/raid1/www/Hosts/bankrupt/TCRLA_Public/160219.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, February 19, 2016, Vol. 17, No. 35
Headlines
A R G E N T I N A
ARCOR S.A.I.C.: Fitch Affirms 'B+' Local Currency LT IDR
ARGENTINA: Reaches Settlement in Bondholder Class Action
ARGENTINA: On the Cusp of Peace With Creditors
B R A Z I L
GOL LINHAS: Moody's Cuts Corporate Family Ratings to Caa1
C A Y M A N I S L A N D S
ALABAMA RISK: Shareholders Receive Wind-Up Report
FORE ERISA: Shareholders Receive Wind-Up Report
LARICE INTERNATIONAL: Shareholders Receive Wind-Up Report
MOWBRAY INVESTMENTS: Shareholders Receive Wind-Up Report
NORTHCAP MANAGEMENT: Shareholders Receive Wind-Up Report
PRIME INVESTMENTS: Shareholder Receives Wind-Up Report
QF PLASTICS: Shareholders Receive Wind-Up Report
QFB LEINSTER: Shareholders Receive Wind-Up Report
QFB LONDON: Shareholders Receive Wind-Up Report
SEARCHLIGHT HARBOR: Shareholders Receive Wind-Up Report
SMGP ADMINISTRATION: Shareholder Receives Wind-Up Report
TOMMY COMPANY: Shareholders Receive Wind-Up Report
UNIVERSAL TELECOM: Shareholders Receive Wind-Up Report
VESUVIUS INVESTMENT: Shareholders Receive Wind-Up Report
VISTA HERMOSA: Sole Member Receives Wind-Up Report
M E X I C O
ARENDAL SRL: S&P Lowers CCR to 'CCC-' on Weak Liquidity
AXTEL SAB: Fitch Hikes Long-term Issuer Default Ratings to 'BB-'
MAXCOM TELECOMUNICACIONES: S&P Cuts Corp. Credit Rating to CCC+
MEXICO: Delivers Unexpected Rate Rise With Eye on Inflation
MEXICO: To Slash 2016 Spending by $7 Billion
P U E R T O R I C O
PUERTO RICO ELECTRIC: House OKs Bill Key for Utility PREPA Deal
PUERTO RICO: Bondholder Group Floats Debt Restructure Plan
T R I N I D A D & T O B A G O
CARIBBEAN AIRLINES: Looking at Providing Flights to Cuba
- - - - -
=================
A R G E N T I N A
=================
ARCOR S.A.I.C.: Fitch Affirms 'B+' Local Currency LT IDR
--------------------------------------------------------
Fitch Ratings has taken various rating actions on the following
Argentine corporates:
-- Arcor S.A.I.C.
-- Capex S.A.
-- Central Puerto S.A.
-- Compania Latinoamericana de Infraestructura y Servicios S.A.
(CLISA)
-- Inversiones y Representaciones S.A.
-- IRSA Propiedades Comerciales S.A.
-- Mastellone Hermanos Sociedad Anonima
-- Medanito S.A.
-- Pan American Energy LLC
-- Pan American Energy LLC Sucursal Argentina
-- YPF S.A.
A full list of rating actions follows at the end of this release.
Fitch upgraded the local currency Issuer Default Ratings (IDRs)
and revised the corporate Outlooks to Stable for Capex, Central
Puerto, and YPF. These actions reflect Argentina's improving
business climate following the election of Mauricio Macri on Nov.
22, 2015. Since taking office, the Macri administration has
partially lifted capital restrictions, floated the currency,
decreased export tariffs on agricultural products, and increased
electrical system wholesale tariffs.
Fitch also revised the Recovery Ratings upward and upgraded
accordingly the long-term senior debt ratings for Arcor, Capex,
and YPF. These adjustments reflect the above average recovery
prospects of several issues. Notes assigned an 'RR3' Recovery
Rating reflect the expectation of a recovery in the range of 50%
to 70% in the event of default. This expectation is due to the
respective companies' strong balance sheets and Fitch's belief
that their default would be most likely driven by transfer and
convertibility restrictions imposed upon the payment of foreign
debt, not a material deterioration of the companies' business or
financial profiles.
Sovereign Constrained Ratings
Fitch has assigned a country ceiling of 'CCC' to the Republic of
Argentina, which limits the foreign currency rating of most
Argentine corporates to 'CCC'. Country ceilings are designed to
reflect the risks associated with sovereigns placing restrictions
upon private sector corporates, which may prevent them from
converting local currency (LC) to any foreign currency (FC) under
a stress scenario, and/or may not allow the transfer of FC abroad
to service FC debt obligations. Key concerns of corporates
domiciled in Argentina include high inflation, a history of
government interference, economic uncertainty, and limited access
to debt markets, especially after the country's recent default.
The Stable Outlook for eight of the 11 companies from the review
reflects the more positive expectations for the business climate
in Argentina post elections.
RATING SENSITIVITIES
Negative: Future developments that could, individually or
collectively, lead to negative rating actions in the short term:
-- Further economic deterioration and the Republic of Argentina's
inability to convert and transfer foreign exchange for
corporates;
-- Given high dependence on subsidies by various Argentine
corporates, any further weakening of Argentina's fiscal
accounts could have a negative impact on the companies'
collections / cash flow;
-- A significant deterioration of corporates' credit metrics.
Positive: A positive rating action could be the result of an
upgrade of the sovereign rating.
Fitch has taken the following rating actions:
Arcor S.A.I.C.
-- Foreign currency long-term IDR affirmed at 'B-'; Outlook
revised to Stable from Negative;
-- Local currency long-term IDR affirmed at 'B+'; Outlook revised
to Stable from Negative;
-- Notes due 2017 upgraded to 'B' from 'B-'; Recovery Rating
revised to 'RR3' from 'RR4'.
Capex S.A.
-- Foreign currency long-term IDR affirmed at 'CCC';
-- Local currency long-term IDR upgraded to 'B' from 'B-';
Outlook revised to Stable from Negative;
-- Notes due 2018 upgraded to 'CCC+' from 'CCC'; Recovery Rating
revised to 'RR3' from 'RR4'.
Central Puerto S.A.
-- Foreign currency long-term IDR affirmed at 'CCC';
-- Local currency long-term IDR upgraded to 'B' from 'B-';
Outlook revised to Stable from Negative;
-- Notes due 2017 affirmed at 'CCC+/RR3'.
Compania Latinoamericana de Infraestructura y Servicios S.A.
(CLISA)
-- Foreign currency long-term IDR affirmed at 'CCC';
-- Local currency long-term IDR affirmed at 'B-'; Outlook
Negative;
-- Notes due 2019 affirmed at 'CCC/RR4'.
Inversiones y Representaciones S.A.
-- Foreign currency long-term IDR affirmed at 'CCC';
-- Local currency long-term IDR affirmed at B+; Outlook revised
to Stable from Negative;
-- Notes due 2017 and 2020 affirmed at 'B-/RR3'.
IRSA Propiedades Comerciales S.A.
-- Foreign currency long-term IDR affirmed at 'CCC';
-- Local currency long-term IDR affirmed at 'B+'; Outlook revised
to Stable from Negative;
-- Notes due 2017 affirmed at 'B-/RR3'.
Mastellone Hermanos Sociedad Anonima
-- Foreign currency long-term IDR affirmed at 'CCC';
-- Local currency long-term IDR affirmed at 'CCC';
-- Notes due 2021 affirmed at 'CCC-/RR4'.
Medanito S.A.
-- Foreign currency long-term IDR affirmed at 'CCC';
-- Local currency long-term IDR affirmed at 'B-'; Outlook revised
to Stable from Negative;
-- Long-term international senior unsecured debt rating affirmed
at 'CCC+/RR3(EXP)'.
Pan American Energy LLC
-- Foreign currency long-term IDR affirmed at 'B-'; Outlook
revised to Stable from Negative;
-- Local currency long-term IDR affirmed at 'B+'; Outlook revised
to Stable from Negative.
Pan American Energy LLC Sucursal Argentina
-- Notes due 2021 affirmed at 'B'; Recovery Rating revised to
'RR3' from 'RR4'.
YPF S.A.
-- Foreign currency long-term IDR affirmed at 'CCC';
-- Local currency long-term IDR upgraded to 'B' from 'B-';
Outlook revised to Stable from Negative;
-- Notes due 2018, 2024, 2025, 2028 upgraded to 'CCC+' from
'CCC'; Recovery Rating revised to 'RR3' from 'RR4'.
ARGENTINA: Reaches Settlement in Bondholder Class Action
--------------------------------------------------------
Bonnie Eslinger at Law360.com reports that Argentina has reached
an agreement with bondholders to settle a class action stemming
from the country's 2001 default, according to an announcement from
a court-appointed mediator.
The deal resolving the Brecher class action fits "within the
numerics" of the $6.5 billion offer Argentine President Mauricio
Macri proposed earlier this month to resolve numerous lawsuits
brought on behalf of holders, the report notes.
Special Master's Statement
Daniel A. Pollack, Special Master presiding over settlement
negotiations between the Republic of Argentina and its
Bondholders, issued the following statement on Feb. 16:
I am very pleased to report that the Republic of Argentina has
reached an Agreement in Principle to settle the Brecher Class
Action, pending before Honorable Thomas P. Griesa. The exact
size of the class will not be known for several weeks, but the
settlement is on a "claims made" basis, which will require each
potential class member to demonstrate to the Court that he or she
has been a continuous holder of the Bonds from the outset of the
litigation in 2006 through the present date. The settlement fits
within the numerics of the Proposal publically issued by the
Republic on February 5, and calls for payment of 100% of the
principal and 50% of interest on the principal for each class
member. The settlement is subject to two conditions: first, the
approval by the Congress of Argentina, including the lifting of
the Lock Law and the Sovereign Payment Law, and 2) the lifting of
the Injunctions by Judge Griesa. As Special Master I am
continuing to try to bring about settlements with other
Bondholders, and am hopeful that there will be more settlements
to come. I will have no further comment on this Agreement in
Principle today.
To Pay $1BB to End Debt Fight With EM, Montreux
Meanwhile, Jonathan Randles at Law360.com reported that Argentina
has agreed to pay creditors EM Ltd. and Montreux Partners LP as
much as $1.1 billion to resolve long-running litigation over the
country's 2001 default, according to documents filed in New York
federal court.
The settlements, which must be approved by Argentina's Congress
and require the court to lift an injunction, would pay EM between
$842 million and $848 million and Montreux $298,664,000, according
to Law360.com. The papers filed offer the first glimpse of the
$6.5 billion deal Argentina announced last week, the report notes.
* * *
The Troubled Company Reporter-Latin America reported in Nov. 27,
2015, that Moody's Investors Service has changed the outlook on
Argentina's Caa1 issuer rating to positive from stable. The
outlook on Argentina's (P)Caa2 foreign legislation and
restructured local legislation foreign currency obligations is
also changed to positive from stable. The outlook change is based
on Moody's view that the accession of president-elect Mauricio
Macri of the Cambiemos ("Let's Change") coalition will raise the
probability of credit positive policies being implemented,
including arriving at a resolution with holdout creditors, one of
Argentina's key credit constraints.
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'.
On April 22, 2015, Moody's Investors Service expanded the portion
of Argentina's debt that is rated (P)Caa2. The (P)Caa2 rating
reflects the higher risk of default for both Argentina's
restructured foreign legislation debt (as before) and,
additionally now, its restructured local legislation foreign
currency obligations, as compared with the risk of default on
other debt instruments issued by Argentina. Argentina's local
currency debt and its non-restructured foreign currency debt are
rated Caa1. The debt that remains in default since Argentina's
2001 default is rated Ca.
ARGENTINA: On the Cusp of Peace With Creditors
----------------------------------------------
Robin Wigglesworth at The Financial Times reports that an elegant
three-masted Argentine clipper became an unlikely flashpoint in
one of the longest, most contentious sovereign debt sagas in
history when it was detained in Ghana three years ago by a
litigious hedge fund stalking the government in Buenos Aires for
an unpaid debt.
The ARA Libertad was eventually released when a UN tribunal ruled
that the ship was protected by sovereign immunity, but the episode
showed the lengths to which Elliott Management, a hedge fund
founded by Republican powerbroker Paul Singer, would go to extract
payment for bonds Argentina defaulted on in 2001, according to The
Financial Times.
The report notes that after more than a decade of legal warfare,
Argentina could be on the cusp of peace with its creditors.
However, even if Buenos Aires does reach an accord with Elliott,
experts fear the saga will leave a toxic legacy for the wider
sovereign debt restructuring world that could linger for years to
come.
"In many ways this stopped being about Argentina a long time ago,"
says Anna Gelpern, a law professor at Georgetown University, the
report notes. "The legal and institutional fallout will continue
to be there long after this is resolved," Mr. Gelpern added.
The Financial Times discloses that the genesis for what has been
called the "trial of the century" for sovereign debt dates back to
2001, when an economic crisis forced Argentina to default on more
than $80 billion of bonds. Subsequent governments let creditors
stew and only offered to pay back about 30 cents on the dollar in
2005 (an offer reopened in 2010), the report relays.
Many resignedly accepted the punitive terms, but a significant
minority felt aggrieved enough at the take-it-or-leave-it offer
that they decided to litigate instead, the report notes.
Suing countries is difficult, as most of their overseas assets
enjoy sovereign immunity and domestic judges tend to side with
their governments, the report says. Yet Argentina's "holdouts"
including Elliott, which has a fearsome reputation for wringing
money out of recalcitrant countries, has deployed a brilliant but
controversial strategy against Argentina, the report relays.
All bonds have clauses that stipulate what borrowers can or cannot
do. One is called pari passu, Latin for on equal footing. When
companies go bankrupt, pari passu creditors rank equally in the
queue when their assets are sold and proceeds divvied up, the
report relates. The clause has also traditionally featured in
government bonds even though lawyers consider it an irrelevance as
countries cannot be liquidated, the report discloses.
However, Elliott and its co-plaintiff Aurelius Capital -- founded
by former senior Elliott trader Mark Brodsky -- argued that the
pari passu clause in Argentina's debt should mean that the country
could not continue to pay bondholders that accepted the 2005 and
2010 restructuring without paying them in full as well, The
Financial Times notes.
Sensationally, US District Court Judge Thomas Griesa not only
agreed with Elliott's interpretation but weaponised his ruling by
slapping an injunction against anyone helping Argentina avoid his
order to pay the "pari passu holdouts," the FT discloses.
In practice, this prohibited banks from processing Argentina's
payments to its restructured bond markets and forced the
government, at the time led by Cristina Fernandez de Kirchner, to
choose between paying the holdouts or defaulting again, the report
says. Unwilling to strike an agreement with creditors she
lambasted as "vultures" and "financial terrorists", Argentina in
2014 defaulted for the eighth time in its history, the report
relays.
But a new reformist government led by Mauricio Macri took power
last year, and Argentina struck a deal with the Italian retail
bondholders and two hedge funds earlier this month, the report
notes. Judge Griesa ramped up pressure on the remaining four --
including Elliott -- to compromise by raising the prospect of
lifting his injunction. Hurdles remain, but a solution is expected
soon, the report says.
However, Elliott's pari passu gambit is now legal precedent,
potentially turning a sleepy Latin phrase into sovereign bond
dynamite and showing that countries can be successfully sued,
upsetting the dynamics of state bankruptcies, the report relays.
All sovereign restructurings have some holdouts, but they are
typically so minimal that they can be paid out in full without
upsetting the overall deal, the FT says. But if enough creditors
think they can hold out for full repayment, knowing they could use
the pari passu clause to sabotage a future deal, then it could
upset this equilibrium and make government bond defaults even
harder to resolve, the report notes.
Some experts point out that Argentina's clause was particularly
problematically worded, and question whether other creditors have
Elliott's stomach for a decade-long, expensive legal crusade, the
report discloses. Many bonds also have so-called "collective
action clauses" embedded that bind all creditors to a
restructuring deal agreed by a supermajority, the report relays.
Nonetheless, the potential implications have rattled the sovereign
debt restructuring industry into remedial action. Countries are
beginning to issue bonds with tweaked pari passu clauses and
strengthened CACs to neutralise the threat of holdouts, the report
notes.
This only affects new bonds issued, however. There are hundreds
of billions of dollars' worth of already-issued debt that could in
theory be vulnerable to Argentina-style litigation, the report
relays. Venezuela, for example, is expected to default this year
and lawyers say its bonds could lead to a similarly messy legal
battle, the FT discloses.
"We will eventually find out how big an impact this will have,"
says professor Gelpern. "Let's hope we don't find out too soon,"
Mr. Gelpern added.
* * *
The Troubled Company Reporter-Latin America reported in Nov. 27,
2015, that Moody's Investors Service has changed the outlook on
Argentina's Caa1 issuer rating to positive from stable. The
outlook on Argentina's (P)Caa2 foreign legislation and
restructured local legislation foreign currency obligations is
also changed to positive from stable. The outlook change is based
on Moody's view that the accession of president-elect Mauricio
Macri of the Cambiemos ("Let's Change") coalition will raise the
probability of credit positive policies being implemented,
including arriving at a resolution with holdout creditors, one of
Argentina's key credit constraints.
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'.
On April 22, 2015, Moody's Investors Service expanded the portion
of Argentina's debt that is rated (P)Caa2. The (P)Caa2 rating
reflects the higher risk of default for both Argentina's
restructured foreign legislation debt (as before) and,
additionally now, its restructured local legislation foreign
currency obligations, as compared with the risk of default on
other debt instruments issued by Argentina. Argentina's local
currency debt and its non-restructured foreign currency debt are
rated Caa1. The debt that remains in default since Argentina's
2001 default is rated Ca.
===========
B R A Z I L
===========
GOL LINHAS: Moody's Cuts Corporate Family Ratings to Caa1
---------------------------------------------------------
Moody's Investors Service downgraded Gol Linhas Aereas
Inteligentes S.A.- Gol's Corporate Family ratings to Caa1 from B3.
At the same time, Moody's downgraded to Caa2 from B3 the foreign
currency ratings assigned to Gol Finance's perpetual notes and
senior notes due in 2017, guaranteed by Gol. The outlook for the
those ratings remains negative. Moody's also upgraded the foreign
currency rating assigned to Gol LuxCo S.A.'s term loan, guaranteed
by Delta Air Lines, Inc. to Baa3 and changed the outlook to stable
from positive.
Ratings changed:
Issuer: Gol Linhas Aereas Inteligentes S.A. (Gol)
-- Corporate Family Rating: to Caa1 from B3
Outlook: negative
Issuer: Gol Finance
-- 7.5% USD 225 million guaranteed senior unsecured notes due
2017: to Caa2 from B3 in the global scale
-- 8.75% $US 200 million guaranteed senior unsecured perpetual
notes: to Caa2 from B3 in the global scale
Outlook: negative
Issuer: Gol LuxCo S.A.
-- $300 million BACKED senior unsecured term loan due 2020: to
Baa3 from Ba3 foreign currency rating
Outlook changed to stable from positive
RATINGS RATIONALE
The downgrades reflect Gol's unsustainable capital structure and
insufficient liquidity to support its operations amid increasingly
challenging industry dynamics and, at the same time, to address
all of its debt service in the next 12 to 18 months. Accordingly,
the company will need to rely either on asset sales, a capital
increase or a debt restructuring to reduce debt levels that could
result in higher than expected losses for the existing unsecured
creditors. Moody's believes, however, that Gol's management
remains fully committed to finding a solution to its unsustainable
capital structure and is vigorously pursuing options to improve
liquidity.
The downgrade of the corporate family rating to Caa1 reflects the
low likelihood that Gol's operations and credit metrics will
recover to a level commensurate with a higher rating in the next
12 to 18 months. The Caa2 rating assigned to Gol Finance's senior
unsecured notes are one notch lower than Gol's corporate family
ratings to reflect the structural subordination of unsecured
creditors to the company's other secured obligations and the
limited coverage provided by the company's residual and
unencumbered assets in an event of default.
The upgrade of Gol LuxCo's $300 million senior unsecured term loan
to Baa3 was prompted by the recent upgrade of the senior unsecured
issuer rating of Delta Air Lines, Inc.'s to Baa3 (February 11,
2016). Moody's views the Delta guaranty for this term loan as an
effective guaranty of payment of lenders in the entirety of its
original promise when due, and not just a guarantee of collection
after an event of default. As such, the rating on the term loan is
at the same level as Delta's senior unsecured rating and the
outlook is stable.
Although we believe that Gol remains well positioned in the
Brazilian domestic air passenger market, supported by its strong
brand name, large market share and modern operating fleet, the
company's ratings are constrained by its weakened credit metrics,
namely high leverage, low interest coverage and deteriorated cash
flow metrics. Gol's leverage metrics, as measured by the gross
debt to lease adjusted EBITDA ratio, reached 9.4 times in the last
twelve months ended September 2015 (5.3 times in December 2014)
while the operating profit declined to 3.9% (8% in 2014) and the
interest coverage fell to 0.4 times (0.9 times in 2014).
The negative outlook on Gol and Gol Finance reflects Moody's
perception that the steep drop in global jet-fuel prices and the
potential improvement in yields with the announced capacity
adjustments will be not enough to fully mitigate the high
operating and financial costs under a prolonged scenario of
devaluated local currency, which will keep the company's
profitability and cash flow generation under pressure at least
through 2017.
Downward pressure on Gol's ratings or the outlook will occur if
credit metrics continue to deteriorate over the next few quarters
without expectation of recovery. Quantitatively, negative ratings
pressure increases if adjusted gross Debt to EBITDA remains above
8.0x for a prolonged period, or should cash trend towards 15% of
revenues. Moody's perception of a material deterioration in the
company's financial flexibility to meet capital requirements could
also lead to a negative rating action for Gol. Further downward
pressure on the ratings would arise with a default in interest or
debt amortization, payment deferral or a larger than expected loss
for creditors in a debt restructuring.
An upgrade of Gol's ratings is unlikely at this time. Positive
ratings pressure requires sustained adjusted leverage below 6.0
times on a gross basis along with an EBIT interest coverage above
1.0x, and unrestricted cash that represents at least 25% of net
revenues.
An upgrade or downgrade in the term-loan rating depends on changes
in Delta's creditworthiness.
Gol Linhas Aereas Inteligentes S.A., headquartered in Sao Paulo,
Brazil, is the largest low-cost and best-fare carrier in Latin
America, offering approximately 900 daily passenger flights to
connect Brazil's major cities and various destinations in South
America and the Caribbean, along with cargo and charter flight
services. In the last twelve months ended 30 September 2015, Gol
reported consolidated net revenues of R$9.9 billion ($3.3 billion)
and lease adjusted EBITDA of R$1.5 billion ($500 million). Gol
LuxCo and Gol Finance are a wholly-owned subsidiary of Gol Linhas
Aereas Inteligentes S.A. (Gol, Caa1negative).
==========================
C A Y M A N I S L A N D S
==========================
ALABAMA RISK: Shareholders Receive Wind-Up Report
-------------------------------------------------
The shareholders of Alabama Risk Solutions Limited received on
Jan. 15, 2016, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Graham Robinson
c/o Tanya Armstrong
P.O. Box 2499, George Town
Grand Cayman KY1-1104
Cayman Islands
Telephone: (345) 946-0820
Facsimile: (345) 946-0864
FORE ERISA: Shareholders Receive Wind-Up Report
-----------------------------------------------
The shareholders of Fore Erisa Multi Strategy Funds, Ltd. received
on Jan. 22, 2016, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
P.O. Box 897 Windward 1
Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
Telephone: (345) 949-7576
Facsimile: (345) 949-8295
LARICE INTERNATIONAL: Shareholders Receive Wind-Up Report
---------------------------------------------------------
The shareholders of Larice International Ltd. received on Jan. 19,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Morval Bank & Trust Cayman Ltd.
P.O. Box 30622 Grand Cayman KY1-1203
Cayman Islands
Telephone: +1 (345) 949-9808
MOWBRAY INVESTMENTS: Shareholders Receive Wind-Up Report
--------------------------------------------------------
The shareholders of Mowbray Investments Limited received on
Jan. 14, 2016, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Christopher Tushingham
Wardour Management Services Limited
Telephone: (345) 945-3301
Facsimile: (345) 945-3302
P.O. Box 10147 Grand Cayman KY1-1002
Cayman Islands
NORTHCAP MANAGEMENT: Shareholders Receive Wind-Up Report
--------------------------------------------------------
The shareholders of Northcap Management Ltd. received on Jan. 12,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Zenith Trust Reg.
Telephone: + 00423 237 5858
Facsimile: + 00423 237 5868
Herrengasse 21, FL-9490 Vaduz
PRIME INVESTMENTS: Shareholder Receives Wind-Up Report
------------------------------------------------------
The shareholder of Prime Investments Limited received on Jan. 19,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Michael Charles Culhane
Level 9, 146 Arthur Street
North Sydney, NSW 2060
Australia
QF PLASTICS: Shareholders Receive Wind-Up Report
------------------------------------------------
The shareholders of QF Plastics Ltd. received on Jan. 12, 2016,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Richard Fear
c/o Ryan Charles
P.O. Box 2681 Grand Cayman KY1-1111
Cayman Islands
Telephone: (345) 814 7364
Facsimile: (345) 945 3902
QFB LEINSTER: Shareholders Receive Wind-Up Report
-------------------------------------------------
The shareholders of QFB Leinster Developments Ltd. received on
Jan. 12, 2016, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Richard Fear
c/o Ryan Charles
P.O. Box 2681 Grand Cayman KY1-1111
Cayman Islands
Telephone: (345) 814 7364
Facsimile: (345) 945 3902
QFB LONDON: Shareholders Receive Wind-Up Report
-----------------------------------------------
The shareholders of QFB London Partner Ltd. received on Jan. 12,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Richard Fear
c/o Ryan Charles
P.O. Box 2681 Grand Cayman KY1-1111
Cayman Islands
Telephone: (345) 814 7364
Facsimile: (345) 945 3902
SEARCHLIGHT HARBOR: Shareholders Receive Wind-Up Report
-------------------------------------------------------
The shareholders of Searchlight Harbor Ltd. received on Jan. 12,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Victor Murray
MG Management Ltd.
Landmark Square, 2nd Floor, 64 Earth Close
Seven Mile Beach
P.O. Box 30116 Grand Cayman KY1-1201
Cayman Islands
Telephone: +1 (345) 749 8181
Facsimile: +1 (345) 743 6767
SMGP ADMINISTRATION: Shareholder Receives Wind-Up Report
--------------------------------------------------------
The shareholder of SMGP Administration Ltd received on Jan. 21,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Anna Yonge
IMS Liquidations Ltd.
P.O. Box 61 Harbour Centre, George Town
Grand Cayman KY1-1102
Cayman Islands
Telephone: (345) 949-4244
Facsimile: (345) 949-8635
TOMMY COMPANY: Shareholders Receive Wind-Up Report
--------------------------------------------------
The shareholders of Tommy Company Limited received on Jan. 15,
2016, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Avalon Ltd.
Landmark Square, 1st Floor, 64 Earth Close
P.O. Box 715 Grand Cayman KY1-1107
Cayman Islands
Facsimile: +1 (345) 769-9351
UNIVERSAL TELECOM: Shareholders Receive Wind-Up Report
------------------------------------------------------
The shareholders of Universal Telecom Investment Strategies Fund
SPC received on Dec. 29, 2015, the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Wilton Mcdonald II
Advanced Fund Administration (Cayman) Ltd.
27 Hospital Road
Cayman Corporate Centre, 5th Floor
P.O. Box 1748 Grand Cayman KY1-1109
Cayman Islands
VESUVIUS INVESTMENT: Shareholders Receive Wind-Up Report
--------------------------------------------------------
The shareholders of Vesuvius Investment Fund received on Dec. 29,
2015, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Wilton Mcdonald II
Advanced Fund Administration (Cayman) Ltd.
27 Hospital Road
Cayman Corporate Centre, 5th Floor
P.O. Box 1748 Grand Cayman KY1-1109
Cayman Islands
VISTA HERMOSA: Sole Member Receives Wind-Up Report
--------------------------------------------------
The sole member of Vista Hermosa Limited received on Feb. 2, 2016,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Lion International Management Limited
Craigmuir Chambers
Road Town
Tortola VG1110
British Virgin Islands
===========
M E X I C O
===========
ARENDAL SRL: S&P Lowers CCR to 'CCC-' on Weak Liquidity
-------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Arendal, S. de R.L. de C.V. to 'CCC-' from 'B-'. The
outlook is negative. At the same time, S&P lowered its issue-level
rating on the company's $100 million senior unsecured notes due
May 2016 to 'CCC-' from 'B-'. The '4L' recovery rating, indicating
S&P's expectation for average recovery (30%-50%; lower half of the
range) for lenders in the event of a payment default, remains
unchanged.
The downgrade reflects S&P's view that Arendal's refinancing risk
has escalated because the company doesn't have sufficient
liquidity to meet debt that's due in less than six months. The
downgrade also reflects Arendal's potentially limited access to
external funding. In S&P's opinion, the likelihood of default
has significantly increased because the company faces MXN3.3
billion in short-term maturities, including $100 million of its
senior unsecured notes due May 23, 2016, as well as a bank loan of
$60 million due July 31, 2016.
Arendal's liquidity constraints are twofold. On one hand, the
company has limited flexibility due to the short-term nature of
its debt maturity profile. Also, delays in Arendal's bill
collections related to completed works has extended its working
capital cycle, resulting in continued shortfall in cash
flow, which has inhibited the build-up of cash reserves.
S&P said, "We consider that our assessment of Arendal's vulnerable
business risk profile fully captures the operating and financial
pressures that the company has been facing in the past 12 months,
which has prevented the recovery of its cash flow generation. The
company's heavy reliance on public projects, particularly those
associated with Petroleos Mexicanos (PEMEX), which accounted for
more than 90% of Arendal's backlog as of December 2015, coupled
with its dependence on debt financing in early stages of projects,
have had a negative effect on
the working capital cycle, as seen days receivables rising to more
than 280 days in September 2015. In addition, Arendal has
increased the use of revolving credit facilities to fund initial
project requirements."
Arendal's business risk profile is further limited by its smaller
scale than those of its peers, despite projects awarded in recent
years, which expanded scale of its operations. This, in S&P's
opinion, poses a lesser revenues and projects base stability.
The company's good track record of executing projects, ownership
of Mexico's largest pipeline construction equipment, a competitive
edge due to its specialization in pipeline construction, and its
ability to pass-through cost overruns to its customers mitigate
the abovementioned risks.
S&P's assessment of a highly leveraged financial risk profile
reflects the company's relatively high debt levels and negative
free cash flow.
AXTEL SAB: Fitch Hikes Long-term Issuer Default Ratings to 'BB-'
----------------------------------------------------------------
Fitch Ratings has upgraded Axtel S.A.B. de C.V.'s (Axtel) long-
term foreign-currency and local-currency Issuer Default Ratings
(IDRs) to 'BB-' from 'B'. Fitch has also removed the IDRs from
Rating Watch Positive and assigned them a Stable Rating Outlook.
These rating actions follow the closing of Axtel's merger with
Alestra S. de R.L. de C.V. (Alestra). A full list of rating
actions follows below.
The upgrade reflects Axtel's improved operational competitiveness
and market position and enhanced capital structure following the
merger with Alestra, a Mexican fixed-line telecom operator and a
wholly owned subsidiary of Alfa S.A.B. de C.V. (Alfa), rated 'BBB-
'/Outlook Stable by Fitch. Alfa is one of the largest business
groups in Mexico with leading market positions across various
industries, including petrochemical, automotive components, and
processed foods. Through the merger, Alfa will own 51% of Axtel,
and Alestra will become a subsidiary of Axtel. The merger became
effective on Feb. 15, 2016.
As part of the merger conditions, all of Axtel's existing $US
senior unsecured and secured notes, a total of which amounted to
$US 701 million at end-2015, will be refinanced with bank loans.
Fitch estimates that the refinancing will lower the company's
annual interest expenses by about $US 40 million.
Positive Merger Synergies:
The upgrade reflects the enhanced credit profile of the merged
entity through an economy of scale and operational synergies,
mainly in terms of network competitiveness and improved
efficiencies, as well as a stronger market presence in the
enterprise business segment in Mexico. Based on the operating
result of each entity in 2015, the company will become the third
largest fixed-line service provider with revenues and EBITDA of
MXN16.3 billion and MXN5.8 billion, respectively, which compare to
Axtel's stand-alone figure of MXN10.1 billion and 3.2 billion. Its
small scale of operation and market shares against the backdrop of
an intense competitive landscape, however, will still remain a key
credit concern.
Axtel expects to achieve operational synergies of MXN1 billion a
year (equivalent to $US 60 million) over the medium term, which
would represent close to a 20% improvement from the current
combined EBITDA level. The company also expects to save about $US
20 million on annual capex through reduced network maintenance
costs and integrated network management.
Good Strategic Fit:
Alestra's enterprise-customer-focused operation is positive for
Axtel's business profile as the enterprise segment is subject to
less fierce competition compared to residential segments. This is
also in line with Axtel's recent growth strategy, which has been
centered more on the corporate clients, including government, as
demand for traditional fixed-voice service is declining. Fitch
believes that the growth outlook for the enterprise segment is
more positive than the overall Mexican telecom market given the
increasing demand for IT and data management service, which is in
line with the global trend.
This enterprise-segment-focused business strategy has helped fuel
both companies' EBITDA growth in recent years. Axtel has improved
its EBITDA by 24% during 2012-2015, with its margin improving to
31.1% from 24.9%. Similarly, Alestra has maintained a solid growth
track record, with its revenues and EBITDA growing by 33% and 46%,
respectively, during the same period.
Enhanced Financial Profile:
The merged entity's financial profile will be materially stronger
than Axtel's stand-alone level, given Alestra's low leverage, and
Fitch's forecast for positive FCF generation over the medium term.
At end-2015, Axtel's net leverage ratio was 3.3x, while that of
Alestra was 1.4x. Based on the current financial profile of each
entity without reflecting any synergy benefit, the merged entity's
consolidated net leverage would be 2.4x. Including the off-
balance-sheet debt related with network lease expenses, the
adjusted net leverage ratio of the merged entity is estimated to
be 3.0x, which compares to Axtel's stand-alone 4.0x at end-2015.
Fitch forecasts this ratio to gradually fall toward 2.5x over the
medium to long term, backed by positive FCF generation amid
continued EBITDA expansion, which is considered moderate for a
'BB' category considering the company's market position.
Strong Parent:
Axtel's credit quality will also benefit from becoming part of a
strong business group in Alfa. While Fitch does not foresee any
explicit legal or financial support from Alfa, Axtel should enjoy
better access to capital markets/financial institutions when in
need of external financing given the group's strong reputation and
entrenched business position in the country, as already evidenced
by its $US 750 million credit agreement to refinance the existing
notes. This should help strengthen Axtel's financial flexibility.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for Axtel include:
-- Low-to-mid single digits revenue growth over the medium term
-- Operational synergies to boost Axtel's EBITDA margin to 36-37%
over the medium term, compared to the company's stand-alone
31% in 2015
-- Capex to hover at around MXN4 billion over the medium term
-- $US 50 million of annual dividends assumed from 2017
-- Positive FCF generation over the medium term enabling gradual
adjusted-net-leverage reduction toward 2.5x
RATING SENSITIVITIES
Continued negative FCF generation due to competitive pressures and
dampened demand under unfavourable economic conditions, resulting
in its adjusted net leverage, including network lease expense
adjustments, increasing to above 3.5x on a sustained basis could
result in a negative rating action.
Conversely, Successful business integration and continued solid
growth in the enterprise business segment, resulting in consistent
positive FCF generation with improved adjusted net leverage toward
2.0x on a sustained basis could result in a positive rating
action.
LIQUIDITY
Axtel's liquidity profile is sound as the company will not face
any material debt maturity as all of its senior notes will be
refinanced with the bank loans, of which $US 250 million will
become due in 2019. The combined cash balance of Axtel and Alestra
was over $US 190 million. Fitch does not foresee any liquidity
problem for the company based on projected stable operational cash
flow generation in the short to medium term.
FULL LIST OF RATING ACTIONS
Fitch has removed from Rating Watch Positive and upgraded the
following ratings:
Axtel S.A.B. de C.V.
-- Long-term foreign-currency IDR to 'BB-' from 'B';
-- Long-term local-currency IDR to 'BB-' from 'B';
-- National long-term rating to 'A-(mex)' from 'BB-(mex)';
-- Senior unsecured notes due 2017 and 2019 to 'BB-' from 'B-
/RR5';
-- Senior secured notes due 2020 to 'BB-' from 'B+/RR3'.
The Rating Outlook is Stable.
MAXCOM TELECOMUNICACIONES: S&P Cuts Corp. Credit Rating to CCC+
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Maxcom Telecomunicaciones S.A.B. de C.V. to 'CCC+' from
'B-'. The outlook is stable. At the same time, S&P lowered its
issue-level rating on the company's senior secured notes to
'CCC+' from 'B-'. The '3H' recovery rating on the notes remains
unchanged, indicating expectations for substantial (70% to 90%)
recovery in the event of a payment default.
The downgrade reflects Maxcom's weaker credit metrics during 2015,
which isn't in line with S&P's earlier expectations. Maxcom's
commercial strategies to increase its participation in the
commercial segment didn't turn out as expected, resulting in weak
sales performance, and declining revenues, revenue generating
units (RGUs), and EBITDA margins. Additionally, frequent
management changes continue to be a rating restraint. S&P expects
key credit metrics will remain weak through 2016 with a debt to
EBITDA of about 7.0x and funds from operations (FFO) to debt of
about 8%, coupled with a shortfall in free operating cash flow
(FOCF). S&P is also uncertain about the sustainability of
its business model due to high competitive pressures from the
entrance of AT&T, the merger of Axtel and Alestra, and existing
larger and better capitalized telecom and cable companies.
S&P said: "We estimate the company has sufficient cash to fund its
operations beyond the next 12 months, stemming from its recent
capitalization. However, we believe that Maxcom's capital
structure is unsustainable in the long term because its negative
FOCF will gradually weaken its liquidity position and will force
the company to rely on favorable business, financial, and economic
conditions to meet its financial obligations.
"The ratings on Maxcom reflect its vulnerable competitive position
due to its operations in only five Mexican states, its small
market share, smaller scale than of the larger and better
capitalized players in the Mexican market, limited growth
potential, and margin pressures amid fierce competition."
MEXICO: Delivers Unexpected Rate Rise With Eye on Inflation
-----------------------------------------------------------
Jude Webber at The Financial Times reports that Mexico's central
bank raised the key lending rate by half a point to 3.75 per cent
at an extraordinary meeting in an attempt to nip in the bud the
prospect of rising inflation.
The bank -- which followed the US Federal Reserve in lifting rates
in December when it lifted rates by a quart of a point, and had
been expected to stay in step with the US -- stressed its decision
was not the start of a rate raising cycle, according to The
Financial Times.
It said it had been mindful of steps that the government and state
oil company Pemex were taking to shore up the company's ailing
finances, the report notes. Pemex, Mexico's biggest company,
which pays taxes that fund about a fifth of the national budget,
lost nearly $10 billion in the third quarter, the report relays.
The peso has tested historic lows against the dollar persistently
and lurched towards a psychological barrier of MXN20 recently, the
report discloses. On Feb. 17 it surged almost 5 per cent on the
rate rise news to 18.2 to the dollar. It had shed almost 10 per
cent so far this year against the dollar, the FT reports.
Mexican authorities until now have said the plunging peso would
not spark an inflationary spiral, but the Bank of Mexico (Banxico)
said in its statement that international market volatility had
increased since December and the outlook for the Mexican economy
had "continued to deteriorate," the FT notes.
The report discloses that the impact of that on the peso had
"increased the probability of inflation expectations that are not
in line with the consolidation of the permanent objective of 3 per
cent", Banxico said, the FT relays.
"This does not kick off a hiking cycle but we will be following
very closely all the inflation parameters," the report quoted
Agustin Carstens, Banxico governor, as saying in a news conference
with Luis Videgaray, the finance minister.
The unexpected rate rise comes as Mexico is preparing to make new
cuts in public spending for next year's budget and to throw a
financial lifeline to Pemex, the state oil company, where
stagnating oil production and a plunge in international prices has
pushed the company into a financial crisis, the report notes. The
government has made clear that help for Pemex is conditional on
Pemex helping itself by slashing costs and unproductive projects,
the report relays.
The report notes that Mr. Videgaray said federal spending would be
cut by MXN132.3 billion, equivalent to 0.7 per cent of GDP -- in
line with previous belt-tightening last year. Mr. Videgaray
stressed spending on security and social development would not be
affected, the report relays.
As part of the new austerity drive, Pemex would cut its budget by
MXN100 billion, the minister added.
Alfredo Coutino, Latin America director for Moody's Analytics,
said the actions went in the right direction but "could be taken
as a sign of weakness, particularly because they are taken out of
calendar," the report relays.
The report notes that he added: "The cost of delaying the
adjustment could be higher since the measures are taken in a more
deteriorated environment."
The government has yet to announce what form its help to Pemex
will take but Mr. Videgaray said it would be up to the new Pemex
chief executive, Jose Alberto Gonzalez Anaya, to announce details
of the cuts, the report relays. Pemex announces 2015 results on
February 26.
"The priority should be to preserve projects that have an
immediate impact on production and projects that do not have a
positive impact on the net present value of the company should be
cancelled," Mr. Videgaray said, the report relays.
The government said there would be a weakening of growth as a
result of the spending cuts and the Pemex rescue plans, but did
not say by how much, the report notes. The spending cuts will be
spelt out in the coming weeks, Mr. Videgaray said and should be
"manageable . . . . We are analyzing options".
Banxico by law transfers excess profits from its operations to the
government and the finance ministry says they are set this year to
be significantly higher than last year, when they totaled MXN31.4
billion, the report notes. Some in the market think they could be
10 times that level. Mr. Videgaray said some of that cash, which
is transferred to the Treasury in April, could be used to help out
Pemex, but gave no more details, the report relays.
Mr. Carstens said that bank intervention to prop up the peso would
now be made only on an exceptional basis, the report notes. The
bank has been auctioning dollars for months to try-in vain-to stem
the peso's depreciation. Mr. Carstens said it was hard to specify
all exceptional circumstances but said they could include
occasions when there were "large deviations in the exchange rate
that cannot be explained by fundamentals and temporary factors and
respond to a very low volatility in markets," the report relays.
The peso has been hammered, in part, because it is used by
emerging market traders as a proxy -- it is the most liquid
emerging markets currency. Mr Carstens said he expected that
pattern to continue. But he said the exchange rate had been taken
to "levels which were not appropriate," the report notes.
Mr. Videgaray, who has long stressed that Mexico is being hurt by
external shocks, said the dynamics of market intervention were
being altered, but not the principle that "the exchange rate is
set by the market," the report notes.
Mexico has a MXN70 billion peso credit line with the IMF but that
would only be used as a "last resort", Mr. Carstens said, the
report adds.
MEXICO: To Slash 2016 Spending by $7 Billion
--------------------------------------------
EFE News reports that Mexico's government said it would cut the
2016 budget by MXN132.2 billion (around $7 billion), equivalent to
roughly 0.7 percent of gross domestic product, "in response to the
deteriorated global scenario."
The federal government will reduce spending by MXN32.3 billion
($1.71 billion), while state-owned oil company Petroleos Mexicanos
will slash its budget by MXN100 billion ($5.3 billion), the
Finance Secretariat said in a statement obtained by the news
agency.
Pemex will prioritize new projects that offer the highest
potential profitability, while also looking to boost productivity
and cost efficiency at existing projects, the government added,
the report notes.
Roughly 60 percent of the cuts in spending by federal government
agencies, meanwhile, will come from cuts to current expenditures,
while the remainder will come from reducing investment outlays,
the report relays.
In justifying the cuts, the secretariat pointed to increased
market volatility; a new drop in oil prices since the start of the
year, which has affected public finances and triggered a further
depreciation of the peso; and the U.S. Federal Reserve's plans for
a gradual normalization of interest rates, the report says.
====================
P U E R T O R I C O
====================
PUERTO RICO ELECTRIC: House OKs Bill Key for Utility PREPA Deal
---------------------------------------------------------------
Nick Brown and Megan Davies at Reuters report that Puerto Rico's
House of Representatives approved a bill aimed at overhauling the
island's troubled power utility Puerto Rico Electric Power
Authority's (PREPA), pushing the agency a step closer to
finalizing a deal with creditors to restructure more than $8
billion debt a day before a key deadline.
Fixing PREPA's debt is seen as an important step in resolving an
overall $70 billion debt load in Puerto Rico, and the utility has
struck agreements with creditors on a debt exchange in which
bondholders would accept 15 percent cuts to repayments, according
to Reuters.
The creditors' support, though, is premised on passing legislation
aimed at stabilizing PREPA's finances and governance, the report
notes.
The House passed the bill, known as the PREPA Revitalization Act,
according to a webcast of the vote, following passage by the
Puerto Rican Senate, the report discloses.
However, because the House introduced amendments, the bill must
return to the Senate for approval before Governor Alejandro Garcia
Padilla can sign it into law, the report notes.
"This Act will facilitate key aspects of PREPA's comprehensive
transformation, including our financial restructuring," said
Javier Quintana Mendez, Executive Director of PREPA, in a
statement obtained by Reuters.
Under the terms of the debt restructuring, creditors can walk away
from the deal if it isn't enacted by midnight on Feb. 16.
However, according to a source familiar with the matter, creditors
are willing to extend the deadline if senators need a little extra
time, the report relays.
"We don't anticipate there being major problems" regarding the
deadline, said the source, the report notes. "There's a sense
that both the Senate and the House will have worked through the
major issues on the bill," the source added.
Lisa Donahue, PREPA's chief restructuring officer, said elements
of the bill that would impose an independent board and explore
partnerships with private sector energy producers had raised the
most questions from legislators, the report relays.
The deal to restructure PREPA was struck in December but hit a
road bump earlier this year when Puerto Rico's lawmakers failed to
meet initial deadlines in January to pass the bill, the report
discloses. PREPA's largest bondholder group offered an extension,
which PREPA at first rejected over terms of a $115 million loan
from the bondholders, the report relates. The two sides
eventually came to terms on the extension through Feb. 16, the
report adds.
As reported in the Troubled Company Reporter-Latin America on
Dec. 21, 2015, Standard & Poor's Ratings Services maintained its
'CC' long-term and underlying ratings (SPURs) on Puerto Rico
Electric Power Authority's (PREPA) electric revenue bonds.
However, the ratings remain on CreditWatch, where they were
originally placed with negative implications on June 18, 2014.
As of June 30, 2015, PREPA had about $8.44 billion of long-term
debt outstanding, and an additional $730 million due to
noteholders.
PUERTO RICO: Bondholder Group Floats Debt Restructure Plan
----------------------------------------------------------
Jonathan Randles at Law360.com reports that a bondholder group
holding $17.3 billion in Puerto Rico debt floated a restructuring
proposal as the White House continued to push Congressional
Republicans to back legislation that would give the island's
municipalities the ability to seek bankruptcy.
The proposal was submitted by the Puerto Rico Sales Tax Financing
Corporation, or COFINA, which was formed in 2006 with the backing
of new sales and use tax revenue, according to Law360.com.
COFINA's proposal is a response to a bond-exchange plan floated to
the island's creditors by Puerto Rico's development bank on Feb.
1, the report notes.
COFINA bondholders are owed $7.6 billion in senior debt and $9.7
billion in second lien debt and represent one of Puerto Rico's
largest creditor groups, according to the agency, the report
relates. The plan contemplates reducing the amount of tax that
would be pledged to COFINA in exchange for contractual language
that would bolster its bondholders' position, the report notes.
In a presentation laying out the plan, COFINA said the proposal is
designed to accommodate the development bank's restructuring plan
"while respecting COFINA securitization," the report relays.
COFINA said the framework it's proposing would "stabilize the
Commonwealth's economy" and reduce the risk of litigation, the
report notes.
"[The proposal] creates momentum for a consensual restructuring
framework and avoids cost, delay and uncertainty inherent in
litigation," COFINA said, the report discloses.
Meanwhile, U.S. Treasury Secretary Jacob Lew told lawmakers to
adopt federal legislation that would permit Puerto Rico to undergo
a court-monitored restructuring. Lew has repeatedly pressed
Congress to give Puerto Rico a bankruptcy option over the last
several months but Republicans have resisted, the report says.
"I encourage Congress to act with the speed that this crisis
requires," the report quoted Mr. Lew as saying. "This must begin
with legislation to permit a financial restructuring along with
new oversight, neither of which cost any taxpayer dollars."
Puerto Rico has been roiled for months as it grapples with a $72
billion debt load that has sapped the commonwealth's economy and
has pushed it toward a humanitarian crisis, the report notes.
Unlike states and other municipalities, Puerto Rico does not have
access to the U.S. bankruptcy regime. Attempts by Puerto Rico to
pass its own legislation to restructure its debt have been blocked
by the courts, the report says.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, said that
Congress does not have a clear view of Puerto Rico's finances
because federal lawmakers have not received audited financial
records, the report notes. Mr. Hatch said a Chapter 9 option
would give preferential treatment to unsecured creditors relative
to general obligation bondholders, and violate bondholders'
Constitutional rights, the report relays.
"I do not believe the administration has been straightforward
about the nature of the debt restructuring authority it is seeking
for the territory," Mr. Hatch added.
As reported in the Troubled Company Reporter-Latin America on
Dec. 28, 2015, Moody's Investors Service has downgraded $1.09
billion of Puerto Rico appropriation bonds issued by the Public
Finance Corporation (PFC) to C from Ca, while maintaining other
ratings assigned to the US territory's debt.
===============================
T R I N I D A D & T O B A G O
===============================
CARIBBEAN AIRLINES: Looking at Providing Flights to Cuba
--------------------------------------------------------
RJR News reports that Caribbean Airlines Limited is reportedly
looking at providing flights to Cuba.
This follows the signing of an aviation agreement by the United
States and Cuba, according to RJR News. This paves the way for
regularly scheduled flights between the countries in nearly five
decades, the report relays.
The deal opens up 110 flights to Cuba on U.S carriers.
Dennis Lalor, Jamaica's representative on the Board of Caribbean
Airlines, told RJR's Financial Report that the entity is
interested in adding Cuba to its list of destinations, the report
notes.
"The Cuban connection was a big part of Air Jamaica's operation .
. . We had a fairly large percentage of the traffic going into
Cuba . . . . and so we (as Caribbean Airlines) are seriously
contemplating going back," the report quoted Mr. Lalor as saying.
US-Cuba Deal
The deal between the US and Cuba stipulates that 20 of the 110
flights on American carriers will provide links to the Cuban
capital, Havana, the report notes.
Beyond those 20 allocated for Havana, there will be 10 daily
flights allowed on routes to each of Cuba's nine other
international airports, the report relays.
The Associated Press reported that the announcement opens a 15-day
window for U.S airlines to request rights to the new Cuba routes,
the report notes.
American carriers would then have to strike deals with Cuban
aviation officials, a process the U.S. hopes will be completed by
fall, the report adds.
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
November 2, 2015, RJR News said that Michael DiLollo, Chief
Executive Officer of Caribbean Airlines Limited has quit after
just 17 months on the job. The 48-year-old Canadian national,
citing personal reasons, resigned with immediate effect. His
resignation was accepted by the airline's board of directors. Mr.
DiLollo was appointed Caribbean Airlines CEO in May 2014,
following the sudden resignation of Robert Corbie in September
2013.
In early February 2015, Larry Howai, then Finance Minister, told
Parliament that unaudited accounts for 2014 showed the airline
made a loss of US$60 million, inclusive of its Air Jamaica
operations, and the airline planned to break even by 2017.
Mr. Howai told the Parliament that a five-year strategic plan had
been completed and was in the process of being approved for
implementation.
In an interview with the Trinidad & Tobago Guardian in early
November 2015, Mr. DiLollo said CAL did not need a bailout just
yet. Mr. DiLollo said the airline had benefited from extremely
patient shareholders for years and he believed the airline was
strategically positioned to break even in three years.
***********
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 2016. 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 * * *