/raid1/www/Hosts/bankrupt/TCRLA_Public/150319.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, March 19, 2015, Vol. 16, No. 055
Headlines
A N T I G U A & B A R B U D A
LIAT: Leave Us With Airline, Says Prime Minister Browne
A R G E N T I N A
ARGENTINA: Citigroup to Stop Bond Payments Amid Turmoil
BANCO CETELEM: Moody's Puts BCA on Review
PROVINCE OF CHUBUT: Moody's Rates ARS781.8MM Notes at 'Caa1'
B O L I V I A
BANCO FORTALEZA: Average BCA Likely to Remain at ba3, Says Moody's
B R A Z I L
BANCO BBM: Moody's Puts Ba1 Current LT Sr Unsec. Rating on Review
GALVAO PARTICIPACOES: Fitch Lowers Issuer Default Rating to 'CCC'
PETROLEO BRASILEIRO: PT Treasurer Charged in Corruption Case
C A Y M A N I S L A N D S
ALPHANORTH OFFSHORE: Members' Final Meeting Set for April 16
CVI GVF CLO 1: Members' Final Meeting Set for April 15
DEMETER SOLUTIONS: Members' Final Meeting Set for April 28
ELF HOLDINGS: Members' Final Meeting Set for April 9
JAFCO ASIA: Creditors' Proofs of Debt Due April 12
MACQUARIE INTERNATIONAL: Members' Final Meeting Set for April 16
ROCKET REALTY: Members' Final Meeting Set for April 22
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Builders Admit Illegality, Warn of Collapse
J A M A I C A
TULLOW OIL: Starts Cutting Staff
T R I N I D A D & T O B A G O
CARIBBEAN AIRLINES: Still Faces Pilot Shortage
X X X X X X X X X
* LATAM: Poor Port Infrastructure in Markets Hinders Cruises
* Moody's Publishes New Bank Rating Methodology
* Moody's Review Global Bank Ratings
- - - - -
===============================
A N T I G U A & B A R B U D A
===============================
LIAT: Leave Us With Airline, Says Prime Minister Browne
-------------------------------------------------------
The Daily Observer reports that Antigua & Barbuda said it will
resist further efforts to have the base of regional airline LIAT,
operating as Leeward Islands Air Transport, moved from Antigua to
Barbados with Prime Minister Gaston Browne appealing to his
regional colleagues to "leave us with LIAT."
Mr. Browne told the inaugural edition of OBSERVER PM that his
government is "fighting" to have LIAT remain here although it
knows that "from a legal standpoint we don't have the shareholding
capacity."
"They are literally pulling, and have pulled to some extent, the
rug from under our feet over the years and we are not looking to
resist any such further move," the report quoted Mr. Browne, who
is also the country's minister of finance, as saying.
Mr. Browne made an impassioned plea to fellow shareholding
governments, asking them to consider that "all we export from this
country is LIAT," according to The Daily Observer.
"We buy flour from St Vincent; we buy juices from Barbados;
vegetables from Dominica and all I am saying to them, leave us
with LIAT," Mr. Browne said, the report notes.
The report relays that Mr. Browne said while the major
shareholding governments of LIAT had legal right "we have every
right to defend what's in the best interest of Antigua & Barbuda."
In mid-February the airline announced its intention to rebase two
aircraft currently stationed in Antigua to Barbados, the report
notes. Prime Minister Browne said the move was part of a
systematic plan to disenfranchise the country.
"As you know, they're seeking to redeploy assets to Barbados," Mr.
Browne said, the report discloses. "You can be assured that if
those assets move, then you can't justify having the maintenance
base here, and if the maintenance base moves, then you cannot
justify the headquarters," Mr. Browne added.
The report recalls that after LIAT announced the changes, Mr.
Browne wrote to Chairman of LIAT Shareholder Governments, Dr.
Ralph Gonsalves asking him to put a stop to the rebasing efforts
until Cabinet could discuss the matter.
LIAT has also announced plans to part ways with close to 200
employees, the report relays. Speaking on the planned
retrenchment, Mr. Browne said the company should consider the
least painful option.
"Now with St Vincent going into an election this year, if LIAT is
going to retrench (do) you think the Prime Minister of St Vincent
is going to want to let go anybody in St Vincent? Barbados has the
majority shares; they say they want more business. (Do) you think
they're going to allow anybody from (Barbados) to go? At the end
of the day it is Antigua and Barbuda that will be affected," Mr.
Browne said, the report relates.
The report adds that Mr. Browne reiterated his view that the move
would have negative impact on the local economy and appealed to
workers "to start to put their business in order because I
guarantee you, it will be a total meltdown and destruction of
LIAT."
LIAT is owned by Caribbean governments, with the majority being
the governments of Barbados, Antigua & Barbuda, St Vincent & the
Grenadines and Dominica, notes the report.
About LIAT
LIAT, operating as Leeward Islands Air Transport, is an airline
headquartered on the grounds of V. C. Bird International Airport
in Antigua. It operates high-frequency inter-island scheduled
services serving 21 destinations in the Caribbean. The airline's
main base is VC Bird International Airport, Antigua and Barbuda,
with bases at Grantley Adams International Airport, Barbados and
Piarco International Airport, Trinidad and Tobago.
* * *
As reported in the Troubled Company Reporter-Latin America on
Dec. 2, 2014, Caribbean360.com said that chairman of the
shareholder governments of the financially troubled regional
airline, LIAT, operating as Leeward Islands Air Transport, Dr.
Ralph Gonsalves said while he is unaware of the details regarding
any possible retrenchment of employees, the airline needs to deal
with its high cost of operations.
The TCR-LA on March 10, 2014, citing Caribbean360.com, reported
that LIAT said it will take "decisive action" to deal with
unprofitable routes as the Antigua-based airline seeks to make its
operations financially viable.
On Sept. 23, 2013, the TCRLA, citing Trinidad and Tobago Newsday,
reported that there's much upheaval at the highest levels of LIAT
-- the Board and the Executive. Following the sudden resignation
of Chief Executive Officer Captain Ian Brunton, David Evans
replaced Mr. Brunton as chief executive officer.
=================
A R G E N T I N A
=================
ARGENTINA: Citigroup to Stop Bond Payments Amid Turmoil
-------------------------------------------------------
Jonathan Stempel at Reuters reports that Citigroup Inc. said it
plans to exit its custody business in Argentina as soon as
possible, after a U.S. judge refused to lift an injunction that
blocked the bank from processing interest payments on $2.3 billion
of Argentina bonds.
In a defeat for the bank, clients and Argentina itself, Citigroup
said it made its decision in light of U.S. District Judge Thomas
Griesa's March 12 order letting the injunction stand, and
Argentina's renewed threats to strip its banking license and
impose criminal, civil and administrative sanctions, according to
Reuters.
Citigroup may sell portions of the business or end some customer
relationships, according to a letter to Judge Griesa from
Citigroup's lawyer, Karen Wagner, the report notes.
The New York-based bank also again asked Judge Griesa to put his
order, which it hopes to overturn, on hold as it prepares to exit
the custody business, the report relays. Citigroup called itself
the victim of an "unprecedented international conflict of laws,"
the report notes.
The report discloses that Citigroup's decision may further
complicate Argentina's efforts to pay bondholders and return to
global debt markets, more than 13 years after its 2001 default on
roughly $100 billion of bonds.
Most investors holding Argentina bonds exchanged them for bonds
worth much less, but a group of bondholder holdouts rejected the
swaps, the report relays.
These holdouts, including billionaire Paul Singer's Elliott
Management LP hedge fund and its NML Capital affiliate, as well as
the Aurelius Capital Management hedge fund, have insisted they be
paid in full if holders of exchanged bonds are paid, the report
says.
In his March 12 order, Judge Griesa ordered Citigroup not to
process a $3.7 million interest payment due March 31 on bonds
issued under Argentine law, the report notes.
The judge had previously blocked payments on bonds governed by New
York and English law, the report relays. His injunction last year
set off another Argentina default on July 31, the report
discloses.
As custodian, Citigroup is supposed to transfer interest payments
to clearinghouses that in turn pay bondholders, the report says.
Waiting Game
Reuters relates that Judge Griesa's repeated rulings in favor of
the holdouts have prompted defiance from Argentina and its
president Cristina Fernandez, who has labeled the holdouts as
"vultures" bent on astronomical profits.
President Fernandez cannot seek a third term, and her successor
will take office in December, notes the report.
The March 12 order "put an end to any serious thought for
Argentina to issue foreign currency debt to foreign investors,"
said Mark Weidemaier, a University of North Carolina law professor
specializing in sovereign debt disputes, the report relays.
"It now becomes a waiting game," the report quoted Mr. Weidemaier
as saying. "The decision gives holdouts more leverage, but it
might be that the current administration in Argentina is not
interested in settling, and will hand the problem to its
successor," Mr. Weidemaier added.
In a letter, Aurelius' lawyers urged Judge Griesa not to put the
order on hold, saying Citigroup neither committed to ending its
role in making bond payments, nor showed how exiting the custody
business created an "emergency need" for a stay, the report notes.
The bank has portrayed itself as an innocent third party stuck
with an untenable choice between ignoring JudgeGriesa, and putting
its Argentina banking license in jeopardy, the report relays.
In his March 12 order, Judge Griesa expressed sympathy for
Citigroup, but said Argentina's recalcitrance caused Citigroup's
predicament, and that any third party that aids the country's
payment process would violate his injunction, the report
discloses.
The report adds that Judge Griesa also again urged Argentina to
work with court-appointed mediator Daniel Pollack to end its
disputes with the holdouts.
Citigroup tried to downplay its decision to quit the Argentina
custody business, saying that business has "no meaningful
connection with banking business in general," and concerns only
servicing assets belonging to clients, the report relays.
The case is NML Capital Ltd v. Argentina, U.S. District Court,
Southern District of New York, No. 08-06978.
* * *
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.
On Nov. 3, 2014, the TCR-LA reported that Fitch Ratings downgraded
Argentina's rating on Par Bonds issued under Foreign Law to 'D'
from 'C' as Argentina has not been able to cure the missed coupon
payments on its par bonds issued under foreign law after the
expiration of the 30-day grace period on Oct. 30. According to
Fitch's criteria, this constitutes an event of default and Fitch
has downgraded the affected securities to 'D'. In addition, Fitch
has affirmed:
-- Foreign Currency Issuer Default Rating (IDR) at 'RD';
-- Local Currency IDR at 'CCC';
-- Short-term Foreign Currency IDR at 'RD';
-- Country Ceiling at 'CCC'.
-- Performing Foreign Law Exchanged Securities (Global 17) at
'C';
-- Local Currency exchanged bonds under Argentine Law at 'CCC';
-- Foreign and Local Currency non-exchanged securities under
Argentine Law at 'CCC';
-- Discount Bonds issued under Foreign Law at 'D'.
BANCO CETELEM: Moody's Puts BCA on Review
-----------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo (MLA) has
placed on review the adjusted baseline credit assessment (BCA) of
Banco Cetelem Argentina S.A. following March 16, 2015 publication
by Moody's Investors Service of its updated bank rating
methodology.
Banco Cetelem's deposit and debt ratings are unaffected.
At the same time, MLA has withdrawn for its own business reasons
the bank financial strength ratings on all Argentine banks. Going
forward the BCA will be the only indicator of issuers' standalone
intrinsic strength.
The action follows the release of Moody's updated bank rating
methodology, which incorporates several new elements designed to
help accurately predict bank failures and determine how each
creditor class is likely to be treated when a bank fails and
enters resolution, reflecting insights gained from the crisis and
the fundamental shift in the banking industry and its regulation.
Key changes include the addition of a Macro Profile, a new
Financial Profile and a Loss Given Failure (LGF) analysis
framework, all of which are described below. The first two
elements primarily affect the positioning of a bank's BCA, while
the last one can lead, through the assessment of instrument volume
and subordination levels and of expected treatment by resolution
authorities, to changes in long-term issuer, deposit and debt
ratings.
A list of the affected credit ratings is available at
http://is.gd/VHOU0P
-- BCA: New BCA Scorecard Focused on Core Financial Ratios and
Macro Profile
The new Financial Profile takes as its starting point five
solvency and liquidity-related financial ratios which are
considered predictive of bank failure (asset risk, capital,
profitability, funding structure and liquid resources). In
addition, the Financial Profile incorporates a broader range of
supplementary ratios, forward-looking expectations and other
relevant qualitative considerations. Joining these as a new input
into the determination of BCAs is the Macro Profile, which
explicitly captures banking system-wide pressures that have been
shown to be predictive of the propensity of banks to fail.
-- Long-Term Ratings: Loss Given Failure, Resolution, and
Government Support
Under the new methodology, the LGF analysis assesses the impact a
bank's failure will have on its various debt classes and deposits
in the absence of any government support. For banks that are
subject to operational resolution regimes an advanced LGF approach
is applied, whereby losses can be imposed selectively on creditors
outside of liquidation. For banks which are not subject to an
operational resolution regime, a basic LGF approach is applied. In
Argentina, in the absence of regulatory-driven going-concern
resolution regimes, MLA applies its Basic LGF approach.
Moody's has withdrawn BFSRs for its own business reasons.
The updated rating methodology published on March 16, 2015, will
be the primary methodology for all bank ratings covered in this
press release, including ratings that have not been placed on
review. MLA rates 24 Argentine banks, 23 of which are unaffected
by the publication of the methodology.
Whenever credit rating methodologies are revised, the updated
methodology is applied to all relevant credit ratings and the
ratings of those banks likely to be affected are placed on review.
MLA expects to conclude its review in the coming few months.
During the review period, the impact of the new methodology on
Banco Cetelem's adjusted BCA will be assessed, with a focus on the
probability that Cetelem will receive support from its parent, BNP
Paribas, in the event that the subsidiary encounters difficulties.
PROVINCE OF CHUBUT: Moody's Rates ARS781.8MM Notes at 'Caa1'
------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo has
assigned Caa1 (global scale local currency) and Baa1.ar (Argentina
National Scale) debt ratings to the Province of Chubut's Class 2
Notes for up to the amount in US dollars equivalent to ARS781.8
millions (USD89 million aproximately). The notes "Bono para el
Desarrollo e Infraestructura del Chubut Clase 2 or BODIC 2" will
be issued under the provincial debt program for up to ARS2,065.5
million.
Like the formerly issued notes, BODIC 1 Notes, the new Notes
constitute direct, unconditional, secured and unsubordinated
obligations of the province. Authorized by Provincial's Laws II
N106 and 151, Provincial's Decree N 604/13 and by the Provincial
Ministry of Finance's Resolutions N 127/13-EC, revised by
Resolutions N 159/15-EC and by Resolution N160/15-EC, BODIC 2
Notes will be payable in Argentine pesos, carry fixed interest
rate and mature in 2021 with quarterly principal amortization
after two-years grace period.
BODIC 2 Notes will be denominated in US dollars but subscribed and
payable in Argentine pesos at the specified exchange rate and sold
in the local capital market. As a result, the US dollar will be a
currency of reference and not a means of payment. For that reason,
the transaction is considered to be denominated in local currency.
The Notes interests and principal services are secured by
dedicated oil royalties of the province.
The Caa1 global rating assigned to these Notes is in line with the
current Province of Chubut's issuer rating whereas the assigned
rating on Argentina national scales is Baa1.ar, one notch higher
than the Province's national scale issuer credit profile of
Baa2.ar, reflecting the credit enhancement provided by the
presence of dedicated oil provincial royalties to back the debt
services. After this new debt issuance, Moody's anticipates that
the ratio of total debt to total revenues of the Province of
Chubut will rise to 25% from 20% estimated for the end 2014 fiscal
year, still a relatively low level.
The assigned ratings are based on preliminary documentation
received by Moody's as of the rating assignment date. Moody's does
not expect changes to the documentation reviewed over this period
or anticipates changes in the main conditions that the notes will
carry. Should issuance conditions and/or final documentation of
any of the classes under this program deviate from the original
ones submitted and reviewed by the rating agency, Moody's will
assess the impact that these differences may have on the ratings
and act accordingly.
Given the negative outlook on the issuer ratings, Moody's does not
expect upward pressures neither in the Province of Chubut's issuer
nor in BODIC 2 Notes ratings in the near to medium term. However,
a change in Argentina's sovereign outlook back to stable could
lead to a change in the outlook back to stable of the Province of
Chubut. Conversely, any material deviation from the expected flows
of oil royalties into the structure or debt service coverage
ratios could exert downward pressure on the assigned ratings.
Finally, The Province of Chubut and BODIC 2 Notes could also be
downgraded if the negative outlook on the sovereign rating
materializes into a rating downgrade.
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".
=============
B O L I V I A
=============
BANCO FORTALEZA: Average BCA Likely to Remain at ba3, Says Moody's
------------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo (MLA) has
the announced rating actions affecting seven Bolivian banks and
one affiliated leasing company, following yesterday's publication
by Moody's Investors Service of its updated bank rating
methodology.
MLA has placed the following ratings on review:
(1) two baseline credit assessments (BCAs), both for upgrade
(2) seven long-term global local currency deposit ratings, two
for upgrade and five for downgrade
MLA has also placed a number of other bank ratings (including
foreign currency, national scale, and senior and subordinate debt
ratings) on review, some up and some down. At the same time, MLA
has withdrawn for business reasons the bank financial strength
ratings on all Bolivian banks. Going forward the BCA will be the
only indicator of issuers' standalone intrinsic strength.
A list of the affected credit ratings is available at
http://is.gd/jTi1kK
The actions follow March 16, 2015 publication of Moody's updated
bank rating methodology, which incorporates several new elements
designed to help more accurately predict bank failures and better
determine how each creditor class is likely to be treated when a
bank fails and enters resolution, reflecting insights gained from
the crisis and the fundamental shift in the banking industry and
its regulation.
Key changes include the additions of a Macro Profile, a new
Financial Profile, and a Loss Given Failure (LGF) analysis. The
first two elements primarily affect the positioning of a bank's
BCA, while the last can lead, through assessments of levels of
subordination as well as expected treatment by resolution
authorities, to changes in long-term issuer, deposit and debt
ratings.
Following the conclusion of its review, MLA expects to make the
following rating changes:
-- BCA: New BCA Scorecard Focused on Core Financial Ratios and
Macro Profile
The new Financial Profile takes as its starting point five
solvency and liquidity-related financial ratios which are
considered predictive of bank failure (asset risk, capital,
profitability, funding structure and liquid resources). In
addition, the Financial Profile incorporates a broader range of
supplementary ratios, forward-looking expectations and other
relevant qualitative considerations. Joining these as a new input
into the determination of BCAs is the Macro Profile, which
explicitly captures banking system-wide pressures that have been
shown to be predictive of the propensity of banks to fail.
In Bolivia, MLA expects a generally modest impact on banks'
baseline credit assessments from the enhanced approach, with just
two BCAs -- Banco Fortaleza S.A. and Banco Fassil S.A. -- likely
to be raised and the average BCA likely to remain unchanged at
ba3.
-- Long-Term Ratings: Loss Given Failure, Resolution, and
Government Support
Under the new methodology, the LGF analysis assesses the impact a
bank's failure will have on its various debt classes and deposits
in the absence of any government support. For banks that are
subject to operational resolution regimes an advanced LGF approach
is applied, whereby losses can be imposed selectively on creditors
outside of liquidation. For banks which are not subject to an
operational resolution regime, a basic LGF approach is applied. In
Bolivia, in the absence of regulatory-driven going-concern
resolution regimes, MLA applies its Basic LGF approach.
The most significant impact of the new methodology to the Bolivia
banks is related to the change in MLA's view that the capacity for
government support is limited to the government's bond rating, and
that there is little scope for other policy tools to provide
durable support beyond this constraint. As a result of this
change, the long-term global local currency deposit ratings on
five banks have been placed on review for downgrade. The banks'
deposit ratings are likely to be downgraded to Ba3, the same level
as the Bolivian sovereign rating, from their current level of Ba2.
-- REVIEW RATINGS OF SUBORDINATED DEBT, BANK HYBRIDS AND
CONTINGENT CAPITAL SECURITIES
Changes in Banco Fortaleza and Banco Fassil's BCAs will affect the
ratings of their junior securities owing to the general assumption
that these instruments do not benefit from support. Therefore, for
these banks, MLA has also extended the review of their BCAs to the
ratings of their subordinated debt.
The updated rating methodology published on 16 March 2015 will be
the primary methodology for all bank ratings covered in this press
release, including ratings that have not been placed on review.
MLA rates 16 banks in Bolivia, nine of which are unaffected by the
updated methodology.
SCOPE OF THE REVIEW
Whenever credit rating methodologies are revised, the updated
methodology is applied to all relevant credit ratings, and the
ratings of those banks that are likely to be affected are,
accordingly, placed on review. MLA expects to conclude the
majority of its reviews in the coming few months. During the
review period, MLA will assess the impact of the new methodology
on rated instruments with a focus on the following:
(1) BCA analysis, which will incorporate of 2014 full year data,
if available, and entail further assessment of fundamental
credit trends in the context of the new scorecard
(2) Government support analysis, which will entail further
analysis of the change in potential government support
LIST OF AFFECTED CREDIT RATINGS
Moody's has withdrawn its bank financial strength ratings for its
own business reasons. Going forward the BCA will be the only
indicator of issuers' standalone intrinsic strength.
Moody's has withdrawn the rating for its own business reasons.
Below is the link to access the List of Affected Credit Ratings
which includes the full list of affected ratings. The database
also provides guidance on the likely outcomes for the deposit and
senior unsecured debt ratings.
The List of Affected Credit Ratings and the lists of withdrawn
BFSRs are an integral part of this press release and identify each
affected issuer covered by this press release:
- Overall List of Affected Credit Ratings: http://is.gd/jTi1kK
- List of withdrawn BFSRs: http://is.gd/7AYGPZ
The principal methodology used in rating Banco BISA S.A., Banco
Fortaleza S.A., Banco Mercantil Santa Cruz S.A., Banco Nacional de
Bolivia S.A., Banco Solidario S.A., Banco Union S.A. and Banco
Fassil S.A. was Banks published in March 2015. The principal
methodology used in rating BISA Leasing S.A. was Finance Company
Global Rating Methodology published in March 2012. Please see the
Credit Policy page on www.moodys.com for a copy of these
methodologies.
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".
===========
B R A Z I L
===========
BANCO BBM: Moody's Puts Ba1 Current LT Sr Unsec. Rating on Review
-----------------------------------------------------------------
Moody's America Latina placed on review its long-term global local
currency issuer and debt ratings on Itausa -- Investimentos Itaa
S.A. (Itausa) and Dibens Leasing S.A. Arrendamento Mercantil, as
well as the local currency subordinated debt ratings on
outstanding notes issued by BFB Leasing Arrendamento Mercantil
S.A. and Itaubank Leasing Arrendamento Mercantil S.A. and backed
by Dibens. The Brazilian national scale issuer and senior
unsecured debt ratings assigned to Itausa and Dibens remained
unchanged.
At the same time, Moody's has placed on review Banco BBM S.A.'s
Ba1 long-term global local currency senior unsecured debt rating
and its Aa2.br long-term Brazilian national scale senior unsecured
debt rating.
List of Affected Ratings:
Organization Name Current LT Sr. Unsecured
and Issuer Ratings
----------------- ------------------------
Banco BBM S.A. Ba1
Itausa - Investimentos Itau S.A. Baa3
Dibens Leasing S.A. -
Arrendamento Mercantil Baa1
These actions follow March 16, 2015 publication of Moody's updated
bank rating methodology and the rating actions taken by Moody's
Investors Service (MIS) on Itau Group and Banco BBM.
The actions follow the release of Moody's updated bank rating
methodology, which incorporates several new elements designed to
help more accurately predict bank failures and better determine
how each creditor class is likely to be treated when a bank fails
and enters resolution, reflecting insights gained from the crisis
and the fundamental shift in the banking industry and its
regulation.
Key changes include the addition of a Macro Profile, a new
Financial Profile and a Loss Given Failure (LGF) analysis. The
first two elements primarily affect the positioning of a bank's
baseline credit assessment (BCA), while the last can lead, through
assessment of both subordination levels and expected treatment by
resolution authorities, to changes in long-term issuer, deposit
and debt ratings. Please refer to the press release "Moody's
publishes its new bank rating methodology".
The updated rating methodology published on March 16, 2015 will be
the primary methodology for all bank ratings, including ratings
that have not been placed on review.
Whenever credit rating methodologies are revised, the updated
methodology is applied to all relevant credit ratings, and Moody's
accordingly places on review the ratings of those banks that are
likely to be affected. Moody's expects to conclude the majority
of its reviews in the coming few months. During the review period,
Moody's will assess the impact of the new methodology on rated
instruments with a focus on the following:
(1) BCA analysis, which will incorporate 2014 full year data,
if available, and entail further assessment of fundamental
credit trends in the context of the new scorecard
(2) LGF analysis, which will incorporate 2014 full year data,
if available, and entail further analysis of banks that are
close to subordination and volume thresholds for change in
LGF notching
(3) Government support analysis, which will entail further
analysis incorporating Moody's revised view on potential
government support
The principal methodology used in these ratings was Banks
published in March 2015.
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".
LAST RATING ACTIONS:
The last rating action on Itausa -- Investimentos Itau S.A. was
taken on Sep. 9, 2014, when Moody's changed to negative, from
stable, the outlook for both the long-term global local currency
issuer and the long-term Brazilian national scale issuer ratings
on Itausa.
The last rating action on Dibens Leasing S.A. Arrendamento
Mercantil was on Sep. 9, 2014, when Moody's changed to negative
from stable the outlook for the long-term global local currency
issuer, senior unsecured debt program and subordinated debt
ratings of Dibens Leasing. The outlook for the national scale
debt rating remained stable.
The last rating action on Banco BBM S.A. was on Jan. 24, 2014,
when Moody's affirmed all of the bank's ratings, including the
bank financial strength rating of D+. The outlook remained stable.
GALVAO PARTICIPACOES: Fitch Lowers Issuer Default Rating to 'CCC'
-----------------------------------------------------------------
Fitch Ratings has downgraded the foreign and local currency Issuer
Default Ratings (IDRs) for Galvao Participacoes S.A. (GalPar) to
'CCC' from 'B-' and the national long-term rating to 'CCC(bra)'
from 'BB+(bra)'. Fitch has also downgraded the national long-term
rating for GalPar's fully owned subsidiary, Galvao Engenharia S.A.
(GESA), to 'CCC(bra)' from 'BB+(bra)'. The ratings have been
removed from Negative Watch.
KEY RATING DRIVERS
The downgrades reflect GalPar's and GESA's intensifying liquidity
risks. The group has been facing growing difficulties in
obtaining working capital funding to operate, pay suppliers, and
lengthen its debt maturity profile. Allegations of involvements
in the Lava-Jato investigation and potential heavy fines, has led
banks to become more restrictive towards the group. Important
projects, such as the BR-153 toll road, are on hold as Banco
Nacional de Desenvolvimento Economico e Social (BNDES) is
demanding additional guarantees to provide the long term
financing. The challenging conditions and delays in receiving
payments for completed projects and recognizing claims related to
contract amendments with Petroleo Brasileiro S.A. (Petrobras),
worth more than BRL500 million, have also negatively impacted
GESA's cash flow generation and increased refinancing risk.
Fitch considers positive the group's effort to sell some of its
assets in order to improve liquidity, which would alleviate short
term pressures if successful. By the end of February 2015 the
GalPar and GESA's cash position remained tight at BRL154 million,
compared with BRL429 million of debt due until August 2015. The
ratings of GalPar and GESA are the same, given the mutual
financial and operating support and cross guarantees provided.
GESA should continue in the medium term to provide support to its
affiliates in the form of debt guarantees, and indirectly through
dividends streamed up to GalPar.
The latest financials available for GALPAR and GESA are June 2014
which reported weak credit metrics. As of June 30, 2014, GALPAR
and GESA, on a consolidated basis, cash positions were low at
BRL272 million and BRL183 million, respectively, which covered
only 32% and 49% of their short term debts of BRL847 million and
BRL371 million. In the same period, the consolidated total debt
for GalPar was BRL2.1 billion and for GESA BRL597 million which
resulted on net leverage of 3.8x and 3.2x, respectively.
KEY ASSUMPTIONS
-- Ongoing and challenging negotiations for the company with
the banks to support its working capital needs and rollover
its short term debt;
-- Sale of assets under tight conditions which could provide
the company access to significant amount of cash;
-- No expectation of short term progress in receiving the late
payments and claims from Petrobras.
RATING SENSITIVITIES
The company's ratings could be downgraded if the company formally
files for bankruptcy protection.
An upgrade is unlikely at this time given the group's challenging
operating and financing scenario. A successful sale of assets
above Fitch expectations would be positive.
Fitch has downgraded these ratings:
Galvao Participacoes S.A.
-- Foreign currency IDR to 'CCC' from 'B-';
-- Local currency IDR to 'CCC' from 'B-';
-- National scale rating to 'CCC(bra) from 'BB+(bra)';
-- BRL300 million senior unsecured debentures due 2020 to
'CCC(bra)' from 'BB+(bra)'.
Galvao Engenharia S.A.
-- National scale rating to 'CCC(bra) from 'BB+(bra)'.
Fitch has removed the ratings from Negative Watch.
PETROLEO BRASILEIRO: PT Treasurer Charged in Corruption Case
------------------------------------------------------------
EFE News reports that the treasurer of Brazil's governing Workers
Party, or PT, was among 27 people charged in connection with a
corruption scandal centered on state-controlled oil giant Petroleo
Brasileiro S.A. (Petrobras).
Joao Vaccari, who in February was detained for several hours to
make a deposition, was formally accused of the crimes of
corruption, money laundering and illegal association, federal
prosecutors in the southern city of Curitiba said, according to
EFE News. Among those charged was also former Petrobras executive
Renato Duque.
The prosecutors said Mr. Vaccari held regular meetings with Duque
to convert into legal campaign donations for the PT the bribes
paid to Petrobras directors by construction companies, the report
notes.
"Mr. Vaccari knew the payments came from bribes," prosecutor
Deltan Dallagnol told a press conference, the report relates.
The report discloses that Petrobras, which represents 12 percent
of Brazilian GDP, is under investigation following disclosure of
widespread corruption said to have cost the company billions of
dollars since the mid-1990s.
The scandal involves accusations that some of Brazil's leading
engineering and construction companies formed a cartel to
overcharge for Petrobras contracts, the report says.
Those outside companies then allegedly split the extra money with
corrupt Petrobras officials while setting aside some of the loot
to pay off politicians who provided cover for the graft, the
report notes.
Among the 27 charged for new crimes were individuals already
accused in federal court for this enormous scandal, such as one-
time Petrobras department head Pedro Barusco, the report relays.
Mr. Barusco told a congressional investigative committee that
"many" of the construction contracts between the oil company and
suppliers were inflated and that the differences where shared out
among Petrobras directors and "political agents" represented by
Mr. Vaccari, the report discloses.
Following Mr. Barusco's accusation, the PT denied accepting any
ill-gotten gains and noted that as soon as it receives legal
donations, they are duly reported to the electoral authority, the
report notes.
More than 100 people have been charged since the massive
corruption probe began a year ago, the report relays.
Brazil's Supreme Court cleared the way for prosecutors to
investigate the heads of both houses of Congress and 45 other
politicians, including 34 legislators and three former Cabinet
ministers, for their alleged role in the scandal, the report adds.
==========================
C A Y M A N I S L A N D S
==========================
ALPHANORTH OFFSHORE: Members' Final Meeting Set for April 16
------------------------------------------------------------
The members of Alphanorth Offshore Inc. will hold their final
meeting on April 16, 2015, at 10:00 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
Creditors are required to file their proofs of debt by April 13,
2015, to be included in the company's dividend distribution.
The company commenced liquidation proceedings on March 12, 2015.
The company's liquidator is:
Marc Randall
c/o PO Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
e-mail: Natasha.morgan@maplesfs.com
CVI GVF CLO 1: Members' Final Meeting Set for April 15
------------------------------------------------------
The members of CVI GVF CLO 1 Ltd. will hold their final meeting on
April 15, 2015, at 1:00 p.m., to receive the liquidator's report
on the company's wind-up proceedings and property disposal.
Creditors are required to file their proofs of debt by April 13,
2015, to be included in the company's dividend distribution.
The company commenced liquidation proceedings on March 10, 2015.
The company's liquidator is:
Maples Liquidation Services (Cayman) Limited
c/o PO Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
DEMETER SOLUTIONS: Members' Final Meeting Set for April 28
----------------------------------------------------------
The members of Demeter Solutions Limited will hold their final
meeting on April 28, 2015, at 10:00 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
Creditors are required to file their proofs of debt by April 15,
2015, to be included in the company's dividend distribution.
The company commenced liquidation proceedings on March 11, 2015.
The company's liquidator is:
Maples Liquidation Services (Cayman) Limited
c/o PO Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
e-mail: Tanya.campbell@maplesfs.com
ELF HOLDINGS: Members' Final Meeting Set for April 9
----------------------------------------------------
The members of Elf Holdings Limited will hold their final meeting
on April 9, 2015, at 1:00 p.m., to receive the liquidator's report
on the company's wind-up proceedings and property disposal.
The company's liquidator is:
Mervin Solas
c/o Maples Liquidation Services (Cayman) Limited
P.O. Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
JAFCO ASIA: Creditors' Proofs of Debt Due April 12
--------------------------------------------------
The creditors of Jafco Asia Technology Fund II are required to
file their proofs of debt by April 12, 2015, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on March 9, 2015.
The company's liquidator is:
Yoshiyuki Shibusawa
10 Marina Boulevard
#33-05 Marina Bay Financial Centre Tower Two
Singapore 018983
MACQUARIE INTERNATIONAL: Members' Final Meeting Set for April 16
----------------------------------------------------------------
The members of Macquarie International SC Investments Co. will
hold their final meeting on April 16, 2015, at 9:00 a.m., to
receive the liquidator's report on the company's wind-up
proceedings and property disposal.
Creditors are required to file their proofs of debt by April 13,
2015, to be included in the company's dividend distribution.
The company commenced liquidation proceedings on March 9, 2015.
The company's liquidator is:
Marc Randall
c/o Maples Liquidation Services (Cayman) Limited
P.O. Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
ROCKET REALTY: Members' Final Meeting Set for April 22
------------------------------------------------------
The members of Rocket Realty Ltd. will hold their final meeting on
April 22, 2015, at 1:00 p.m., to receive the liquidator's report
on the company's wind-up proceedings and property disposal.
Creditors are required to file their proofs of debt by April 13,
2015, to be included in the company's dividend distribution.
The company commenced liquidation proceedings on March 10, 2015.
The company's liquidator is:
Mervin Solas
c/o Maples Liquidation Services (Cayman) Limited
P.O. Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Builders Admit Illegality, Warn of Collapse
---------------------------------------------------------------
Dominican Today reports that Dominican Housing Builders and
Developers Association (ACOPROVI) President Fermin Acosta warned
that if the authorities deport all undocumented Haitians working
in construction, the sector will founder and cripple the economy.
Mr. Acosta said it's a fallacy and a dream to expel all Haitians
out of the country as proposed, and rejected as unfeasible the 80-
20 proportion of Dominican-to-foreign workers, as the Labor Code
stipulates, according to Dominican Today.
The report relates that Mr. Acosta revealed that as many as
270,000 foreign workers, mostly Haitians work in the construction
sector, for which in his view the fact that those foreigners lack
documents is a national issue, not of the construction sector.
Interviewed by diariolibre.com, Mr. Acosta said a massive
repatriation of Haitians would not only affect construction, but
also other sectors such as agriculture, the report notes.
The report relates that Mr. Acosta acknowledged a surplus of
foreign laborers, but blamed the authorities, since in his view,
it's a problem the country has had since the 1930s.
The report discloses that Mr. Acosta also acknowledged his
sector's violations of the Labor Code, which stipulate the at
least 80-to-20 proportion of employees of a Dominican company. " .
. . And what are we going to say, that it's not true? I once fired
all Haitians . . . and had to call them back, because I couldn't
build."
=============
J A M A I C A
=============
TULLOW OIL: Starts Cutting Staff
--------------------------------
RJR News reports that Irish company Tullow Oil, which was issued a
license last year for oil and gas exploration in Jamaica, has
started a redundancy consultation with the 140 staff employed in
its Dublin offices.
It is likely to result in more than a third of them losing their
jobs, according to RJR News.
The report notes that several employees were informed that their
roles will be under threat, once the 30-day consultation
concludes.
The company, which recently reported a loss of about US$2 billion,
is in the midst of a $500 million cost-cutting drive, after the
price of oil halved since last summer, undercutting the revenues
of oil explorers, the report relates.
================================
T R I N I D A D & T O B A G O
================================
CARIBBEAN AIRLINES: Still Faces Pilot Shortage
----------------------------------------------
RJR News reports that it is being reported that Caribbean Airlines
Limited is still facing an acute shortage of pilots.
Trinidad's Newsday newspaper said the airline is still reeling
from the loss of close to a dozen pilots from its Jamaican
operations last year, forcing it to send Trinidadian pilots to
operate some of the Jamaican routes to US destinations, according
to RJR News.
The report notes that the newspaper said the recent hiring of two
B-737 pilots by CAL on four month contracts and several who have
just finished training are still not enough to fill the need.
Asked whether more contract pilots would be hired, the airline
said if it became necessary, it will, but this would depend on
schedule requirements and the progress by the six new pilots in
their training, the report relates.
Caribbean Airlines also stated that the newly trained pilots were
expected to take up duties this month, the report discloses.
About Caribbean Airlines
Caribbean Airlines Limited -- http://www.caribbean-airlines.com/
-- provides passenger airline services in the Caribbean, South
America, and North America. The company also offers freighter
services for perishables, fish and seafood, live animals, human
remains, and dangerous goods. In addition, it operates a duty
free store in Trinidad. Caribbean Airlines Limited was founded in
2006 and is based in Piarco, Trinidad and Tobago.
As reported in the Troubled Company Reporter-Latin America on July
11, 2014, Trinidad and Tobago Newsday said that Caribbean Airlines
is facing another loss. However, Finance Minister Larry Howai is
hopeful the loss could be narrowed down to less than TT$100
million, according to Trinidad and Tobago Newsday. Mr. Howai
noted the airline industry is not the easiest and many airlines
have gone bankrupt at some point.
Citing Caribbean360.com, the TCRLA on May 20, 2013, said Minister
Howai said Caribbean Airlines Limited recorded losses estimated at
US$70 million in 2012. In 2011, CAL had recorded losses of US43.7
million.
=================
X X X X X X X X X
=================
* LATAM: Poor Port Infrastructure in Markets Hinders Cruises
------------------------------------------------------------
EFE News reports that the poor quality -- or outright lack -- of
infrastructure in some ports of Latin America, the Caribbean and
Asia are holding back the great possibilities of cruise-ship
tourism, industry leaders said.
The cultural, natural and architectural riches of emerging markets
would clearly be a boon for the industry, but the lack of
infrastructure, high operating costs and complex bureaucracies,
among other burdens, keeps the sector from fully taking advantage
of this heritage, according to EFE News.
The report notes that was the basic point of discussion at the
"Port Infrastructure Development in the Emerging Markets"
conference that formed part of the Cruise Shipping Miami 2015 fair
that began Monday, March 16 at the Miami Beach Convention Center.
Gianluca Suprani, head of global port development and shore
activities for MSC Cruises, pointed to deficiencies in the
Brazilian ports of Santos, Rio de Janeiro and Salvador, and in
Buenos Aires, Argentina, the report notes.
EFE News discloses that among other factors limiting the growth of
these attractive cruise destinations, Suprani noted problems with
luggage, the lack of areas exclusively for passengers and
terminals still not operational.
Those at the conference gave as an example the optimization of
results and the serious work in terms of infrastructure that has
been done in the South Korean port of Busan, the report relates.
Jin-sun Shin of the Busan Port Authority detailed the strategies,
status and development of that port, one of the biggest facilities
of its kind in the world that has become a center of tourism for
cruises from Japan and China, the report discloses.
EFE News relays that John F. Tercek, vice president of new
business development at Royal Caribbean Cruises Ltd., sees a
potential growth of 16.5 million passengers in emerging markets,
though the sector faces such challenges as the ongoing recession
in Europe, turmoil in the Middle East, and question marks like
U.S. President Barack Obama's announcement of the "slow
normalization" of relations with Cuba.
Within this panorama, the development of cruise tourism in the
Baltic looks "cloudy" because no one knows what Russia is going to
do, while northwestern Brazil lacks infrastructure and the exotic
Pacific side of the Southern Cone of South America is very far and
very expensive, Mr. Tercek said, the report notes.
The same is true of other attractive destinations like the
Philippines, Thailand, Vietnam and Cuba, all short on port
infrastructure, Mr. Tercek said, the report adds.
* Moody's Publishes New Bank Rating Methodology
-----------------------------------------------
Moody's Investors Service, on March 16, 2015, published its
updated methodology for rating banks globally, which incorporates
several new components: a Loss Given Failure (LGF) analysis; the
introduction of a Macro Profile into the elements that Moody's
considers when it assigns a bank's baseline credit assessment
(BCA); a BCA scorecard which now incorporates not only financial
ratios but also a broader range of metrics and qualitative
considerations; and a Counterparty Risk Assessment (CR
Assessment).
The revisions to the methodology reflect insights gained from the
crisis and the fundamental shift in the banking industry and its
regulation. The revised approach to establishing BCAs helps to
more accurately predict bank failures, while Moody's LGF
framework assesses how different creditor classes are likely to
be affected when a bank enters resolution based on the relevant
resolution policy and balance sheet structure.
The updated methodology, "Rating Methodology: Banks," is now
available. The introduction of this new methodology follows a
market consultation initiated via a Request for Comment published
on Sep. 9, 2014.
"The first key change is the introduction of a Loss Given Failure
(LGF) analysis, which addresses expected loss and assesses the
impact a bank's failure would have on its various debt
instruments and deposits in the absence of any support. For banks
subject to operational resolution regimes, the LGF analysis will
incorporate the cushion against loss that each creditor class
derives from the amount of debt subordinate to it in a
resolution," says Gregory Bauer, Managing Director Global
Banking, Moody's.
"With the recent dramatic shift in public policy toward
implementation of resolution regimes, it has become increasingly
important for investors to know their position in a bank's
liability structure, and thus the potential losses they are
exposed to in the event of a resolution," continues Bauer. "LGF
analysis directly addresses this key investor concern."
Moody's employs both a basic and an advanced LGF analysis. The
basic LGF analysis applies to banks that are not subject to
operational resolution regimes. The advanced LGF analysis
applies to banks that are subject to operational resolution
regimes, whereby losses can be imposed selectively on creditors
outside of a liquidation, and through which specific legislation
provides a reasonable degree of clarity on how the bank's failure
could affect depositors and other creditors.
Basic LGF analysis entails an approach wherein senior unsecured
debt and deposits are positioned at the level of the adjusted BCA
(the adjusted BCA is the BCA plus Moody's assessment of support
from affiliates being forthcoming in the event of need), before
government support and additional coupon-related notching
considerations. Subordinated instruments are positioned at one
notch below the adjusted BCA, excluding support and additional
notching, reflecting increased loss severity. This basic LGF
analysis continues the previous notching practice and, in the
rating agency's view, remains an appropriate guide to loss
severity for banks in systems without operational resolution
regimes.
Under the advanced LGF analysis, which would be applied, for
example, to banks subject to the European Union's Bank Recovery
and Resolution Directive and to US banks subject to Titles I and
II of the Dodd-Frank Act, Moody's bases its notching on (1) the
likely bank-wide loss rate in failure; (2) the amount of
subordination below a given instrument class; and (3) the volume
of a given instrument class itself. In Moody's view, taking these
together provides a more refined and predictive view of expected
loss for each instrument class under new resolution regimes.
"The second key change is the revision of our framework for
assessing the risk of bank failure, expressed by our baseline
credit assessment. This includes the introduction of a Macro
Profile, which allows us to place greater emphasis on potential
system-wide pressures that we believe are predictive of the
propensity of banks to fail," explains Frederic Drevon, Managing
Director Global Banking, Moody's.
Moody's framework for assigning BCAs is structured around a new
Scorecard that more comprehensively integrates Moody's analytical
judgments. The Scorecard begins by focusing on five core ratios
that Moody's has found to be predictive of bank failure covering
five main financial factors: asset risk, capital, profitability,
funding structure and liquid resources. Additionally, analysts
and rating committees may consider supplementary ratios, as
relevant, for each institution. Individual scores for each
factor will now directly incorporate not only financial ratios,
but also a broader range of metrics, Moody's forward-looking
judgments and qualitative considerations relative to each.
Moody's new Macro Profile complements the bank-specific analysis
reflected in the Scorecard and will be expressed on a scale
ranging from Very Strong+ to Very Weak-. It comprises six
elements: economic strength, institutional strength,
susceptibility to event risk, credit conditions, funding
conditions and industry structure. The Macro Profile, combined
with the results of the Scorecard, helps establish the bank's
Financial Profile. This results in the BCA, representing Moody's
view of a bank's probability of default, in the absence of
support.
Lastly, Moody's has introduced a Counterparty Risk (CR)
Assessment into its analysis. This is not a rating, but an
assessment of an issuer's ability to avoid defaulting on certain
senior bank operating obligations and other contractual
commitments. The CR Assessment takes into account the issuer's
standalone strength as well as the likelihood of affiliate and
government support in the event of need, reflecting the
anticipated seniority of counterparty obligations in the
liabilities hierarchy. The CR Assessment also takes into account
other steps authorities can take to preserve the key operations
of a bank in a resolution.
When credit rating methodologies are revised, the updated
methodology is applied to all relevant credit ratings.
Accordingly, in the coming days, Moody's will place on review the
ratings of those banks that are likely to be affected.
Regulation requires that rating actions related to methodology
changes be completed within six months of the release of the
methodology. However, Moody's expects to conclude the large
majority of the reviews in the first half of 2015. In
conjunction with the methodology-driven review, Moody's expects
to incorporate revised views on government support in Europe,
driven by the introduction of resolution regimes. For any banks
whose ratings are placed under review, CR Assessments will be
assigned when the reviews are concluded; for other banks, CR
Assessments will be assigned in the coming months.
Moody's preliminary assessment of the anticipated impact of the
new methodology and revised support assumptions shows that the
ratings impact is likely to vary across countries and regions.
Moody's anticipates the following key outcomes:
(1) An overall net neutral impact on banks' BCAs globally, with
around 15% of BCAs changing. About half of these changes
are anticipated to be within Europe, with a modest positive
bias;
(2) in the US, a significant positive effect on bank deposit
ratings and a material negative effect on senior unsecured
bank debt ratings. This reflects the nature of deposit
preference, which benefits depositors at the expense of
senior unsecured debt. However senior unsecured holding
company ratings are expected to be little changed, overall;
(3) in the EU and western Europe, a modest positive effect on
deposit ratings and a broadly neutral effect on senior
unsecured ratings, reflecting the changes in BCAs coupled
with the counterbalancing effects of the new resolution
regime and reduced likelihood of government support. While
support is expected to decline, banks' most senior
creditors, especially depositors, will benefit from the
lower loss rates expected in an orderly resolution and the
subordination that protects them from loss;
(4) in Asia Pacific, the Commonwealth of Independent States,
Western Asia, Latin America, the Middle East and Africa, a
small negative effect on senior unsecured and deposit
ratings in some systems. This reflects Moody's view that the
capacity for government support is henceforth limited to the
government bond rating, and that there is little scope for
other policy tools to provide durable support beyond this
constraint.
* Moody's Review Global Bank Ratings
------------------------------------
Moody's Investors Service announced multiple rating actions
following its publication of its new bank rating methodology,
which now is the primary methodology for Moody's bank ratings
globally.
The rating actions affect 1,021 out of 1,934 rated banking
entities, which include operating banks, holding companies,
subsidiaries, special purpose issuance conduits, branches and
other entities for which Moody's has assigned ratings to at least
one debt class. Within this total group of entities, 856 are
assigned baseline credit assessments (BCAs), of which 147 are
affected. These total numbers refer to the banks that are covered
under this press release, as certain bank ratings in a small
number of countries (Japan, Bolivia, Brazil, Argentina, and
Russia) will be discussed in separate local press releases.
Moody's has placed the following ratings and assessments on
review:
(1) 147 BCAs: 84 for upgrade and 63 for downgrade;
(2) 421 long-term deposit ratings: 314 for upgrade, 96 for
downgrade and 11 direction uncertain; and,
(3) 451 senior unsecured debt and issuer ratings: 214 for
upgrade, 212 for downgrade and 25 direction uncertain.
At the same time, Moody's has affirmed 124 long-term deposit
ratings and 147 senior unsecured debt and issuer ratings.
"Our fundamental approach to bank ratings has not changed
dramatically, but we have introduced a number of new tools to
enhance our analysis, which has resulted in these rating reviews,"
said Greg Bauer, Moody's Co-head of Global Banking. "These reviews
are prompted by our new methodology, which we are confident will
enable us to appropriately reflect the rapidly evolving global
banking environment as it continues to develop."
Additionally, Moody's has withdrawn for business reasons inputs to
ratings in the form of bank financial strength ratings (BFSRs) and
ratings for other senior obligations (OSOs). Separate lists of
withdrawn BFSRs and OSOs are available at the bottom of this press
release. Going forward the BCA will be the only indicator of
issuers' standalone intrinsic strength. In a few cases where a
BFSR was previously on review, this review has now been assigned
to the BCA.
The reviews follow its March 16, 2015 publication of Moody's
updated bank rating methodology, which incorporates several new
elements designed to help accurately predict bank failures and
determine how each creditor class is likely to be treated when a
bank fails and enters resolution, reflecting insights gained from
the crisis and the fundamental shift in the banking industry and
its regulation.
Key changes include the addition of a Macro Profile, a new
Financial Profile and a Loss Given Failure (LGF) analysis
framework, all of which are described below. The first two
elements primarily affect the positioning of a bank's BCA, while
the last one can lead, through the assessment of instrument volume
and subordination levels and of expected treatment by resolution
authorities, to changes in long-term issuer, deposit and debt
ratings. Please refer to the press release "Moody's publishes its
new bank rating methodology," published on March 16, 2015.
Separate from the implementation of the updated bank rating
methodology, Moody's has also lowered its expectations about the
likelihood of government support for European banks in light of
the introduction of the Bank Recovery and Resolution Directive
(BRRD) in the European Union and the move toward similar
frameworks with provisions for burden-sharing with senior
creditors in Switzerland, Norway and Liechtenstein. In
anticipation of this decline in support, on May 29, 2014, Moody's
changed the outlook for the long-term ratings on 82 European banks
to negative and maintained the outlooks for the 74 banks that
already had negative outlooks or whose ratings were on review for
downgrade.
Moody's has concluded that the probability of support to even
systemically important banks across the region has declined.
However, the impact on ratings is moderated -- and in some cases
wholly or more than offset -- by a decline in expected loss
assumptions under the new LGF framework. Moody's will publish a
more detailed report on the diminished probability of government
support in European bank ratings.
The updated bank rating methodology published on March 16, 2015
will be the primary methodology for all Moody's bank ratings,
including ratings that have not been placed on review. This
updated bank rating methodology is being implemented on a global
basis, except in jurisdictions where certain regulatory
requirements must be fulfilled prior to implementation.
A list of the affected credit ratings is available at
http://is.gd/IXm14v
This list is an integral part of this Press Release and identifies
each affected issuer.
Moody's updated bank rating methodology introduces several new
elements that will affect ratings to varying degrees across
countries and regions.
-- BCA: NEW BCA SCORECARD FOCUSED ON MACRO PROFILE AND CORE
FINANCIAL RATIOS
Moody's new Financial Profile takes as its starting point five
solvency- and liquidity-related financial ratios that are
predictive of bank failure: asset risk, capital, profitability,
funding structure and liquid resources. The Financial Profile
also incorporates a broader range of supplementary ratios, Moody's
forward-looking expectations and other relevant qualitative
considerations. Joining these as a new input in determining the
BCA is the Macro Profile, which explicitly captures banking
system-wide pressures that have been shown to be predictive of a
bank's propensity to fail.
Impact on Baseline Credit Assessments
Globally, Moody's expects the enhanced approach to have a
generally modest positive impact on banks' BCAs, with changes
concentrated among European banks. These likely changes will
generally be the result of the application of the new scorecard
framework, which provides additional tools to assess banks' credit
fundamentals. (See below for regional breakdowns.)
-- LONG-TERM RATINGS: LOSS GIVEN FAILURE, RESOLUTION AND
GOVERNMENT SUPPORT
The LGF analysis assesses the potential impact of a bank's failure
on its various debt classes and deposits in the absence of any
government support. Under its new methodology, Moody's applies an
Advanced LGF to banks subject to operational resolution regimes,
wherein authorities can impose losses on creditors selectively
outside of liquidation, and for which specific legislation
provides a reasonable degree of clarity on how the bank's failure
could affect depositors and other creditors. The Basic LGF
analysis applies to those banks that are not subject to
operational resolution regimes.
Impact on Long-Term Ratings
(1) In the US, Moody's expects generally positive effects on
bank deposit ratings and mixed, though net negative, effects
on senior unsecured debt ratings, reflecting explicit
deposit preference in resolution, which benefits depositors
at the expense of senior unsecured debt.
(2) In the EU, Switzerland, Norway and Liechtenstein, Moody's
expects a positive effect on long-term deposit ratings,
albeit more modest compared to the US, and a generally
neutral effect on senior unsecured debt ratings. For banks
whose long-term ratings are being affirmed or placed on
review for upgrade, in general, the separate actions taken
related to the diminished probability of government support
are wholly or more than offset by the benefit of instrument
volume and subordination protecting creditors from losses in
resolution under the Advanced LGF approach.
(3) In all other regions covered through this press release,
Moody's will apply its Basic LGF approach, in the absence of
regulatory-driven operational resolution regimes. However,
Moody's expects a small negative effect on senior unsecured
and deposit ratings in some systems, reflecting the change
in its view that the capacity for government support is
limited to the government's bond rating, and that going
forward there will be little scope for other policy tools to
provide durable support beyond this constraint.
The sections below summarize the key likely rating changes by
region following the conclusion of Moody's review for banks
covered through this press release. The affected ratings refer to
banking entities, rather than consolidated banking groups.
Following the conclusion of its reviews, Moody's expects to make
the following rating changes:
NORTH AMERICA
-- The ratings of Canadian banks are unaffected.
-- In the US, 290 out of 417 rated banking entities are
affected.
- Moody's has assigned BCAs to 91 US banking entities, of which
81 BCAs remain unchanged; for the remaining 10 banking
entities, the BCAs of half of these are on review for upgrade
and half are on review for downgrade.
- The long-term deposit ratings for 100 banking entities are on
review for upgrade and one is on review direction uncertain.
None are on review for downgrade, owing to the substantial
volume of deposits in US banks' liability structures, which
should result in high recovery rates.
- The senior unsecured debt and issuer ratings for 54 banking
entities (including operating and holding companies) are on
review for upgrade, and 69 are on review for downgrade. The
issuer rating for one banking entity is on review direction
uncertain and the senior unsecured debt and issuer ratings for
19 banking entities are affirmed.
- In general, for US banking entities subject to resolution
under Title II of the Dodd-Frank Act, their bank-level senior
unsecured debt and issuer ratings are on review for upgrade
given the substantial loss absorbing capital subordinated to
them as well as the reduced loss assumption of an expected
going concern resolution under the single point of entry
resolution framework. At the holding company level, the senior
unsecured debt ratings of several of these firms may benefit
from the substantial thickness of this debt tranche as well as
the amount of debt subordinated to it.
- For most US banking entities subject to Title I resolution,
their deposit ratings are on review for upgrade and their
bank-level senior unsecured debt and issuer ratings are on
review for downgrade. The deposit ratings are most influenced
by their substantial size. The senior unsecured debt and
issuer rating actions result from the limited amount of senior
unsecured debt outstanding, the lack of a substantial debt
tranche subordinated to it, and the higher loss assumption
under a Title I receivership-based resolution approach.
Therefore, bank-level senior unsecured debt ratings could be
reduced to the same level as the holding company senior
unsecured debt ratings, which are largely unaffected by this
review.
EUROPEAN UNION AND OTHER WESTERN EUROPE
- The ratings on 609 out of 800 banking entities are affected.
- A BCA is assigned to 278 banking entities. Moody's expects to
make changes to the BCAs of some European banking entities,
with 53 BCAs on review for upgrade and 30 on review for
downgrade as a result of the additional tools provided in the
new scorecard framework. The BCAs on review for upgrade are
concentrated in the Nordics, the United Kingdom, Germany,
France, Spain and Luxembourg. The BCAs on review for
downgrade are primarily for banking entities in Austria,
Greece and Italy.
- The bulk of long-term deposit ratings (for 187 banking
entities) and senior unsecured debt and issuer ratings (for
154 banking entities) are on review for upgrade, because the
combination of instrument volume and subordination results in
an expected loss under the LGF analysis sufficiently low to
more than offset the diminished expectations of government
support. The latter will be further discussed in a more
detailed report that will be published.
- A much smaller number of long-term deposit ratings (for 48
banking entities) are on review for downgrade, because fewer
banking entities are affected by the decline in government
support compared to the benefit their deposit ratings receive
under the LGF framework. Nevertheless, senior unsecured debt
and issuer ratings for 95 banking entities are on review for
downgrade, reflecting more limited degrees of instrument
volume and subordination compared to deposits in the banks'
liability structures.
- Additionally, 96 banking entities' long-term deposit ratings
and 116 banking entities' senior unsecured debt and issuer
ratings have been affirmed, typically because the result of a
change in government support assumption is offset through the
LGF framework. Some deposit ratings (for 10 banking entities)
and senior unsecured debt and issuer ratings (for 24 banking
entities) are on review direction uncertain.
COMMONWEALTH OF INDEPENDENT STATES (CIS) AND WESTERN ASIA
- Only 14 out of 149 CIS banking entities are affected by the
review. Moody's has assigned BCAs to 138 banking entities, of
which five BCAs are on review for upgrade and nine are on
review for downgrade.
- Eleven deposit ratings (including both local and foreign
currency ratings) are on review for upgrade, and eleven are on
review for downgrade, generally in the same direction as the
change Moody's expects to make to the banks' BCAs.
- Similarly, the senior unsecured debt rating of one banking
entity is on review for upgrade and for one banking entity on
review for downgrade, again as a result of the review on the
BCA.
ASIA PACIFIC (EXCLUDING JAPAN)
- Among the total of 290 rated banking entities in the region,
excluding those of Japanese banks, which are covered through a
local press release, ratings on 65 banking entities are
affected. Within this total group of banking entities, 158
are assigned BCAs, of which 20 BCAs are affected: 15 are on
review for upgrade and five are on review for downgrade. The
reviews for upgrade are concentrated among banks in Taiwan
(4), the Philippines (3), Malaysia (3) and Indonesia (2), and
are driven by the positioning of a bank's credit strength in a
global context under the new scorecard framework.
- Long-term deposit, issuer and senior unsecured debt ratings
are generally unaffected, given that banks in the region are
not subject to operational resolution regimes and government
support expectations therefore remain largely unchanged.
However, among Asia Pacific banking entities covered through
this press release, 17 long-term deposit and 29 senior
unsecured debt and issuer ratings (including both local and
foreign currency ratings) are on review for downgrade. This is
largely driven by the change in Moody's view that the capacity
for government support is limited to a government's bond
rating, rather than the previous expectation that banks in
India, Thailand and Malaysia could benefit from additional
support through other policy tools.
- Ten banking entities' long-term deposit and five banking
entities' senior unsecured debt and issuer ratings are on
review for upgrade, generally reflecting the expectations of
an increase in those banking entities' BCAs. Long-term deposit
ratings of 28 banking entities and senior unsecured debt and
issuer ratings of 12 banking entities are affirmed.
LATIN AMERICA
- The ratings on 32 out of 103 banking entities covered through
this press release are affected. Moody's has assigned a BCA to
75 banking entities, of which six BCAs are on review for
upgrade and 12 are on review for downgrade. Of these, three
Brazilian banking entities' BCAs, which currently are higher
than the government bond rating, are on review for downgrade,
with the expectation of aligning them with the government's
rating. Other BCAs are generally on review for upgrade or
downgrade as the new scorecard framework provides additional
tools to position a bank's credit strength in a global
context.
- Long-term deposit, issuer and senior unsecured debt ratings
are generally unaffected. Nevertheless, six banking entities'
long-term deposit ratings are on review for upgrade, generally
owing to the expectation that these banks' BCAs will be
raised.
- Additionally, 11 banking entities' long-term deposit and 18
banking entities' senior unsecured debt or issuer ratings are
on review for downgrade, largely owing to the review for
downgrade on these banking entities' BCAs and/or the change in
Moody's view that the capacity for government support is
limited to a government bond rating, rather than the previous
expectation that banks in Chile, Colombia and Guatemala could
benefit from additional support through other policy tools.
MIDDLE EAST AND AFRICA
- Only 11 out of 133 banking entities are affected by the
review. Moody's has assigned a BCA to 106 banking entities,
of which two BCAs are on review for downgrade under the new
scorecard framework.
- The deposit ratings of nine banking entities are on review for
downgrade, one of which is driven by the review of the BCA.
The other eight banking entities' long-term deposit ratings of
the banks in Pakistan, Morocco and Jordan are on review for
downgrade as a result of the change in Moody's view that the
capacity of the government to provide support is limited to
the government's own creditworthiness, as implied by its bond
rating, rather than the previous expectation that banks could
benefit from additional support through other policy tools.
SUBORDINATED DEBT, BANK HYBRIDS AND CONTINGENT CAPITAL SECURITIES
Changes in a bank's BCA will, in most instances, affect the
ratings of its junior securities. This reflects the general
assumption that these instrument ratings do not benefit from
government support. Therefore, for banks whose BCAs have been
placed on review, Moody's has also extended the review to the
ratings on subordinated debt, bank hybrids and contingent capital
securities. Additionally, some holding company junior instrument
ratings have been placed on review for upgrade owing to a smaller
notching differential versus the BCA under Moody's LGF analysis,
depending on the amount of issuance of the same instrument class
and the amount of more subordinated instruments.
SCOPE OF THE REVIEW
Whenever credit rating methodologies are revised, the updated
methodology is applied to all relevant credit ratings.
Accordingly, Moody's places on review the ratings of those banks
that are likely to be affected. Moody's expects to conclude the
majority of its reviews in the coming few months. During the
review period, Moody's will assess the impact of the new
methodology on rated instruments and will focus on the following
in particular:
(1) BCA analysis, which will incorporate 2014 full-year data, if
available, and entail further assessment of fundamental
credit trends in the context of the new scorecard;
(2) Advanced LGF analysis, which will incorporate 2014 full-year
data, if available, and entail further analysis of banks and
their securities for which subordination levels and volume
thresholds are likely to lead to a change in LGF notching;
and/or,
(3) Government support analysis, which will entail further
analysis on Moody's revised view on potential government
support in Europe.
LIST OF AFFECTED CREDIT RATINGS
Below is the link to access the list of Affected Credit Ratings
which includes the full list of affected ratings covered by this
press release. This list also provides guidance on the likely
outcomes for the deposit and senior unsecured debt ratings on
review.
The affirmations of long-term ratings are due to a change in the
standalone assessment or support assumption being offset through
other components of the new rating framework, such as LGF. This
particularly affects European bank long-term deposit and senior
unsecured debt ratings, where a reduction in government support is
offset by uplift through the advanced LGF.
Moody's has withdrawn its BFSRs as well as ratings on OSOs.
Moody's has withdrawn these ratings for its own business reasons.
The List of Affected Credit Ratings, which includes a list of all
affected credit ratings, and the lists of withdrawn BFSRs and OSOs
rating are an integral part of this press release and identify
each affected issuer covered by this press release:
- Overall List of Affected Credit Ratings: http://is.gd/IXm14v
- List of withdrawn BFSRs: http://is.gd/0zKA9A
- List of withdrawn ratings for OSOs: http://is.gd/Ym4Gr8
Owing to local regulatory requirements, certain bank ratings in a
small number of countries (Japan, Bolivia, Brazil, Argentina, and
Russia) will be discussed in local press releases; those rating
actions are not covered by this press release.
***********
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 2015. 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
202-362-8552.
* * * End of Transmission * * *