/raid1/www/Hosts/bankrupt/TCRLA_Public/170207.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
Tuesday, February 7, 2017, Vol. 18, No. 027
Headlines
A R G E N T I N A
FONDO DE GARANTIAS: Moody's Assigns B3 Global Scale LC Rating
B E L I Z E
BELIZE: CIHL to Challenge New Pieces of Legislation in Court
B R A Z I L
LOCALIZA RENT-A-CAR: S&P Affirms 'BB+' Rating; Outlook Still Neg.
OI SA: Two Dutch Units Won't Enter Bankruptcy Proceedings
PDG REALTY: Moody's Lowers Corporate Family Rating to C
PDG COMPANHIA: Moody's Cuts Ratings on 15th Cert. Series to C
C A Y M A N I S L A N D S
ASIA RACE: Commences Liquidation Proceedings
BLUE CITY: Sole Contributory Receives Wind-Up Report
CALABAS CAPITAL: Shareholders Receive Wind-Up Report
CENTURION SHORT: Shareholder Receives Wind-Up Report
FAR EAST: Shareholders Receive Wind-Up Report
FAR EAST INVESTMENTS: Shareholders Receive Wind-Up Report
FR MIDSTATES: Commences Liquidation Proceedings
MAGMA VENTURES I: Shareholders Receive Wind-Up Report
MAPLEHURST HOLDINGS: Members Receive Wind-Up Report
D O M I N I C A N R E P U B L I C
AEROPUERTOS DOMINICANOS: S&P Affirms 'BB-' Rating; Outlook Stable
* DOMINICAN REPUBLIC: Announces Support for Dragon Fruit Farmers
M E X I C O
DEUTSCHE BANK: Moody's Ratings Remain Under Review for Downgrade
N I C A R A G U A
NICARAGUA: S&P Affirms 'B+' Sovereign Credit Ratings
X X X X X X X X X
LATIN AMERICA: Abandons Fuel Subsidies in Shift to Austerity
LATIN AMERICA: Caribbean Association of Banks Support FATCA
- - - - -
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A R G E N T I N A
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FONDO DE GARANTIAS: Moody's Assigns B3 Global Scale LC Rating
-------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo has
assigned a B3 global scale (local currency) and a Baa3.ar on
Argentina's national scale insurance financial strength (IFS)
ratings to Fondo de Garantias del Chaco ("FOGACH"). The outlook
for FOGACH's ratings is stable.
RATINGS RATIONALE
According to Moody's, the ratings of FOGACH reflect its strong
integration, alignment and affiliation with one of the northern
Argentine Provinces (the Province of Chaco, rated Caa1/POS), which
owns the company through the province's Ministry of Public
Finance, Ministry of Industry, Commerce and Services, and by the
Ministry of Production. The rating agency went on to say that the
company's current and expected low underwriting leverage is an
additional credit strength of FOGACH. Furthermore, the expectation
of a well-balanced business diversification by economic activity,
given its public ownership -- not fully linked to any economic
industry in particular- strengthens FOGACH credit profile.
These key credit strengths are offset by several credit concerns
and challenges for the company including the following: 1)
FOGACH's lack of track record in the industry, and the associated
uncertain future performance; 2) the company's small market
presence; 3) the weak credit quality of its investment portfolio
(a factor also common to other guarantors in the market); and 4)
the significant Argentine sovereign and operating environment
risk.
Commenting on factors that could result in an upgrade for the
company's ratings, Moody's mentioned: 1) good and sustained
leverage levels -- with the ratio of outstanding guarantees
divided by shareholders equity below 2.2x -- coupled with strong
business growth in the coming two years; 2) a sustained record of
good diversification of par outstanding by economic activity, with
at least three different economic sectors representing 25% each of
its total par outstanding; 3) an upgrade on the Province of
Chaco's ratings, and/or 4) an improvement of Argentina's rating
and/or operating environment. Conversely, FOGACH's ratings could
be downgraded for the following reasons: 1) a downgrade of
Argentina's government bond rating and/or deterioration in the
country's operating environment; 2) a downgrade of the Province of
Chaco's rating; 3) a significant increase in delinquencies and
claims -- i.e. above 4% of its total outstanding guarantees --;
and/or 4) a significant increase in its leverage (e.g.
persistently above 3x).
FOGACH was created in 2013 to facilitate the access of small and
medium size companies of the Province of Chaco to different type
of funding, thereby promoting the social and economic development
of that jurisdiction.
Headquartered in Resistencia, Argentina, Fondo de Garantias del
Chaco reported a net profit of ARS 1.5 million for the full fiscal
year ended December 31, 2015. As of that date, the company
reported total assets of ARS 9.2 million and shareholders' equity
of ARS 9.2 million.
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B E L I Z E
===========
BELIZE: CIHL to Challenge New Pieces of Legislation in Court
------------------------------------------------------------
The Daily Observer reports that Caribbean Investment Holdings
Limited said it will challenge in court new anti-arbitration laws
passed by the Belize Parliament, deeming the measures to be
unconstitutional.
CIHL, previously known as BCB Holdings, in a statement said that
the Central Bank of Belize Act and the Crown Proceedings Act were
clearly an attempt to intimidate and restrain it from pursuing its
rights in judicial proceedings, which it claims the Belize
government has lost, according to The Daily Observer.
It said similar amendments to the Supreme Court of Judicature Act
in 2010 were similarly challenged and substantially overturned by
the Caribbean Court of Justice (CCJ) in 2014, the report notes.
The Belize government said earlier this month that it would not
honor a United States court ruling that declined to hear petitions
for review of two judgments originally handed down by London Court
of International Arbitration granting millions of dollars to at
least two companies operating here, the report relays.
"The Office of the Prime Minister makes clear that while the US
courts have upheld the awards, those courts have no authority to
overrule the CCJ (Caribbean Court of Justice)" and that the
companies involved "can never collect on those awards in Belize,"
the report discloses.
In January, the United States Supreme Court declined to hear the
petitions for review of two judgments against the Bermuda
government, one in favor of Belize Social Development Limited
(BSDL) and the other in favor of Caribbean Investment Holdings
Limited, and the Belize Bank Limited, the report says.
A third, separate judgment for another company, NEWCO Limited, was
also not heard.
BSDL had sought enforcement of a London Court of International
Arbitration award in the U.S. District Court in Washington, D.C.
in November 2009, the report relays. That court granted
enforcement of the award in a judgment dated February 2014 and
that judgment was affirmed by the U.S. Court of Appeals for the
D.C. Circuit in July 2015, the report notes.
The main opposition People's United Party (PUP) has criticized the
government over its move not to honor the arbitration award.
But in a statement, the Office of the Prime Minister it is
"astounded" by the statement made by the PUP on the denial by the
United States Supreme Court of the Government of Belize's petition
for a review of lower court judgments in three cases, the report
relays.
In its statement, CIHL said the settlement of the nationalization
of a company here came about after an unnecessary seven-year delay
with substantial costs on all sides.
Following the passage of the legislation, Attorney General Michael
Peyrefitte reviewed the present situation and Government's options
should there be any attempt to attach Belizean assets, the report
relays.
"There cannot be any criminal sanctions for challenging the law
itself; if one wants to make a constitutional application to say
that the laws we ratified here . . . are unconstitutional, then
the court would decide that," the report relates.
"If you don't make that challenge, but you attempt to do what the
acts criminalize, then you will have to suffer the penalties that
the acts articulate in them," he added.
As reported in the Troubled Company Reporter-Latin America on
Nov. 28, 2016, S&P Global Ratings lowered its long-term foreign
and local currency sovereign credit ratings on Belize to 'CC' from
'CCC+'. The outlook on both long-term ratings is negative. At
the same time, S&P affirmed its 'C' short-term foreign and local
currency ratings. S&P also lowered its transfer and
convertibility (T&C) assessment to 'CC' from 'CCC+'.
===========
B R A Z I L
===========
LOCALIZA RENT-A-CAR: S&P Affirms 'BB+' Rating; Outlook Still Neg.
-----------------------------------------------------------------
S&P Global Ratings has affirmed its 'BB+' global scale and 'brAA+'
national scale ratings on Localiza Rent-a-Car S.A. S&P also
affirmed its 'brAA+' national scale issue-level rating on
Localiza's senior unsecured debentures. The outlook on the
corporate rating remains negative. The recovery rating on the
company's rated debt remains at '3', reflecting meaningful
recovery of 50%-70%.
The affirmation reflects S&P's view that lower interest rates and
still robust used-car market will enable Localiza to maintain its
low leverage and sound profitability over the next several
quarters, despite still high competition, which limits price
increases. Also, S&P expects Localiza to maintain its leading
position in Brazil while maintaining the highest operating
efficiency among the rated peers in the country, mainly through
robust fleet management strategy.
S&P continues to view Localiza's strong brand reputation, sound
operating efficiency, and nationwide network of rental and used-
vehicle resale stores as strengths in our analysis of the
company's business. These factors, along with the company's
fleet-leasing business (about 25% of its total fleet), with
average contract period of three years, mitigate the potentially
higher volatility of profitability at Localiza's rent-a-car
segment (75% of its total fleet). In S&P's view, the rent-a-car
(RAC) business mainly services customers with cyclical demand
(including travel and corporate clients), and faces intense
competition, exposing Localiza to potential fluctuations in usage
rates and daily tariffs.
The company's recent acquisition of Hertz Global Holdings Inc.'s
(B+/Stable/--) operations in Brazil should help further strengthen
Localiza's brand, given the brand cooperation agreement between
the two companies. However, the acquisition is still pending
antitrust agency approval, and is likely to be completed in the
first quarter of 2017, and will add about 9,500 vehicles to
Localiza's fleet.
S&P expects Localiza's overall scale and market position to
continue allowing it to maintain some pricing power and higher
profitability than those of its peers, with EBIT margins in the
20%-25% range. These factors will continue to support the
company's strong cash generation, and consequently, low leverage
ratios despite increasing competition and Brazil's weak economy.
Although the latter acts as a drag on the overall auto sales and
rental market, it has mainly taken a toll on smaller and less
capitalized players, which usually have less bargaining power with
automakers and lower economies of scale, allowing Localiza to gain
share. Also, S&P expects the used-car market in the country to
remain robust, providing stable margins and accessible liquidity
source to Localiza.
S&P expects Localiza's financial metrics to remain stable through
2017, with a reduced interest burden due to lower average base
interest rates in Brazil.
OI SA: Two Dutch Units Won't Enter Bankruptcy Proceedings
---------------------------------------------------------
Ana Mano at Reuters reports that Oi SA said in a securities filing
a court in the Netherlands on Feb. 2 decided that two subsidiaries
of the debt-laden Brazilian phone carrier would not start
bankruptcy proceedings.
The filing confirmed a Reuters report that Oi Brasil Holdings
Cooperatief UA and Portugal Telecom International Finance BV,
would remain operating under "suspension of payments" legal
status.
Creditors had sought to convert the companies' status from
"suspension of payments" to bankruptcy proceedings, Reuters
relates.
Oi's two Dutch subsidiaries issued about EUR5.8 billion (US$6.2
billion) of debt, representing most of the company's outstanding
bond debt of approximately EUR8.5 billion, Reuters discloses.
About Oi SA
Headquartered in Rio de Janeiro, and operating almost exclusively
within Brazil, the Oi Group provides services like fixed-line data
transmission and network usage for phones, internet, and cable,
Wi-Fi hot-spots in public areas, and mobile phone and data
services, and employs approximately 142,000 direct and indirect
employees.
Ojas N. Shah filed a Chapter 15 petition for Oi S.A. (Bankr.
S.D.N.Y. Case No. 16-11791), Oi Movel S.A. (Bankr. S.D.N.Y. Case
No. 16-11792), Telemar Norte Leste S.A. (Bankr. S.D.N.Y. Case No.
16-11793), and Oi Brasil Holdings Cooperatief U.A. (Bankr.
S.D.N.Y. Case No. 16-11794) on June 21, 2016. The case is
assigned to Judge Sean H. Lane.
The Chapter 15 Petitioner is represented by John K. Cunningham,
Esq., and Mark P. Franke, Esq., at White & Case LLP, in New York;
and Jason N. Zakia, Esq., Richard S. Kebrdle, Esq., and Laura L.
Femino, Esq., at White & Case LLP, in Miami, Florida.
PDG REALTY: Moody's Lowers Corporate Family Rating to C
--------------------------------------------------------
Moody's America Latina has downgraded the corporate family ratings
(CFR) assigned to PDG Realty S.A. Empreendimentos e Participacoes
(PDG) to C from Caa3 on the global scale and to C.br from Caa3.br
on the Brazilian national scale. At the same time, Moody's
downgraded the ratings of the company's BRL250 million senior
secured bank credit notes due in 2020 to C/C.br from Caa3/Caa3.br,
and the rating of the company's BRL140 million senior unsecured
debentures due in 2018 to C/C.br from Ca/Ca.br.
Issuer: PDG Realty S.A. Empreendimentos e Participacoes (PDG)
Ratings downgraded:
-- Corporate Family Ratings: to C from Caa3 (global scale) and
to C.br from Caa3.br (national scale)
-- BRL250 million senior secured bank credit notes (CCBs- 15th
series- 1st issuance) due in 2020: to C/C.br from
Caa3/Caa3.br
-- BRL140 million senior unsecured debentures due in 2018 (7th
issuance): to C/C.br from Ca/Ca.br
Outlook, Changed To No Outlook From Negative
RATINGS RATIONALE
The downgrade to C follows PDG's announcement on February 1, 2017
of a missed payment of an extraordinary early amortization on the
company's BRL250 million senior secured bank note (CCB) that is
underlying the 15th series of the 1st issuance of real estate
certificates (CRI). According to the instruments' indentures, the
missed payment can trigger the acceleration of both the CCB and
the CRI.
Even though PDG has been defaulting on its debt obligations as per
Moody's definitions since March 2016, PDG's ratings still
incorporated an expected recovery ranging from 65% to 80% for
PDG's senior secured creditors in an event of default.
Nevertheless, the recurring missed payments on principal and
interests and still ongoing debt renegotiations reduces Moody's
visibility over the recovery potential of secured creditors, which
weakens Moody's notching considerations among different debt
classes. Accordingly, PDG's secured and unsecured ratings are been
equalized at the same levels as the corporate family rating.
The extraordinary early amortization was a requirement made by the
certificates holders and included in the third amendment of this
certificates. By the amendment, the certificates holders agreed to
postpone the final maturity date of the CCB and CRI to July 27,
2020 and July 28, 2020, from the original December 20, 2016 and
December 21, 2016, respectively, and to split the certificates on
a proportion of 1 to 12. Interest rates on both the CRI and CCB
would continue to accrue at 120% CDI, and would be paid along with
the principal payment upon maturity of the notes. Nevertheless,
PDG failed to comply with the early amortization of approximately
R$17 million split in 12 monthly instalments, as partial
amortization of the interest and principal outstanding debt
balance between January 2017 and December 2017 and will now have
to discuss new terms and conditions with the note holders.
PDG's C/C.br ratings reflect its weak operating performance,
untenable capital structure, evolving liquidity profile with
significant near-term debt maturities and Moody's views of a high
likelihood of a near term filing for bankruptcy. The ratings also
incorporate Moody's expectations of significant losses to secured
and unsecured creditors, given the company's ongoing challenges to
conclude debt renegotiations.
Although unlikely in the short term, the ratings could be upgraded
if PDG effectively executes a debt renegotiation strategy that
materially reduces its debt burden and improves its liquidity
position. Positive pressure on the secured ratings would also
arise if Moody's perceptions of the recovery value of secured
instruments improves, with greater visibility on the collateral's
enforcement and timing of collection.
PDG Realty S.A. Empreendimentos e Participacoes (PDG) is a
Brazilian homebuilder operating through its wholly owned
subsidiaries, Goldfarb, CHL, Agre and minority investments in
other companies. In the last twelve months ended September 2016,
PDG generated net revenues of BRL306 million (USD84 million) and
net losses of BRL4.8 billion (USD1.3 billion).
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
PDG COMPANHIA: Moody's Cuts Ratings on 15th Cert. Series to C
------------------------------------------------------------------
Moody's America Latina Ltda. has downgraded to C from Caa3 (global
scale, local currency) and to C.br from Caa3.br (national scale)
the ratings of the 15th series of the 1st issuance of real estate
certificates (CRI or certificates) issued by PDG Companhia
Securitizadora, following the downgrade of the underlying CCB to
C/C.br from Caa3/Caa3.br.
The real estate certificates are backed by a CCB (cedula de
credito bancario) issued by PDG Realty S.A. Empreendimentos e
Participacoes (PDG).
This rating action follows Moody's downgrade of PDG's ratings on
February 3, 2017.
Issuer: PDG Companhia Securitizadora
15th Series / 1st Issuance of Certificates: downgrade to C from
Caa3 (global scale, local currency), and to C.br from Caa3.br
(national scale);
RATINGS RATIONALE
Moody's views the certificates as full pass-through securities of
the underlying CCB. Given that the ratings of the 15th series of
certificates are primarily based on PDG's ability to make payments
under the bank loan agreement (CCB), any changes in ratings on the
senior secured ratings of the underlying CCB will cause a change
in the ratings of the CRIs.
The downgrade to C follows PDG's announcement on February 1, 2017
of a missed extraordinary early amortization payment on the
underlying CCB and, consequently, on the CRI. According to the CCB
and CRI's indentures, the missed payment can trigger the
acceleration of both CCB and the CRI. The securitization company
has called for an investor meeting scheduled to March 2, 2017.
Factors that would lead to an upgrade or downgrade of the ratings:
Any changes to the senior secured ratings of the CCB will lead
to a change in the ratings assigned to the certificates.
The principal methodology used in these ratings was "Moody's
Approach to Rating Repackaged Securities" published in June 2015.
==========================
C A Y M A N I S L A N D S
==========================
ASIA RACE: Commences Liquidation Proceedings
--------------------------------------------
The sole shareholder of Asia Race Investments (Cayman) Ltd, on
Dec. 13, 2016, 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:
Walkers Liquidations Limited
27 Hospital Road, George Town
Grand Cayman KY1-9008
Cayman Islands
BLUE CITY: Sole Contributory Receives Wind-Up Report
----------------------------------------------------
The sole contributory of Blue City Investments 1 Limited received
on Jan. 12, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Andrew Morrison
FTI Consulting (Cayman) Ltd.
Suite 3212, 53 Market Street Camana Bay
P.O. Box 30613 Grand Cayman KY1-1203
c/o Sandipan Bhowmik
Telephone: +1 (345) 743 6830
e-mail: sandipan.bhowmik@fticonsulting.com
CALABAS CAPITAL: Shareholders Receive Wind-Up Report
----------------------------------------------------
The shareholders of Calabas Capital Fund received on Jan. 13,
2017, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Kenneth Stewart
c/o Apex Fund Services (Cayman) Ltd.
161a Artillery Court, Shedden Road
PO Box 10085, Grand Cayman KY1 1001
Cayman Islands
Telephone: (345) 747 2739
CENTURION SHORT: Shareholder Receives Wind-Up Report
----------------------------------------------------
The sole shareholder of Centurion Short Term Trading Master Fund
Ltd. received on Jan. 19, 2017, the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Cathlin Rossiter
c/o Genesis Trust & Corporate Services Ltd.
Elgin Court, 2nd Floor
Elgin Avenue George Town
Grand Cayman
Cayman Islands KY1-1106
Telephone: (345) 945 3466
Facsimile: (345) 945 3470
FAR EAST: Shareholders Receive Wind-Up Report
---------------------------------------------
The shareholders of Far East Capital Partners Limited received on
Jan. 13, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Kenneth Stewart
c/o Apex Fund Services (Cayman) Ltd.
161a Artillery Court, Shedden Road
PO Box 10085, Grand Cayman KY1 1001
Cayman Islands
Telephone: (345) 747 2739
FAR EAST INVESTMENTS: Shareholders Receive Wind-Up Report
---------------------------------------------------------
The shareholders of Far East Investments L.P. received on Jan. 13,
2017, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Kenneth Stewart
c/o Apex Fund Services (Cayman) Ltd.
161a Artillery Court, Shedden Road
PO Box 10085, Grand Cayman KY1 1001
Cayman Islands
Telephone: (345) 747 2739
FR MIDSTATES: Commences Liquidation Proceedings
-----------------------------------------------
The shareholders of FR Midstates Cayman Holdings, Ltd., on Dec.
12, 2016, 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:
Daren Schneider
c/o Matt Bernardo
First Reserve Corporation
One Lafeyette Place, Third Floor
Greenwich, Connecticut 06830
USA
Telephone: +1 (345) 914 4268
MAGMA VENTURES I: Shareholders Receive Wind-Up Report
-----------------------------------------------------
The shareholders of Magma Ventures I Management Ltd. received on
Jan. 10, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Marc Randall
c/o Maples Liquidation Services (Cayman) Limited
PO Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
MAPLEHURST HOLDINGS: Members Receive Wind-Up Report
---------------------------------------------------
The members of Maplehurst Holdings Ltd. received on Jan. 6, 2017,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106
Citco Trustees (Cayman) Limited
89 Nexus Way, Camana Bay
Grand Cayman KY1-1205
Cayman Islands
===================================
D O M I N I C A N R E P U B L I C
===================================
AEROPUERTOS DOMINICANOS: S&P Affirms 'BB-' Rating; Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' ratings on Aeropuertos
Dominicanos Siglo XXI S.A. Additionally, S&P revised its
liquidity assessment to strong from adequate. The outlook on
Aerodom remains stable.
On Feb. 3, 2017, and in line with S&P's expectations, Aerodom
raised $533 million in new debt ($317 million in the form on
senior secured bonds due 2029 and $216 million in a bank loan due
2024, both with an amortizing structure and pari passu). The
company used the proceeds repay its outstanding $484 million
bullet bonds due 2019 and for other corporate purposes. S&P views
the transaction as a pure liability management operation that
extended the maturity schedule to 2029. S&P's base-case scenario
already included this debt refinancing. Therefore, Aerodom's
credit metrics have remained unchanged.
The main difference from S&P's last revision is the inclusion of
the proceeds in its base-case scenario, which improved the
company's liquidity position of the company, which prompted S&P to
revise its liquidity assessment to a stronger category. The
reassessment is neutral from a credit perspective.
* DOMINICAN REPUBLIC: Announces Support for Dragon Fruit Farmers
----------------------------------------------------------------
Dominican Today reports that during his "suprise visit" to rural
communities, President Danilo Medina promised the National Cluster
of Pitahaya Producers in Baitoa in Santiago province that the
authorities would finance the cultivation of 400 areas of dragon
fruit or pitahaya, with a view to exporting the exotic crop.
During the president's 159th surprise visit, through which 960
farming and community projects have been implemented nationwide
with a RD$23 billion investment, Medina and the Cluster members
agreed that each farmer would cultivate at least 20 tareas with a
view to receiving approximately RD$60,000 per month by exporting
pitahaya, which he described as "the best quality in the world,"
according to Dominican Today.
As reported in the Troubled Company Reporter-Latin America on
Nov. 22, 2016, Fitch Ratings has taken the following rating
actions on the Dominican Republic:
-- Long-Term Foreign Currency Issuer Default Rating (IDR)
upgraded to 'BB-' from 'B+'; assigned Stable Outlook;
-- Long-Term Local Currency IDR upgraded to 'BB-' from 'B+';
assigned Stable Outlook;
-- Senior unsecured Foreign and Local Currency bonds upgraded
to 'BB-' from 'B+';
-- Short-Term Foreign Currency IDR affirmed at 'B';
-- Short-Term Local Currency IDR affirmed at 'B'.
===========
M E X I C O
===========
DEUTSCHE BANK: Moody's Ratings Remain Under Review for Downgrade
----------------------------------------------------------------
Moody's de Mexico said that the ratings of Deutsche Bank Mexico,
S.A. and of Deutsche Securities, S.A. de C.V., Casa de Bolsa
remain under review for downgrade pending regulatory approval of
the sale of these entities to Mexico's InvestaBank S.A.
(Investabank, unrated). The review was initiated on November 4,
2016.
The following ratings remain on review for downgrade:
Deutsche Bank Mexico, S.A.:
-- Baseline credit assessment of ba2
-- Adjusted baseline credit assessment of ba1
-- Long-term global local currency deposit rating of Ba1
-- Long-term global foreign currency deposit rating of Ba1
-- Long-term Mexican National Scale deposit rating of A1.mx
-- Short-term Mexican National Scale deposit rating of MX-1
-- Long and short term Counterparty Risk Assessments of Baa3(cr)
and Prime-3(cr)
Deutsche Securities, S.A. de C.V., Casa de Bolsa:
-- Long-term global local currency issuer rating of Ba1
-- Long-term Mexican National Scale issuer rating of A1.mx
-- Short-term Mexican National Scale issuer rating of MX-1
RATINGS RATIONALE
The reviews for downgrade on Deutsche Bank Mexico's and Deutsche
Securities Mexico's ratings followed the signing of an agreement
by the companies' ultimate parent, Deutsche Bank AG (Deutsche AG,
BCA ba1), to sell these operations to InvestaBank, as part of a
broader scaling back of its global operations pursuant to its 2020
strategic plan.
The reviews for downgrade reflect the progressive deterioration of
earnings generation and business diversification that will occur
as the balance sheets shrink and existing derivative operations
are wound down through the transaction's closing date. In
addition, it considers that once the transaction closes, Deutsche
Bank Mexico and Deutsche Securities Mexico will no longer benefit
from support from Deutsche AG. Despite the marginal business
importance of the Mexican entities to their parent, Moody's
assesses a high likelihood of parent support given their shared
brand name, which results in one notch of ratings uplift from
Deutsche Bank Mexico's baseline credit assessment.
The companies have already begun to exit or transfer to their
parent certain operations that will not be sold to InvestaBank.
Moody's expects that at the sale's closing, the business being
acquired by InvestaBank will largely consist of the trustee
division of Deutsche Bank Mexico. If the sales unexpectedly fall
through, Moody's expects an orderly wind down of the Mexican
entities' remaining lines of business, which are not currently
under stress. Should their situation suddenly deteriorate before
the parent can finish winding them down, however, the reputational
cost for Deutsche Bank's global business of allowing these
entities to fail would likely outweigh the costs of bailing them
out.
WHAT COULD MOVE THE RATINGS DOWN
The ratings will likely be downgraded when the transaction reaches
financial close. They could be downgraded prior to financial close
if the companies' standalone credit profiles deteriorate
significantly as a result of preparations for their upcoming sale.
The long-term Mexican National Scale ratings of A1.mx indicate
issuers or issues with above-average creditworthiness relative to
other domestic issuers. The short- term Mexican National Scale
ratings of issuers rated MX-1 indicate the strongest ability to
repay short-term senior unsecured debt obligations relative to
other domestic issuers.
The principal methodology used in rating Deutsche Bank Mexico,
S.A. was Banks published in January 2016. The principal
methodology used in rating Deutsche Securities, S.A. de C.V., Casa
de Bolsa was Global Securities Industry Methodology published in
May 2013.
The period of time covered in the financial information used to
determine the rating is between January 1, 2011 and September 30,
2016 (source: Moody's, Deutsche Bank Mexico and Deutsche
Securities Mexico).
The sources and items of information used to determine the rating
include 2016 interim financial statements (source: Moody's,
Deutsche Bank Mexico and Deutsche Securities Mexico); year-end
2013, 2014 and 2015 audited financial statements (source: Moody's,
Deutsche Bank Mexico and Deutsche Securities Mexico, audited by
KPMG Cardenas Dosal, S. C. member of KPMG International).
Deutsche Bank Mexico is headquartered in Mexico City, Mexico. As
of 30 September 2016 it had total assets of MX$43.8 billion and
total shareholder's equity of MX$4 billion.
Deutsche Securities Mexico is headquartered in Mexico City,
Mexico. As of September 30, 2016 it had total assets of MX$1.6
billion and total shareholder's equity of MX$1.6 billion.
=================
N I C A R A G U A
=================
NICARAGUA: S&P Affirms 'B+' Sovereign Credit Ratings
----------------------------------------------------
S&P Global Ratings affirmed its 'B+' long-term local and foreign
currency sovereign credit ratings on the Republic of Nicaragua.
The outlook on the long-term ratings remains stable. At the same
time, S&P affirmed the 'B' short-term local and foreign currency
sovereign credit ratings.
In addition, S&P affirmed its transfer and convertibility (T&C)
assessment at 'BB-'.
RATIONALE
The ratings on the Republic of Nicaragua reflect low per capita
income, lack of monetary policy flexibility, and vulnerability to
external shocks. A moderate general government debt burden and
track record of pragmatic economic policies and stable economic
growth counterbalance those factors. Consensus between the
government and the private sector on pragmatic economic policies
has contributed to investor confidence. That, plus low crime
rates compared with other Central American countries, has helped
to sustain GDP growth around 4.7% in the last four years.
President Daniel Ortega of the leftist Frente Sandinista de
Liberacion Nacional (FSLN, the Sandinistas) was reelected in
November 2016 in elections marred by controversies about the
disqualification of several opposition members of Congress and by
the absence of international observers. After the elections, the
government entered into discussions with the Organization of
American States to strengthen electoral practices, including
agreeing to the presence of international observers for municipal
elections in November 2017. Despite the recent controversy, S&P
expects that Nicaragua will maintain good access to official
funding to sustain the sovereign's favorable debt profile.
In S&P's view, Nicaragua's system of political checks and balances
remains weak as power is centralized in the presidency and the
ruling Sandinista party. However, S&P believes that policy
continuity following the November 2016 elections will support
macroeconomic stability in the coming years.
Despite robust GDP growth that outperforms its Central American
neighbors, Nicaragua's low income per capita -- just above $2,100
in 2017, continues to constrain the rating. S&P expects real GDP
growth to remain broadly stable at 4.5% of GDP in 2017, from 4.7%
in 2016, based on continued growth in the tourism industry and
better performances in the agricultural and manufacturing sectors.
Despite uncertainty regarding the impact of trade policies pursued
by the new U.S. administration, S&P expects trend GDP growth to
average 4.5% (and per capita growth around 3.5%) in the coming
three years, assuming broad continuity in domestic economic
policies. Over the long term, Nicaragua's growth rate is
constrained by the low average education level of its workforce,
poor (albeit expanding) physical infrastructure, and its
vulnerability to external shocks.
The general government deficit widened slightly to 1.1% of GDP in
2016 from 0.8% in 2015, due to spending on elections and larger
outlays for the pension system and for infrastructure. S&P
expects deficits to remain around 1% of GDP in 2017-2020. General
government debt (which includes the central government, the
central bank, and the city of Managua) will increase on average by
3% of GDP or slightly less annually during 2017-2020 due to both
moderate fiscal deficits and steady planned depreciation of the
currency. S&P projects net general government debt to be 33% of
GDP this year and to slightly decline in 2017-2019. Moreover,
interest payments on the debt are projected to remain below 5% of
general government revenues.
The country's shortfall in basic services and infrastructure is
likely to continue to constrain fiscal flexibility. All of the
general government debt is denominated in foreign currency, which
poses a potential vulnerability to unexpected changes in the
exchange rate. S&P estimates that contingent liabilities are
limited, according to its criteria.
Large current account deficits (CAD) and high private external
debt have weakened Nicaragua's external position. Due to lower
commodity export prices and volumes, the CAD widened in 2016 to an
estimated 9% of GDP. S&P expects the CAD to stabilize at 8% in
2018-2020, as major commodities exports are expected to recover --
both in volume and value terms -- and steady growth of renewable
energy should contain the oil import bill. S&P also expects that
foreign direct investment (FDI) will continue to cover a large
part of the CAD, containing the rise in external debt.
S&P projects that Nicaragua's gross external financing needs will
average 108% of current account receipts (CARs) plus usable
reserves for 2017-2020 and narrow net external debt will be 116%
of CARs in 2017. Nicaragua's net external liability position
(which includes FDI assets and liabilities) has increased at a
faster pace than its narrow net external debt, highlighting a
potential vulnerability to an unexpected loss of access to
official funding or FDI inflows. Moreover, shortcomings in data
on the country's balance of payments remain despite the
government's efforts to improve the collection.
S&P expects that the government and private sector could manage a
potential sudden loss of funding from Venezuela through its
PetroCaribe program. Such inflows have diminished substantially
in recent years, along with falling oil prices. A sudden loss of
such external financing could lead the government to begin paying
through its budget for some of the quasi-fiscal social spending
currently undertaken by nongovernment companies under the
PetroCaribe program. Under such a scenario, S&P expects that the
government will take additional fiscal measures to contain the
negative impact of such spending on its fiscal deficit. All debt
owed under the PetroCaribe program is classified as private-sector
debt and does not have a sovereign guarantee.
S&P's assessment of Nicaragua's monetary flexibility reflects the
country's crawling peg exchange rate, high level of dollarization,
and small domestic capital market, which limits the effectiveness
of monetary policy. The exchange rate is expected to depreciate
5% annually against the U.S. dollar, contributing to an average
inflation rate likely around 6%-7% during 2017-2020. The level of
dollar-denominated assets and liabilities in the financial system
is high. Dollar deposits account for 75% of total deposits and
89% of all loans.
OUTLOOK
The stable outlook is based on S&P's expectation of continued
political stability, pragmatic economic policies, and low fiscal
deficits. S&P expects only moderate annual increases in
government debt, compared with past years. S&P also expects the
government to maintain good access to official funding to sustain
economic growth and the sovereign's favorable debt profile.
S&P may raise the ratings over the next two years if Nicaragua
achieves sustained and substantial improvement in its external
liquidity and indebtedness, as well as greater transparency on
statistics. In addition to these factors, an upgrade would depend
on a substantial improvement in fiscal performance and a decline
in the net general government debt burden, likely as a result of
an acceleration of GDP growth.
Conversely, S&P could lower the ratings during the same period if
unexpected political or external developments raise doubts about
the continuity of economic policies, weakening the country's
institutional framework and growth prospects. Weaker-than-
expected fiscal performance, be it from lower economic growth or
policy initiatives, and high annual increases in government debt
could weigh on the rating. Similarly, S&P could lower the ratings
if, contrary to its expectation, the government decides to assume
private-sector debt owed under the PetroCaribe program, which
would increase the sovereign's debt burden.
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. 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
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
Nicaragua (Republic of)
Sovereign Credit Rating B+/Stable/B
Transfer & Convertibility Assessment BB-
=================
X X X X X X X X X
=================
LATIN AMERICA: Abandons Fuel Subsidies in Shift to Austerity
------------------------------------------------------------
Sabrina Valle at Bloomberg News reports that Latin America's major
economies are phasing out expensive fuel subsidies as they shift
to fiscal austerity in the aftermath of the commodities bust.
Brazil, Argentina and Mexico have recently joined Colombia in
bringing pump prices to or near international levels in a move
Moody's Investors Service said has a positive impact on risk
perception by shoring up government budgets, according to
Bloomberg News. So far the policies are surviving street protests
in Mexico and low approval ratings in Brazil.
State-controlled producers Petrobras and YPF SA have seen stock
valuations gain as they slash subsidies previous administrations
used to tame inflation and placate voters, the report notes. The
moves are part of a wider story of many Latin American leaders
reversing years of populist economic policies to reign in fiscal
deficits and restore confidence in their economies, Bloomberg News
relays.
"These countries are under enormous fiscal pressure and are
reacting to it," said Samar Maziad, a sovereign analyst at
Moody's.
President Mauricio Macri has made Argentina's economy more
competitive since he took over in 2015, and an 8 percent gasoline
price increase this month has contributed to Buenos Aires-based
YPF's recent rally to the highest in more than a year, Bloomberg
News relays. Argentina is moving to completely liberalize prices
by 2018. YPF declined to comment on its stock price.
Mexico has lifted prices about 20 percent this month as it opens
state-owned Petroleos Mexicanos's monopoly to foreign competition.
It has pledged to completely phase out fuel subsidies over the
course of the year, Bloomberg News says. The so-called
"gasolinazo," or fuel-price slam, sparked protests across the
country that curtailed fuel distribution and has left President
Enrique Pena Nieto's approval rating at an all-time low of 12
percent, Bloomberg News relays. Mexico is planning another fuel
price increase on Feb. 4.
The main outlier is Venezuela, the region's biggest exporter with
the cheapest gasoline in the world at about 15 U.S. cents to fill
a tank, even after the first price increase in almost two decades
last year, the report discloses. Colombia got a head start when
it began tracking international prices in 2008, a year when fuel
subsidies contributed to an economic contraction, Bloomberg News
says.
In Brazil, where subsidies drained an estimated $40 billion from
Petrobras between 2011 and 2014, Chief Executive Officer Pedro
Parente has shown greater independence from the government to set
fuel rates, Bloomberg News relays. Under Parente, the company
formally known as Petroleo Brasileiro SA set a new price
methodology in October and has implemented five adjustments since
then, Bloomberg News notes.
This is helping the company rebuild a reputation tarnished by a
massive graft scandal and multibillion-dollar losses from
unprofitable investments in refineries that led to a downgrade of
its investment-grade rating to junk, Bloomberg News notes.
Brazil's history of heavy intervention in Petrobras has some
investors wondering how long market-based prices will last,
especially with the government's approval rating at 13 percent,
Bloomberg News relays.
Petrobras lowered gasoline and diesel prices 1.4 and 5.1 percent,
respectively, starting Friday, Jan. 27, 2017, in response to a
stronger local currency. Shares were down 0.6 percent at BRL15.71
at 10:46 a.m. local time, Bloomberg News relays. Domestic prices
will remain above international levels, it said in an e-mailed
response, Bloomberg News discloses.
"Petrobras needs to lock in its domestic fuel-pricing policy, so
as to reduce market anxiety over price changes," Bradesco BBI oil
analyst Filipe Gouveia said in a Jan. 17 report, Bloomberg News
adds.
LATIN AMERICA: Caribbean Association of Banks Support FATCA
-----------------------------------------------------------
Sasha Harrinanan at Trinidad and Tobago Newsday reports that the
Caribbean Association of Banks said it "fully supports" bankers
associations, at the country level, in their efforts to have their
respective governments finalize their Foreign Account Tax
Compliance Act (FATCA) Inter-Governmental Agreements (IGAs) with
the United States (US) Government.
However CAB "remains concerned" about the number of Caribbean
countries who do not yet have IGAs in force and is therefore
renewing its "call for Caribbean countries to enact the necessary
legislation for the implementation of FATCA," according to
Trinidad and Tobago Newsday.
CAB warned that "failure to do so has far reaching implications
for banks in terms of an increase in sovereign risk and its impact
on their ability to conduct business," the report notes.
In a statement, CAB added that it's important to note that if a
country does not have an IGA in force, "domestic financial
institutions in that territory will have to establish an
individual agreement with the US Government at significant cost,
which may have to be passed on to their customers," the report
relays.
CAB reminded that failure to become FATCA compliant by the
deadline given for each territory will result in a 30 percent
withholding tax on any "payment of interest, dividends, rents,
royalties, salaries, wages, annuities, licensing fees and other
FDAP (Fixed, Determinable, Annual or Periodic) income, gains and
profits, if such payment is from sources within the US," the
report relays.
Additionally, any gross proceeds from the sale or disposition of
US property of a type that can produce interest or dividends and
certain foreign pass-through payments will be liable to the 30
percent tax withholding, the report notes.
CAB is a community of banks and other financial institutions in
the Caribbean Region, which proactively influences issues
impacting the financial services sector through advocacy,
education and networking, the report adds.
***********
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.
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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, Ivy B.
Magdadaro, and Peter A. Chapman, Editors.
Copyright 2017. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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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
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