/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/150410.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, April 10, 2015, Vol. 16, No. 070 Headlines A R G E N T I N A ARGENTINA: Sues Citibank as Default Row Turns Ugly FIDEICOMISO FINANCIERO: Moody's Assigns Caa1 Global Scale Rating B E R M U D A CRANBERRY RE: Fitch Expects to Rate Class A Notes 'Bsf' B R A Z I L CAMARGO CORREA: Fitch Keeps 'BB' Issuer Default Rating PETROLEO BRASILEIRO: May Issue Earnings in April JP Morgan, Says SCHAHIN II 2012-1: Fitch Lowers Rating on Sr. Sec. Notes to 'B-' TONON BIOENERGIA: Fitch Lowers IDR to 'B-' & Puts on Watch Neg. C A Y M A N I S L A N D S AIR 2 US: Fitch Raises Rating on Series A EENs to 'BB+/RR1' BROUGHTON CORPORATION: Members' Final Meeting Set for April 28 CONTINENTAL ASSET: Members' Final Meeting Set for April 21 CORE-MALAYSIA: Members' Final Meeting Set for April 27 CPIM STRUCTURED: Members' Final Meeting Set for April 22 FARENHEIT ADVISORS: Shareholder to Hear Wind-Up Report on April 20 JIMILI INVESTMENTS: Members' Final Meeting Set for April 30 MIDSHIPS OPPORTUNITY: Member to Hear Wind-Up Report on April 21 MIDSHIPS OPPORTUNITY: Member to Hear Wind-Up Report on April 21 RIVERSIDE GLOBAL: Shareholders' Final Meeting Set for April 23 SAYBOLT MALAYSIA: Members' Final Meeting Set for April 27 STRUCTURED CREDIT: Members' Final Meeting Set for April 23 THALASSA LIMITED: Members Receive Wind-Up Report VIETNAM RESOURCE: Members' Final Meeting Set for May 4 WESSEX ASIA: 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: Heads Push to Fix Country's Energy Woes DOMINICAN REP: Decries 'Secret Talks' to Waylay Workers' Benefits DOMINICAN REPUBLIC: Agree with Private Sector on Wage Hike M E X I C O CONTROLADORA COMERCIAL: Moody's Withdraws Ba1 Corp Family Rating MCEWEN MINING: Gold Worth $8.5 Million Stolen From Mining Firm MUNICIPALITY OF MEXICALI: Fitch Affirms B3/Ba2.mx Issuer Rating U R U G U A Y ACI AIRPORT: Fitch Expects to Rate $200MM Sr. Secured Notes 'BB+' - - - - - ================= A R G E N T I N A ================= ARGENTINA: Sues Citibank as Default Row Turns Ugly -------------------------------------------------- The Telegraph reports that Argentina is suing Citibank for striking a deal with a group of US creditors fighting the government over unpaid debt, its economy minister said, marking a fresh low in deteriorating relations between the South American nation and the bank. Citibank Argentina, a subsidiary of Citigroup, found itself at the center of a lengthy court battle after the government demanded it process interest payments on exchanged debt, in defiance of US court orders, according to The Telegraph. The report notes that the bank last month agreed with the litigating investors not to appeal the court's injunction blocking Argentina's payments if it was allowed to process two one-off transfers in March and June to help it quit its local bond custody business. Alex Kicillof, Argentina's economy minister, said the agreement "violated and interfered with regulations governing our public debt," the report relates. The report notes that the relations between the leftist government and Citibank Argentina, the country's 12th largest by deposits, have unraveled in the past two weeks. On March 27, Argentina's securities regulator suspended the bank from capital market operations and declared a local financial house would take over its role as custodian of some bonds, the report relays. Four days later, the central bank stripped Citibank Argentina's chief executive of his authority and then sent regulators into the bank's headquarters to monitor its operations, notes the report. Argentina denigrates the hedge funds that spurned bond swaps after the country's record default on $100 billion in 2002 as "vultures" bent on crippling an economy in the pursuit of mega profits, the report notes. Mr. Kicillof lampooned Citibank Argentina for signing "a deal with the devil" and said the government had asked the Argentine courts to nullify the pact, the report 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. 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'. FIDEICOMISO FINANCIERO: Moody's Assigns Caa1 Global Scale Rating ---------------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo, S.A. has assigned a rating of Baa2.ar (national scale rating) and Caa1 (global scale, local currency) to the class A and class B debt securities (VRDA and VRDB); and a rating of Ca.ar (national scale rating) and Ca (global scale, local currency) to the participation certificates (CP) of Fideicomiso Financiero EISA 2014, a financial trust established in Argentina. The debt securities will be issued by Nacion Fideicomisos S.A., acting solely as issuer and trustee. As of April 8, the securities for this transaction have not yet been placed in the market. The transaction is pending approval from the Comision Nacional de Valores, if any assumption or factor Moody's considers when assigning the ratings change before closing, the ratings may also change. ISSUER: Fideicomiso Financiero EISA 2014 -- VRDA: Baa2.ar (national scale) and Caa1 (global scale, foreign currency) ratings assigned -- VRDB: Baa2.ar (national scale) and Caa1 (global scale, local currency) ratings assigned -- CP: Ca.ar (national scale) and Ca (global scale, local currency) ratings assigned RATINGS RATIONALE The transaction is backed by a refinanced debt agreement between Electroingenier¡a S.A (EISA, as seller, rated Caa1/Baa3.ar) and Empresa Provincial de Energ¡a de Cordoba (EPEC, as obligor, rated Caa1/Ba1.ar), related to performed operation and maintenance works by EISA of the EPEC's Central Pilar plant. To complement that agreement, EPEC assigned the rights to receivables to be generated between February 2015 and December 2017 of three electricity distribution cooperatives that are clients of EPEC. In addition, EISA will provide a guarantee for all amounts outstanding under the VDRA and VDRB. The ratings are based mainly on the following factors: (i) EPEC's obligation to pay under the refinanced debt agreement; (ii) the irrevocable and unconditional guaranty provided by EISA that covers timely payment of principal and interest on the VRDA and VRDB, and trust expenses and taxes and (ii) the assignment of certain underlying future flow receivables relating to the delivery of energy by EPEC to three cooperatives; Moody's ratings are primarily based on a joint default analysis of EPEC meeting its obligation under the renegotiation contract and the guaranty provided by EISA, which covers interest and principal payments on the rated securities. As a result, the national scale rating on the debt securities (Baa2.ar) is one notch higher than EISA's national scale rating (Baa3.ar). The Central Bicentenario -- Central Termica Ciclo Combinado Pilar (Central Pilar) is a combined cycle thermoelectric power plant located in the Province of Cordoba, Argentina. The power plant is owned by the Provincial Energy Company of the Province of Cordoba (EPEC). Factors that would lead to an upgrade or downgrade of the rating: Any future change in the rating of the obligor or guarantor may lead to a change in the rating assigned to this transaction. The rating addresses the payment of interest and principal on or before the legal final maturity date of the securities. ============= B E R M U D A ============= CRANBERRY RE: Fitch Expects to Rate Class A Notes 'Bsf' ------------------------------------------------------- Fitch Ratings expects to rate the Principal At-Risk Variable Rate Notes issued by Cranberry Re Ltd, a registered special purpose insurer in Bermuda as: -- Series 2015-1 Class A Principal At-Risk Variable Rate Notes with amount to be determined by sponsor; expected maturity July 6, 2018; expected rating 'Bsf'; Outlook Stable TRANSACTION SUMMARY The notes are exposed to insured property losses caused by 'named storms', 'severe thunderstorms' and 'winter storms' on an annual aggregate basis using an indemnity trigger, from Subject Business written by the Massachusetts Property Insurance Underwriting Association (MPIUA, also known as the MA FAIR Plan). The subject business covers solely the state of Massachusetts representing a total insured value of $97.5 billion or a 12% market share (based on 2013 premium). The subject business consists of homeowners (91%) and dwelling coverage (9%) with very minimal commercial coverage (<1%). Significant coastal counties; such as Barnstable (Cape Cod area) and Suffolk (Boston area), have the largest exposure at 29.5% and 14.6%, respectively. Other notable coastal counties, Dukes (Martha's Vineyard area) and Nantucket, have 4.8% and 3.2% of the total insured value, respectively. A covered event within the risk period, July 1, 2015 through June 30, 2018, must cause at least $10 million of ultimate net loss to MPIUA to qualify. Notable recent events would be considered a covered event but not significant to cause a principal loss to the Series 2015-1 Notes. Of the multiple winter storms in 2014 and the first quarter of 2015, the only covered event has an estimated $14.4 million of incurred claims. Recent 'named storms' Superstorm Sandy (October 2012) had total losses of $10.1 million and Hurricane Irene (August 2011) would not have qualified. The most damaging event caused by wind and thunderstorms occurred in May 2011 and had $16.8 million of total paid losses. Initially, noteholders are subject to principal loss (and reduced interest) if the annual aggregate ultimate net losses exceed the attachment point of $300 million and a total loss of principal occurs if the severity reaches $1.4 billion in the first twelve- month risk period. Based on the profile of the subject business and the attachment point, the third party modeling firm AIR Worldwide (AIR) calculates the modeled annual attachment probability to be 3.081%, which implies a 'Bsf' rating per Fitch's criteria. It should be noted that the threshold between a 'B' and 'B+' rating is 3.02% (in other words, Fitch may have rated the note 'B+' if the attachment probability was slightly lower). The modeled expected loss is 1.377%. There will be three annual risk periods over the term of the notes, with the 'reset' occurring on July 1, 2016 and July 1, 2017 using AIR's escrowed software models and MPIUA's updated subject business data and loss adjustment expense factor. At each reset date, MPIUA may exercise an option to decrease (or increase) the attachment levels within a rather wide exceedance probability range of 4.00% to 1.50%. The implied rating under Fitch's criteria at a 4.00% exceedance probability is 'Bsf,' and the implied rating at 1.50% is 'BB-sf'. If such an option is exercised by MPIUA at either reset date, the risk interest spread will be recalculated to reflect the increased (or decreased) level of risk assumed by the noteholders. If MPIUA does not elect to reset the attachment levels, the reset agent will adjust the attachment level and exhaustion level to maintain the initial 3.081% exceedance probability using the updated subject business profile. The notes may be extended for 36 additional months if certain qualifying events occur, or at the discretion of Hannover Ruck SE, a reinsurance company that acts as a transformer and sits between MPIUA and Cranberry Re. However, the notes are not exposed to any further catastrophe events during this extension (only further claim development of existing events). The notes may be redeemed at any time due to regulatory or tax law changes or partially by MPIUA during the extension period or under certain early redemption events. The repayment of the notes to the noteholders occurs subsequent to any qualified payments to MPIUA for covered events. Noteholders have no recourse to MPIUA (or to its transformer, Hannover Ruck SE). KEY RATING DRIVERS The rating is based on the evaluation of the natural catastrophe risk, the business profile of MPIUA, the counterparty risk of the transformer reinsurer (Hannover Ruck SE) and the credit risk of the collateral assets. The natural catastrophe risk represents the weakest link and currently drives the rating of the Series 2015-1 Notes. The rating analysis in support of the evaluation of the natural catastrophe risk is highly model-driven. As with any model of complex physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. Fitch is neutral to any of the major catastrophe modeling firms that is selected by the issuer to provide the modeling analysis, and thus Fitch did not include any explicit margins or qualitative haircuts to the probability of loss metric provided by the modeling firm. The probability of loss was initially estimated at 3.081% based on 100,000 simulations of a one-year risk period ates, version 7.0 of the AIR Severe Thunderstorm model for the United as calculated by AIR using their methodology and proprietary models (Version 16.0 of the AIR Hurricane model for the United St States, version 1.7 of the AIR Winter Storm model for the United States, each as implemented in Touchstone version 2.0.2). Results from other possible modelers or from MPIUA were not provided. Sensitivity analysis provided by AIR indicated the implied rating would be no worse than 'Bsf'. The model estimates 'named storms' contribute 96.3% of the annual expected loss, with winter storms and severe thunderstorms being 2.2% and 1.5%, respectively. In addition, of the simulated years that produced aggregate ultimate net losses exceeding the attachment level, 49.8% are attributed to a single event in the year, while years with two events would represent another 32.9%. Within the record of actual historical events, only four hurricanes (if replicated and applied to the current subject business) would lead to a partial principal loss - notably, Hurricanes Donna (1960) and Bob (1991) would have produced a 27.4% and 20.0% principal loss. The risk modeling included certain stresses for economic demand surge, storm surge and a loss adjustment expense factor of 1.065. The modeled results did not include the possibility that the average annual loss may increase by up to 1.10 in any annual risk period. The model simulates only hurricane activity making landfall, thus it understates claim losses to named storms not recognized as hurricanes or hurricanes that become degraded. Noteholders are exposed to this basis risk or the difference between actual net losses incurred by MPIUA and the AIR modeled net losses. Cranberry Re Ltd. ultimately 'follows the fortunes' of MPIUA in regards to underwriting of new business over the next three years and claim management practices. MPIUA was established by the Massachusetts Legislature in 1968 as a residual insurer of last resort solely for the Commonwealth of Massachusetts and employs approximately 150 people. It is a for-profit organization organized by an association of over 500 member insurers. Business can be placed by licensed agents, brokers or directly by consumers. All properties insured by MPIUA must be certified as built to specified building codes, must have flood insurance coverage in specified flood areas and have maximum limits per residential dwelling of $1,000,000 (higher limits are available for commercial structures). Fitch does not rate MPIUA but believes certain safeguards are in place for noteholders. MPIUA is subject to review, oversight and approval by the Massachusetts Department of Insurance (though it receives no federal, state or local funds for support); there is an independent claim reviewer and loss reserve specialist (Towers Watson Ltd., Bermuda) for Cranberry Re Ltd.; and the data quality of the Subject Business provided to AIR appears good. For this particular peril and transaction, MPIUA will retain at least 5% of the aggregate ultimate net loss on a first-dollar basis, covering the first $100 million. Above this retention, claim losses are paid by traditional reinsurers until reaching the attachment point, where losses are shared between noteholders and reinsurers on a pro-rata basis depending on the ultimate deal size. Hannover Ruck SE (IDR: 'AA-'; Rating Outlook Stable by Fitch) acts as the transformer for MPIUA and Cranberry Re Ltd. Noteholders are exposed to the counterparty risk that Hannover Ruck SE does not pass along retrocession premiums to Cranberry Re Ltd. These premiums are a key component in the coupon payment to noteholders. Proceeds from this issuance will be held in a collateral account and used to purchase high-credit-quality money market funds meeting defined eligibility criteria, otherwise funds will be held in cash. Investment yields generated from these permitted investments are passed directly to noteholders as the other component. Noteholders are exposed to possible market value risk if the net asset value of a money market fund falls below $1.00. Finally, certain actions may be required if the collateral account is invested in money market funds and FATCA is deemed to apply in late 2016. RATING SENSITIVITIES This rating is sensitive to the occurrence of a qualifying event(s), MPIUA's election to reset the note's attachment level, changes in the data quality or purpose of MPIUA, the counterparty rating of Hannover Ruck SE and the rating on the assets held in the collateral account. If qualifying covered events occur that cause annual aggregate losses to exceed the attachment level, Fitch will downgrade the notes reflecting an effective default and issue a Recovery Rating. In the case of a reset election by MPIUA, the rating would not be sensitive to a movement from the initial 3.081% exceedance probability to a probability as high as 4.00%, since both probabilities imply a 'Bsf' rating. However, if MPIUA elected to move closer to an exceedance probability approaching 1.50%, the notes at that time could be upgraded to as high as 'BB-sf'. To a lesser extent, the notes may be downgraded if the money market funds should 'break the buck', Hannover Ruck SE fails to make timely retrocession premium payments or MPIUA materially changes its mission or operations. The escrow model may not reflect future methodology enhancements by AIR which may have an adverse or beneficial effect on the implied rating of the notes were such future methodology considered. Fitch's expected rating is based on a review of a draft Confidential Offering Circular Supplement No. 1 (dated March 24, 2015), a Rating Agency Presentation (dated March 24, 2015) and AIR Expert Risk Analysis and Results (dated March 25, 2015). The final rating is contingent upon receipt of signed legal documents pertinent to this transaction that do not materially change what has currently been reviewed. Any changes could lead Fitch to an alternative rating or inability to rate the note. =========== B R A Z I L =========== CAMARGO CORREA: Fitch Keeps 'BB' Issuer Default Rating ------------------------------------------------------ Fitch Ratings has maintained the ratings for the following issuers on Rating Watch Negative: Camargo Correa S.A. (CCSA), Construtora Andrade Gutierrez S.A. (CAG), Construtora Norberto Odebrecht S.A. (CNO) and Construtora Queiroz Galvao S.A. (CQG). The ratings associated with their financial vehicles' issuances also remain on Rating Watch Negative. KEY RATING DRIVERS Key concerns regarding the aforementioned companies have not registered major developments since the last rating action on January 2015. They include: the ongoing nature of the Lava Jato investigation, which could lead to additional negative findings; decreasing and more expensive financing options for most companies in the sector; yet-to-be determined punitive measures; challenging conditions for receiving payments for completed projects and recognizing claims related to contract amendments; and the potential restructuring, suspension, or delays under existing contracts with Petroleo Brasileiro S.A. (Petrobras). At the same time, there have been no evidences that CNO, CAG, CCSA and CQG's credit metrics have been materially affected by the scandal, although changes on this scenario may occur in the short term. Banks have become more diligent in dealing with Brazilian contractors, cost of capital increased, and the market environment is unfavorable to the government to implement the infrastructure agenda as most of the tier 1 and 2 engineering and construction (E&C) companies in Brazil are under investigation. CNO, CAG, CCSA and CQG have been implementing a robust cash balance policy, which is positive during the current challenging operating scenario. This should partially cushion a potential negative impact on these companies' financial profile in the next quarters. The operations abroad are also likely to mitigate the expected slowdown within operation in Brazil. KEY ASSUMPTIONS -- Local scenario for E&C remains challenging; -- Credit will continue scarce, especially for the E&C sector; -- Public infrastructure agenda remains on hold. RATING SENSITIVITIES Future developments that may collectively or individually lead to negative rating actions include: -- Application of material fines; -- Expectation of reduction on backlog that could lead to material decrease on cash flow from operations during a considerable period; -- Deterioration of liquidity position to below 1.0x the short- term debt. Fitch has maintained these issuers and issuances on Rating Watch Negative: Camargo Correa S.A.: -- Foreign currency Issuer Default Rating (IDR) 'BB'; -- Local currency IDR 'BB'; -- National long-term rating 'AA-(bra)'; -- National short-term rating 'F1(bra)'. CCSA Finance Limited: -- Foreign currency IDR withdrawn; -- Local currency IDR withdrawn; -- USD250 million senior unsecured bonds due 2016 'BB'. Construtora Andrade Gutierrez S.A. -- Foreign currency IDR 'BBB-'; -- Local currency IDR 'BBB-'; -- National scale rating 'AA(bra)'. Andrade Gutierrez International S.A. -- USD500 million senior unsecured bonds due 2018 'BBB-'. Construtora Queiroz Galvao S.A. -- National scale rating 'A(bra)'. Construtora Norberto Odebrecht S.A.: -- Foreign currency IDR 'BBB'; -- Local currency IDR 'BBB'; -- National scale rating 'AAA(bra)'. Odebrecht Finance Ltd.: -- Foreign currency IDR withdrawn; -- BRL500 million senior unsecured notes due 2018 'BBB'; -- USD500 million senior unsecured notes due 2020 'BBB'; -- USD600 million senior unsecured noted due 2022 'BBB'; -- USD800 million senior unsecured notes due 2023 'BBB'; -- USD550 million senior unsecured notes due 2025 'BBB'; -- USD500 million senior unsecured notes due 2029 'BBB'; -- USD850 million senior unsecured notes due 2042 'BBB'; -- USD750 million perpetual bonds 'BBB'. Fitch has withdrawn Odebrecht Finance Ltd.'s foreign currency IDR and CCSA Finance Limited's foreign and local currency IDRs as the agency no longer provides corporate ratings for financial vehicles, only for their respective issuances and guarantors. PETROLEO BRASILEIRO: May Issue Earnings in April JP Morgan, Says ---------------------------------------------------------------- Guillermo Parra-Bernal at Reuters reports that Petroleo Brasileiro SA, struggling with fallout from a corruption scandal and a decline in oil prices, could release audited financial information this month despite facing "a perfect storm," analysts at JPMorgan Securities said. In a client note, JPMorgan analysts led by Marcos Severine said the state-run company known as Petrobras could report third- and fourth-quarter earnings this month and book a one-off average asset impairment of BRL29.4 billion ($9.37 billion) due to a graft scheme that may have inflated the value of some assets, according to Reuters. Rio de Janeiro-based Petrobras, which is Latin America's most indebted listed oil company, delayed the release of its results in the wake of accusations that it systematically overpaid for assets and work by contractors, the report relates. The excess funds may have been funneled to political parties including President Dilma Rousseff's ruling Workers' Party, prosecutors said, the report notes. According to the JP Morgan note, Petrobras' "perfect storm" began last year with the launch of the corruption probe known as "Operation Car Wash" and intensified with the plunge in oil prices, Moody's Investors Service's decision to cut the company's debt rating to below investment grade, and a tumbling Brazilian currency, the report says. Petrobras has the ability to preserve cash and reduce debt, although questions remain as to whether the federal government -- which controls almost half of the company's capital -- will adopt the necessary measures to curb capital spending, JP Morgan said, the report says. "The journey back to health will take time and is likely to require a good bit of 'blood, sweat and tears' to put the company back on track," the note said, the report discloses. "At this point, we do not know how the parent may alter Petrobras' course." The report underscores the short-term headwinds facing Petrobras, once the crown jewel of Brazil's economy but in recent years a symbol of the country's financial problems, partly because of the Rousseff administration's meddling in the company's affairs, the reports Reuters. The report relays that at this moment, Mr. Severine and his team believe Petrobras "is a binary call, with more short-term downside than upside risks, given the lack of visibility of the relevant themes." Although, at current prices, shares of the company might seem attractive, many potential drivers depend on government decisions, the note said, the report discloses. The report adds that Mr. Severine took over coverage of Petrobras with a "neutral" recommendation. Mr. Severine set price targets of 11 reais for the preferred shares of Petrobras and $7 for Petrobras' American common depositary receipt. About Petroleo Brasileiro Based in Rio de Janeiro, Brazil, Petroleo Brasileiro S.A. -- Petrobras (Brazilian Petroleum Corporation) -- explores for oil and gas and it produces, refines, purchases, and transports oil and gas products. The Company has proved reserves of about 14.1 billion barrels of oil equivalent and operates 16 refineries, an extensive pipeline network, and more than 8,000 gas stations. * * * As reported in the Troubled Company Reporter-Latin America on March 12, 2015, Moody's Investors Service said the corruption investigation into Petroleo Brasileiro S.A. (Petrobras) will negatively affect parts of the public and private sectors, but government support for the company is likely to help contain the credit-negative impact. On March 6, 2015, the TCLRA reported that the deepening investigation into the alleged kickback scheme at Petrobras has triggered concerns for the Brazilian banks with exposures not only to the state-controlled oil company, but also to its large base of suppliers, as well as the broader oil and gas (O&G) and construction industries, says Moody's Investors Service. Moody's Investors Service downgraded all ratings for Petrobras, including a downgrade of the company's senior unsecured debt to Ba2 from Baa3, and assigned a Ba2 Corporate Family Rating to the company, the TCRLA reported on Feb. 27, 2015. Its failure to estimate its losses from the alleged corruption scheme and produce audited third-quarter results prompted Moody's to cut its rating to junk, the report said. Rival agency Standard & Poor's delivered a further blow on March 23 when it revised its outlook on the company from stable to negative, the TCRLA reported on March 26, 2015. On Feb. 10, 2015, TCRLA said Fitch Ratings has downgraded the foreign and local currency Issuer Default Ratings (IDRs) and outstanding debt ratings of Petrobras to 'BBB-' from 'BBB'. Concurrently, Fitch has placed all of Petrobras' international and national scale ratings on Rating Watch Negative. SCHAHIN II 2012-1: Fitch Lowers Rating on Sr. Sec. Notes to 'B-' ---------------------------------------------------------------- Fitch Ratings has downgraded the notes issued by Schahin II Finance Company (SPV) Limited and Lancer Finance Company Ltd.: Schahin II Finance Company (SPV) Limited (Schahin II) -- Series 2012-1 senior secured notes due 2023 to 'B-' from 'BB-' ($650 million outstanding). Lancer Finance Company Ltd. (Lancer Finance) -- Series 2010-1 senior secured notes due 2016 to 'B' from 'BB+' ($80 million outstanding). The ratings remain on Rating Watch Negative. The Schahin II notes are backed by flows related to a long-term charter and services agreement signed with Petroleo Brasileiro S.A. (Petrobras) for the use of the dynamically positioned ultra- deepwater (UDW) drillship called 'Sertao'. Schahin Petroleo e Gas S.A. (Schahin P&G), the oil and gas arm of Brazilian-based Schahin group (Schahin), is the operator of the vessel and primary sponsor of the transaction. The Lancer Finance notes are backed by flows related to a long-term charter and services agreement signed with Petrobras for the use of the dynamically positioned drillship S.C. Lancer (Lancer). Schahin Engenharia S.A. is the operator of the drilling rig. The rating actions reflect: (i) the continued deteriorating credit quality of Schahin; and (ii) the transactions' heightened exposure to current depressed market conditions. Many of the risks faced by Lancer Finance are somewhat mitigated by the transaction's additional liquidity and low leverage levels. The Negative Watch primarily reflects the uncertainty surrounding the temporary suspension of the operations of five vessels within Schahin's fleet and the financial situation of the sponsor group. KEY RATING DRIVERS Deteriorating Financial Condition of Schahin: Liquidity constraints, which may affect the company's ability to operate the vessels, potentially impacting overall maintenance, general safety, and uptime performance, have led Schahin to temporarily suspend operations on five drill ships contracted with Petrobras. The company communicated to Petrobras its intention to temporarily suspend the operation of the vessels on April 2, 2015, and Petrobras has stated it is evaluating the appropriate contractual measures. Payment on the Schahin II and Lancer notes mainly relies on the cashflow generation under the charter and services agreement for the operation of Sertao and Lancer, respectively. Therefore, a temporary interruption on the operation of the underlying assets would add additional pressure on the transactions as they would have to rely on the available liquidity inside the structures to meet timely debt service. Furthermore, extended periods of downtime could lead to an early termination of the contracts. Increased Exposure to Current Depressed Market Conditions: The deteriorating credit quality of Schahin heightens the transactions' exposure to the potential risk of early termination under the charter and services agreements. These transactions are directly and indirectly exposed to sponsor risk as the underlying contracts have termination clauses that include operator bankruptcy and performance weaknesses. If any of these agreements terminate for any reason, the related transactions could be exposed to current depressed market conditions. However, Fitch believes exposure to current market conditions under a contract termination is mitigated to different degrees in each transaction given the different loan-to-value (LTV) levels. High Liquidity and Low Leverage Support Lancer Finance: The transaction benefits from low leverage as the structured financing has continuously de-levered since closing in 2010. Currently, Fitch conservatively estimates current LTVs to be in the range of 20%-30%, depending on various assumptions. Additionally, the transaction benefits from debt service reserve accounts and opex reserves sufficient to cover timely interest payments for approximately two years in case Lancer is not operating. RATING SENSITIVITIES The ratings are sensitive to further deterioration of Schahin's credit quality as sponsor of the transactions, and Petrobras' decision regarding the temporary suspension of the operations of the rigs. Additionally, the transactions are sensitive to the conclusions of the Lava-Jato investigations and their impact on Schahin and the Brazilian oil and gas industry, changes in the credit quality of Petrobras as offtaker and its willingness to honor existing agreements, and the operating performance of the rigs. TONON BIOENERGIA: Fitch Lowers IDR to 'B-' & Puts on Watch Neg. --------------------------------------------------------------- Fitch Ratings has downgraded Tonon Bioenergia S.A's (Tonon) foreign and local currency Issuer Default Ratings (IDRs) to 'B-' from 'B'. Fitch has also downgraded to 'B-/RR4' from 'B/RR4' the ratings on the company's USD300 million unsecured notes due 2020 and the USD230 million secured notes due 2024 issued by Tonon's fully-owned subsidiary Tonon Luxembourg S.A. The ratings are currently on Watch Negative. KEY RATING DRIVERS The downgrade is based on Tonon's weaker financial profile in the volatile sugar and ethanol business, underpinned by higher short- term debt concentration, generation of negative free cash flows (FCF) and increased leverage ratios. Systemic risk has increased in the Brazilian sugar and ethanol (S&E) sector following the default by Aralco S.A. Industria e Comercio and Virgolino de Oliveira S.A. Acucar e Alcool's (GVO) struggle to restructure its debt, making it increasingly difficult for companies to obtain working capital financing and post comfortable cash to short-term debt coverage ratios. The Watch Negative reflects Fitch's concerns about Tonon's escalating debt refinancing risks. The company has been rolling over its maturing debt with short-term debt as availability of medium and long-term unsecured loans has become scarcer for most Brazilian S&E companies. Tonon does not own land properties to collateralize new financings, which makes access to longer tenor debt more challenging. Tonon still faces a stressed scenario for sugar and ethanol prices, which adds challenges to the company to strengthen its operational cash flow generation, even with the improvements on the ethanol industry in 2015 compared to 2014 and the benefits of the weaker BRL for the competitiveness of the Brazilian sugar abroad. The increase in crushed volumes and generation of more robust operational cash flow in the new season ending March 2016 will depend largely on the maintenance of favorable weather conditions as seen in early 2015. Higher Refinancing Risk Tonon's liquidity is under pressure as short-term debt is increasing at a higher pace than the cash position. The company has been finding it difficult to roll over its maturing obligations with new long-term loans as bank lending activity in the sector has been focused on short-term borrowings. The company does not own land properties against which to borrow new medium or long-term loans, which reduces its refinancing prospects and makes the company dependent on the availability of short-term credit lines. As of Dec. 31 2014, Tonon's cash position of BRL159 million compared unfavorably with short-term debt of BRL257 million to yield a 0.62x coverage ratio. In the previous quarter the company had reported cash and short-term debt positions of BRL148 million and BRL154 million, respectively, yielding a 0.96x coverage ratio. Tonon's higher refinancing risks are also underpinned by the generation of negative free cash flow (FCF). The company's cash flows have been pressured by a large expansion capital expenditure program that raised crushing capacity to 9.4 million from 8.2 million tons of sugar cane. Investments were concentrated primarily on the expansion of the Vista Alegre Unit in the state of Mato Grosso do Sul, whose crushing capacity went to 3.7 million tons from 2.5 million tons. In the last 12 months ended Dec. 31 2014, the company posted cash flow from operations (CFFO) at BRL304 million, which compared unfavorably to capital expenditures at BRL452 million to leave FCF at a negative BRL147 million. Fitch expects Tonon's FCF to remain negative in the next two years, even with a reduction on capital expenditures to BRL260 million for fiscal year 2016, after the end of the capacity expansion. While strongly attenuated by the recent depreciation of the BRL, the rebound of international sugar prices is taking much longer than expected to materialize and it is holding back a more prominent recovery of S&E companies' operating cash flows. A series of government measures both at the federal and state levels have improved the prospects for the ethanol industry, but the positive short-term impact is expected to be limited. Increased Leverage and FX Risk: Tonon presents a weak financial profile underpinned by its levered capital structure in a volatile sector. The company's total adjusted debt as per Fitch's internal criteria amounted to BRL2.3 billion as of Dec. 31 2014, unfavorably comparing to BRL1.8 billion in March 31 2014. The increase was due to the issuance by Tonon Luxembourg of USD230 million senior secured notes in May 2014, and the BRL depreciation, which added BRL276 million to Tonon's total debt figure in the 9 months ended Dec. 31, 2014. In the last 12 months ended Dec. 31, 2014, the company's consolidated net adjusted debt/EBITDAR ratio was 4.9x compared with 4.0x in March 2014 and 3.0x in March 2013. Fitch expects Tonon's net adjusted debt to EBITDAR to reach over 6.0x in March 2015 and stay above 5.0x in March 2016. The company is highly exposed to foreign exchange risk as USD- denominated debt accounted for 75% of its total adjusted debt while exports accounted for 53% of revenues in the last 12 months ended Dec. 31, 2014. The company's USD-denominated debt is not protected by hedging instruments. At the same date, Tonon's total adjusted debt outstanding comprised the USD300 million Unsecured Senior Notes due 2020 (33%); USD230 million Senior Secured Notes due 2024 (25%); land lease agreements as per Fitch's internal criteria (24%), exports pre-payments and other trade finance facilities (11%); working capital lines (6%) and others with the balance. Average Business Position Tonon is a medium-sized sugar and ethanol company in a fragmented commodity sector in which scale is relevant and volatility is high. The company has recently concluded investments that raised crushing capacity by 1.2 million tons to 9.4 million tons of sugar cane per year, distributed in three industrial units located in the states of Sao Paulo and Mato Grosso do Sul. Tonon's sugar output is mostly exported, while around 80% of its ethanol production is sold to the domestic market. Own sugar cane accounts for around 75% of its total origination needs and the company does not own cogeneration assets. KEY ASSUMPTIONS -- Crushed volumes of 8 million tons in 2015/2016 and gradual increases of 2% thereafter; -- Mix relatively unchanged at 56% sugar and 44% ethanol for the projected period; -- Average sugar prices at USD14 cents/pound in 2015/2016, USD16 cents/pound in 2016/2017 and flat at USD17 cents/pound from 2017/2018 on; -- Domestic ethanol prices keeping the historical correlation with international sugar prices. RATING SENSITIVITIES Tonon's inability to improve its liquidity risk in the coming months could lead to a negative rating action. A positive rating action is unlikely in the short to medium term. ========================== C A Y M A N I S L A N D S ========================== AIR 2 US: Fitch Raises Rating on Series A EENs to 'BB+/RR1' ----------------------------------------------------------- Fitch Ratings has upgraded the ratings for the enhanced equipment notes (EENs) issued by AIR 2 US as: -- Series A EENs to 'BB+/RR1' from 'BB'; -- Series B EENs to 'B/RR5' from 'B-'. AIR 2 US is a special purpose Cayman Islands company created to issue EENs; utilize the proceeds to purchase Permitted Investments; and enter into a risk transfer agreement. AIR 2 US entered into the risk transfer agreement (the Payment Recovery Agreement), with a subsidiary of Airbus. The primary provision of the Payment Recovery Agreement states that if United Airlines, Inc. (rated 'B+'; Positive Outlook by Fitch) fails to pay scheduled rentals under existing subleases of aircraft with subsidiaries of Airbus, AIR 2 US will pay these rental deficiencies to a subsidiary of Airbus. These deficiency payments will come from the cash flows created by the Permitted Investments. As such, the greatest risk of the transaction is the bankruptcy risk of the lessee airline. KEY RATING DRIVERS AIR 2 US is not covered effectively by Fitch's EETC ratings criteria as a result of the fact that aircraft cannot be sold and liquidated in the event of lease rejection of Airbus A320 aircraft sub-leased by United. In addition, the underlying subleases are not cross-defaulted or cross-collateralized. Applying a framework similar to that employed in analysis of corporate obligations, Fitch expects recoveries for series A note holders to be very strong in a lease rejection scenario. Discounted lease cash flows, applying heavy stresses to current A320 lease rates, cover series A principal and a full liquidity facility draw. The 'BB+/RR1' rating, three notches above United's 'B+' Issuer Default Rating (IDR), reflects the high level of projected recovery. Expected recoveries for series B note holders would be weak, in the 'RR5' range, reflecting a high probability of lease payment shortfalls in a post-rejection scenario. The one notch differential between the 'B/RR5' rating of the series B notes and United's 'B+' corporate IDR captures this weak recovery potential. RATING SENSITIVITIES The ratings are primarily driven by Fitch's recovery expectations and by the IDR of the underlying airline. However, consistent with Fitch's recovery criteria, Fitch is unlikely to upgrade the A tranche above 'BB+' if United's IDR were upgraded to 'BB-'. The B tranche ratings could be upgraded if Fitch were to upgrade the ratings on United. The Ratings Outlook for United is Positive. Conversely, ratings for both tranches could be downgraded if the airline IDR was downgraded (not anticipated at this time) or if Fitch's expectations for future lease rates were to decline materially. Fitch previously assigned rating outlooks to these ratings. The outlooks have been removed since Fitch typically do not assign outlooks to specific issue ratings. Fitch has upgraded these ratings: AIR 2 US -- Series A enhanced equipment notes to 'BB+/RR1' from 'BB'; -- Series B enhanced equipment notes to 'B/RR5' from 'B-'. BROUGHTON CORPORATION: Members' Final Meeting Set for April 28 -------------------------------------------------------------- The members of Broughton Corporation will hold their final meeting on April 28, 2015, at 10:00 a.m., to receive the liquidators' report on the company's wind-up proceedings and property disposal. The company's liquidator is: Philip Mosely Harbour Centre, Ground Floor 42, North Church Street George Town, Grand Cayman KY1-1110 Cayman Islands Telephone: +1 (345) 949 4018 Facsimile: +1 (345) 949 7891 CONTINENTAL ASSET: Members' Final Meeting Set for April 21 ---------------------------------------------------------- The members of Continental Asset Management will hold their final meeting on April 21, 2015, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Charalambos Michaelides 5 Themistokli Dervi Street,Elenion Building P.C. 1066 Nicosia Cyprus Telephone: +357 22 555800 Facsimile: +357 22 555801 e-mail: pambos.michaelides@abacus.com.cy CORE-MALAYSIA: Members' Final Meeting Set for April 27 ------------------------------------------------------ The members of Core-Malaysia Holdings Ltd. will hold their final meeting on April 27, 2015, to receive the liquidators' report on the company's wind-up proceedings and property disposal. The company's liquidators are: Susan Craig Lorna Carroll CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 Cayman Islands CPIM STRUCTURED: Members' Final Meeting Set for April 22 -------------------------------------------------------- The members of CPIM Structured Credit Fund 500 Inc. will hold their final meeting on April 22, 2015, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mark Longbottom c/o Kinetic Partners (Cayman) Limited The Harbour Centre 42 North Church Street P.O. Box 10387 Grand Cayman KY1-1004 Cayman Islands Telephone: (345) 623 9900 Facsimile: (345) 943 9900 FARENHEIT ADVISORS: Shareholder to Hear Wind-Up Report on April 20 ------------------------------------------------------------------ The shareholder of Farenheit Advisors Ltd. will hear on April 20, 2015, at 11:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Philippe Pouponnot c/o of Azur Management 17 rue des Pierres du Niton 1207 Geneve Switzerland JIMILI INVESTMENTS: Members' Final Meeting Set for April 30 ----------------------------------------------------------- The members of Jimili Investments Ltd. will hold their final meeting on April 30, 2015, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Eagle Holdings Ltd. c/o Barclays Private Bank & Trust (Cayman) Limited FirstCaribbean House, 4th Floor P.O. Box 487 Grand Cayman KY1-1106 Cayman Islands MIDSHIPS OPPORTUNITY: Member to Hear Wind-Up Report on April 21 --------------------------------------------------------------- The member of Midships Opportunity Fund Ltd. will hear on April 21, 2015, at 11:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Hilltop Park Associates LLC c/o Justin Savage Ogier, 89 Nexus Way Camana Bay, Grand Cayman KY1-9007 Cayman Islands Telephone: +1 (345) 949 9876 Facsimile: +1 (345) 949 9877 MIDSHIPS OPPORTUNITY: Member to Hear Wind-Up Report on April 21 --------------------------------------------------------------- The member of Midships Opportunity Master Fund Ltd. will hear on April 21, 2015, at 11:10 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Hilltop Park Associates LLC c/o Justin Savage Ogier, 89 Nexus Way Camana Bay, Grand Cayman KY1-9007 Cayman Islands Telephone: +1 (345) 949 9876 Facsimile: +1 (345) 949 9877 RIVERSIDE GLOBAL: Shareholders' Final Meeting Set for April 23 -------------------------------------------------------------- The shareholders of Riverside Global Value Fund Offshore Investors will hold their final meeting on April 23, 2015, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Peter Goulden Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue, Camana Bay P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands SAYBOLT MALAYSIA: Members' Final Meeting Set for April 27 --------------------------------------------------------- The members of Saybolt Malaysia Holdings Ltd. will hold their final meeting on April 27, 2015, to receive the liquidators' report on the company's wind-up proceedings and property disposal. The company's liquidators are: Susan Craig Lorna Carroll CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 Cayman Islands STRUCTURED CREDIT: Members' Final Meeting Set for April 23 ---------------------------------------------------------- The members of Structured Credit (General Partner) 500 Inc. will hold their final meeting on April 23, 2015, at 9:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mark Longbottom c/o Kinetic Partners (Cayman) Limited The Harbour Centre 42 North Church Street P.O. Box 10387 Grand Cayman KY1-1004 Cayman Islands Telephone: (345) 623 9900 Facsimile: (345) 943 9900 THALASSA LIMITED: Members Receive Wind-Up Report ------------------------------------------------ The members of Thalassa Limited received on March 30, 2015, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Eagle Holdings Ltd. c/o Barclays Private Bank & Trust (Cayman) Limited FirstCaribbean House, 4th Floor P.O. Box 487 Grand Cayman KY1-1106 Cayman Islands VIETNAM RESOURCE: Members' Final Meeting Set for May 4 ------------------------------------------------------ The members of Vietnam Resource Investments S.A.R.L. will hold their final meeting on May 4, 2015, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Beat Schurch Maples and Calder, Attorneys-at-law c/o Aisling Dwyer The Center, 53rd Floor 99 Queen's Road Central Hong Kong WESSEX ASIA: Members' Final Meeting Set for April 22 ---------------------------------------------------- The members of Wessex Asia Pacific Fund Limited will hold their final meeting on April 22, 2015, at 9:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mark Longbottom c/o Kinetic Partners (Cayman) Limited The Harbour Centre 42 North Church Street P.O. Box 10387 Grand Cayman KY1-1004 Cayman Islands Telephone: (345) 623 9900 Facsimile: (345) 943 9900 =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Heads Push to Fix Country's Energy Woes ----------------------------------------------------------- Dominican Today reports that as part of the National Electricity Sector Reform Pact, Dominican Republic's Economic and Social Council (ECOSOC) hosted the "Electricity Sector Day," with the participation of experts from the World Bank, the Inter-American Development Bank and the Latin American Energy Organization (OLADE). Economic and Social Council (ECOSOC) President Monsignor Agripino Nunez headed the event's inaugural, and stressed the importance of having a reliable, competitive and sustainable electricity system for all, according to Dominican Today. The report relates that present in the meeting were World Bank local representative McDonald Benjamin and OLADE Studies and Projects director Jorge Asturias, who lectured on "How an efficient electricity sector functions." "Through an interesting and fruitful work dynamic, organized into six groups of no more than 20 people each, attendees could interact with invited experts, who were revealing their knowledge and experiences on the following themes: Institutional Framework and Regulatory, Generation, Transmission, Distribution, Tariff and Financial Aspects and Users and Consumers," the World Bank said in an emailed statement obtained by Dominican Today. "Therefore the objective of the actors called for the Electric Pact was fulfilled, to have access to a better knowledge and understanding of the matters to be discussed at the next Working Groups under the Third Phase of the General Methodology of the Coalition of National Agreement on Reform of the Electricity Sector," the statement said, the report notes. The report discloses that ECOSOC Executive Director Iraima Capriles read the conference's conclusions and outlined the next steps for discuss proposals paving the way to the Electricity Pact. For his part, Ruben Jimenez, chief executive officer of the State- owned Electric Utility (CDEEE), delivered the speech to close the conference held at the Hotel Embajador, the report relays. DOMINICAN REP: Decries 'Secret Talks' to Waylay Workers' Benefits ----------------------------------------------------------------- Dominican Today reports that Labor leader Rafael Pepe-Abreu again warned of a nationwide shutdown on the stalled talks over a salary increase, and affirmed that the government and management meet secretly to negotiate the removal of workers' benefits. Mr. Abreu said statements by Administrative minister Jose Ramon Peralta on the three-way talks, come after private meetings between employers and officials to discuss a wage increase, according to Dominican Today. The report relates that the head of the labor unions grouped in the CNUS said in the meetings employers have stated their willingness to agree to "a generous salary increase," if labor agrees to amend the Labor Code. "There've been meetings here trying to determine that. Our message is that we will never, our federation of unions, sign an agreement to change one thing for another, ever." The report discloses that Mr. Abreu noted however that labor awaits management's concrete proposal of a percentage during the next Wage Committee meeting on April 22, but warned that they'll start a campaign of action otherwise. "We call on the population for a general strike, our confederation is also available if needed." The report adds that Mr. Abreu said a study conducted by the unions found that household staples cost round RD$23,000 per month, "that's why an increase of the minimum wage is necessary." DOMINICAN REPUBLIC: Agree with Private Sector on Wage Hike ---------------------------------------------------------- Dominican Today reports that Presidency Administrative Minister Jose Ramon Peralta said the government and private sector have agreed on the talks to secure a "satisfactory" wage increase, expected to materialize in the coming weeks. Minister Peralta said that with regard to the public sector, there may be a salary adjustment, according to Dominican Today. Minister Peralta said the wage increase for the private sector will be a higher percentage than the inflation during the last two years, "which guarantees an invigorated economy," the report relates. "It seems we're talking about an important figure that will help boost the Dominican economy further. We have an economy that's growing at more than 6%, we see the dynamism in general, so a wage increase in these circumstances would be one more boost to the economy and the sales of all companies," the report quoted Minister Peralta as saying. =========== M E X I C O =========== CONTROLADORA COMERCIAL: Moody's Withdraws Ba1 Corp Family Rating ---------------------------------------------------------------- Moody's de Mexico (Moody's) withdrew the Ba1 corporate family rating and Aa3.mx national scale rating on Controladora Comercial Mexicana S.A.B. de C.V. (Comerci) due to business reasons. There were no ratings assigned to specific debt instruments. Please refer to Moody's Withdrawal Policy on www.moodys.com for details about Moody's rating withdrawal policies. RATINGS RATIONALE Moody's has withdrawn the rating for its own business reasons. Please refer to the Moody's de Mexico Policy for Withdrawal of Credit Ratings, available on its website, www.moodys.com.mx. Moody's last rating action on Controladora Comercial Mexicana was on February 9, 2015 when the agency placed the ratings on review for upgrade. Controladora Comercial Mexicana S.A. de C.V. operates 199 stores, roughly 80% of them in the Mexico City metropolitan area and the country's central region. Comerci maintains seven different store formats, including hypermarkets (Mega, Bodega, and Comercial Mexicana stores) and supermarkets (Sumesa, City Market, Fresko and Alprecio stores). Comerci is majority owned and controlled by the Gonz lez family with approximately 43% of its shares traded on the Mexican stock exchange. The company reported revenues of MXN47.7 billion for the twelve months ended September 30, 2014. MCEWEN MINING: Gold Worth $8.5 Million Stolen From Mining Firm -------------------------------------------------------------- EFE News reports that Canada's McEwen Mining said that some 7,000 ounces of gold worth $8.5 million were stolen in an armed robbery at its El Gallo 1 mine in the northwestern Mexican state of Sinaloa. No one was hurt in the robbery and the mine in the city of Mocorito was not damaged, the company said in a statement obtained by EFE News. Mining and processing operations are continuing at El Gallo 1, McEwen Mining said, the report notes. "Mexican authorities are vigorously investigating" the theft of 900 kilos of gold concentrate, which contains about 7,000 ounces of the precious metal, McEwen Mining said, the report relates. "The company maintains insurance against these types of incidents and is working closely with its insurance carrier to determine the extent of available coverage," McEwen Mining said, the report notes. "However, the company's policy will not be sufficient to cover the entire expected loss," McEwen Mining added. El Gallo 1, inaugurated in January 2013 by Sinaloa Gov. Mario Lopez, produced 38,212 ounces of gold and 25,912 ounces of silver last year, the report relays. McEwen Mining plans to boost production by 31 percent to 50,000 ounces of gold this year, the report adds. MUNICIPALITY OF MEXICALI: Fitch Affirms B3/Ba2.mx Issuer Rating --------------------------------------------------------------- Moody's de Mexico (Moody's) revised the rating outlook for Municipality of Mexicali to stable from negative and affirmed issuer ratings at B3/Ba2.mx. RATINGS RATIONALE RATIONALE FOR THE RATING AFFIRMATION The affirmation of Mexicali's rating reflects negative operating and consolidated results, offset by a broad economic base. By the end of 2015, Moody's expects that Mexicali's debt levels will be higher than B3-rated peers. Mexicali's own-source revenues are in line with B3 Mexican municipalities. Moody's expects that the current administration's policies to improve budget management and enhance the municipality's own-source revenues will result in improvements in the municipality's operating and cash balances. RATIONALE FOR THE STABLE OUTLOOK The outlook change to stable for the Municipality of Mexicali is prompted by the improvement in the municipality's operating and liquidity metrics. Public policy measures resulting in a cut of personnel expenditures by 15% has led to a stabilization of operating expenditures, which remained constant in nominal terms between 2013 and 2014.This in turn led to a significant reduction of the operating deficit to -6.6% of operating revenues in 2014 from - 21.7% in 2013. Combined with cuts in capital expenditures, the improved operating performance in 2014 resulted in a much lower cash financing deficit (-8.9% of total revenue) than in the previous three years (-17.6% on average between 2011 and 2013). As a result, Mexicali's gross and cash balances in 2014 are in line with peers in the B category. Liquidity levels have improved and net working capital to total expenditures was equivalent to -14.7% in 2014, up from -23.9% in 2013. While Mexicali increased its reliance on short-term financing to MXN 275 million at the end of 2014 from MXN 100 million at the end of 2013, Moody's believes that the risks associated to the increased short-term debt are incorporated in the B3 ratings. In 2015, the municipality's debt levels are expected to increase to 75.7% of operating revenues as a result of an expected credit to pay arrears with the pension system of the state of Baja California (Baa3/Aa3.mx, stable) that were previously registered as short-term liabilities. We expect this increase will change debt composition to a long term profile easing liquidity and cash management pressures, as well as creating more certainty around pension payments. WHAT COULD CHANGE THE RATING UP/DOWN Sustained improvements in the municipality's gross operating and cash balances, as well as in liquidity, could exert upward pressure on Mexicali's issuer ratings. Conversely, lower than expected reductions in the gross operating deficit and in cash balances that would lead to an increase in debt levels or a deterioration in liquidity, would exert downward pressure on Mexicali's issuer ratings. The principal methodology used in this rating was Regional and Local Governments published in January 2013. Please see the Credit Policy page on www.moodys.com.mx for a copy of these methodology. The period of time covered in the financial information used to determine Municipality of Mexicali 's rating is between 01/01/2010 and 12/31/2014 (source: Municipality of Mexicali). 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". ============= U R U G U A Y ============= ACI AIRPORT: Fitch Expects to Rate $200MM Sr. Secured Notes 'BB+' ----------------------------------------------------------------- Fitch Ratings expects to rate ACI Airport SudAmerica, S.A.'s $200 million senior secured notes 'BB+(exp)' with a Stable Rating Outlook, subject to receipt of final documentation. The expected rating reflects the strategic but modest size traffic base, strong O&D share of passenger traffic, limited reliance on revenue growth, and moderate leverage and capacity needs. Fitch also views the recent renewal of the concession by the government to be a credit supportive factor. The issuance is senior at the holding company level, but subordinated to approximately USD60 million of debt at the operating company level. KEY RATING DRIVERS Important Small-Scale International Gateway [Revenue Risk - Volume: Midrange]: Located in Uruguay's capital city, the airport is the main international gateway of Uruguay with approx. 85% of the country's flights. The airport is almost exclusively an O&D airport with only 2% of passengers transferring to other destinations. Traffic growth since 2004 has been strong averaging 6.2% despite the bankruptcy of the country's flagship carrier, Pluna, and the resulting loss of capacity and status as a regional hub. No significant investments needed [Infrastructure Development & Renewal: Stronger]: The airport's current capacity of 4.5 million pax/year is well below management's forecast of 3.1 million pax at concession end. Under the amended concession agreement which extended the term of the concession through 2033, the new taxi way construction (USD10 million) was extended until the end of the concession, with no other significant mandatory investments needed in the remaining term. Inflation and Exchange Adjusted Tariffs [Revenue Risk - Price: Midrange]: Revenues are 95% denominated in USD with Aeronautical revenues being adjusted by a global index that considers foreign exchange and inflation rates. Tariffs do not decrease under the adjustment scheme; however, increases have occasionally been subject to political risk. No increase in tariffs is assumed over the life of the concession. Limited Exposure to Termination Events: Breach of contract termination events are standard and manageable by the concessionaire; however, a unilateral termination for public interest by the government in the short-term (prior to 2018) would leave the transaction exposed to a loss of less than 10% given the debt level and subordinate nature of the issuance. Fitch considers the risk unlikely given (i) the recent extension of the concession and general public good-will for the project; (ii) the increased fee paid by the concessionaire to the government; (iii) the airports operating status with no material infrastructure construction needs; and (iv) the stability of Uruguay as an investment grade country. Subordinated Fixed Rate Amortizing Issuance [Debt Structure: Midrange]: The issuance is conservatively structured with 100% fixed rate and fully amortizes over the life of the debt, although the amortization schedule is back loaded. All cash flows available to pay debt service for the rated debt are subordinate to the notes issued at the opco level and subject to dividend distribution tests through maturity of the opco notes in 2021. Lock out of dividends is considered highly unlikely as a trigger breach prior to 2021 would require severe stresses with traffic declines in excess of 40%. Should a lock-out occur, the issuance also benefits from deferrable debt service for up to 12 months. Moderate Financial Metrics: Debt service coverage ratios (DSCR) average 1.82x and 1.72x for the base and rating cases, respectively. Despite strong average coverage ratios for the issuance, coverages in the early years of the transaction life are weaker. Minimum DSCR for the base and rating cases are 1.16x and 1.23x with the minimums occurring in the near term while the senior debt is outstanding. Leverage is considered adequate at 5.6 times Net Debt to EBITDA. No dependence on traffic growth to support debt requirements is needed as break even traffic annual growth rate is negative 1.3%. PEER GROUP The airport's nearest peers include Lima Airport Partners S.R.L. (LAP; rated 'BBB+'/Stable Outlook), which serves as an international gateway airport with significant O&D and relatively low leverage. Unlike this peer, Carrasco International Airport has a significantly lower enplanement base and weaker near-term financial coverage ratios which limit the expected rating in the short term. Should performance come in line with management expectations, higher coverage levels should warrant a risk level more similar to LAP. RATING SENSITIVITIES -- Negative: Repeated failure of the government to approve increases in regulated tariffs, exposing the issuance to foreign exchange and/or inflation rate fluctuations that materially affect the cash flow available to service debt. -- Positive or Negative: Traffic levels materially divergent from base and rating case projections in the mid- to long- term. -- Positive: Steady improvement in debt coverage levels over time may allow for a positive rating consideration. TRANSACTION SUMMARY Carrasco International Airport, located approximately 12 miles from downtown Montevideo, is the primary international gateway of Uruguay. The 20-year concession agreement awarded in November 2003 was recently extended for an additional 10-year term and matures in November 2033. The airport's new terminal was inaugurated in 2009 with a capacity of 4.5 million passengers per year, comparing favorably with the current 1.7 million passengers as well as the sponsor's projected 2033 volume of 3.1 million. The operator of the airport is a wholly owned subsidiary of the Corporacion America Group, one of the world's largest operators with 52 operations in Latin America and Europe. The airport has suffered a number of setbacks in recent years including the failure of the country's flagship carrier, Pluna Lineas Aereas Uruguayas S.A., resulting in the loss of the airport's hub status, and the poor economic performance of the country's neighbors, Argentina and Brazil, which weighed particularly heavily on the tourism industry. Despite these headwinds, the airport has managed to post strong growth averaging over 6% annually since 2004, with an increasing O&D profile, and finds itself in a strong position moving forward. The Fitch Base Case assumes total passenger activity growth as per the traffic consultant's (ICF) low case (3.3% traffic CAGR through 2033) while cargo volume forecasts considered the ICF base case. Fitch did not consider increases under the Global Index Adjustment; however, this assumption was moderated by the stable currency and inflation assumptions within the cash flow model provided. Fitch considered 1.5% real growth in Duty Free revenues per passenger and a 24% concession fee beginning in 2024. Fitch's operating expense assumption considered the management's assumption plus an additional 5%. Under this scenario the minimum DSCR is 1.16x in 2018, with an average financial coverage ratio of 1.82x. The Fitch Rating Case assumes total passenger activity growth as per the ICF low case with moderation of the front-ended growth over the first 6-years, the management assumption in years 2021- 2026, and the ICF low case from 2027-2033 (2.7% traffic CAGR through 2033) while cargo volume forecasts considered the ICF low case. No increases under the Global Index Adjustment were considered. Fitch considered 0% real growth in Duty Free revenues per passenger and no increase in the concession fee beginning in 2024. Fitch's operating expense assumption considered the management's assumption plus an additional 7.5% as well as a 10% stress on all local currency costs to account for a possible short-term revaluation in foreign exchange rates. Under this scenario the minimum DSCR is 1.23x in 2018, with an average financial coverage ratio of 1.72x. Holding company (holdco) structures that are dependent on dividends from operating companies (opcos) bring an added layer of complexity to the analysis of debt issued at the holdco level. As such, a holistic approach to the analysis of the subordinate debt is necessary. First, cash flows to the holdco can be locked out under certain circumstances, so scenario stresses must be applied at the opco level and tested against the opco triggers. For this transaction, neither of the senior DSCR (1.7x) or leverage (3.0x) tests was breached in any Fitch scenario including break even O&M and traffic cases. Additionally, Fitch's analysis of the financial ratios of the issuance includes both the subordinate and senior issuances even though the senior debt is outside of the transaction structure. The necessity for this approach is obvious for leverage calculations but equally important when considering debt service coverage ratios. Fitch primarily utilizes ratios with the total debt service including senior debt issued at the opco, although the holdco-only coverages are also analyzed to ensure that they at least meet the expected level for the respective rating category. This analysis is consistent with Fitch's approach for subordinate issuances within the same trust. SECURITY The security package supporting the notes is typical for project financings and include a pledge of 100% of the shares of the operating company, PDS; a pledge of 100% of the shares of the holding company, Cerealsur; the transaction distribution, issuer and debt service accounts; all of the issuer's property, all present and future payments, proceeds and claims of any kind with respect to the foregoing. *********** 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 * * *