatively solid USD83 million, or 0.5x of short-term
debt. This is one of the strongest cash and equivalents to short-
term debt ratios among Argentine corporates and should the
exchange offering be successful this ratio would meaningfully
improve to a proforma 0.7x figure.
CYCLICAL BUSINESS
The company's cash flow is exposed to the cycles of the
construction industry and public works in Argentina. While
infrastructure needs remain high, the construction segment is
currently undergoing a deceleration as the government has reduced
funding on future projects. However, CLISA's consolidated
construction backlog continued to be strong at US$814 million in
June 2014 (AR$6,614 million) allowing the company to maintain an
important cash generation source for approximately three years.
The company is also exposed to collection risk derived from having
the government as its main counterparty.
EXPOSURE TO REGULATORY RISK
CLISA's main activities depend on contractual agreements and
government regulations at the national, provincial and municipal
levels. Exposure to regulatory risk derives from the delay in the
renegotiations of public service contracts. In particular, in its
mass transportation subsidiary Metrovias there has been heightened
political risk since the National Government attempted to transfer
the subway concession to Buenos Aires City. Most of Metrovias
income was generated from subsidies from the National Government.
However, in April 2013, Metrovias and SBASE signed an agreement in
which SBASE granted exclusively to Metrovias the operation and
maintenance of the subway, excluding the exploitation of
collateral services and the execution of works and investments.
The term of the contract is 2 years, extendable for two more years
plus an option for one addition year by SBASE.
RATING SENSITIVITIES
The company's ratings reflect the close relationship between CLISA
and the Argentina government, which has a 'CCC' country ceiling.
Without an upgrade of Argentina's country ceiling, CLISA's ratings
will likely not be upgraded. The company will likely not be
downgraded unless Argentina's 'CCC' country ceiling is lowered.
PESCARMONA GROUP: Argentina Seeks Pari Passu With Creditors
-----------------------------------------------------------
Pablo Gonzalez at Bloomberg News reports that Argentina Industry
Minister Debora Giorgi said the country is requiring an equal-
treatment clause known as pari passu to bailout the Pescarmona
group and avoid the first corporate default since the country
failed to make a debt payment in July.
Mr. Giorgi said in an interview with Radio del Plata that
Pescarmona, owner of Argentina's biggest renewable energy company,
is in talks with the government after overdue payments from the
group's biggest clients in Venezuela and Brazil created a cash-
flow shortage, threatening 1,700 jobs, according to Bloomberg
News.
The pari passu would apply to Pescarmona's creditors.
"We will help the company to keep its jobs, defending the state
interests," Bloomberg News quoted Mr. Giorgi as saying. "The cash
to be injected should be pari passu of what other potential
creditors may have injected."
Bloomberg News discloses that the government's rescue of
Pescarmona is being negotiated after the company said Sept. 15 it
would miss Sept 19's debt payment and is at risk of becoming
Argentina's first default after the sovereign's failed payment.
U.S. District Court Judge Thomas Griesa blocked Argentina's debt
payment due June 30 after the country refused to comply with an
order to pay holders of debt from the 2001 default in full at the
same time it pays bondholders that accepted restructurings in 2005
and 2010.
Pescarmona's problems "aren't related to Judge Griesa and the
holdouts saga," Mr. Giorgi said, Bloomberg News notes. Pescarmona
needs to explain the source of its financial difficulties for the
past two years, Bloomberg News relays.
Impsa, which owns turbine maker Industrias Metalurgicas Pescarmona
SA through Luxembourg-based Venti SA, has cross-default clauses
with its sister Brazilian company Wind Power Energia SA, Bloomberg
News says.
The Venti units have combined debt payments of US$45 million due
this month, including US$9 million in Argentina to be missed Sept.
19 and a US$20 million amortization payment on its US$390 million
WPEI international bond due Sept. 30, Bloomberg News notes. The
WPEI notes have lost more than two-thirds of their value in the
past three months, Bloomberg News relays. The bond payments have
a 30-day grace period before default is declared, Bloomberg News
adds.
SBS DESARROLLO: Moody's Withdraws Caa-bf Global Scale Rating
------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo S.A. has
withdrawn the ratings of five bond funds managed by SBS Asset
Management SASGFCI (SBS AM).
The ratings of the following five bond funds have been withdrawn:
- SBS Estrategia FCI - global scale rating and national scale
rating were withdrawn at B-bf and A-bf.ar, respectively
- SBS Retorno Total FCI - global scale rating and national scale
rating were withdrawn at B-bf and A-bf.ar, respectively
- SBS Pymes FCI Abierto Pymes - global scale rating and national
scale rating were withdrawn at B-bf and A-bf.ar, respectively
- SBS Renta Pesos FCI - global scale rating and national scale
rating were withdrawn at Caa-bf and Baa-bf.ar, respectively
- SBS Desarrollo FCI Abierto P.P.P.E.R.e I.- global scale rating
and national scale rating were withdrawn at Caa-bf and Baa-bf.ar,
respectively
Moody's has withdrawn the ratings of these bond funds for its own
business reasons.
SBS AM is an independent asset manager and the 13th largest fund
advisor in Argentina with a 3.0% share of the domestic market as
of August 2014. SBS AM manages assets of approximately AR$3,605
million or roughly $429.2 million.
Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable with
the full universe of Moody's rated entities, but only with NSRs
for other rated debt issues and issuers within the same country.
NSRs are designated by a ".nn" country modifier signifying the
relevant country, as in ".za" for South Africa. For further
information on Moody's approach to national scale credit ratings,
please refer to Moody's Credit rating Methodology published in
June 2014 entitled "Mapping Moody's National Scale Ratings to
Global Scale Ratings".
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B E R M U D A
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LOVIT BOUTIQUE: To Close Queen Street Store
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The Royal Gazette reports that Lovit Boutique is to close its
Queen Street store in Bermuda after three years.
However, owner Jenia Thompson said that the three-year-old store
had plans to reopen in the near future -- possibly within a year,
The Royal Gazette relates.
The store has one full-time employee, notes the report.
In a statement, Lovit Boutique said "Downsizing will allow Lovit
Boutique to focus solely on providing fashionable work and special
event options as dictated by the needs of its local clients,"
reports The Royal Gazette.
All items will be sold at discounts of between 50 percent and 75
percent, Ms. Thompson told The Royal Gazette.
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B R A Z I L
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CAMARGO CORREA: S&P Affirms 'BB' Rating; Outlook Positive
---------------------------------------------------------
Standard & Poor's Rating Services affirmed its 'BB' global scale
rating on Camargo Correa S.A. (Camargo) and on its subsidiaries
InterCement Brasil S.A. (Intercement) and Cimpor Cimentos de
Portugal, S.G.P.S. S.A. (Cimpor). At the same time, S&P raised
its national scale ratings on Camargo's senior unsecured debt and
the corporate credit rating on InterCement Brasil to national
scale 'brAA' from 'brAA-'. The outlook remains positive.
"The national scale rating action reflects our favorable
comparative analysis on Camargo and InterCement in relation to
national scale rated peers mainly due to the group's significant
revenues base, business diversification and exposure to non-
controlled listed equity investments valued at about R$10 billion
as of June 30, 2014, which is a contingent liquidity source," said
Standard & Poor's credit analyst Renata Lotfi.
S&P's senior unsecured debt ratings at the holding level (Camargo)
are the same as the national scale issuer credit rating on it,
incorporating the group's diversification and good recovery
prospects from unencumbered liquid assets that, in S&P's view,
mitigate potential structural subordination to priority
liabilities at the operating subsidiaries' level.
S&P's ratings on InterCement mirros the ratings on its parent
company, Camargo, as S&P considers both entities as a single
economic group bearing the same default risk. S&P also views
InterCement and Cimpor as integrated companies. InterCement, the
group's cement division, is Camargo's core subsidiary, in S&P's
view. InterCement is one of the most profitable subsidiaries that
the group controls, accounting for most of the group's cash flow
generation.
Although the degree of separation between companies within the
group has been increasing following the Cimpor acquisition, S&P's
analysis is based on the assumption that InterCement will remain
as Camargo's main cash generator, which will continue to exercise
control over InterCement's main financial policies. In S&P's
view, InterCement is Camargo's core investment thanks to its
efficient operations and stable revenue stream. This equalizes
the risk of default and ratings on Camargo and Intercement.
JALLES MACHADO: S&P Assigns 'BB-' Global Scale CCR; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' global scale
and 'brA' national scale corporate credit ratings on Jalles
Machado S.A. (Jalles). The outlook is stable. The company
doesn't have any rated debt.
The ratings reflect S&P's expectation that Jalles will increase
its operating cash flow generation as a result of its premium
portfolio of products, combined with full processing capacity at
its mills due to adequate investments in cane fields in the past
few years and favorable weather conditions in the region where it
operates. In S&P's view, these factors will enable Jalles to
generate positive free operating cash flow (FOCF) in fiscal 2015
(which started on April 1, 2014) and afterwards, improving its
capital structure through debt reduction, along with debt
refinancing at better terms and conditions.
"We assess Jalles' business risk profile as "fair." The company's
EBITDA margins have consistently been above peers'--above 60%--
thanks to the production of higher value-added products such as
organic sugar, branded crystal sugar, and anhydrous ethanol. We
believe that its above-average operating efficiency reflects the
full ownership of sugarcane plantations, less competition to
obtain additional acreage as more than 50% of the company's
sugarcane plantations are the shareholders' assets, its capacity
to generate excess energy from its cogeneration boilers, and its
irrigation capacity that mitigates the volatile weather effects on
the harvest productivity. We believe that these factors mitigate
the company's limited scale of only 4.3 million tons of crushing
capacity and its operation in the state of Goias, where shipping
costs are higher than in other sugarcane producing states and soil
and weather are usually less favorable than in the state of Sao
Paulo. Although the company is exposed to volatile weather
conditions and global sugar demand and prices, we believe that its
recent investments in the plantations, increased irrigation
capacity, and the much higher prices for organic sugar mitigate
these risks," S&P said.
Jalles' ultimate shareholder is Planagri S.A. (not rated). Jalles
accounts for more than 87% of the group's revenues and debt, and
we incorporate Planagri's debt in S&P's analysis of Jalles. The
shareholders of Planagri are the majority owners and the most
senior executives of the group, with a long-term track record in
the sugarcane business.
S&P views Jalles' financial risk profile as "significant." The
drought of 2009 reduced the harvest and liquidity crunch prevented
the company from sufficiently investing in the cane fields at that
time. The company has improved its operating and free operating
cash flow generation; its shortfall in FOCF narrowed to R$3.9
million in 2014 and should be positive afterwards.
MARANHAO, BRAZIL: Moody's Affirms Ba1 Global Scale Currency Rating
------------------------------------------------------------------
Moody's America Latina Ltda affirmed the ratings of the Brazilian
States of Maranhao, Mato Grosso and Parana. At the same time,
Moody's changed the outlook of those ratings to negative from
stable, as follows:
- State of Maranhao. Ratings affirmed at Ba1 (Global Scale, Local
and Foreign Currency) and Aa2.br (National Scale, Local Currency).
Outlook revised to negative from stable.
- State of Mato Grosso. Ratings affirmed at Baa3 (Global Scale,
Local and Foreign Currency) and Aa1.br (National Scale, Local
Currency). Outlook revised to negative from stable.
- State of Parana. Ratings affirmed at Baa3 (Global Scale, Local
and Foreign Currency) and Aa1.br (National Scale, Local and
Foreign Currency). Outlook revised to negative from stable.
The action follows Moody's recent rating action to assign a
negative outlook to the government of Brazil's Baa2 rating
Macroeconomic and institutional factors closely link the credit
quality of state and municipal governments in Brazil to that of
the federal government.
Ratings Rationale
In Moody's view, the reduction of economic growth perspectives in
Brazil and the ongoing deterioration of the sovereign's fiscal
position have a direct impact on the operating environment of
Brazilian states. In addition, the fiscal position of Brazilian
states could see some deterioration resulting from Moody's
expectation of lower revenues, both own-source revenues but also
through a reduction of federal transfers. In the context of
expenditure rigidities, a sustained reduction in the revenue
stream would exert pressure on the credit quality of Brazilian
states.
Moody's also notes that the assigned ratings are supported by a
strong institutional framework and by a close oversight that
Brazil's federal government exerts over states and municipalities
in Brazil. This framework has translated in limited borrowing
activity and gradually declining debt levels. While those trends
are credit positive, they provide further evidence of the close
linkages that exist between the credit quality of the federal
government and states in Brazil.
What Could Change The Rating Up/Down
Given the negative outlook, an upgrade for these three Brazilian
states is unlikely in the near- to medium-term. However, a
stabilization of Brazil's sovereign bond rating could lead to a
ratings' stabilization for these three issuers. Conversely, a
downgrade of the sovereign bond rating will translate into a
downgrade. Furthermore, a deterioration in the key financial
metrics of each of these states could exert additional downward
pressure on their ratings.
The principal methodology used in this rating was Regional and
Local Governments published in January, 2013.
Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable with
the full universe of Moody's rated entities, but only with NSRs
for other rated debt issues and issuers within the same country.
NSRs are designated by a ".nn" country modifier signifying the
relevant country, as in ".za" for South Africa. For further
information on Moody's approach to national scale credit ratings,
please refer to Moody's Credit rating Methodology published in
June 2014 entitled "Mapping Moody's National Scale Ratings to
Global Scale Ratings".
OGX PETROLEO: Owner Has US$50 Million Frozen by Judge
-----------------------------------------------------
Blake Schmidt and Francisco Marcelino at Bloomberg News report
that federal judge Flavio Roberto de Souza froze BRL117 million
(US$50 million) held by former billionaire Eike Batista in a fund,
according to one of his lawyers.
Brazil's central bank transmitted the judge's order to block the
funds, said Marcelo Carpenter, a lawyer at Sergio Bermudes
Advogados, a firm that represents Batista, according to Bloomberg
News. Mr. Carpenter said the money is parked in an investment
fund that holds corporate bonds, without giving further details.
Bloomberg News relates that Judge Roberto de Souza ordered the
asset freeze as a preventive measure after federal prosecutors in
Rio de Janeiro state accused Batista of financial-market crimes
and requested that as much as BRL1.5 billion of his assets be
seized. Judge Roberto de Souza gave Batista 15 days to respond to
the request by prosecutors to seize assets, according to a copy
obtained by Bloomberg of the Sept. 15 decision.
"The judge ordered the freeze until there is a decision on whether
to seize assets," Mr. Carpenter said in a phone interview with
Bloomberg from Rio de Janeiro.
Houses, Boats
The amount of assets that prosecutors seek to seize is
approximately equal to the damage to financial markets as a result
of the crimes of which he's accused, according to a statement
posted on the prosecutors' office's website Sept. 13, Bloomberg
News notes.
"It could extend to assets like houses, vehicles and boats," said
Leonardo Theon de Moraes, head of corporate and bankruptcy areas
at Sao Paulo-based law firm Theon de Moraes e Britto Sociedade de
Advogados, Bloomberg News discloses. "It's to guarantee that if
he is convicted, he has enough financial assets to cover the
damages," Mr. Theon de Moraes added.
Bloomberg News notes that Mr. Batista is already accused by the
country's securities regulator of insider trading over his sale of
shares in the oil company before its downfall.
Mr. Batista's lawyers have said he sold the shares to pay back
creditor Mubadala Development Co. and not because he anticipated
project failures, according to a document obtained by Bloomberg.
Sergio Bermudes, a civil lawyer who says he is coordinating
Batista's judicial affairs, has said the allegations against
Batista are "groundless," Bloomberg News relays.
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 US$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 US$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 US$500
million in new funds. OGX said Oct. 29, 2013 that the talks
concluded without an agreement.
SUZANO PAPEL: Posts BRL97.2 Million Net Income in 2Q 2014
---------------------------------------------------------
Suzano Papel e Celulose disclosed its consolidated results for the
second quarter of 2014 and first six months of 2014.
The Company recorded net income of BRL97.2 million in second
quarter 2014, compared to the net loss of BRL247.5 million in
second quarter 2013 and the net income of BRL201.0 million in
first quarter 2014.
In 6 Months 2014, the Company recorded net income of BRL298.2
million, compared to the net loss of BRL205.6 million in 6M13.
A full text copy of the company's financial results is available
free at:
http://is.gd/hMSHrm
SUZANO PAPEL: S&P Revises Outlook to Stable & Affirms 'BB' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Suzano
Papel e Celulose S.A. (Suzano) to stable from negative. S&P also
affirmed its 'BB' ratings on the company.
The outlook revision and rating affirmation reflect the successful
start-up of Suzano's new 1.5-million ton pulp mill in Maranhao,
which is in line with S&P's expectations. The new mill should
contribute about 900,000 tons of Bleached Eucalyptus Kraft Pulp
(BEKP) this year and 1.5 million tons in 2015. The incremental
cash flows from the Maranhao mill would help the company reduce
its debt, although free cash flow generation is likely remain
negative this year.
==========================
C A Y M A N I S L A N D S
==========================
AGATE CAPITAL: Shareholders' Final Meeting Set for Sept. 26
-----------------------------------------------------------
The shareholders of Agate Capital Management Limited will hold
their final meeting on Sept. 26, 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
AGATE GLOBAL: Shareholders' Final Meeting Set for Sept. 26
----------------------------------------------------------
The shareholders of Agate Global Macro Fund will hold their final
meeting on Sept. 26, 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
KOREA ACE: Commences Liquidation Proceedings
--------------------------------------------
On Aug. 15, 2014, the shareholder of Korea Ace Mortgage 2A Company
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 liquidators are:
Edel Andersen
Roger Priaulx
Telephone: (345) 815 8532
Facsimile: (345) 945 3470
c/o Genesis Trust & Corporate Services Ltd.
P.O. Box 448 Midtown Plaza, Elgin Avenue, George Town
Grand Cayman KY1-1106
Cayman Islands
NOBLE SOVEREIGN: S&P Assigns Prelim. 'B+' Rating on $1BB Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B+'
credit rating to Noble Sovereign Funding I Ltd.'s series 1 $1.0
billion floating-rate notes.
At closing, Noble Sovereign Funding I will issue the series 1
notes and use the proceeds to fund the purchase of a loan to
Empresa Publica de Hidrocarburos del Ecuador, EP Petroecuador.
The loan benefits from a guarantee provided by the Republic of
Ecuador. The issuer -- a special-purpose entity (SPE) established
in the Cayman Islands -- will pass through to its noteholders any
interest and redemption payments that it receives from the
underlying loan.
The key risk for the repack notes is the credit risk of the
Republic of Ecuador as the guarantor of the underlying loan. S&P
has therefore weak-linked its 'B+' long-term rating on the
Republic of Ecuador to S&P's preliminary 'B+' rating on Noble
Sovereign Funding I's series 1 notes, which is in line with S&P's
global criteria for rating repackaged securities.
The preliminary rating assigned to Noble Sovereign Funding I's
series 1 notes also reflects S&P's assessment of:
-- The transaction's legal structure, which is bankruptcy
remote in accordance with S&P's legal criteria.
-- The transaction's compliance with S&P's multiple-use SPE
criteria.
-- The transaction's reliance on cash flows from the Republic
of Ecuador, as guarantor on the underlying loan, to pay
interest and principal on the notes.
-- The guarantee's compliance with our guarantee criteria.
-- The maximum achievable rating that can be supported by The
Bank of New York Mellon S.A./N.V. (London Branch), as
custodian, is 'AA-' as the documented replacement language
does not fully comply with S&P's current counterparty
criteria.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and a
description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities.
There is no Standard & Poor's 17g-7 Disclosure Report included in
this credit rating report because, in our view, there are no
representations, warranties and enforcement mechanisms available
to investors.
RIPPLEWOOD INVESTORS: Commences Liquidation Proceedings
-------------------------------------------------------
On Aug. 11, 2014, the shareholders of Ripplewood Investors Limited
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:
Cititrust (Bahamas) Limited
c/o Citigroup Fund Services (Cayman), Ltd.
27 Hospital Road
Fifth Floor, Cayman Corporate Centre
George Town Grand Cayman KY1-1003
Cayman Islands
c/o Schell Stubbs
Telephone: (242) 302-8714
SHILEY TANKER: High Court Enters Modification Orders
----------------------------------------------------
The High Court of Justice, Chancery Division, on Aug. 13, 2014,
entered a modification order in respect of the recognition orders
made on Jan. 29, 2013 in relation to Shirley Tanker SRL in the
following terms:
-- the automatic stay granted pursuant to Article 20(1) of the
Model Law as a result of the recognition granted in
paragraph 1 of each Recognition Order shall not apply to
Claims against the debtor that are permitted by the
provisions of the Confirmation Order and the Plan.
-- Paragraph 1 of the Recognition Order made in respect of
each Debtor, and the first sentence of Paragraph 1 of the
Recognition Order made in respect of International Seaways,
is modified and replaced with the following paragraph
"Pursuant to article 21(1) (angel) of the Model Law that the
commencement or continuation of all individual actions or
individual proceedings, including arbitral proceedings,
concerning the debtor's assets, rights, obligations or
liabilities are stayed, other than in respect of Claims
that are permitted by the provision of the Confirmation
Order and the Plan."
-- Paragraph 3 of each Recognition Order is modified and
replaced with the following paragraph: "Pursuant to article
21(1)(beer) of the Model Law that any execution against the
debtor's assets is stayed, including, without limitation,
any seizure, arrest, foreclosure upon, or levy against the
debtor's vessels or other property, other than in respect
of Claims that are permitted by the provisions of the
Confirmation Order and the Plan."
-- For the purposes of each Modification Order and each
Recognition Order, "Claim" shall mean:
(1) A right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured; or
(2) A right to an equitable remedy for breach of
performance if such breach gives rise to a right
payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured.
-- For the purposes of each Modification Order, the foreign
representative is not required to serve the application
upon the Debtor at its registered office.
These orders were made following the entry of an order on
Aug. 5, 2014 in respect of the Debtors' joint proceedings under
Chapter 11 of the United States Bankruptcy Code approving a plan
of reorganization of the Debtors and their affiliates.
The Debtors can be reached at:
1301 Avenue of the Americas, 42nd Floor
New York, NY 10019
United States of America
The foreign representative can be reached at:
John J. Ray III
c/o Cleary Gottlieb Steen & Hamilton LLP
City Place House
55 Basinghall Street
London EC2V 5EH
SOCKS INVESTMENTS: Creditors' Proofs of Debt Due Oct. 7
-------------------------------------------------------
The creditors of Socks Investments Limited are required to file
their proofs of debt by Oct. 7, 2014, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on Aug. 15, 2014.
The company's liquidator is:
Wardour Management Services Limited
Telephone: (345) 945-3301
Facsimile: (345) 945-3302
P.O. Box 10147 Grand Cayman KY1-1002
Cayman Islands
TST OPPORTUNITY: Commences Liquidation Proceedings
--------------------------------------------------
On Aug. 6, 2014, the shareholders of TST Opportunity (US) Cayman
Finance Company 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:
Cititrust (Bahamas) Limited
c/o Citigroup Fund Services (Cayman), Ltd.
27 Hospital Road, Fifth Floor
Cayman Corporate Centre
George Town
Grand Cayman KY1-1003
Cayman Islands
c/o Schell Stubbs
Telephone: (242) 302-8714
TYG CAPITAL: Commences Liquidation Proceedings
----------------------------------------------
On Aug. 13, 2014, the shareholder of TYG Capital Fund 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:
Hugh Dickson
c/o Sarah Bourke
10 Market Street #765, Camana Bay
Grand Cayman KY1-9006
Cayman Islands
Telephone: (345) 769 7205
Facsimile: (345) 949 7120
UNIVERSA ASYMMETRY: Members' Final Meeting Set for Sept. 22
-----------------------------------------------------------
The members of Universa Asymmetry Offshore Fund II Ltd. will hold
their final meeting on Sept. 22, 2014, to receive the liquidator's
report on the company's wind-up proceedings and property disposal.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
UNIVERSA BLACK I: Members' Final Meeting Set for Sept. 22
---------------------------------------------------------
The members of Universa Black Swan Protection Protocol Offshore I
Ltd. will hold their final meeting on Sept. 22, 2014, to receive
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
UNIVERSA BLACK V: Members' Final Meeting Set for Sept. 22
---------------------------------------------------------
The members of Universa Black Swan Protection Protocol Offshore V
Ltd. will hold their final meeting on Sept. 22, 2014, to receive
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
=========
C H I L E
=========
AUTOMOTORES GILDEMEISTER: Moody's Cuts Corp. Family Rating to B2
----------------------------------------------------------------
Moody's Investors Service has downgraded Automotores Gildemeister
S.A. (Gildemeister)'s corporate family rating and its senior
unsecured rating to B2 from B1. The outlook is negative.
Ratings downgraded:
Issuer: Automotores Gildemeister S.A.
- Corporate Family Rating: to B2 from B1 (global scale)
- USD400 million Senior Unsecured Notes due 2021: to B2 from B1
(foreign currency)
- USD300 million Senior Unsecured Notes due 2023: to B2 from B1
(foreign currency)
Ratings Rationale
"The downgrade to B2 was triggered by Gildemeister's further
deterioration in financial performance, as a result of the
continued losses posted by the Brazilian operations combined with
weaker vehicle sales trends experienced in 2014 both in Chile and
Peru" explained Moody's senior analyst, Veronica Amendola.
Gildemeister's B2 rating reflects primarily its overall weak
credit metrics and high leverage, which has steadily risen over
the last few years to 14.7x for the LTM ended June 30th, 2014 from
4.7x at December 2012, according to Moody's standard definitions
and adjustments. The rating is also constrained by Gildemeister's
high dependence on the Hyundai brand as well as the cyclical
nature of the automotive industry and light vehicle sales, which
are easily affected by changes in consumer preferences and product
mix. These factors are partially offset by Moody's expectation
that the company will be able to continue to benefit from the
attractive medium-term fundamentals of the Chilean and Peruvian
automotive retail sector and maintain its solid business model as
one of the leading automotive distributors and retailers in its
markets, driven partially by the strong consumer reception to
Hyundai's product offerings.
Gildemeister has been able to slightly improve its market share
over the last couple of quarters, mainly as a consequence of a
better supply of highly demanded SUV and LCV models from Hyundai,
but top line was hit by the recent deceleration in the Peruvian
and Chilean vehicle markets in the same period. At the same time,
the Brazilian operations remained a cash drain; in this sense, the
company reported EBITDA margin declined to 5.4% as of last twelve
months ended June 2014 from 10.7% at the end of 2012. Moreover,
working capital outflows, mainly related to higher inventory
levels and high capital expenditures, have contributed towards
negative free cash flow and higher leverage in the past few
quarters. The company's cost reduction plans, including its
revised dividend policy and expected capex reduction, could
translate into improved free cash flow generation, as recently
seen in the 2nd quarter 2014, while the disposal of real estate
assets would contribute to strengthen its liquidity. Nevertheless,
Moody's still see execution risks in the restructuring of the
Brazilian business and uncertainties related to the supply
availability of some of Hyundai's most popular models going
forward.
The negative outlook reflects Gildemeister's deteriorating credit
metrics and overall weak margins, as well as the challenges to
stem the decline and continue addressing its high cost structure.
The negative outlook also reflects the perception that the
Brazilian operations will continue to pressure performance over
the next few quarters.
Gildemeister's ratings could be further downgraded if liquidity
worsens; operating performance remains weak; adjusted debt to
EBITDA is sustained above 8.5x; or adjusted EBIT to interest falls
further below 1.2x. The ratings could also be downgraded in case
its agreement with Hyundai were to be unfavorably altered.
Although unlikely in the near to-medium-term, due to the current
high leverage and negative operating trends, the ratings could
experience upward pressure, if Gildemeister's adjusted debt to
EBITDA were to reduce sustainably below 6.0x, if free cash flow
were to be maintained at positive levels and if the company is
successful in improving its EBITDA margins with cost-cutting
measures while deleveraging the business going forward.
Structurally, a substantial increase in secured debt could also
lead to a downgrade of the B2 rating of both senior unsecured
bonds.
Gildemeister S.A., headquartered in Santiago, Chile, is one of the
largest importers and distributors in Chile and Peru operating a
network of company-owned and franchised vehicle dealerships. Its
principal car brand is Hyundai for which it is the sole importer
in both of its markets. For the last twelve months ended June 30,
2014, Gildemeister reported consolidated net revenues of about USD
1.5 billion with approximately 61% being generated from its key
market, Chile.
The principal methodology used in this rating was the Global
Retail Industry published in June 2011.
===============
C O L O M B I A
===============
PACIFIC RUBIALES: S&P Assigns 'BB+' Rating to $500MM Sr. Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' rating to
Pacific Rubiales Energy Corp.'s (Pacific: BB+/Stable/--) proposed
$500 million senior unsecured notes due 2025. The notes will
benefit from the unconditional and irrevocable guarantee by the
company's main subsidiaries, which represent about 85% of the
Pacific's total assets. S&P expects the company to use the
proceeds for refinancing activities and capital expenditures
program.
The rating on the notes is based on S&P's corporate credit rating
on Pacific. The 'BB+' corporate credit rating on Pacific is
derived from S&P's anchor of 'bb+', based on the company's "fair"
business risk profile given its geographic concentration because
it generates 100% of its EBITDA in Colombia; smaller scale in
terms of proved reserves with about 290 million barrels (MMbbl) as
of 2013 compared with its investment-grade peers with more than
1,500 MMbbl; and 50% of its revenues coming from the Rubiales and
Piriri blocks, whose concessions expire in 2016. However, S&P
believes that the combined production from the new heavy-oil
fields, CPE-6 and Rio Ariari, and Pacific's active exploration
program will help the company to replace its production from the
Rubiales field in the next two to three years. The rating also
reflects the company's "intermediate" financial risk profile based
on its debt leverage of less than 1.5x and its strong cash
generation despite its aggressive capital expenditures plans of
about $2.5 billion during the next two years.
RATINGS LIST
Pacific Rubiales Energy Corp.
Corporate credit rating BB+/Stable/--
Rating Assigned
Pacific Rubiales Energy Corp.
Sr. unsec. notes due 2025 BB+
===================
C O S T A R I C A
===================
BANCO DE COSTA RICA: Moody's Downgrades Deposit Ratings to Ba1
--------------------------------------------------------------
Moody's Investors Service has downgraded Banco de Costa Rica
(BCR)'s long- and short-term local and foreign currency deposit
ratings to Ba1 / Not Prime and Ba2 / Not Prime, respectively, from
Baa3 / Prime-3. Moody's also downgraded BCR's foreign currency
senior debt rating to Ba1 from Baa3 and lowered its baseline
credit assessment (BCA) to ba1 from baa3. In addition, BCR's D+
standalone bank financial strength rating (BFSR) has been
affirmed. The outlook on all BCR's ratings has been changed to
stable from negative.
At the same time, Moody's has downgraded Banco Nacional de Costa
Rica (BNCR)'s long- and short-term local and foreign currency
deposit ratings to Ba1 / Not Prime and Ba2 / Not Prime,
respectively, from Baa3 / Prime-3. The bank's foreign currency
senior debt rating was also downgraded to Ba1 from Baa3, while the
BCA was maintained at ba1. Furthermore, the bank's D+ BFSR has
been affirmed. The outlook on all BNCR's ratings has been changed
to stable from negative.
Moody's also downgraded the BFSR of Panama-based Banco
Internacional de Costa Rica (BICSA) to D from D+, and lowered its
BCA to ba2 from ba1. The bank's long- and short-term foreign
currency deposit ratings of Ba1 and Not Prime were affirmed. The
outlook for all ratings is stable. BICSA is 51% owned by BCR and
49% by BNCR.
These rating actions follow Moody's downgrade of Costa Rica's
government bond rating to Ba1 from Baa3, with the outlook changed
to stable from negative, as well as the lowering of the country
ceiling for foreign currency deposits to Ba2/Not Prime from Baa3/
Prime-3. For details on this rating action please refer to Moody's
press release "Moody's downgrades Costa Rica's government bond
rating to Ba1 from Baa3; outlook stable", dated 16 September 2014.
The following ratings were affirmed, with the outlook changed to
stable from negative:
Banco de Costa Rica and Banco Nacional de Costa Rica:
Standalone Bank Financial Strength Rating: D+
The following ratings were downgraded, with the outlook changed to
stable from negative:
Banco de Costa Rica and Banco Nacional de Costa Rica:
Long term and short term local currency deposit rating: to Ba1/Not
Prime from Baa3 / Prime-3
Long term and short term foreign currency deposit rating: to
Ba2/Not Prime from Baa3 / Prime-3
Foreign currency senior debt rating: to Ba1 from Baa3
The following rating was downgraded with a stable outlook:
Banco Internacional de Costa Rica:
Standalone Bank Financial Strength Rating: to D from D+
The following ratings were affirmed with a stable outlook:
Banco Internacional de Costa Rica:
Long term and short term foreign currency deposit rating: Ba1/Not
Prime
Ratings Rationale
Downgrade Of The Ratings Of Banco De Costa Rica And Banco Nacional
De Costa Rica
Moody's said that the downgrade of BCR's and BNCR's local currency
deposit and foreign currency senior debt ratings and the lowering
of BCR's BCA, was driven by the downgrade of Costa Rica's
government bond rating to Ba1 from Baa3. Given the banks' close
financial and business linkages with the government, including
their large government securities holdings, chiefly domestic
operations, and the government guarantee of their obligations,
their BCAs are substantially aligned with the government's risk,
captured in the Ba1 government bond rating. Both standalone and
supported ratings are therefore limited by that rating. The
downgrade of BCR and BNCR's foreign currency deposit ratings
follows the lowering of Costa Rica's country ceiling for foreign
currency deposits to Ba2/Not Prime from Baa3/Prime-3. Hence, the
foreign currency deposit ratings of both banks are now constrained
by that ceiling.
According to Moody's analyst Georges Hatcherian, "despite the
deterioration in its creditworthiness related to its direct and
indirect exposure to sovereign risk, BCR's standalone credit
quality continues to reflect a number of important strengths,
including the bank's strong market positioning in both corporate
and retail banking as the second largest bank in the country, its
well managed portfolio, and stable asset quality." Additionally,
as is the case for all state-owned banks in the country, BCR
benefits from a government guarantee of its obligations which has
provided it with superior local funding access. The government's
downgrade notwithstanding, Moody's does not anticipate a
significant impact on the bank's ability to attract deposits.
However, these strengths are somewhat offset by limitations to
profitability due to weak efficiency and mandatory transfers to
government-sponsored programs. Further challenges encompass BCR's
high loan growth and large single borrower concentrations, a
consequence of its mostly commercial loan book. Foreign exchange
mismatches in borrowers' balance sheets resulting from foreign
currency loans made to local currency earners is also a key risk,
particularly in light of recent volatility in the Colon.
BNCR's ba1 BCA reflects its dominant position as the largest bank
in Costa Rica, as well as its fluid access to local funding given
the government's guarantee. Credit challenges include BNCR's
greater emphasis on higher risk SMEs and individuals, which could
pressure the currently stable asset quality if interest rates
continue to increase, or the Colon resumes its depreciation.
Further, the net interest margin has decreased due to higher
dollar-denominated lending, which usually bears a lower rate of
interest than lending in Colones. This increase in dollar-
denominated lending compounds the pressures on the bank's
profitability deriving from its sizeable historical exposure to
low-margined residential mortgages, weak efficiency, and the
mandatory transfers to government-sponsored programs.
Hatcherian also noted the government deteriorating finances may
cause it to rely more heavily on both BCR and BNCR to finance
public sector deficits and lend to public infrastructure programs,
which might continue to compress profit margins. Given the banks'
high lending limits for the public sector, there are few
constraints on the government's ability to demand loans from the
banks. As of June 2014, total public sector lending reached a
relatively high 80% of tier 1 capital for BNCR and around 45% for
BCR, although relative to total loans, exposures are 8% and 5%,
respectively.
Downgrade Of Banco Internacional De Costa Rica's Financial
Strength
According to Hatcherian "the lowering of BICSA's BCA to ba2 from
ba1 reflects the downgrade of the sovereign rating of Costa Rica,
given the bank's sizable exposure to the country." As of June
2014, Costa Rica accounted for 42% of the bank's total loan book.
The rating agency also noted the pressures to the bank's core
profitability metrics as a result of tight competition and slower
business growth that followed changes in senior management early
in 2013. BICSA does not benefit from the same government
guarantees as its parents and consequently does not have the same
privileged access to deposit financing, or dominant market
position. Rather, it is a relatively minor player in Central
America's highly competitive commercial and export-finance market.
NPLs stood at a low 1.1% of loans as of June 2014, though
delinquencies may increase if fiscal difficulties in Costa Rica
provoke a slowdown in economic growth, or if the economic
deceleration continues in Panama, though from very high rates,
where BICSA has a quarter of its loan portfolio. Furthermore,
BICSA's strong reliance on US dollar wholesale funding exposes it
to repricing and refinancing risks, in light of the ongoing
normalization of monetary policy in the US.
On the other hand, BICSA's ba2 BCA continues to capture the bank's
expertise in corporate banking and international trade and deep
knowledge of Central America, where its business remains
concentrated. The standalone assessment also incorporates the
strengthening of the risk management and control frameworks
following the changes in senior management during 2013.
BICSA's Ba1 foreign currency deposit rating now incorporates one
notch of uplift from the ba2 BCA deriving from Moody's assumption
of a high probability of support from the bank's main shareholder,
Banco de Costa Rica, based on the latter's management support as
well as on a full earnings retention policy. The support
assumption also gauges the parent's endorsement of BICSA's purpose
of developing international business with companies in Central and
South America.
The principal methodology used in these ratings was Global Banks
published in July 2014.
The last rating action on BCR was on September 24, 2013 when
Moody's affirmed the bank's BFSR, the local currency deposit
ratings and the foreign currency senior debt rating, changing the
outlook to negative from stable. At that time Moody's also
upgraded the foreign currency deposit ratings. These actions were
in line with similar actions on the rating for the government of
Costa Rica and on the foreign currency country ceiling for
deposits.
The last rating action on BNCR was on October 18, 2013 when
Moody's assigned first time standalone, deposit and debt ratings.
The last rating action on BICSA was on April 5, 2013 when Moody's
upgraded the bank's BFSR to D+ from D and affirmed its deposit
ratings.
Based in San Jose, Costa Rica, Banco de Costa Rica reported total
consolidated assets of US$8.2 billion (CRC 4.5 trillion), equity
of US$789 million (CRC 428 billion) and six-month net income of
US$27 million (CRC 14.8 billion), as of 30 June 2014.
Banco Nacional de Costa Rica is also headquartered in San Jose,
and reported total consolidated assets of US$9.8 billion (CRC 5.3
trillion), equity of US$873 million (CRC 474 billion) and six-
month net income of US$31 million (CRC 16.9 billion), as of 30
June 2014.
Based in Panama City, Panama, BICSA reported total assets of US$
1.5 billion, equity of US$ 181 million, and six-month net income
of US$ 10.8 million, as of 30 June 2014.
COSTA RICA: Moody's Cuts Gov't Bond Rating to B1; Outlook Stable
----------------------------------------------------------------
Moody's Investors Service has downgraded Costa Rica's government
bond rating to Ba1 from Baa3. Moody's has also changed the outlook
to stable from negative.
The rating action was prompted by the following factors:
1. Institutional weakness, as evidenced by continued political
obstacles to comprehensive fiscal reform. Several attempts in
recent years to address Costa Rica's growing fiscal deficits and
debt have not brought these levels lower. The new Solis
administration, which took office in May of this year, has
indicated it will only gradually introduce fiscal consolidation.
2. As a consequence of inaction, Moody's expect the current large
fiscal deficits and increasing debt burden are likely to continue
for the next few years. The fiscal deficit has averaged 4.5% of
GDP since 2009, largely driven by spending growth, and is expected
to reach 5.8% of GDP in 2014 and 6% next year. The high deficits
have materially worsened Costa Rica's debt burden, with debt to
GDP expected to rise close to 40% this year, compared to 25% of
GDP in 2008.
The outlook assigned to Costa Rica's Ba1 government bond rating is
stable indicating further rating changes are unlikely in the next
12 to 18 months.
Rating Rationale
Continued Political Obstacles To Fiscal Reform
The downgrade reflects our expectations that material fiscal
improvements are unlikely in the next one to two years. A negative
consequence of Costa Rica's entrenched democratic tradition has
been the cumbersome process of consensus-building. For the past
few administrations, the government's weak position in Congress
has delayed approval of legislation because of the need to forge
ad-hoc alliances. Consequently, efforts to approve significant
fiscal reforms have been impeded.
Moody's expect continued political obstacles to comprehensive
fiscal reform during the Solis administration, in office since May
2014. The government aims to introduce new revenue measures by
early 2015, but successful implementation will be difficult and
the impact on the fiscal deficit insufficient to undo the rise in
the debt burden. Moody's expect that the current government will
only gradually introduce fiscal reforms going forward.
Continued Weakness In Fiscal Position, Driven By Expenditure
Growth
The second driver of the rating action is continued weakness in
Costa Rica's main fiscal and debt metrics as the country has been
unable to bring its deficit back to pre-2009 levels. The central
government deficit, which averaged a 0.9% of GDP from 2004 to
2008, rose significantly to an average of 4.5% of GDP from 2009 to
2013. We expect a fiscal deficit of 5.8% of GDP for 2014, which
will be almost double the 3.0% median for the 'Ba' category.
Absent any change fiscal deficits will average 6%-7% in 2015 and
2016.
The higher deficits are mostly the result of the steady rise of
current expenditures, which have increased 4.5% of GDP since 2008
reaching over 18% of GDP in 2014. Expenditure growth was mainly
due to increases in wages and transfers that Costa Rica has found
difficult to constrain. Years of high current expenditures create
structural rigidities through greater public-sector hiring and
increased dependence on fiscal transfers. This in turn increases
the political difficulty of expenditure cuts, and places the
burden of fiscal consolidation on increased revenues. As a result
of high fiscal deficits Costa Rica's debt burden, which had fallen
to 25% of GDP in 2008, will reach close to 40% in 2014 according
to Moody's estimates , and will continue rising in 2015 and 2016.
What Could Change The Rating Down/Up
Structural budgetary adjustments, such as increased tax revenues,
spending cuts or a combination of both, could lead to a positive
rating action if such actions successfully limit, and eventually
arrest, the rise in the debt burden.
A continued deterioration of the fiscal accounts and further
increases in the main debt metrics will likely lead to further
negative rating actions. Evidence of stress in the banking system
or a significant increase in the level of financial dollarization
could also place downwards pressure on the rating.
Country Ceilings
Moody's has affirmed the A3 country ceilings for local-currency
debt and deposits. The ceilings for long-term and short-term
foreign-currency bonds have also been affirmed at Baa2/P-3.
Finally, the ceiling for foreign-currency deposits was downgraded
to Ba2/NP from Baa3/P-3.
Moody's Local Currency Country Risk Ceilings determine the maximum
credit rating achievable in local currency for a debt issuer
domiciled in that country or for a structured note whose cash
flows are generated from domestic assets or residents. Moody's
foreign-currency country ceilings generally set the highest rating
possible in a given country by denoting the risk that a government
would interfere with a domiciled debtor's repayment of its
foreign-currency-denominated bonds (the Foreign Currency Bond
Ceiling) or the risk that the government would impose a foreign
currency deposit freeze (the Foreign Currency Deposit Ceiling).
The principal methodology used in these ratings was Sovereign Bond
Ratings published in September 2013.
INSTITUTO COSTARRICENSE: Moody's Lowers Sr. Unsec. Rating to Ba1
----------------------------------------------------------------
Moody's Investors Service downgraded to Ba1 the Baa3 senior
unsecured rating of Instituto Costarricense de Electricidad (ICE).
Concurrently, Moody's also downgraded to Ba1 the Baa3 senior
secured rating of Reventazon Finance Trust. Moody's also assigned
Corporate Family ratings of Ba1 to both issuers. The outlook for
each is changed to stable from negative.
Ratings Rationale
The rating action on ICE's ratings is prompted by the September
16, 2014 announcement that Moody's has downgraded the bond rating
of the Government of Costa Rica to Ba1 from Baa3 and changed the
outlook to stable from negative. The rating action on the
Reventazon Finance Trust's ratings follows the downgrade of ICE's
rating as the Project is very highly dependent on ICE's financial
performance given the obligations that ICE has assumed under the
contractual arrangements as Sponsor, EPC contractor, lessee and
operator.
Given that ICE is fully owned by the Costa Rican government, it
falls under the scope of Moody's rating methodology for
government-related issuers (GRIs). The Costa Rican government
guarantees certain loans executed by ICE (around 10% of its
outstanding indebtedness) but does not guarantee ICE's debt
obligations rated by Moody's. However, Moody's believes that there
is a "high" likelihood of government extraordinary support in the
case of financial distress for several reasons including
reputational given the company's status as a major government-
owned entity, its strategic importance to the country's economy
overall, and the low likelihood of privatization in the
foreseeable future. Moody's estimate of "high" default dependence
reflects the expectation that there is an elevated likelihood that
the government and ICE would default simultaneously due to common
risk factors.
ICE's Baseline Credit Assessment (BCA), which is a representation
of the group's intrinsic creditworthiness before taking into
account possible extraordinary support from the sovereign is ba3,
based on a scale of aaa to ca which aaa indicates the highest
credit quality.
ICE's BCA is underpinned by its role as an autonomous government
entity established to develop the Costa Rican resources to provide
electricity and telecommunication services, and is especially
driven by its dominant position as the largest vertically
integrated utility in the country. It also factors the fully
regulated nature of these electric operations. The BCA captures
Moody's opinion that the regulatory framework under which ICE
operates is overall credit supportive and stable albeit subject to
some inconsistencies. Moody's consider the diversification
benefits associated with the telecommunications operations albeit
it faces strong challenges following the opening of the mobile
segment to new entrants.
That said, Moody's acknowledges that this business unit aids ICE's
consolidated credit metrics.
The BCA incorporates the anticipated deterioration in its
consolidated credit metrics in the wake of the increased leverage
to fund the electricity business unit's material capital
expenditure program (capex), particularly in connection with the
305.5MW Reventazon hydro-electric facility. It further factors the
modest size of ICE's operations and service territory, its
reliance on the capital markets to refinance its debt. It further
reflects ICE's exposure to foreign exchange risk albeit the Board
of Directors' strategy approved in October 2013 to mitigate this
risk is credit positive.
The BCA is currently tempered also by Moody's perception of ICE's
weak corporate governance. Moody's considers the qualified audit
opinions issued with ICE's 2013, 2012, 2011 and 2010 financial
statements by KPMG to be credit negative. In addition, the
restatement of certain items in its 2012 and 2011 statements are
largely due to retroactive adjustments as well as changes in the
accounting policies, and in the 2010 statements due to
misstatements all of which are credit negatives.
Moody's understands that ICE is working on an amendment to the
definition of the leverage threshold under its annual
certifications under its Corporaci¢n Andina de Fomento (CAF) loan,
particularly the minimum EBITDA to debt service covenant of at
least 1.6x (year-end 2013: 1.2x; 2012: 1.1x). Moody's understand
that the latter violation is partially due to the components of
the calculation which consider in the denominator bullet debt
payments due at maturity for certain pieces of debt. That said,
ICE's BCA assumes that CAF, as a multilateral, is unlikely to
accelerate the outstanding balance of its loan and will continue
providing the required waivers until the amendment is completed.
On a more positive note, ICE is currently complying with its other
financial covenants following the amendment in 2012 of certain
financial covenant thresholds under several of its other bank loan
agreements. That said, the cushion is limited and some of them
could be violated again if ICE fails to modify the thresholds
before the Reventazon facility starts operations in 2016. Failure
to comply with the financial covenants is a credit concern because
certain pieces of ICE's outstanding indebtedness include cross-
default provisions.
The ratings of ICE and Reventazon Finance Trust also acknowledge
that according to the Independent Engineer's report dated June
2014 the Reventazon project (capex: around US$1.4 billion) is
currently progressing according to the works rescheduled in 2012.
Moody's understands the project reports a progress of over 70%.
The next critical milestone under the EPC contract, namely the
completion of the embankment fill for the dam, is scheduled for
mid July 2015.
ICE's stable rating outlook reflects the stable outlook on the
rating of the Costa Rican government and Moody's expectation that
the implied extraordinary support and dependence levels from the
sovereign will not change. The stable outlook also reflects
Moody's belief that ICE will be able to successfully manage the
increasing leverage associated with its material investment
program and associated liquidity in a way that the credit metrics
remain appropriate for its current BCA rating. Specifically, that
its retained cash flow (RCF) to debt and cash flow (CFO pre-W/C)
interest coverage exceeds 9% and 2.0x, respectively.
The stable rating outlook further incorporates Moody's expectation
that ICE's exposure to foreign currency risk will not cause major
liquidity challenges. Another key expectation embedded in the
stable outlook is that ICE will further improve its overall
governance management.
Since ICE's Ba1 rating is based on Moody's methodology for GRIs,
upward rating pressure is unlikely given the stable rating outlook
for the Costa Rican government and ICE's BCA. The BCA rating of
ICE could be raised if ICE successfully executes its capex plans
and manages the on- and off-balance sheet indebtedness prudently,
or if evidence surfaced of a more credit supportive Costa Rican
regulatory framework which enhances ICE's ability to earn a higher
rate of return on rate base on a sustainable basis. Importantly,
positive momentum could be triggered on the BCA by evidence of
improved governance in terms of complying with all covenants in a
comfortable manner and elimination of KMPG's qualifications. Upon
resolution of those issues, the BCA could be raised if after
completion of the construction of its ongoing large capex program,
ICE reports RCF to debt that represents at least 10% of total
adjusted debt and cash flow interest coverage higher than 3.0x on
a sustainable basis.
An upgrade of ICE's ratings would also likely prompt an upgrade of
Reventazon Finance Trust's ratings.
ICE's ratings or outlook would come under pressure by a new
downgrade in the sovereign rating or a change in the outlook to
negative or in the case of lower than anticipated implied
sovereign support or if the BCA is also reviewed downward.
Negative rating pressure on the BCA could surface from a
deterioration in the credit supportiveness of the Costa Rican
regulatory framework or if ICE's expansion plan is poorly executed
and/or indebtedness increases significantly above anticipated
levels such that the credit metrics deteriorate and cash flow
interest coverage falls below 2.0x or RCF to debt declines below
6% for an extended period. In addition, ratings could be
downgraded if the issuer is not able to comply with its covenant-
package under its loan agreements.
A downgrade of ICE's ratings would also likely result in an
downgrade of Reventazon Finance Trust's ratings.
The methodologies used in these ratings were Regulated Electric
and Gas Utilities published in December 2013, and Global
Telecommunications Industry published in December 2010. Other
methodologies used include the Government-Related Issuers:
Methodology Update published in July 2010.
Headquartered in San Jose, Costa Rica, ICE is a government-owned
vertically integrated electric utility as well as an integrated
telecommunications service provider. ICE is the largest electric
utility in Costa Rica accounting for the vast majority of the
country's transmission assets as well as over 75% of the installed
capacity and electricity generation. The group's market share in
the distribution of power also exceeds 75% after considering ICE's
98.6% ownership stake in Compa¤ia Nacional Fuerza y Luz that
serves the capital. At the end of June 2014, ICE reported
consolidated assets of around US$8.7 million and funds from
operations for the last twelve month period ended in June 2014 of
around US$870 million.
=============
J A M A I C A
=============
NATIONAL COMMERCIAL BANK: Names Angus Young as New CEO
------------------------------------------------------
RJR News reports that National Commercial Bank introduced its new
chief executive officer in the launching of its newly acquired
subsidiary NCB Global Finance Trinidad and Tobago.
Angus Young is National Commercial Bank's new chief executive
officer, notes the report.
According to RJR News, NCB Global's launching was held at the
company's offices in Port of Spain on Sept. 15.
Headquartered in Kingston, Jamaica, National Commercial Bank
Jamaica Limited -- http://www.jncb.com/-- together with its
subsidiaries, provides various banking and financial products and
services primarily in Jamaica.
* * *
As reported in the Troubled Company Reporter-Latin America on
May 23, 2014, Fitch Ratings affirmed the long-term foreign
currency and local currency IDRs for National Commercial Bank
Jamaica Ltd. (NCBJ) at 'B-'. Fitch has also revised NCBJ's Rating
Outlook to Stable from Negative. Additionally, Fitch has affirmed
NCBJ's Viability Rating (VR) at 'b-' and revised its Support
Rating Floor (SRF) to 'B-' from 'CCC.'
===========
M E X I C O
===========
GRUPO MEXICO: Spill Sparks Scrutiny of US$150 Million Cleanup
-------------------------------------------------------------
Nacha Cattan and Brendan Case at Bloomberg News report that Mexico
is sending federal officials to Sonora state to oversee Grupo
Mexico SAB's US$150 million cleanup of a copper mine spill that
the government says contaminated the water supplies of at least
24,000 people.
The special commission of environmental and agriculture ministry
officials will monitor the company's pledge to mop up the worst
chemical discharge in Mexico's mining industry, which occurred
Aug. 6 in the northern state that borders Arizona, according to
Bloomberg News.
Bloomberg News relates that pressure on Grupo Mexico rose Sept. 18
as a committee of lawmakers from the lower house of the Mexican
Congress said the accident endangered human lives. The mining and
railroad company controlled by billionaire German Larrea should
establish a development fund for Sonora with MXN5 billion (US$378
million), the lawmakers said in a report obtained by Bloomberg
News.
Grupo Mexico and its Buenavista del Cobre mine have "put at risk
human life, the environment and the region's economic
development," according to the report, Bloomberg News notes.
The Mexico City-based company said last week it would create a
US$150 million trust after its Buenavista del Cobre operation
dumped 11 million gallons of copper sulfate solution into two
Sonora rivers, Bloomberg News says. Industrias Bachoco SAB de CV
and Ford Motor Co. (F) operate plants in Hermosillo, south of the
contaminated waterways.
Rain Blamed
Bloomberg News discloses that the company initially said the
chemical spill from the copper mine that turned waters reddish-
orange stemmed from heavy rains that caused containment ponds to
overflow.
The government rejected that claim, while the nation's
environmental prosecutor filed a criminal complaint against the
company, Bloomberg News relates. On Sept. 1, the company said
defective pipe seals also contributed to the spill.
The spill of copper sulfate and heavy metals contaminated drinking
water for communities near the mine in Cananea and resulted in the
temporary closing of schools, according to Sonora's civil
protection agency, Bloomberg News relates.
Grupo Mexico said Sept. 4 that Buenavista's output remained stable
after the environmental prosecution agency Profepa closed part of
the mine, which the company says contains the world's largest
copper reserves, Bloomberg News recalls. The stoppage only
affected portions of the mine under construction for future
operations, it said.
Grupo Mexico SAB is among the world's largest copper producers,
with mining operations in Mexico, Peru and the U.S. The company
aims to produce 850,000 metric tons of copper this year, raising
that to 1.3 million tons by 2017.
=======
P E R U
=======
MAESTRO PERU: Fitch Puts 'B' Currency IDRs on Watch Positive
------------------------------------------------------------
Fitch Ratings' affirmation of S.A.C.I. Falabella (Falabella)
follows the company's announcement that it has purchased Maestro
Peru S.A. (Maestro), a Peruvian home improvement store retail
chain, for approximately USD492 million. This transaction is
viewed as neutral for Falabella's credit quality, as the pro forma
increase in its leverage that results from the transaction remains
in line with expectations incorporated in the ratings. The Rating
Outlook for Falabella remains Stable. Fitch has simultaneously
placed the ratings of Maestro on Rating Watch Positive.
Through this transaction, Maestro has become a fully owned
subsidiary of Sodimac Peru, which is an indirect wholly owned
subsidiary of Falabella. Sodimac Peru and Maestro are the two
largest home improvement specialty retailers in Peru with combined
sales on a pro forma basis of more than USD1 billion. The
acquisition will represent incremental adjusted debt of
approximately USD724 million for Falabella, which includes the
transaction price and the assumption of Maestro's adjusted debt.
Falabella had EBITDAR and net adjusted debt levels of USD2.1
billion and USD8.7 billion, respectively, as of June 30 2014.
Excluding Falabella's banking operations from these figures, the
company generated USD1.5 billion of EBITDAR and had USD4.9 billion
of net adjusted debt.
Falabella's net adjusted leverage measured as total adjusted net
debt/EBITDAR remains moderate at around 3.2x, excluding its
banking operations, and nearly 4.2x on a consolidated basis.
Fitch estimates Falabella's pro forma total adjusted net
debt/EBITDAR ratio to increase to around 4.3x. Excluding banking
operations, Falabella's pro forma net adjusted leverage is
expected to increase to 3.6x .
Fitch views the acquisition as strategically positive over the
medium term. Through this acquisition Falabella will become the
undisputed leader in the underpenetrated Peruvian home improvement
industry. As of June 30, 2014, the main players in the industry -
modern channel only -- were Sodimac, Maestro and Promart, with
market share participations of approximately 45%, 41%, and 14%,
respectively. Maestro's operations include 30 stores that have a
total selling space of 182,000 square meters (m2). Approximately
50% of these stores are owned by Maestro.
Falabella's ratings continue to reflect its position as a leading
regional retailer with store formats that include department
stores, home improvement stores, and food retailing businesses.
The company has a strong presence in Chile, Peru and Colombia and
a small participation in the Brazilian home improvement market.
The company complements its retail business with a proprietary
credit card business and retail banking operations in Chile, Peru
and Colombia.
The Positive Rating Watch on Maestro's ratings takes into account
the credit linkage between the two companies post-acquisition,
which stems from the legal, operational, and strategic synergies
between Falabella and Maestro that will result from the announced
acquisition. Positive rating actions on Maestro's ratings, likely
to be a multi-notch upgrade, are possible after the legal,
operational and financial strategies of Falabella in regards to
Maestro become clearer.
The Stable Outlook for Falabella incorporates the view that the
company's credit profile should remain relatively moderate in the
medium term. Gross financial leverage -- excluding liabilities
related to the banking business -- is expected to trend toward 3x
as this acquisition is being absorbed. Capex and financial
services needs are projected to be funded primarily with the
company's cash flow generation.
RATING SENSITIVITIES:
Positive: Future developments that could collectively lead to
positive rating action include:
-- Gross adjusted leverage - excluding banking operations --
consistently below 2.5x;
-- Moving towards positive free cash flow (FCF) generation
after capex & dividends;
-- Liquidity ratio, measured as FCF plus cash and marketable
securities over debt service coverage, consistently in
excess of 1.25x.
Negative: Future developments that could lead to a negative rating
action include:
-- Significant deterioration in the credit quality of the
company's credit card and banking businesses;
-- FCF consistently reaching levels around -15% of revenues;
-- Gross adjusted leverage - excluding banking operations --
consistently above 4x.
Fitch affirms Falabella's ratings as follows
-- Local currency Issuer Default Rating (IDR) at 'BBB';
-- Foreign currency IDR at 'BBB';
-- USD500 million unsecured bonds first tranche due in 2023 at
'BBB';
-- CLP94,500 million unsecured bonds second tranche due in 2023
at 'BBB';
-- Long-term national scale rating at 'AA (cl)';
-- Bonds No. 468, series F at 'AA(cl)';
-- Bonds No. 579, series J at 'AA(cl)';
-- Bonds No. 578, series G and H at 'AA(cl)';
-- Bonds No. 395 at 'AA(cl)';
-- Bonds No. 467 at 'AA(cl)';
-- Bonds No. 395, series K and L at 'AA(cl)';
-- Bonds No. 467, series M at 'AA(cl)';
-- Commercial paper instruments No. 028 at 'AA(cl)'/'N1+ (cl)';
-- Commercial paper instruments No. 035 at 'AA(cl)'/'N1+ (cl)';
-- Commercial paper instruments No. 036 at 'AA(cl)'/'N1+ (cl)';
-- Commercial paper instruments No. 037 at 'AA(cl)'/'N1+ (cl)';
-- Commercial paper instruments No. 038 at 'AA(cl)'/'N1+ (cl)';
-- National equity rating at Level 2 (cl) (Primera Clase Nivel
2).
The Rating Outlook is Stable.
Fitch places these ratings for Maestro on Rating Watch Positive:
-- Foreign currency IDR 'B';
-- Local currency IDR 'B';
-- Senior unsecured notes 'B/RR4'.
* PERU: Seeks Private Funding for US$19 Billion of Water Works
--------------------------------------------------------------
John Quigley at Bloomberg News reports that Peru is seeking
investors for US$19 billion of projects through 2021 to help
improve access to potable water and sanitation in the South
American country.
The government will auction the rights to build and operate water
infrastructure works while opening up state-owned sanitation
companies to private capital, according to a website statement by
the Housing, Construction and Sanitation Ministry, Bloomberg News
notes.
About 86 percent of Peru's 31 million people had access to
drinking water in 2013, up from 76 percent in 2012. Public
financing alone won't be sufficient to raise coverage to 100
percent, Housing Minister Milton von Hesse said, Bloomberg News
relates.
"We need to foster private investment, promoting public-private
partnerships that contribute to improving the management" of state
sanitation companies, added Mr. von Hesse, Bloomberg News relates.
=====================
P U E R T O R I C O
=====================
PUERTO RICO ELECTRIC: Moody's Cuts Rating on $8.8BB Bonds to Caa3
-----------------------------------------------------------------
Moody's Investors Service has downgraded the rating for Puerto
Rico Electric Power Authority's (PREPA) $8.8 billion of Power
Revenue Bonds to Caa3 from Caa2. This rating action concludes the
rating review that Moody's initiated on July 1, 2014. PREPA's
rating outlook is negative.
Summary Rating Rationale
The downgrade considers the uncertainty that persists regarding
the details of the expected restructuring plan by PREPA, the
implementation risk that continues regarding PREPA's ability to
execute on its multi-year fuel conversion plan as well our belief
that any such debt restructuring will involve some degree of
impairment for bondholders. The downgrade to Caa3 further
incorporates a belief that the expected recovery rate could
approximate 65% to 80% in the event of a default, which Moody's
believe is highly likely. While the recently entered Forbearance
Agreement provides time for parties to work on a consensual
restructuring plan, Moody's believe that any restructuring
proposal will be influenced, to some degree, by the Commonwealth's
politics, particularly given the weakened and lackluster state of
the Puerto Rico economy. We also believe that implementation risk
is high with respect to completing the multi-year fuel conversion
plan, an important element for PREPA, and portions of this risk
are outside of the PREPA's management control. The extensions of
PREPA bank lines to March 31, 2015, and the Forbearance Agreement
addressed immediate issues, but longer-term structural and
liquidity issues remain.
PREPA's financial condition remains fragile, as bondholder debt
service due January 1, 2015 is expected to be satisfied by draws
against various reserve accounts held by a trustee, and as part of
the Forbearance Agreement, liquidity needs can be satisfied by
draws under the construction account reserve. In the end, the
ability of the Forbearance Agreement to remain in place depends
upon the progress towards completing a complex restructuring plan.
For example, PREPA could fall behind on its milestones and
jeopardize the forbearance. The Ad Hoc group of bondholders may be
working constructively with each other now, but this could change.
There is also the possibility of political interference on the
part of the Commonwealth government. While Moody's view the
existence of the Forbearance Agreement and the September 4th
appointment of a Chief Restructuring Officer as constructive data
points, Moody's cannot rule out the possibility that efforts to
restructure could be derailed resulting in the Forbearance
Agreement being terminated and PREPA moving to restructure under
the newly enacted Debt Enforcement and Recovery Act (Recovery
Act).
During the period of the forbearance, PREPA will make required
payments on the bonds as stipulated in the Forbearance Agreement
while it works on a restructuring plan, which is to be completed
by March 2, 2015. The stipulated payments are to be put into a
separate Specified Period Defeasance Fund with the Trustee,
sufficient to enable PREPA to make its next scheduled interest
payment on the bonds of $214 million. Also during the period of
the forbearance, PREPA must continue to pay interest on the
outstanding bank lines. Failure to comply with the terms of any
forbearance agreement will cause an early termination of that
forbearance agreement and will cross-terminate to the other
forbearance agreements. If PREPA were to fail to make its required
payments or to meet the milestones, the forbearance would unravel,
and bondholders will be free to exercise their remedies and take
other legal action.
Moody's stills believe that a restructuring is most likely in the
early part of 2015, and the timeline and milestones spelled out in
the Forbearance Agreement support this. Hosver, there is the
possibility that a restructuring announcement could happen sooner
and PREPA could avail itself of the new Recovery Act if
negotiations among bondholders, PREPA and the government break
down.
The Caa3 rating and the negative outlook incorporate this
uncertainty. The negative outlook also considers the uncertainty
and obstacles to executing on a complex restructuring plan as well
as the long-term capital investment program focused on converting
oil-based power generation to natural gas in the face of a very
challenging economic environment within the Commonwealth.
What Could Change The Rating - Up
In light of the negative outlook, the rating is not expected to
move upward over the near-to-medium term. There could be
stabilizing and upward pressure on the rating and outlook if the
restructuring is announced and the ensuing prospects for recovery
are better than the Caa3 would suggest.
What Could Change The Rating - Down
The rating could be pressured downward if the Forbearance
Agreement collapses and/or the prospects for recovery worsen.
Rating Methodology
The principal methodology used in this rating was U.S. Public
Power Electric Utilities with Generation Ownership Exposure
published in November 2011
PUERTO RICO HIGHWAY: Moody's Confirms Caa2 Rating on Lien Bonds
---------------------------------------------------------------
Moody's Investors Service has confirmed ratings on the Puerto Rico
Highway and Transportation Authority (PRHTA), the Puerto Rico
Aqueduct and Sewer Authority (PRASA), and the Puerto Rico
Convention Center District Authority (CCDA), concluding a review
for possible downgrade that began July 1. The ratings have been
confirmed at Caa1, except for PRHTA subordinate-lien bonds, which
are confirmed at Caa2. The outlooks are negative, in line with the
Commonwealth of Puerto Rico (B2, negative).
Summary Rating Rationale
Confirmation of the ratings on bonds issued by PRHTA, PRASA and
CCDA ends a review period that began after the commonwealth passed
a law permitting these entities, along with the Puerto Rico
Electric Power Authority (PREPA) to restructure their debt. Our
rating action on PREPA (which Moody's simultaneously downgraded to
Caa3, negative) is described in a separate release. The three
authorities discussed in this release have adequate coverage of
maturing debt for the near term, and no unmanageable maturing
short-term obligations that could trigger a default. The passage
of a debt restructuring law applicable to these public
corporations indicates that a default trigger could emerge, and it
underscores that the central government of the commonwealth (B2,
negative) will no longer be able to provide operating support to
these entities as it struggles with an onerous debt burden and
long-running economic stagnation.
Strengths
-- Manageable near-term financial obligations
-- Debt service coverage from pledged revenues that is adequate
for the foreseeable future
-- Ability to increase revenue to cover debt service as well as
operating needs
Challenges
-- Eligibility for untested local law under that provides these
authorities a way to default on bonds to manage pressure from
large debt burdens
-- Diminished ability to borrow from central government to offset
operating deficits
-- Potential political and economic constraints on future rate
increases
Outlook
The outlook is negative for the debt of PRHTA, PRASA, and CCDA,
matching the outlook of the commonwealth itself and reflecting
these entities' exposure to Puerto Rico's intensifying debt burden
and long-running economic stagnation, as well as their ability to
default on bonds under a recently enacted law.
What Could Move The Rating Up
-- Evidence that authorities will not restructure debt under
recent law
-- Other factors such as improved revenues reflecting economic
stabilization and ability to manage near-term obligations
What Could Move The Rating Down
-- Increasing probability of default, whether or not in connection
with recent restructuring law
Rating Methodologies
The principal methodology used in rating the Puerto Rico Highway &
Transportation Authority debt and Puerto Rico Convention Center
District Authority debt was US Public Finance Special Tax
Methodology published in January 2014. The principal methodology
used in rating the Puerto Rico Aqueduct and Sewer Authority debt
was Analytical Framework For Water And Sewer System Ratings
published in August 1999. The additional methodology used in these
ratings was US States Rating Methodology published in April 2013.
===============================
T R I N I D A D & T O B A G O
===============================
SAN JUAN/LAVENTILLE: Transportation Workers Demand Back Pay
-----------------------------------------------------------
Trinidad and Tobago Newsday reports that transportation workers
from the San Juan/Laventille Regional Corporation (SJLRC) staged a
protest on Aug. 29, outside the corporation's office in Mount Hope
demanding outstanding back pay.
One of the workers, Denis Flarey, told Trinidad and Tobago Newsday
"We are fed up of this treatment. We are constantly told next
fortnight we would get our money."
"Some of us come here every day without a cup of tea in our belly.
We should get our hard earned money," Mr. Flarey added, notes the
report.
Since December 2013, the workers claimed, they were expecting to
get their back pay, but after five months of waiting a decision
was made to stage a protest, the report discloses.
The transportation workers include sewer truck operators, water
truck operators, material truck drivers, and health truck drivers.
The report notes that Vice Chairman of the PNM-controlled
Corporation Dr. Jeffrey Reyes tried to speak with the irate
protesters, offering to hold a private meeting with them. The
workers declined the offer.
Corporation Chairwoman Nafeesa Mohammed told Newsday all efforts
were taken to ensure the workers receive their payments and
auditors completed their assessment of the payments on Aug. 22
with all documents sent to the Ministry of Finance.
Now the corporation is waiting for the Ministry to approve the
cheques, Ms. Mohammed said, the report adds.
It was explained that all 14 corporations use the same auditors to
assess back payments, and as the SJLRC is one of the bigger
corporations, it took longer to audit the claims, the report
notes.
This corporation employs 1,289 workers and the back pay owed is in
the vicinity of TT$35 to TT$36 million, the report adds.
San Juan-Laventille Regional Corporation is a Regional Corporation
of Trinidad and Tobago. It has a land area of 220.39 sq. km. The
San Juan-Laventille Regional Corporation is headquartered in
Aranguez.
=================
V E N E Z U E L A
=================
PETROLEOS DE VENEZUELA: S&P Lowers CCR to 'CCC+'; Outlook Neg.
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit and senior unsecured debt ratings on Petroleos de Venezuela
S.A. (PDVSA) to 'CCC+' from 'B-'. The outlook remains negative.
The rating action on PDVSA followed the downgrade of Venezuela to
'CCC+' from 'B-'. S&P assess that there is an "almost certain"
likelihood that the government would provide timely and
extraordinary support to PDVSA, in case of financial distress, and
result in extraordinary financial burden on it, in case of
sovereign stress. S&P's assessment of an "almost certain"
likelihood of extraordinary government support is based on:
-- PDVSA's "critical" role as it contributes about 50% of
Venezuela's revenues and 90% of its exports, key role in
meeting the sovereign's political and economic objectives;
and
-- Its "integral" link with the government, given its full and
stable ownership of the company.
The company's "weak" business risk profile continues to reflect
the government's heavy intervention and PDVSA's challenge to
increase production. S&P's assessment of an "aggressive"
financial risk profile reflects a continued rise in debt, the
challenges to finance the very high capital expenditures needed to
develop reserves and increase production, and considerable
contributions to the government's social programs.
The company's financial policy has a negative impact on S&P's
rating outcome. In addition S&P applies a downward adjustment of
one notch for comparable rating analysis. This is based on S&P's
view that, on a stand-alone basis, PDVSA's credit quality is
highly intertwined with that of the sovereign. S&P considers that
the government has a high involvement in the company and the
sector, as seen in PDVSA's high fiscal contributions to the
government's social programs, which the company increased to about
35% of its revenues in 2013.
The negative outlook on PDVSA reflects that on Venezuela. S&P
could lower the ratings on the company if it downgrade the
sovereign. A positive rating action is unlikely at this point.
S&P don't expect PDVSA's relationship with the government to
change significantly in the next two to three years. S&P also
believes that the government won't significantly reduce its strong
involvement in the sector or in the company. Therefore, the
rating on PDVSA will likely follow the rating trajectory on the
sovereign.
***********
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 * * *