/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/160720.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 Wednesday, July 20, 2016, Vol. 17, No. 142 Headlines C A Y M A N I S L A N D S ADA EMERGING: Creditors' Proofs of Debt Due Aug. 8 ARC FUND: Creditors' Proofs of Debt Due Aug. 17 AVOCET LEASING: Commences Liquidation Proceedings B-C CIG HOLDINGS: Commences Liquidation Proceedings CALEDONIAN SECURITIES: Creditors' Meeting Set for Aug. 3 GOLDMAN SACHS: Commences Liquidation Proceedings GS LIQUIDITY: Commences Liquidation Proceedings OC WORD: Commences Liquidation Proceedings PINNACLE MEDICAL: Commences Liquidation Proceedings RIVERSIDE EQUITY: Creditors' Proofs of Debt Due Aug. 18 RIVERSIDE FRONTIER: Creditors' Proofs of Debt Due Aug. 18 ROONEY LTD: Creditors' Proofs of Debt Due Aug. 18 WESTLAND INSURANCE: Creditors' Proofs of Debt Due Sept. 5 D O M I N I C A N R E P U B L I C BANCO DE BOGOTA: Fitch Maintains IDRs on Rating Watch Negative BANCOLOMBIA SA: Fitch Keeps Rating Watch Neg. on Int'l Ratings DOMINICAN REPUBLIC: AMCHAMDR and OSAC Promote US Interests H O N D U R A S HONDURAS: S&P Revises Outlook to Pos. & Affirms 'B+/B' Ratings J A M A I C A JAMAICA: Make CSME work, Mahfood Urges JAMAICA: IMF Appoints New Resident Representative P E R U INTERCORP PERU: S&P Raises CCR to 'BB+'; Outlook Stable P U E R T O R I C O INDUSTRIAS VASSALLO: Court Dismisses Suit vs. Peter Vasquez Massa INVERSIONES ARAXI: Hires Juan A. Ruiz Reyes as Accountant POPULAR (BPOP): Fitch's BB- IDR Reflects Commonwealth's Challenge PUERTO RICO: Rubio, Pierluisi Among Appointees to Task Force SOUTH CARIBBEAN BLOCK: Hires MRO Attorneys as Counsel - - - - - ========================== C A Y M A N I S L A N D S ========================== ADA EMERGING: Creditors' Proofs of Debt Due Aug. 8 -------------------------------------------------- The creditors of Ada Emerging Markets Fund, Ltd. are required to file their proofs of debt by Aug. 8, 2016, to be included in the company's dividend distribution. The company commenced liquidation proceedings on June 24, 2016. The company's liquidator is: Mourant Ozannes Sachin Shah c/o Jo-Anne Maher 94 Solaris Avenue, Camana Bay P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands Telephone: (345) 814-9255 Facsimile: (345) 949-4647 ARC FUND: Creditors' Proofs of Debt Due Aug. 17 ----------------------------------------------- The creditors of ARC Fund Ltd. are required to file their proofs of debt by Aug. 17, 2016, to be included in the company's dividend distribution. The company commenced liquidation proceedings on June 24, 2016. The company's liquidator is: Intertrust SPV (Cayman) Limited 190 Elgin Avenue, George Town Grand Cayman KY1-9005 Cayman Islands c/o Kim Charaman Telephone: (345) 943-3100 AVOCET LEASING: Commences Liquidation Proceedings ------------------------------------------------- On June 27, 2016, the sole shareholder of Avocet Leasing Limited resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Phang Thim Fatt 8 Shenton Way #18-01 Singapore 068811 B-C CIG HOLDINGS: Commences Liquidation Proceedings --------------------------------------------------- At an extraordinary meeting held on July 7, 2016, the shareholders of B-C CIG Holdings Ltd. resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: David Dyer P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands Telephone: (345)949-8244 Facsimile: (345)949-5223 CALEDONIAN SECURITIES: Creditors' Meeting Set for Aug. 3 -------------------------------------------------------- The creditors of Caledonian Securities Limited will hold their meeting on Aug. 3, 2016, at 10:00 a.m. The company's liquidator is: Ms. Claire Loebell c/o Gerard Somers Ernst & Young Ltd. 62 Forum Lane, Camana Bay P.O. Box 510 Grand Cayman KY1 -1106 Cayman Islands e-mail: gerard.somers@ky.ey.com GOLDMAN SACHS: Commences Liquidation Proceedings ------------------------------------------------ At an extraordinary meeting held on July 7, 2016, the shareholders of Goldman Sachs Islamic Products Limited resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: David Dyer Telephone: (345)949-8244 Facsimile: (345)949-5223 P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands GS LIQUIDITY: Commences Liquidation Proceedings ----------------------------------------------- At an extraordinary meeting held on July 7, 2016, the shareholders of GS Liquidity Products Limited resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: David Dyer P.O. Box 1984 Grand Cayman KY1-1104 Cayman Islands Telephone: (345)949-8244 Facsimile: (345)949-5223 OC WORD: Commences Liquidation Proceedings ------------------------------------------ On June 27, 2016, the sole shareholder of OC Word Ltd. resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Gail Steiner c/o Standard General L.P. 767 Fifth Avenue, 12th Floor New York New York 10153 United States of America Telephone: +1 (212) 257 4728 PINNACLE MEDICAL: Commences Liquidation Proceedings --------------------------------------------------- On June 17, 2016, the sole shareholder of Pinnacle Medical Protective SPC resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Graham Robinson c/o Tanya Armstrong Telephone: (345) 946-0820 Facsimile: (345) 946-0864 P.O. Box 2499, George Town Grand Cayman KYl-1104 Cayman Islands RIVERSIDE EQUITY: Creditors' Proofs of Debt Due Aug. 18 ------------------------------------------------------- The creditors of Riverside Equity Strategies Fund SPC are required to file their proofs of debt by Aug. 18, 2016, to be included in the company's dividend distribution. The company commenced liquidation proceedings on June 28, 2016. The company's liquidator is: Peter Goulden Mourant Ozannes Cayman Liquidators Limited Attorneys-at-Law for the Company Reference: NDL Telephone: (+1) 345 949 4123 Facsimile: (+1) 345 949 4647; or Mourant Ozannes Cayman Liquidators Limited Reference: Peter Goulden Telephone: (+1) 345 949 4123 Facsimile: (+1) 345 949 4647 94 Solaris Avenue, Camana Bay P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands RIVERSIDE FRONTIER: Creditors' Proofs of Debt Due Aug. 18 --------------------------------------------------------- The creditors of Riverside Frontier Opportunities Fund are required to file their proofs of debt by Aug. 18, 2016, to be included in the company's dividend distribution. The company commenced liquidation proceedings on June 28, 2016. The company's liquidator is: Peter Goulden Mourant Ozannes Cayman Liquidators Limited Attorneys-at-Law for the Company Reference: NDL Telephone: (+1) 345 949 4123 Facsimile: (+1) 345 949 4647; or Mourant Ozannes Cayman Liquidators Limited Reference: Peter Goulden Telephone: (+1) 345 949 4123 Facsimile: (+1) 345 949 4647 94 Solaris Avenue, Camana Bay P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands ROONEY LTD: Creditors' Proofs of Debt Due Aug. 18 ------------------------------------------------- The creditors of Rooney Ltd are required to file their proofs of debt by Aug. 18, 2016, to be included in the company's dividend distribution. The company commenced liquidation proceedings on June 28, 2016. The company's liquidator is: Colin Reid Wardour Management Services Limited Telephone: (345) 945-3301 Facsimile: (345) 945-3302 P.O. Box 10147 Grand Cayman KY1-1002 Cayman Islands WESTLAND INSURANCE: Creditors' Proofs of Debt Due Sept. 5 --------------------------------------------------------- The creditors of Westland Insurance Company are required to file their proofs of debt by Sept. 5, 2016, to be included in the company's dividend distribution. The company commenced liquidation proceedings on May 5, 2016. The company's liquidator is: Michael Gibbs P.O. Box 10027 Grand Cayman KY1-1001 Cayman Islands Telephone: (345) 946 2100 (Main) Facsimile: (345) 946 2110 =================================== D O M I N I C A N R E P U B L I C =================================== BANCO DE BOGOTA: Fitch Maintains IDRs on Rating Watch Negative -------------------------------------------------------------- Fitch Ratings has maintained the Rating Watch Negative on Banco de Bogota S.A.'s (Bogota) Viability Rating (VR) and Issuer Default Ratings (IDRs). Fitch has also maintained the Negative Watch on the following related entity ratings: -- Grupo Aval Acciones y Valores S.A. (Grupo Aval) IDR of 'BBB'; -- Corporacion Financiera Colombiana S.A. (Corficolombiana) IDR of 'BBB+'. At the same time, Fitch also affirmed other ratings for Bogota and related entities that were not directly affected by the Watch status. The Rating Watch Negative has been maintained pending an in-depth review of Bogota's capital optimization plans. Fitch will resolve the Negative Watch after assessing the potential evolution of Bogota's capital metrics within the context of the bank's overall financial and business profile as well as its operating environment. KEY RATING DRIVERS VIABILITY RATING (VR), IDRS, NATIONAL RATINGS AND SENIOR DEBT BANCO DE BOGOTA Bogota's ratings are highly influenced by its strong franchise and generally sound and consistent financial metrics. In Fitch's view, capital adequacy is tight, and will be the main focus of its review to resolve the Negative Watch." Capitalization was particularly affected by a change in accounting standards to IFRS from Colgaap in December 2014, as well as the significant depreciation of the local currency, which boosted Bogota's $US-denominated risk-weighted assets (RWA) and goodwill deductions from capital. Under IFRS, which provided new revelations in the issuer's financial statements, Bogota's Fitch Core Capital (FCC) ratio declined to 9.89% compared with 11.24% under Colgaap as of December 2014, since the change in accounting standards mainly affected goodwill and revaluations of fixed assets treatment, among others. In 2015, the bank's FCC ratio declined further to 8.84%, more than Fitch anticipated, as the currency depreciated by 32%. Grupo Aval and Bogota announced measures in June 2016 to reverse the deterioration of the bank's capital base. Leasing Bogota Panama, which is the vehicle that carries BAC-Credomatic's investments, will be merged with Banco de Bogota in Colombia. This operation, which is pending approval from the Panamanian and Colombian regulators, will result in less volatility in goodwill and tax savings. The group also decided that Corficolombiana will be consolidated (for accounting purposes) directly under Grupo Aval instead of with Bogota in order to strengthen the capital position of the bank and focus its consolidated management in the financial business. This change, which was implemented during June 2016, brings an immediate positive impact because the RWA and intangibles from infrastructure and 4G concessions will no longer detract from Bogota's capitalization. According to Fitch's initial projections, these actions along with a deceleration in balance sheet growth, sustained internal capital generation, and a moderate dividend payout policy, will lead to a recovery of Bogota's capitalization ratios to a level more commensurate with its current rating level and similarly rated international peers in the short term. Fitch's base case scenario of less dynamic economic growth and a stabilizing exchange rate also augurs well for the rebuilding of capital ratios. After appraising the real impact of the above-mentioned measures and the bank's actual performance, Fitch will re-assess its Negative Watch on Bogota's ratings. Bogota is Colombia's second largest bank by assets (15.2% market share at December 2015) and the largest bank by assets in Central America (8.4% market share). Additionally, the bank's Central American operations contribute to a diversified revenue base, a balanced credit portfolio and critical credit card and retail know-how. Bogota's conservative credit and strong risk management policies, amidst a challenging economic environment in Colombia (as well as relative stability in Central America) resulted in very good asset quality (90-day past-due loans [PDLs] remained stable at 1.47% at March 2016) which has remained fairly stable over time and is complemented by sufficient loan loss reserves (1.6x its PDL portfolio). Overall profitability improved and remained quite robust with an ROAA at 1.93%, a level that compares well with that of similarly rated peers. Future growth is expected to be moderate, with loans increasing 10%-12%. Margins should be supported by rising interest rates and continued expansion into retail. Operating expenses should stabilize in relative terms, while the cost of credit is expected to grow due to changes in the economic cycle in Colombia while in Central America no changes are expected. Profitability should remain stable with Operating ROAA expected to remain close to 3%, with Operating ROAE inching toward mid-20%. These moderate profitability levels reflect a more balanced and mature portfolio and growth. Bogota enjoys a wide customer base and relatively lower funding costs compared to its peers. Customer deposits fund Bogota's loan portfolio in its entirety and the bank has ample access to domestic and international capital markets. Furthermore, the bank has the full support of its shareholders, as illustrated during the acquisition of BAC and the subsequent purchase of Grupo Reformador and BBVA Panama, which prompted timely capital injections from Grupo Aval. GRUPO AVAL Grupo Aval's ratings are driven by the business and financial profile of its subsidiaries, particularly its main operating subsidiary, Bogota. As such, Fitch has maintained the Rating Watch Negative on Grupo Aval's Long-Term IDRs. In addition, low double leverage, moderate debt, adequate cash flow metrics and a sound competitive position in multiple markets also support Grupo Aval's ratings. On a consolidated basis, asset quality remains strong, reflecting diversification and the specific strengths within each bank. On an unconsolidated basis, Grupo Aval's double leverage is moderate (1.04x at December 2015) and is expected to remain fairly stable unless the group embarks on rapid asset or inorganic growth, which is a scenario not expected by Fitch in the short term. GRUPO AVAL LIMITED The ratings for Grupo Aval Limited's senior secured debt are aligned with those of Grupo Aval, as this entity guarantees the senior bonds issued by the former. BANCO DE OCCIDENTE Occidente's VR, IDRs and National ratings reflect its solid capital ratios, low-risk and diversified business model, and stable though moderately concentrated funding. Fitch also considered potential profitability challenges within a less benign economic environment, the bank's moderate franchise, and its role as one of Grupo Aval's most important subsidiaries. Consistent capital generation and moderate dividend policies underpin Occidente's capital metrics. The bank's Fitch Core Capital Ratio (FCC) ratio has declined over the past three years as asset growth exceeded capital formation. Occidente's FCC ratio decreased to 12.68% at December 2015 while tangible equity-to- assets decreased to 10.97%, though this level continues to exceed that of its domestic peers. In Fitch's view, Occidente's capital ratios are adequate given the bank's strong loan loss reserves and loan quality as well as its stable earnings generation. Occidente's business model is largely based on commercial banking, with an increasing participation of low-risk consumer banking products. Occidente has become Aval's vehicle to develop its leasing business in Colombia, where it had reached a market share of 18%, above its natural market share of about 6.3% by assets at end-December 2015. Occidente's conservative credit and risk management policies underpin its good asset quality indicators. The bank's impaired loans (i.e. greater than 90 days past due)-to- gross loans ratio has remained stable over the past five years at around 1.5% thanks to its commercial focus, minimal growth in PDLs and consistent charge-offs. Sufficient loan loss reserves (2x its 90-day PDL portfolio) also complement this metric. As a medium-sized bank with ample presence throughout the country, Banco de Occidente boasts a stable and ample depositor base. Deposits come primarily from institutional and public investors, resulting in higher funding costs and depositor concentrations compared to banks with a wider retail deposit base. Fitch believes that Occidente's less-diversified company profile relative to other larger Colombian banks could be a potential limitation to future rating upgrades. Financial activity rather than non-recurring income supported Occidente's financial performance in 2015. Corporate reorganization and the resulting non-recurring income from the sale of two-thirds of Occidente's stake in Corficolombiana (one of Grupo Aval's subsidiaries) to the holding company (Grupo Aval) boosted revenues in 2014. Interest margins, consistent with the bank's business model, and the sustainable generation of non- interest revenues support normalized operations. However, changes in macroeconomic fundamentals, a less liquid market and the effects of central bank policy measures to control inflation could increase operational costs in 2016. The bank's operating profitability weakened to 1.5% (YE2015) from an average of 2.1% (2012-2014) but remains good compared with its closest international peers. CORFICOLOMBIANA Corficolombiana's ratings reflect the potential support it would receive from its main shareholder, Banco de Bogota, should it be required. Fitch has maintained Corficolombiana's IDRs on Rating Watch Negative, in line with its main shareholder's ratings. Bogota's willingness to support the entity remains unchanged as long as the bank remains Corficolombiana's main shareholder, but the ability to do so could be affected in the event of a downgrade of Bogota's ratings. In Fitch's opinion, Corficolombiana's long-term equity investments and active treasury activity make it a core part of the wider Grupo Aval businesses. As such, the entity allows Colombia's largest financial conglomerate to have a foothold in the non- financial sector and a key gauge of the local capital market. Fitch said, "This review takes into account Grupo Aval's decision that Corficolombiana will be consolidated (for accounting purposes) directly under Grupo Aval instead of with Bogota. In our view this change, which was implemented during June 2016, has no impact on Corficolombiana's ratings, since there is no change on ownership and Bogota continues to be its main shareholder." CREDOMATIC INTERNATIONAL CORPORATION (CIC) CIC's IDRs reflect the support it would receive from its parent, Banco de Bogota, should it be required. Fitch has maintained CIC's IDRs on Rating Watch Negative in line with its parent's ratings. Bogota's willingness to support the entity remains unchanged, but its ability to do so could be affected in the event of a downgrade of Bogota's ratings. SUPPORT RATING AND SUPPORT RATING FLOOR BANCO DE BOGOTA Given its size and systemic importance, Bogota is likely to receive support from Colombia's government, should it be required. Colombia's ability to provide such support is reflected in its sovereign rating ('BBB'/ Outlook Stable') and drives Bogota's support floor of 'BBB-'. GRUPO AVAL As the focus of regulators is on protecting banks' depositors, not their shareholders, it is not likely that they would support a bank holding company. Hence Grupo Aval's SR and SRF are rated '5' and 'No floor', respectively. CORFICOLOMBIANA AND BANCO DE OCCIDENTE Given their importance to the strategy and business of their parents, support for these entities would come from Banco de Bogota and Grupo Aval, respectively. The parents' ability to support their subsidiaries is reflected in their respective ratings of 'BBB+' and 'BBB'. SUBORDINATED DEBT BANCO DE BOGOTA Bogota's subordinated debt is rated one notch below the bank's VR and therefore mirrors the Rating Watch Negative on its VR. The bonds do not have equity-like features that would merit equity credit, as based on Fitch's criteria. The notching reflects higher expected losses in the case of liquidation but no additional notching for non-performance, given its gone concern characteristics (plain-vanilla subordinated debt).] RATING SENSITIVITIES VR, IDRS, NATIONAL RATINGS, SENIOR AND SUBORDINATED DEBT BOGOTA Bogota's Long-Term IDRs and VR are already above the sovereign. Therefore, there is limited upside potential for these ratings, as the bank's capitalization metrics will continue to compare unfavorably to international peers even if full implementation of Bogota's capital optimization plan is achieved. However, significant progress on the bank's capital optimization plan which leads to the restoration of its capital buffers could resolve the Negative Watch given the bank's overall financial and business profile. On the other hand, a dismal performance (ROAA below 1.5%) and/or severely weaker asset quality that pressures loan loss provisions and erode the bank's capital/reserves cushion (FCC consistently below 9.5%) could lead to a ratings downgrade. Senior and subordinated debt ratings will move in tandem with Bogota's IDR'. Fitch expects to resolve the Rating Watch Negative on Bogota's IDRs and VR once it has completed an in-depth review of the decisions taken in June and described above. GRUPO AVAL and GRUPO AVAL LIMITED Grupo Aval's IDR would remain one notch below Bogota's and would move in tandem with any rating actions on its main operating subsidiary. However, the relativity between these two entities could also be affected in the event of consistent material changes, positive or negative, in Grupo Aval's double-leverage metrics or in the dividend flows from the operating companies that affects its debt coverage ratios. The ratings for Grupo Aval Limited's senior secured debt would move in line with Grupo Aval's IDRs. CORFICOLOMBIANA AND CIC Corficolombiana's and CIC's IDRs are support-driven, and therefore [these ratings would mirror any changes in its main shareholder's IDRs]. OCCIDENTE Occidente's Rating Outlook is Stable reflecting Fitch's expectation of no substantial changes in the bank's financial profile over the rating horizon. Nevertheless, the bank's VR, IDRs, and National ratings could be pressured if its performance deteriorates (Operating ROAA below 1%) or its capital weakens (FCC consistently below 10%), though this is not Fitch's base case scenario. While there is limited upside potential given the current level of the bank's and the sovereign's ratings, in the event of a sovereign upgrade, Occidente's VR and IDR could benefit from a reduction in deposit concentration and more diversified funding, combined with the maintenance of its overall solid asset quality, capital and performance metrics over the medium term]. SUPPORT RATING AND SUPPORT RATING FLOOR The SR is potentially sensitive to any change in assumptions as to the propensity or ability of the Republic of Colombia or the entity's parent to provide timely support to the bank. Bogota's and Grupo Aval's SR and SRF would be affected if Fitch changes its assessment of the government's ability and/or willingness to support the bank. Corficolombiana's and Banco de Occidente's SR would be affected if Fitch changes its assessment of their respective parents' willingness and/or ability to provide them support. Fitch has taken the following rating actions: Banco de Bogota -- Long-Term Foreign Currency Issuer Default Rating (IDR) 'BBB+', Rating Watch Negative maintained; -- Short-Term Foreign Currency IDR 'F2', Rating Watch Negative maintained; -- Long-Term Local Currency IDR at 'BBB+', Rating Watch Negative maintained; -- Short-Term Local Currency IDR at 'F2', Rating Watch Negative maintained; -- Viability rating at 'bbb+', Rating Watch Negative maintained; -- Senior unsecured debt rating of 'BBB+', Rating Watch Negative maintained; -- Subordinated debt rating of 'BBB', Rating Watch Negative maintained; -- Support rating affirmed at '2'; -- Support rating floor affirmed at 'BBB-'; Grupo Aval -- Long-Term Foreign Currency Issuer Default Rating (IDR) 'BBB', Rating Watch Negative maintained; -- Short-Term Foreign Currency IDR affirmed at 'F3'; -- Long-Term Local Currency IDR 'BBB', Rating Watch Negative maintained; -- Short-Term Local Currency IDR affirmed at 'F3'; -- Support rating affirmed at '5'; -- Support rating floor affirmed at 'NF'; Grupo Aval Limited -- Senior unsecured guaranteed debt issued by Grupo Aval Ltd. 'BBB', Rating Watch Negative maintained. Corficolombiana -- Long-Term Foreign Currency IDR 'BBB+', Rating Watch Negative maintained; -- Long-Term Local Currency IDR 'BBB+', Rating Watch Negative maintained; -- Short-Term Foreign Currency IDR 'F2', Rating Watch Negative maintained; -- Short-Term Local Currency IDR 'F2', Rating Watch Negative maintained; -- Support Rating affirmed at '2'; -- National Scale Long-Term Rating affirmed at 'AAA(col)'; Outlook Stable; -- National Scale Short-Term Rating affirmed at 'F1+(col)'. Occidente -- Long-Term Foreign Currency IDR affirmed at 'BBB', Outlook Stable; -- Long-Term Local Currency IDR affirmed at 'BBB', Outlook Stable; -- Short-Term Foreign Currency IDR affirmed at 'F3'; -- Short-Term Local Currency IDR affirmed at 'F3'; -- Viability rating affirmed at 'bbb'; -- Support Rating affirmed at '2'; -- National Scale Long-Term Rating affirmed at 'AAA(col)'; Outlook Stable; -- National Scale Short-Term Rating affirmed at 'F1+(col)'. CIC -- Long-Term Foreign Currency IDR 'BBB+', Rating Watch Negative maintained; -- Short-Term Foreign Currency IDR 'F2', Rating Watch Negative maintained; -- Support Rating affirmed at '2'; BANCOLOMBIA SA: Fitch Keeps Rating Watch Neg. on Int'l Ratings -------------------------------------------------------------- Fitch Ratings has maintained Bancolombia S.A. and certain foreign subsidiaries' selected international ratings on Rating Watch Negative. At the same time, Fitch has affirmed other Bancolombia ratings, as well as some of its subsidiaries', which are not directly affected by the watch status. A full list of rating actions is at the end of this release. Affected related subsidiaries are: -- Bancolombia Panama S.A. (BP) -- Bancolombia Puerto Rico International Inc. (BPR) -- Banistmo S.A. The ratings remain on Rating Watch Negative pending further review of the bank's recapitalization plans. Fitch will resolve the Rating Watch Negative after assessing the evolution of Bancolombia's capital metrics for consistency with the current rating levels. KEY RATING DRIVERS - BANCOLOMBIA IDRS, VR, NATIONAL RATINGS AND SENIOR DEBT RATINGS Bancolombia's capital ratios declined in 2015 due to changes in the accounting standards (IFRS was introduced starting 2015), the significant depreciation of the local currency, which boosted its $US denominated risk-weighted assets and $US denominated goodwill deduction from Fitch Core Capital (FCC), as well as the consolidation of Grupo Agromercantil Holding as a result of an increase in Bancolombia's majority stake. While Fitch expected a slight decline in the bank's capital ratios due to continued growth, the FCC ratio fell to 7.16% at March 2016 (December 2014: 10.1%), a metric that is not consistent with the current rating levels. Moderate growth, expected higher margins, increased retained earnings and Colombian peso stability are the main assumptions for Bancolombia recapitalization plan. According to Fitch's projections, Bancolombia's slower growth and sustained internal capital generation, could aid in rebuilding its capital ratios over the next year amid a stable economic environment and less volatile exchange rates, which is Fitch's baseline scenario. Nevertheless, Fitch does not expect capitalization to return to levels reported in 2014 during this period. In 2015, profitability ratios were slightly better than in 2014 given resilient margins, significant loan growth, and the 32% depreciation of the Colombian peso that resulted in foreign exchange gains and significant gains on forward contracts in foreign currency. Operational profits will keep increasing steadily, allowing the bank to boast competitive profitability ratios. Asset quality indicators have broadly been stable through the cycles, in part benefiting from rapid loan growth. However, a few large exposures in the commercial sector led to a modest deterioration over 2015. Given Bancolombia's conservative credit- risk culture, Fitch expects the bank to maintain asset-quality ratios in line with its current rating level and similar to regional peer medians. Nevertheless, loan quality indicators will be slightly weaker than other large Colombian banks. Bancolombia's successful franchise, distribution network and its reputation as a longstanding, conservative institution, support a well-diversified, stable and relatively low-cost funding base. In addition, Bancolombia has proven access to local and global capital and debt markets. Accordingly, the loan-to-deposits ratio reached 124% at December 2015, as Bancolombia actively uses capital markets to better match its assets and liabilities tenor profile. Bancolombia boasts a well-balanced business with loans diversified by geography, industry, product and obligor. The bank has few undesired concentrations, robust asset quality, ample reserves and sufficient liquidity. SUPPORT RATING AND SUPPORT RATING FLOOR Fitch has assigned a Support Rating of '2' and Support Rating Floor of 'BBB-', reflecting the agency's estimation of a high probability of sovereign support should it be required, given the bank's systemic importance. The ability of the sovereign to provide support is based in its 'BBB'/'BBB+'/Outlook Stable IDRs. SUBORDINATED DEBT Bancolombia's subordinated debt is rated one notch below its IDR to reflect higher expected losses in case of liquidation but no additional notching for non-performance, given its gone concern characteristics. KEY RATING DRIVERS - BP, BPR AND BANISTMO IDRS, NATIONAL RATINGS and SENIOR DEBT BP, BPR and Banistmo's IDRs and BPR's national ratings reflect the potential support they would receive from their main shareholder, Bancolombia S.A., should it be required. Therefore, these entities' IDRs and BP's senior debt are aligned with those of Bancolombia and mirror the Rating Watch Negative of their parent's IDRs. SUPPORT RATINGS Fitch believes Bancolombia's willingness to support BP, BPR and Banistmo is substantial should it be required, given that are core in the parent's business strategy and regional expansion, underpinning a support rating of '2'. Its ability to support these entities is reflected in Bancolombia's IDR of 'BBB+'. RATING SENSITIVITIES - BANCOLOMBIA IDRS, VR, AND SENIOR DEBT The bank's IDR, VR and senior debt ratings are sensitive to a change in Fitch's assumptions regarding capitalization. While there is no upside potential given the recent deterioration in the bank's capital position, Bancolombia's ratings could be affirmed if the bank can successfully restore its capital buffers. As Bancolombia's IDRs, VR and senior debt ratings are above those of the sovereign, any negative rating action on the sovereign would also lead to a similar action on Bancolombia's ratings. An unexpected deterioration of Bancolombia's impaired loans ratio above 4% or a significant reduction of its ample loan loss coverage may also trigger a negative rating action on its VR and IDRs. A dismal performance (operating ROAA consistently below 1.5%) and/or severely weaker asset quality that pressures loan loss provisions and further erodes the bank's capital (FCC ratio sustained below 10%) could also lead to a downgrade of its VR and IDRs. SUPPORT RATING AND SUPPORT RATING FLOOR Bancolombia's Support and Support Rating Floor ratings would be affected by a change in Colombia's ability or willingness to support the bank. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES The ratings of Bancolombia's subordinated debt would move in line with the bank's IDR. NATIONAL RATINGS Bancolombia's national scale ratings are not affected due to Rating Watch Negative on IDRs, because Fitch's baseline scenario is that a potential downgrade in the Bancolombia's ratings, if any, would be limited to one notch, a scenario that would not alter such national scale ratings. RATING SENSITIVITIES - BP, BPR and Banistmo IDRs The IDRs of these entities are support-driven and aligned to its parent's. Therefore, these ratings would mirror any changes in Bancolombia's IDRs. NATIONAL RATINGS The national scale ratings of these entities are not affected due to Bancolombia's Rating Watch Negative, because Fitch's baseline scenario is that a potential downgrade in the Bancolombia's ratings, if any, would be limited to one notch, a scenario that would not alter such national scale ratings. SENIOR AND SUBORDINATED DEBT Senior and subordinated debt could be downgraded in the same magnitude of a potential downgrade in Bancolombia's IDRs. Fitch has maintained the following ratings on Rating Watch Negative: Bancolombia -- Long-Term Foreign Currency IDR 'BBB+'; -- Short-Term Foreign Currency IDR 'F2'; -- Long-Term Local Currency IDR 'BBB+'; -- Short-Term Local Currency IDR at 'F2'; -- Viability Rating 'bbb+'; -- Senior unsecured debt 'BBB+'; -- Subordinated debt 'BBB'. Bancolombia Panama -- Long-Term IDR 'BBB+'; -- Short-Term IDR 'F2'; -- Long-Term Deposits 'BBB+'; -- Short-Term Deposits at 'F2'. Bancolombia Puerto Rico -- Long-Term IDR 'BBB+'; -- Short-Term IDR at 'F2'; Banistmo -- Long-Term IDR 'BBB+'; -- Short-Term IDR at 'F2'. Fitch has affirmed the following ratings: Bancolombia -- National long-term rating at 'AAA(col)', Outlook Stable; -- National short-term rating at 'F1+'; -- Support rating at '2'; -- Support rating floor at 'BBB-'; -- COP1.5 billion program senior unsecured issuances' national rating affirmed at 'AAA(col)'; -- COP1 billion program subordinated issuances' national rating affirmed at 'AA+(col)'; -- COP2 billion program senior unsecured issuances' national rating affirmed at 'AAA(col)'. -- COP3 billion program senior unsecured issuances' national rating affirmed at 'AAA(col)'; -- COP3 billion program subordinated issuances' national rating affirmed at 'AA+(col)'. Bancolombia Panama -- Support rating at '2'; Bancolombia Puerto Rico -- National long-term rating at 'AAA(col)', Outlook Stable; -- National short-term rating at 'F1+'; -- Support rating at '2'. DOMINICAN REPUBLIC: AMCHAMDR and OSAC Promote US Interests ---------------------------------------------------------- Dominican Today reports that the American Chamber of Commerce of the Dominican Republic (AMCHAMDR) and the Overseas Security Advisory Council (OSAC) will collaborate to shore up Dominican Republic's climate for United States investments and the safety of American nationals and entities in the country. Chamber president Gustavo Tavares and OSAC chairman Alain Astacio signed the document in an activity with executives at AMCHAMDR offices, according to Dominican Today. "We have many opportunities and ample fertile field to join forces and achieve greater results in the Dominican Republic. Direct investment from the US to the RD has multiple and substantial benefits to both countries such as employment, GDP growth and standard of living. In addition, private investment will benefit, and grows when there's security, stability and the rule of law," Tavares said in his brief speech, the report notes. For Mr. Astacio, relations through talks and documentation of some processes, activities and parameters as a first step in the partnership rapprochement have great potential, the report relays. "More than 3,500 companies and 18,000 specialists worldwide are part of the OSAC. This public-private partnership of the US suitably complements AMCHAMDR's platform, collaborating exponentially with important local government agencies, contributing to Dominican Republic's climate of security and prosperity," he added. In an emailed statement, the business organization said the Memorandum of Understanding seeks to bolster the capacities, talents and institutions related to AMCHAMDR and OSAC, "with a view to strengthening the ways and mechanisms for the Dominican Republic and the United States to come out stronger together," the report adds. As reported in the Troubled Company Reporter-Latin America on July 1, 2016, Moody's Investors Service has changed the outlook on the Dominican Republic's long term issuer and debt ratings to positive from stable. The ratings have been affirmed at B1. =============== H O N D U R A S =============== HONDURAS: S&P Revises Outlook to Pos. & Affirms 'B+/B' Ratings -------------------------------------------------------------- S&P Global Ratings revised its outlook on the Republic of Honduras to positive from stable. S&P also affirmed its 'B+/B' long- and short-term sovereign credit ratings on Honduras. In addition, S&P affirmed its 'BB-' transfer and convertibility assessment. RATIONALE S&P's outlook revision reflects that sustained fiscal improvement, including restructuring the energy sector, and favorable economic growth could improve Honduras' fiscal flexibility over the next two years. Successful adherence to the benchmarks laid out in Honduras' three-year program with the International Monetary Fund (IMF), combined with continued GDP growth, could strengthen public finances by helping to contain the expected annual increase in government debt, boosting fiscal flexibility. The ratings on Honduras reflect its weak political institutions, low-income economy, and exchange rate rigidities that constrain monetary policy. S&P expects that additional revenue collection efficiency, along with energy-sector restructuring, will contain Honduras' general government fiscal deficit to around 3.5% of GDP over the next two years. That, along with a modest increase in economic growth, should help keep net general government debt about 36% of GDP over the same period. S&P forecasts that real GDP growth could reach 3.6% in 2016 and approach 3.7% over the next two years (equivalent to 2% per capita GDP growth), similar to the 3.6% growth in 2015. The implementation of revenue and spending measures since 2014 has reduced the government's fiscal deficit. The government has also advanced with reforms in the electricity sector, restructuring the National Electric Energy Company (ENEE). The reforms reduced ENEE's fiscal cost to the central government budget to 0.3% of GDP in 2015 from 1.3% in the previous year. S&P expects that revenue collection efficiency and spending controls, which will be reinforced by the recently enacted Fiscal Responsibility Law, along with energy-sector restructuring, will contain Honduras' general government fiscal deficit to around 3.5% of GDP over the next two years. Based on this, net general government debt would stabilize around 36% of GDP in 2017-2018. The combination of low oil prices, high remittances, and continued implementation of fiscal consolidation could support a further reduction in Honduras' current account deficit (CAD) to 6% of GDP in 2016 and 2017. Honduras' CAD continued to improve in 2015, declining to 6.41% of GDP from 7.4% of GDP in 2014 and a record- high 9.6% in 2013. S&P estimates that the country's gross external financing needs would average 94% of current account receipts and usable reserves over the next two years, slightly below the 95% of 2015. As the economic program with the standby arrangement signed with the IMF remains on track, it will reinforce investor confidence and continue supporting foreign direct investment around 5.7% of GDP for the next two years, largely funding the CAD. Honduras' political institutions, including the system of checks and balances among government branches, overall remain weak and volatile. Following the 2015 Supreme Court resolution that allows presidential reelection, new election laws that define term limits and whether terms can be consecutive are still undefined. Foreign exchange regime rigidities continue to constrain the central bank's monetary policy. Honduras has heavily managed its exchange rate within a narrow band since 2011, although it has been increasing. Based on the Central Bank Monetary Program for 2016-2017, S&P expects a 6% nominal devaluation this year, with inflation staying within target of 4.5% (plus or minus 1%), somewhat above the 2.36% of 2015. Dollar-denominated assets and liabilities in the banking system account for about one-third of commercial bank claims and deposit liabilities, creating a vulnerability to sharp movements in the exchange rate. Honduras' economy is likely to grow 3.6% in 2016 and approach 3.7% over the next two years, supported by recovered coffee production and higher remittance inflows. Large human development and infrastructure needs continue to constrain Honduras' medium-term growth potential. Honduras is a low-income country with projected per capita GDP of $2,350 in 2016. Over the past five years, per capita GDP has grown at a modest 1.3% per year on average. Its small, open economy is relatively diversified across agriculture, low-value-added manufacturing factories, and tourism. OUTLOOK S&P expects broad continuity in economic policies following national elections in late 2017. S&P expects that, as has been observed so far, the next administration will continue to effectively implement the country's recent Fiscal Responsibility Law, as well as consolidate recent gains in restructuring public- sector enterprises like ENEE. S&P could raise the ratings over the next 12-18 months if the government continues to strengthen public finances and, including through implementation of steps to strengthen fiscal revenues, contains the expected annual increase in its debt. In contrast, S&P could revise the outlook to stable if there is a reversal in the recent trend of strengthening public finances, or if unexpected political developments undermine investor confidence and weaken the country's growth prospects. Slippage in the implementation of energy reform, coupled with a renewed deterioration in fiscal performance, could undermine investor confidence and growth prospects. Such negative trends could, if they appear and persist, weaken public finances and lead to a downgrade. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable (see 'Related Criteria And Research'). At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee agreed that the external assessment had improved and that the debt assessment had deteriorated. All other key rating factors were unchanged. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. RATINGS LIST Ratings Affirmed; Outlook Action To From Honduras (Republic of) Sovereign Credit Rating B+/Pos/B B+/Stable/B Ratings Affirmed Honduras (Republic of) Transfer & Convertibility Assessment BB- Senior Unsecured B+ ============= J A M A I C A ============= JAMAICA: Make CSME work, Mahfood Urges -------------------------------------- RJR News reports that William Mahfood, President of the Private Sector Organisation of Jamaica (PSOJ) is urging regional leaders to stand together to make the CARICOM Single Market and Economy (CSME) work. Mr. Mahfood, who is to meet with Trinidad and Tobago's Prime Minister on Tuesday to discuss that country's relationship with Jamaica, told RJR News that CARICOM has not outgrown its usefulness, according to RJR News. Mr. Mahfood said the regional body offers its members opportunities in the global marketplace which would not be gained by each country acting on its own, the report relays. "Each of our markets are (sic) fairly small . . . . We don't really mean a lot in the global marketplace, but when you join all of us together, with 15 million people, we are much stronger... and we have to have one way to operate as a single market, and as a true force to reckon with," he said, the report notes. Mr. Mahfood contends that, if CARICOM cannot survive, Jamaica will still need to bond with other countries in the region, rather than go it alone, the report adds. * * * As reported in the Troubled Company Reporter-Latin America on Feb. 15, 2016, Fitch Ratings has upgraded Jamaica's Long-term foreign and local currency IDRs to 'B' from 'B-' and revised the Rating Outlooks to Stable from Positive. In addition, Fitch upgraded Jamaica's senior unsecured Foreign- and Local-Currency bonds to 'B' from 'B-'. The Country Ceiling has been affirmed at 'B' and the Short- Term Foreign-Currency IDR affirmed at 'B'. JAMAICA: IMF Appoints New Resident Representative ------------------------------------------------- RJR News reports that the International Monetary Fund (IMF) has appointed Dr Constant Lonkeng Nguouana, as the new Resident Representative to Jamaica. Dr. Nguouana, who is from Cameroon, took up the position, according to RJR News. He replaces Dr. Bert van Selm who took up the post in May 2013. Dr. Nguoana comes to Jamaica at the tail end of the current four year IMF program, the report notes. Under that program, Jamaica has so far managed to reduce its debt to GDP from close to 150 per cent to 125 per cent. The country has also managed to achieve macro-economic stability and now turn its focus to growth after a period of austerity, the report adds. * * * As reported in the Troubled Company Reporter-Latin America on Feb. 15, 2016, Fitch Ratings has upgraded Jamaica's Long-term foreign and local currency IDRs to 'B' from 'B-' and revised the Rating Outlooks to Stable from Positive. In addition, Fitch upgraded Jamaica's senior unsecured Foreign- and Local-Currency bonds to 'B' from 'B-'. The Country Ceiling has been affirmed at 'B' and the Short- Term Foreign-Currency IDR affirmed at 'B'. ======= P E R U ======= INTERCORP PERU: S&P Raises CCR to 'BB+'; Outlook Stable ------------------------------------------------------- S&P Global Ratings raised its corporate credit rating on Intercorp Peru Ltd. to 'BB+' from 'BB'. At the same time, S&P raised its issue-level rating to 'BB+' from 'BB' on Intercorp's $250 million 144 A/Reg. S senior unsecured notes due 2025 and PEN301.5 million (about $100 million) private placement due 2030. The outlook remains stable. The upgrade follows a revision to S&P's assessment of Intercorp's financial risk profile to modest from intermediate. This is mainly supported by our expectations that the company will maintain low leverage and protect its cash flow, which would result in an LTV ratio well below 20% and a cash flow adequacy ratio above 2.0x, in spite of increased foreign exchange and financial market volatility and soft macroeconomic conditions. The rating action incorporates S&P's view that the value of the company's portfolio of assets will be well above $3.0 billion, with no significant fluctuations, and that the company will not issue additional debt within the next two years. The stable outlook reflects S&P's expectation that the company will post credit metrics comfortably commensurate with a modest financial risk profile, including an LTV ratio below 20% and a cash flow adequacy ratio above 2.0x for the next two years, in spite of continued soft macroeconomic conditions and regional foreign exchange volatility, underpinned by its current capital and financial flexibility, and coupled with the leading position of its main assets in their respective markets. The company will maintain adequate liquidity mainly underpinned by stable dividend flow from investees. S&P could lower the ratings if Intercorp's LTV ratio rises to above 20% and therefore weakens -- which might be the result of higher debt due to, for example, higher capital infusions into subsidiaries. S&P could also downgrade the company's if its total coverage ratios deteriorate to below 0.7x as a result of lower dividend income or higher interest or dividend payments, or if the company's portfolio value deteriorates significantly, particularly due to lower market capitalization of its listed investees. Although unlikely in the short term, S&P could upgrade the ratings on Intercorp if the issuer successfully consolidates its retail investments, or if it incorporates additional investments leading to an improvement in the portfolio's creditworthiness, resulting in an LTV ratio below 10%, consistently. ====================== P U E R T O R I C O ====================== INDUSTRIAS VASSALLO: Court Dismisses Suit vs. Peter Vasquez Massa ----------------------------------------------------------------- Judge Brian K. Tester of the United States Bankruptcy Court for the District of Puerto Rico dismissed the adversary proceeding captioned VASSALLO INTERNATIONAL GROUP, INC. Plaintiff, v. PETER VAZQUEZ MASSA, et. al. Defendant(s), Adversary No. 16-00137 (Bankr. D.P.R.). Vassallo International Group, Inc., filed before the bankruptcy court an emergency motion requesting the court to stay the proceedings pending before the Puerto Rico Court of First Instance, Ponce part in cases JPE 2015-0383(605) and JPE2015- 0467(605). The urgency of the request stemmed from the fact that the state court has scheduled a trial on the merits in the said cases to commence on July 6, 2016. VIGI requested the stay in order to allow the bankruptcy court to entertain the adversary complaint filed on June 30, 2016. Judge Tester, however, concluded that the bankruptcy court lacks jurisdiction to hear the complaint. All other pending motion related to the adversary proceeding were also denied as moot. A full-text copy of Judge Tester's July 5, 2016 opinion and order is available at https://is.gd/N9kMMh from Leagle.com. The bankruptcy case is IN RE: INDUSTRIAS VASSALLO INC., Chapter 11, Debtor(s), Case No. 08-07752 (Bankr. D.P.R.). VASSALLO INTERNATIONAL GROUP, INC. is represented by: Daniel Molina Lopez, Esq. TOTTI & RODRIGUEZ DIAZ LAW OFFICES Union Plaza Building, Suite 1200 416 Ponce de Leon Avenue San Juan, PR 00918 Tel: (787)753-7910 Fax: (787)764-9480 Email: dml@trdlaw.com INVERSIONES ARAXI: Hires Juan A. Ruiz Reyes as Accountant --------------------------------------------------------- Inversiones Araxi Group, Corp and Buena Vista Platation, Corp seek permission from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Mr. Juan A. Ruiz Reyes as accountant for the Debtor. The Debtor will rely on Mr. Juan A. Ruiz Reyes for general accounting and financial counseling services in connection with, but not limited, to this bankruptcy petition. The Debtor has agreed to pay Mr. Juan A. Ruiz Reyes at a rate of $1,590 per hour. The Debtor has agreed with Mr. Juan A. Ruiz Reyes to pay in advance the amount of $2,000 retainer fee, which is deemed a down payment for the services to be rendered. Mr. Juan A. Ruiz Reyes will also be reimbursed for reasonable out-of-pocket expenses incurred. Mr. Juan A. Ruiz Reyes assured the Court that the he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Mr. Juan A. Ruiz Reyes may be reached at: Mr. Juan A. Ruiz Reyes Urb. Los Laureles 26 Los Robles St. Cayey, PR 00736 Tel: 787-738-0850 E-mail: ruizreyesjuan@yahoo.com Based in Salinas, Puerto Rico, Inversiones Araxi Group Corp., dba Motel The Rose, filed a Chapter 11 petition (Bankr. D. P.R. Case No. 16-02428) on March 31, 2016. The Hon. Edward A Godoy presides over the case. Gerardo L. Santiago Puig, Esq., at GSP LAW, P.S.C., serves as counsel to the Debtor. In its petition, the Debtor estimated under $50,000 in assets, and $1 million to $10 million in liabilities. The petition was signed by Luis J. Perez Delgado, president. POPULAR (BPOP): Fitch's BB- IDR Reflects Commonwealth's Challenge ----------------------------------------------------------------- Following the Commonwealth of Puerto Rico's default, ratings for the island's two main banks, Popular (BPOP) and First BanCorp (FBP), will not be immediately affected, according to Fitch Ratings. The long-term IDR of BPOP of 'BB-' and FBP of 'B-' reflect the persistently weak and difficult operating environment. Fitch believes the banks will be able to weather losses related to Commonwealth exposures. Overall, capital positions and expected profitability at both banks remain adequate to support current rating levels in light of the Commonwealth's recent default. With that said, despite the ongoing fiscal challenges and economic malaise in Puerto Rico, BPOP's and FBP's ratings remain sensitive to the operating environment, particularly regarding the fiscal situation and its impact to the broader local economy. Unemployment rates have remained high (11.7% as of May 2016) and have not dropped significantly. However, Fitch has a cautious view on long-term economic trends given the structural issues in Puerto Rico that need to be addressed, such as net out migration. Should the Commonwealth's fiscal situation worsen further and lead to a material change in economic trends, BPOP and FBP's ratings may be pressured. Both Puerto Rican banks have various exposures to the Commonwealth and its instrumentalities. At March 31, 2016, BPOP's direct and indirect exposure totaled $982m, while FBP's direct and indirect exposure totaled $757m. Although these exposures are sizable, they have been reduced over time, and the majority is directly tied to municipalities with some exposures collateralized by tax revenues. Fitch said, "Capital positions support the current rating levels. Our view is that the banks will be able to manage through a period of stress. In a scenario assuming a 40% write-down to direct and indirect exposures, Fitch estimates a pro forma TCE/TA ratio of 12.05% for BPOP and a pro forma TCE/TA ratio of 12.22% for FBP, which would still be relatively high versus similarly sized US mainland banks. Fitch's mid-tier peer group has a median TCE/TA ratio of about 9%." Fitch also notes that both BPOP and FBP also showed solid capital positions in their 2015 Dodd-Frank Act Stress Test (DFAST) results, which use specifically prescribed macro conditions unique to Puerto Rico's circumstances and worse than those prescribed under the Fed's standard "severely adverse" scenario. The DFAST results reflect a GDP contraction of 3.2%-3.3% (versus a 1.1% contraction for the standard test) and an unemployment rate of 18%-19% (versus 9.2% under the standard test). Both banks passed the tests by comfortable margins over "well-capitalized" minimums. In Fitch's view, earnings performance for both banks is sustainable, although loan growth will be a challenge. Both banks have returned to profitability, albeit at modest levels. Fitch notes that BPOP and FBP have also worked to stabilize NPAs over the past several quarters; nonetheless, nonperformers remain very elevated compared with US banks. Given the low rate environment and consolidation in the local banking sector, as well as weak loan demand, BPOP's and FBP's liquidity positions have also improved. Funding costs have declined as both banks have reduced their reliance on wholesale borrowings. Fitch also highlights many of Puerto Rico's 100+ cooperative banks (also known as cooperativas; not rated by Fitch) in its banking sector, which account for about $8.5billion in total assets, have outsized exposures to the Commonwealth and Government Development Bank. As a result, some cooperatives' capital positions are likely weak. In December 2015, the Legislature passed "Proyecto del Senado 1454," which allowed cooperativas to amortize a loss on defaulted Commonwealth bonds over 15 years rather than immediately. Under the final Puerto Rico restructuring bill, cooperativas will likely be handled by the independent oversight committee. PUERTO RICO: Rubio, Pierluisi Among Appointees to Task Force ------------------------------------------------------------ Ryan Rainey, writing for Morning Consult, reported that Sens. Orrin Hatch (Utah) and Marco Rubio (Fla.) will be Senate Republicans' representatives on a bicameral task force charged with coming up with methods to help Puerto Rico emerge from its debt crisis. According to the report, Rep. Nydia Velazquez (D-N.Y.) and Puerto Rico's non-voting representative in Congress, Pedro Pierluisi, will represent House Democrats. Senate Majority Leader Mitch McConnell (R-Ky.) on July 15 appointed the two senators to the task force, which is separate from the fiscal oversight board established by the recently passed law to address the island's debt crisis, the report related. Hatch is chairman of the Senate Finance Committee, and Rubio has been an outspoken advocate for a solution to the island's crisis, the report said. His home state, Florida, has one of the largest populations of people of Puerto Rican origin in the country, the report further related. Velazquez, whom House Minority Leader Nancy Pelosi (Calif.) appointed on July 14, was born in Puerto Rico and represents a district in New York City with approximately 105,000 residents of Puerto Rican origin, the report noted, citing Census Bureau data. Senate Minority Leader Harry Reid announced his appointment of Sens. Bill Nelson (Fla.) and Robert Menendez (N.J.) to the task force, the report added. The report recalled that President Obama on June 30 signed into law the Puerto Rico Oversight, Management and Economic Stability Act, also known as PROMESA. The congressional task force it established is required to complete a report on the causes and possible solutions to the crisis by the end of 2017, the report said. SOUTH CARIBBEAN BLOCK: Hires MRO Attorneys as Counsel ----------------------------------------------------- South Caribbean Block, Inc. seeks authorization from the U.S. Bankruptcy Court for the District of Puerto Rico to employ MRO Attorneys at Law, LLC, as its attorney. The Debtor requires MRO Attorneys to provide legal advise with respect to its powers and duties as a debtor-in-possession in the continued operation of its business, and to perform all legal services for it as may be necessary in the reorganization of its business. MRO Attorneys will be paid $200 per hour for services to be rendered by Myrna L. Ruiz-Olmo, Esq., plus expenses, for work performed or to be performed upon application, and upon approval of the Court; rates which are considered to be reasonable and fair, in line with services comparable to those performed on behalf of other clients. A retainer fee of $5,000, plus the $1,717 filing fee were paid prior to the bankruptcy filing. The Debtor assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. MRO Attorneys can be reached at: Myrna L. Ruiz-Olmo, Esq. MRO Attorneys at Law, LLC P.O. Box 367819 San Juan, PR 00936-7819 Tel: (787) 237-7440 E-mail: mro@prbankruptcy.com South Caribbean Block Inc., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 16-05121) on June 28, 2016. The Debtor is represented by Myrna L Ruiz Olmo, Esq. *********** 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 comillionercial 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. 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