/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/170504.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, May 4, 2017, Vol. 18, No. 88 Headlines B A R B A D O S BARBADOS: Taxation System Needs Fixing, IMF Study Finds B R A Z I L BNDES: Moody's Rates Proposed Sr. Unsecured Notes 'Ba2' BNDES: S&P Assigns 'BB' Rating on New Sr. Unsecured Notes COMPANHIA ENERGETICA: Fitch Assigns 'B+' LT IDR, Outlook Negative SAMARCO MINERACAO: S&P Affirms 'D' Corporate Credit Ratings C A Y M A N I S L A N D S CHEROKEE LIMITED: Shareholders' Final Meeting Set for June 8 FAHOLD LIMITED: Shareholders' Final Meeting Set for June 8 FURSAHOLD LIMITED: Shareholders' Final Meeting Set for June 8 KIMAHOLD LIMITED: Shareholders' Final Meeting Set for June 8 MALINVEST LIMITED: Shareholders' Final Meeting Set for June 8 MARBAHOLD LIMITED: Shareholders' Final Meeting Set for June 8 MASULINVEST LIMITED: Shareholders' Final Meeting Set for June 8 RASMAL LIMITED: Shareholders' Final Meeting Set for June 8 RATIBHOLD LIMITED: Shareholders' Final Meeting Set for June 8 SANAWIHOLD LIMITED: Shareholders' Final Meeting Set for June 8 D O M I N I C A N R E P U B L I C DOMINICAN REP: Group Complains of Slow Product Registry Process J A M A I C A JAMAICA: Labor Ministry Sees Increase in Work Permit Applications JAMAICA: Lawsuit Involving JSE & CRO Heads to Supreme Court P U E R T O R I C O PUERTO RICO AQUEDUCT: Fitch Cuts Ratings on 2008/2012 Bonds to C X X X X X X X X X * Moody's: Latin American High Yield Debt Issuance Increase in Q1 - - - - - =============== B A R B A D O S =============== BARBADOS: Taxation System Needs Fixing, IMF Study Finds ------------------------------------------------------- RJR News reports that a new International Monetary Fund study concluded that the taxation system in Barbados needs fixing. An IMF senior economist said the establishment of the Barbados Revenue Authority (BRA) has distracted the authorities from the needed reforms, which have, unfortunately, received insufficient attention and resources, RJR News relates. The study also found the BRA's board of management needs to be strengthened, the report cites. As reported in the Troubled Company Reporter-Latin America on March 7, 2017, S&P Global Ratings lowered its long-term foreign and local currency sovereign ratings on Barbados to 'CCC+' from 'B-'. The outlook is negative. S&P also lowered the short-term ratings to 'C' from 'B.' At the same time, S&P lowered its transfer and convertibility assessment for Barbados to 'CCC+' from 'B-'. =========== B R A Z I L =========== BNDES: Moody's Rates Proposed Sr. Unsecured Notes 'Ba2' ------------------------------------------------------- Moody's Investors Service has assigned a Ba2 long-term foreign currency debt rating to the proposed senior unsecured notes to be issued by Banco Nacional de Desenvolvimento Economico e Social (BNDES). The notes will be denominated and settled in US dollars, with maturity between five and ten years. The notes will be issued as a green bond. The outlook on the rating is stable. Assignments: Issuer: Banco Nac. Desenv. Economico e Social - BNDES Senior Unsecured Regular Bond, Assigned Ba2 RATINGS RATIONALE Moody's explained that the foreign currency debt rating is at the country ceiling for Brazil's bond rating and derives from BNDES's Ba2 global local currency deposit rating, which in turn, is aligned to Brazil's government bond rating. The deposit rating is also at the same level as BNDES's standalone baseline credit assessment (BCA), and reflects its position as provider of long- term debt and equity financing in Brazil, its expertise in project financing and its role in the country's infrastructure and export programs. The ba2 BCA also incorporates the bank's adequate capital and liquidity position. Over the last 18 months, management at BNDES has worked towards sharpening the bank's focus on its core development bank mission. Among the measures, it has revised the bank's lending policies and terms to better align funds to its strategic priorities and market demands. Management has also announced a credit positive change to its dividend policy, including its commitment to retain 40% of profits, which will lead to better capital replenishment. While credit demand still remains lackluster as Brazil only starts to emerge from a deep recession, BNDES should be better positioned to support future economic investment and growth needs. This debt issuance is the first inroad of BNDES to international capital markets since 2014. WHAT COULD CHANGE THE RATINGS UP/DOWN BNDES's ratings are currently constrained by the sovereign bond rating of Ba2, and therefore, there is no upward pressure on the ratings. This constrain reflects the high direct and indirect correlation of BNDES's creditworthiness with the government's credit profile, via the liquidity-related exposure to government securities as well as through credit exposure to the real economy. Conversely, BNDES's ratings could move down if its capital position erodes and weakens its financial flexibility over time. A steady deterioration in asset quality owing to macroeconomic conditions or poor asset allocation could also result in lower ratings. Moreover, any downgrade on Brazil's sovereign ratings would trigger a downgrade on BNDES supported ratings. LAST RATING ACTION The last rating action on BNDES was on March 16, 2017, when Moody's changed to stable, from negative, the outlook on BNDES's ratings following the change in outlook to stable, from negative, on Brazil's government bond rating of Ba2, on March 15, 2017. The principal methodology used in this rating was Banks published in January 2016. BNDES is headquartered in Brasilia, Brazil, and had total assets of BRL876 billion (US$269 billion) and total equity of BRL91.4 billion (US$28.1 billion) as of December 31, 2016. BNDES: S&P Assigns 'BB' Rating on New Sr. Unsecured Notes --------------------------------------------------------- S&P Global Ratings Services assigned 'BB' issue-level rating to Banco Nacional de Desenvolvimento Economico e Social S.A.'s (BNDES; global scale: BB/Negative/--; national scale: brAA- /Negative/--) new senior unsecured notes. "The rating on the notes reflects their pari passu ranking with the bank's other senior unsecured debt obligations, and as a result, they have the same rating as the long-term issuer credit rating on the bank," said S&P credit analyst Edgard Dias. The notes should represent less than 1% of BNDES's total funding base, even though amount is yet to be defined. Therefore, S&P doesn't expect this issuance to change its view of the bank's funding as above average. BNDES will use the proceeds for financing wind and solar projects in Brazil. BNDES continues to be a key government-related entity for the Brazil. Therefore, in S&P's view, there's an almost certain likelihood of government support to the bank in case of financial distress. This factor allows S&P to equalize BNDES's credit ratings to those of the sovereign. Nevertheless, the bank's ability to generate predictable revenue has decreased in light of its new strategy, which includes tightening its credit underwriting practices for new loans. Although these changes will bolster the bank's corporate governance, they're already curbing BNDES's portfolio growth, revenue, and business generation capacity. Additionally, S&P views its asset quality as substantially under pressure amid Brazil's recession, while management prudently decided to increase provisions markedly in the past two years. S&P also views BNDES's funding base as long term and benefitting from cheap funding sources, provided by the government. The bank's repayment of R$100 billion in funding to the government doesn't change S&P's view of the sound funding conditions BNDES enjoys through its shareholding structure. Larger repayments in the future could lead S&P to revise the funding and liquidity score on the bank. RATINGS LIST Desenvolvimento Economico e Social S.A. Issuer credit rating Global scale BB/Negative/-- National scale brAA-/Negative/-- Rating Assigned Desenvolvimento Economico e Social S.A. Senior unsecured BB COMPANHIA ENERGETICA: Fitch Assigns 'B+' LT IDR, Outlook Negative ----------------------------------------------------------------- Fitch Ratings has assigned a Long-Term Foreign and Local Currency Issuer Default Rating (IDR) of 'B+' to Companhia Energetica de Minas Gerais (Cemig) and its wholly owned subsidiaries Cemig Geracao e Transmissao S.A. (Cemig GT) and Cemig Distribuicao S.A. (Cemig D). Fitch has also assigned a 'BB-(EXP)/RR3' rating to Cemig GT's proposed USD1 billion senior unsecured Eurobonds due 2024. Fitch affirmed the Long-Term National Scale ratings 'BBB(bra)' for the three entities and for Cemig D and Cemig GT's senior unsecured debentures. The Rating Outlook for the corporate ratings is Negative. The proposed Eurobonds is guaranteed by the holding company Cemig, and the proceeds will be used to prepay existing debt. KEY RATING DRIVERS Cemig and its subsidiaries' IDRs reflect its weak consolidated financial profile underpinned by low short-term debt coverage ratios, high interest rate on its debt and expected moderate to high net adjusted leverage at the range of 4.5x-5.5x in the coming years. Net proceeds from the proposed USD1 billion Eurobonds will be partially used to prepay some of existing short-term debt, but the group will remain with material debt maturities to be refinanced in the next couple of years. Fitch also expects Cemig's consolidated cash flow from operations (CFFO) to reduce, with negative free cash flow in 2017 and 2018. Fitch believes that a divestment plan is crucial to enabling the group to improve its financial profile. Cemig and its subsidiaries' credit profile is analysed on a consolidated basis due to cross default clauses and cash dynamic. The group's aggressive financial profile is partially offset by its low to moderate business risks, supported by low competition and positive diversification mainly into power generation, transmission and distribution segments, being the latter the most volatile. Cemig has a relevant asset base in the Brazilian electric sector, including shared control in several companies, which adds to financial flexibility due to their relevant market value. The IDRs also factor in the existence of political risk, due to Cemig's condition as a state owned company, as well as a moderate regulatory for the Brazilian power sector and a manageable hydrology risk. The Negative Outlook reflects Cemig's challenges to manage its liquidity pressure and improve credit metrics to become more in line with the assigned IDRs. Fitch believes that the group will need to rollover BRL5billion-6 billion until the end of 2018, even considering the Eurobonds issuance. The group has to prove that it still has alternatives to refinance the debt, even if at the expense of high interest rate. Fitch expects to assign a 'RR3' Recovery Rating to Cemig GT's proposed issuance, which reflects recovery prospects at the range of 51%-70% in the event of default, given the group's cash flow generation and strong assets portfolio. FCF in a Negative Territory Fitch believes that Cemig's consolidated FCF will be negative at around BRL150 million in 2017 and negative between BRL500-600 million in 2018. A material reduction in CFFO to BRL1.6 billon and BRL1.4 billion is expected to 2017 and 2018, respectively, in addition to a more aggressive annual capex of approximately BRL1.7 billion. In 2016, Cemig reported CFFO of BRL3.2 billion and FCF of BRL1.3 billion, benefited by Cemig D's strong recovery of non- manageable costs through tariff, that heavily impacted the company's cash flow, but it should not occur next years. Fitch views as positive the flexibility to reduce dividend payments since 2015 to 25% of net income, from aggressive dividends paid in previous years. The performance of Cemig D also benefited from a 3.1% growth in energy consumption in its concession area last year. It has compensated increasing energy losses and delinquency ratios due to high tariff adjustments and an unfavourable macroeconomic scenario in the country. Cemig D's cash flow generation was also important to compensate the worst result on the generation segment due to less favourable prices for the energy sold. The likely return of three important hydroelectric plants to the granting power this year should contribute to an expected BRL500 million in EBITDA reduction for Cemig GT compared to 2016. In 2016, the consolidated adjusted EBITDA of BRL4.2 billion had already dropped from the BRL5.5 billion achieved in 2015. Favorable Business Model The group benefits from its diversification in terms of segments and assets, which mitigates operational risks and reduces cash flow volatility. Cemig is one of the largest power companies in Brazil, with 12.7 million clients served in the distribution segment, 8.4 GW of power generation installed capacity and 8.2 thousand km of transmission lines. The company is expected to reduce its activity in greenfield projects and in the acquisition of existing assets, after being very aggressive historically. The debt associated to the acquisitions at relevant levels and strong dividend payments have significantly affected the group's credit quality. Cemig is currently promoting a divestment plan, which started with the sale of shares in transmission assets in 2016, with a cash inflow of BRL966 million. Leverage Should Remain Moderate to High Fitch expects Cemig's consolidated adjusted net leverage to range between 4.5x-5.5x in the next four years. Decreasing operating results on the generation segment may be mitigated by high energy consumption on Cemig D's concession area and the expected positive result of the distribution company's tariff review process in 2018. The agency's base case indicates Cemig's consolidated adjusted net leverage, as per Fitch's criteria, to peak at 5.4x in 2017 and 2018. In 2016 Cemig reported an adjusted net debt-to- EBITDA ratio of 4.5x, the highest in the last five years. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for Cemig include: -- Cemig D' consumption increase of 0.7% in 2017, and average growth of 2.4% during 2018-2020 period; -- Cemig D' non-manageable costs fully passed through on the tariffs; -- Average consolidated capex of BRL1.6 billion during 2017-2020; -- BRL1.1 billion transmission lines indemnity starting in 2017 (eight annual installments) -- Dividend payout of 25%; -- BRL1.2 billion disbursement on Light's partners PUT; -- No asset sale. RATING SENSITIVITIES Positive rating actions are unlikely in the short to medium term. The revision of the Outlook to Stable from Negative depends on a significant improvement on the group's debt profile, with lower pressure for refinancings. Future developments that may individually or collectively lead to a negative rating action include: -- Perception of higher difficulties to rollover debt; -- Failure to put in place its divestment plan in relevant volumes; -- New investments or additional concession fees; -- Net adjusted leverage consistently above 5.0x. LIQUIDITY Cemig presents an aggressive liquidity profile, which is somewhat mitigated by its positive tracking record in accessing local capital market. Its short-term debt coverage ratio is poor at 0.4x and should not materially improve. Around 40% of the eurobonds amount must be used to prepay part of a long-term debenture issuance that matures from 2019 to 2021. At year-end 2016, Cemig reported total adjusted debt of BRL21 billion, including off- balance sheet debt of BRL5.8 billion, while cash and equivalents was BRL2 billion. The debt maturing up to 2018 was BRL8.7 billion, with BRL4.8 billion in the short-term. Cemig's liquidity is additionally pressured by a BRL1.2 billion related with a put option obligation to be paid in November 2017, related to an indirect stake in Light S.A.'s shares. Fitch considers as manageable the currency risk related to the USD1 billion issuance, based on the company's plan to promptly set FX protection instruments. FULL LIST OF RATING ACTIONS Fitch has taken the following rating actions: Cemig -- Long-Term Foreign Currency IDR assigned 'B+'; -- Long-Term Local Currency IDR assigned 'B+'; -- Long-Term National scale rating affirmed at 'BBB(bra)'. Cemig D -- Long-Term Foreign Currency IDR assigned 'B+'; -- Long-Term Local Currency IDR assigned 'B+'; -- Long-Term National scale rating affirmed at 'BBB(bra)'; -- BRL400 million senior unsecured debentures due 2017 affirmed at 'BBB(bra)'; -- BRL1,615 million senior unsecured debentures due 2018 affirmed at 'BBB(bra)'. Cemig GT -- Long-Term Foreign Currency IDR assigned 'B+'; -- Long-Term Local Currency IDR assigned 'B+'; -- Long-Term National scale rating affirmed at 'BBB(bra)'; -- BRL1,350 million senior unsecured debentures, with two outstanding series due 2019 and 2022, affirmed at 'BBB(bra)'; -- USD1,000 million proposed Eurobonds due 2024 guaranteed by Cemig assigned 'BB-(EXP)/RR3'. The Outlook for the corporate ratings is Negative. SAMARCO MINERACAO: S&P Affirms 'D' Corporate Credit Ratings ----------------------------------------------------------- S&P Global Ratings affirmed its 'D' global and national scale corporate credit ratings on Samarco Mineracao S.A. S&P has also affirmed its 'D' global scale issue-level ratings on Samarco's senior unsecured notes. At the same time, S&P withdrew the recovery ratings on the company's debt, until S&P has updated capital structure. The 'D' ratings continue to reflect Samarco's failure to make payments on its financial obligations since September 2016. The company remains non-operational following the spill from one of its tailings dam in November 2015. Samarco's cash position has been depleted, following the company's efforts to mend the damaged dams and keep operations idle. In addition, there's still uncertainty as to when the company is expected to resume operations, given that it needs to get regulatory approval for its plan to restart operations in order to regain its licenses. S&P will evaluate Samarco under revised capital structure and operational capabilities once it completes negotiations with debtholders and has clearer timetable for resuming operations. ========================== C A Y M A N I S L A N D S ========================== CHEROKEE LIMITED: Shareholders' Final Meeting Set for June 8 ------------------------------------------------------------ The shareholders of Cherokee Limited will hold their final meeting on June 8, 2017, at 9:30 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 FAHOLD LIMITED: Shareholders' Final Meeting Set for June 8 ---------------------------------------------------------- The shareholders of Fahold Limited will hold their final meeting on June 8, 2017, at 9:45 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 FURSAHOLD LIMITED: Shareholders' Final Meeting Set for June 8 ------------------------------------------------------------- The shareholders of Fursahold Limited will hold their final meeting on June 8, 2017, at 8:30 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 KIMAHOLD LIMITED: Shareholders' Final Meeting Set for June 8 ------------------------------------------------------------ The shareholders of Kimahold Limited will hold their final meeting on June 8, 2017, at 10:15 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 MALINVEST LIMITED: Shareholders' Final Meeting Set for June 8 ------------------------------------------------------------- The shareholders of Malinvest Limited will hold their final meeting on June 8, 2017, at 10:30 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 MARBAHOLD LIMITED: Shareholders' Final Meeting Set for June 8 ------------------------------------------------------------- The shareholders of Marbahold Limited will hold their final meeting on June 8, 2017, at 10:45 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 MASULINVEST LIMITED: Shareholders' Final Meeting Set for June 8 --------------------------------------------------------------- The shareholders of Masulinvest Limited will hold their final meeting on June 8, 2017, at 11:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 RASMAL LIMITED: Shareholders' Final Meeting Set for June 8 ---------------------------------------------------------- The shareholders of Rasmal Limited will hold their final meeting on June 8, 2017, at 11:15 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 RATIBHOLD LIMITED: Shareholders' Final Meeting Set for June 8 ------------------------------------------------------------- The shareholders of Ratibhold Limited will hold their final meeting on June 8, 2017, at 11:30 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 SANAWIHOLD LIMITED: Shareholders' Final Meeting Set for June 8 -------------------------------------------------------------- The shareholders of Sanawihold Limited will hold their final meeting on June 8, 2017, at 11:45 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Neil Montgomery 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 =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REP: Group Complains of Slow Product Registry Process --------------------------------------------------------------- Dominican Today reports that Dominican Republic Industries Association (AIRD) President Campos De Moya asked the government to speed up issuing new sanitary registry for food products. The industrial leader made the request in his keynote speech "Changes in Health in the Dominican Republic and its Impact on Health Regulation and Vigilance," during a meeting attended by Public Health minister Altagracia Guzman, according to Dominican Today. Mr. De Moya said a study by the Health Ministry's Medicine, Food and Medical Products Dept. (Digemaps), found generalized delays on the registry process, some as long as 152 working days without response, which De Moya affirms means a 62-day delay, the report notes. Mr. De Moya said the most serious situation emerges when it's time to renew the sanitary registry, "which, after 237 days of being submitted, still have no response, so that the delay is 147 days," the report relays. Mr. De Moya added that the AIRD submitted to Guzman a draft regulation to resolve the delays, the report relays. As reported in the Troubled Company Reporter-Latin America on May 1, 2017, S&P Global Ratings affirmed its 'BB-/B' long- and short-term sovereign credit ratings on the Dominican Republic. The outlook remains stable. The transfer and convertibility (T&C) assessment is unchanged at 'BB+'. ============= J A M A I C A ============= JAMAICA: Labor Ministry Sees Increase in Work Permit Applications ----------------------------------------------------------------- RJR News reports that data from the Jamaican Ministry of Labor have revealed an increase in the number of persons applying for permits to work in Jamaica. During the 2016/17 fiscal year, the number of work permit applications received by the Ministry of Labor increased by 14.7 per cent, moving from 4,884 in 2015/16 to 5,602, according to RJR News. According to the Ministry's just released annual performance report, it processed 5,004 work permits and 1,120 exemption applications, the report notes. In comparison to the previous year, work permits and exemptions processed reflected increases of 53.3 per cent and 173.8 per cent, respectively, the report relays. The Ministry said the increase in work permits approved was due to the number of major projects in the mining and construction industries, which required skilled workers, the report relays. Work permit recipients originated from North America, Latin America, the Caribbean, Europe, Africa and Asia, the report notes. The largest number of recipients was from Asia with 3,221 or 59 per cent of the total work permit applications, the report notes. This was 142 per cent over Latin America, which was the largest recipient for 2015/16, the report adds. As reported in the Troubled Company Reporter-Latin America on Feb. 9, 2017, Fitch Ratings affirmed Jamaica's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B' with a Stable Outlook. The issue ratings on Jamaica's senior unsecured Foreign and Local Currency bonds are also affirmed at 'B'. The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at 'B' and the Short-Term Foreign Currency and Local Currency IDRs at 'B'. JAMAICA: Lawsuit Involving JSE & CRO Heads to Supreme Court ----------------------------------------------------------- RJR News reports that the Supreme Court is scheduled to hear a lawsuit involving the Jamaica Stock Exchange and its Chief Regulatory Officer, Wentworth Graham. Mr. Graham, who was suspended with pay by the Stock Exchange in January, filed a lawsuit challenging the decision, according to RJR News. Mr. Graham has also taken his case to the Industrial Disputes Tribunal (IDT). His attorneys have applied to the Supreme Court for an injunction to block the Stock Exchange from proceeding with a disciplinary hearing against him until his case is heard by the IDT, the report notes. As reported in the Troubled Company Reporter-Latin America on Feb. 9, 2017, Fitch Ratings affirmed Jamaica's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B' with a Stable Outlook. The issue ratings on Jamaica's senior unsecured Foreign and Local Currency bonds are also affirmed at 'B'. The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at 'B' and the Short-Term Foreign Currency and Local Currency IDRs at 'B'. ====================== P U E R T O R I C O ====================== PUERTO RICO AQUEDUCT: Fitch Cuts Ratings on 2008/2012 Bonds to C ---------------------------------------------------------------- Fitch Ratings has downgraded the following Puerto Rico Aqueduct and Sewer Authority (PRASA or the authority) bonds to 'C' from 'CC': -- Approximately $3.3 billion in outstanding senior lien revenue bonds series A, B, 2012A and 2012B; -- Approximately $285 million in outstanding revenue refunding bonds series 2008A and 2008B (guaranteed by the Commonwealth of Puerto Rico). All bonds remain on Negative Watch. SECURITY The senior bonds are secured by a gross lien of all authority revenues related to PRASA's combined water and sewer system (the system), as defined in the amended master agreement of trust (the MAT), senior to all other debt or expenses of PRASA. The series 2008A and 2008B bonds are payable from system revenues subordinate to all PRASA obligations except Commonwealth of Puerto Rico (the commonwealth) supported obligations and obligations payable from surplus revenues. The series 2008A and 2008B revenue refunding bonds are further secured by a guaranty of the commonwealth. Currently, no credit is given for the commonwealth guaranty. KEY RATING DRIVERS DOWNGRADE ON APPROVED FISCAL PLAN: The downgrade to 'C' from 'CC' reflects Fitch's view that a restructuring of PRASA's debt appears imminent or inevitable based on an April 28, 2017, resolution by the Puerto Rico Oversight, Management, and Economic Stability Act Financial Oversight and Management Board approving and certifying PRASA's latest proposed fiscal plan. The fiscal plan contemplates the need to reduce debt service costs for fiscal years 2017-2026 by around 35% to 41% to avoid sizeable annual cash flow shortfalls and/or significant additional rate adjustments. CASH FLOW CONCERNS REMAIN: PRASA's net cash receipts and existing funds on hand remain insufficient to meet long-term working capital, debt service and other funding requirements. PRASA's financial estimates for fiscal years 2017 - 2026 indicate annual revenue shortfalls of between $29 million to $316 million. FISCAL 2016 AUDIT RELEASED: PRASA's most recent audited performance (fiscal year ended June 30, 2016) points to a 6% reduction in operating revenues from the prior year (excluding $90 million transferred from the rate stabilization fund) due in part to severe drought conditions. The lower revenues were somewhat offset by a 3% reduction in operating expenses, although coverage of all obligations was a minimal 1.07x. Days cash improved slightly for the year but remained modest at 62 days. PRASA's auditor (Kevane Grant Thornton LLP) also noted that financial difficulties experienced by the authority raise substantial doubt about its ability to continue as a going concern. RATING SENSITIVITIES NONPAYMENT OR DISTRESSED DEBT EXCHANGE: The Puerto Rico Aqueduct & Sewer Authority's failure to meet debt service obligations as scheduled or execution of a distressed debt exchange, where creditors are offered securities with diminished structural or economic terms compared with the existing bonds to avoid a probable payment default, would result in a downgrade of any affected securities to 'D'. Securities that continue to perform pursuant to any negotiated restructuring will have ratings maintained at 'C'. ================= X X X X X X X X X ================= * Moody's: Latin American High Yield Debt Issuance Increase in Q1 ----------------------------------------------------------------- Debt issuance by Latin American corporates jumped to $7.1 billion in the first quarter of the year, from $1 billion in the same period a year earlier, says Moody's Investors Service in a new report. However, issuance was concentrated among only few companies. Brazil's government-owned oil company Petroleo Brasileiro S.A. - Petrobras (B1 positive) accounted for $4.0 billion, or 56% of the total, during 1Q 2017. High-yield debt issuance will continue at a moderate, selective pace in 2017. While commodity prices have stabilized, and the region's domestic political uncertainties seem contained for the time being, economic growth in the region will still remain tepid for a prolonged period. "Global growth remains at historically low levels, and increased political and policy uncertainty in Europe and the US will contribute to continued risk aversion and volatility in capital flows in the region," said Martina Gallardo Barreyro, an Assistant Vice President and Analyst at Moody's. The weighted-average coupons of issuances dropped to 6.5% in the first quarter of 2017 from 7.8% in the same period a year ago, reflecting the higher credit quality of the companies that were selling debt, according to the report. Better credit quality also helped extend the weighted-average tenor of the debt that was issued to 8.1 years from 6.3 years. Almost all of the debt that was issued in the period was used to refinance existing debt. Investment-related issuance remains constrained by soft business fundamentals and weak demand across the corporate board in the region. Covenant quality also improved in the first quarter. The Central American Bottling Corporation (Ba2 stable), Tecnoglass Inc. (Ba3 stable) and Nemak, S.A.B. de C.V. (Ba1 positive) issued full- package high-yield bonds with an average CQ score of 2.72, an improvement from the 3.01 average CQ score of Latin American full- package bonds issued from 2011 through December 2016. For Moody's covenant quality scores, a lower score denotes stronger covenant quality on Moody's scale from 1.0 to 5.0. Latin American bonds typically offer weaker protection than their Asian counterparts but stronger protection than equivalent North American full- package bonds. *********** 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, 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268. * * * End of Transmission * * *