/raid1/www/Hosts/bankrupt/TCRLA_Public/170719.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 19, 2017, Vol. 18, No. 142
Headlines
A N T I G U A & B A R B U D A
SANDALS GRANDE: Hotel To be Closed for Five Months
A R G E N T I N A
BUENOS AIRES: S&P Rates New EUR500MM Senior Unsec. Notes 'B'
B E R M U D A
CENTRAL EUROPEAN MEDIA: Moody's Affirms B2 Corp. Family Rating
B R A Z I L
BRASKEM SA: Moody's Puts Ba1 CFR Under Review for Downgrade
COMPANHIA SIDERURGICA: Moody's Cuts Global Scale Rating to Caa2
CSN ISLANDS XI: Moody's Cuts Rating on US$750MM Notes to Caa2
C O L O M B I A
COLOMBIA: Seeks Renewed Relations With Cuba
CREDIVALORES-CREDISERVICIOS: Fitch Assigns B+ First Time IDR
J A M A I C A
JAMAICA: Higher Food Prices Due to Flood Rains to Affect Inflation
P E R U
INKIA ENERGY: S&P Affirms BB CCR, Cuts Issue-Level Rating to BB-
P U E R T O R I C O
INMOBILIARIA LEGUISAMO: Triangle Reo Won't Get Paid Under Plan
PANADERIA Y REPOSTERIA: Hires J. I. Rivera Gonzales as Accountant
T R I N I D A D & T O B A G O
TRINIDAD GUARDIAN: Chairman Dismisses Job Cut Rumors
V E N E Z U E L A
VENEZUELA: Opposition Plans Parallel Government
VENEZUELA: Investors Preparing for End Game Look to Cheapest Bonds
- - - - -
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A N T I G U A & B A R B U D A
===============================
SANDALS GRANDE: Hotel To be Closed for Five Months
--------------------------------------------------
RJR News reports that Prime Minister of Antigua and Barbuda,
Gaston Browne, says the planned five-month closure of Sandals
Grande appears to be a play for concessions.
Minister Browne told the Antigua Observer newspaper that he does
not think it is related to the Antigua and Barbuda Sales Tax
dispute with Sandals Chairman Gordon 'Butch' Stewart, according to
RJR News. Talks have been requested with Sandals on the matter,
the report notes.
Minister Browne said Sandals recently demanded that the Cabinet
waive the duties and taxes on food and beverage, the report
relays.
Minister Browne said the request was deferred considering that the
other hotels would have made similar demands resulting in a
significant reduction in tax revenues, the report discloses.
Minister Browne said it was explained to Sandals officials that
the government's finances are in a very precarious position and if
it waived duties and taxes on food and beverage, it would create a
crisis, the report notes.
Scores of workers at Sandals Grande will be affected when the
hotel closes for the first time in 25 years, the report relays.
The closure will take effect from September 20.
Meanwhile, tourism interests in Antigua and Barbuda say Sandal
Grande's closure will have a ripple effect.
The owner of Adventure Antigua, Eli Fuller, says he will have to
lay off workers, Minister Browne discloses.
"This is not like a manufacturing plant. . . . There are so many
business that are on the line. My company is an excursion company.
I will definitely be laying off people because of this. We are not
just talking about laying off people. I will definitely be selling
one of my boats," said Mr. Fuler in an interview with the Antigua
Observer, the report adds.
=================
A R G E N T I N A
=================
BUENOS AIRES: S&P Rates New EUR500MM Senior Unsec. Notes 'B'
------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating to the
province of Buenos Aires' (PBA; B/Stable/--) senior unsecured
notes for up to EUR500 million due 2023. The province will use the
proceeds to continue funding budgetary needs during 2017.
Including the EUR500 million issuance, S&P estimates that the
province's total debt will be around 50% of operating revenue by
the end of 2017.
As of March 31, 2017, stock of provincial debt rose to $14.2
billion from $10.4 billion in the same period last year. Most of
the debt stock consists of international and local capital market
issuances. As of March 31, 2017, 58.6% of PBA's total debt is
denominated in dollars, 9% in euros, less than 1% in other
currencies, and 31.9% is in Argentine pesos.
The foreign currency rating on the PBA is the same as our 'B'
global scale long-term issuer credit rating on Argentina. The
province, like most Argentine local and regional governments
(LRGs), doesn't meet the conditions to have a higher rating than
the sovereign, mostly because the province's liquidity position is
insufficient to meet all debt obligations.
The PBA, like all LRGs in Argentina, operates under a very
volatile and unbalanced institutional framework, in our view.
However, we believe that there's a positive trend on the
predictability of the outcome of potential reforms and pace of
implementation in the coming years. We expect moderate
reforms of the distribution of federal tax revenues to the LRGs.
Also, in our view, a more consistent support from the federal
government has allowed subnational governments to measure its
short- and longer-term impact on their finances. We view favorably
the constructive dialogue between the federal and subnational
governments to address the current institutional, administrative,
and budgetary challenges. As a result, a stronger institutional
framework and more favorable economic and fiscal conditions could
improve LRGs' credit quality in the next few years.
At the same time, rating constraints for the PBA are its very weak
budgetary performance and flexibility, and its weak economy,
financial management, and liquidity position. On the other hand,
the province's moderate contingent liabilities and debt burden
support its creditworthiness.
S&P said, "The stable outlook on the PBA reflects our view of an
increasing and constructive dialogue between Argentina's LRGs and
the federal government to address various fiscal and economic
challenges that are expected to remain in 2017 and 2018. Given
that we don't believe that PBA could meet the conditions to have a
higher rating than the sovereign, we would only consider raising
our rating on the province in the next 12 months if we were to
raise Argentina's foreign and local currency ratings, along with
the transfer and convertibility assessment (T&C). Such an upgrade
would have to be accompanied by a growing track record of the
province's satisfactory long-term capital and financial planning,
as well as improved budgetary flexibility or consistently stronger
budgetary performance in the form of operating surpluses. At the
same time, structural improvements in the institutional framework
could help improve the PBA's creditworthiness. On the other hand,
we could lower the ratings on the PBA during the same period if
Argentina's T&C assessment weakens, if we were to lower the
sovereign local or foreign currency ratings, or if we perceive
that the province's financial commitments are unsustainable or
that the PBA faces a near-term payment crisis."
RATINGS LIST
Province of Buenos Aires
Issuer credit rating B/Stable/--
Rating Assigned
Province of Buenos Aires
Senior Unsecured B
=============
B E R M U D A
=============
CENTRAL EUROPEAN MEDIA: Moody's Affirms B2 Corp. Family Rating
--------------------------------------------------------------
Moody's Investors Service has changed to positive from stable the
outlook on the ratings of Central European Media Enterprises Ltd.
Concurrently, Moody's has affirmed CME's B2 Corporate Family
Rating ("CFR") and its B2-PD Probability of Default Rating (PDR).
The rating action follows the announcement that CME has agreed to
sell its leading broadcast operations in Croatia ("Nova TV") and
in Slovenia ("POP TV") to Slovenia Broadband S.a.r.l., a
subsidiary of United Group B.V. ("United Group") which itself is a
wholly owned subsidiary of Adria Midco B.V ("Adria", B2 negative)
with a majority ownership by the US investment firm KKR. The
transaction is subject to certain closing conditions, including
regulatory approvals, its cash purchase price is EUR230.0 million
(approximately USD262.5 million), subject to customary working
capital adjustments, and it is expected to close by year-end 2017.
If successful, following closing of the transaction proceeds will
be used to repay CME's EUR250.8 million term loan due November
2018.
"The change in outlook to positive principally reflects the
material decrease in leverage to be effected by CME, should the
transaction complete, as well as its continued solid operating
performance expected over the next year," says Alejandro N£§ez, a
Moody's Vice President -- Senior Analyst and lead analyst for CME.
Moody's estimates that the company's Gross Debt/ EBITDA (Moody's-
adjusted) would have decreased to 5.7x on a pro-forma basis,
assuming the application of the transaction proceeds toward debt
reduction, from 6.9x (as at March 31, 2017).
RATINGS RATIONALE
CME's divestment announcement and, more importantly, its stated
intention to apply the full amount of the proceeds to repay debt
underscores CME's commitment to a significantly lower leverage
profile. CME's average cost of borrowing will also decline by 275
basis points, following the intended repayment of the 2018 term
loan, resulting in annual interest cost savings of at least USD30
million. Those savings would not only offset the Operating Income
Before Depreciation and Amortization (OIBDA) of CME's divested
Slovenian and Croatian assets but it would also be accretive to
CME's post-OIBDA margin and free cash flow (FCF). Aside from the
debt reduction resulting from the intended repayment of the 2018
term loan, Moody's anticipates that CME's improving FCF post
transaction will allow it to delever further and to exceed Moody's
credit metric parameters for the current B2 rating.
The divested broadcast operations comprise approximately 10% of
CME's total OIBDA and therefore Moody's does not regard the
disposal as materially increasing CME's business risk profile.
Post-transaction, CME will remain geographically diversified
within the Central and Eastern Europe (CEE) region with operations
across the Czech Republic (A1 stable), Romania (Baa3 stable),
Slovakia (A2 positive) and Bulgaria (Baa2 stable).
CME's B2 CFR continues to reflect: (1) the company's significant
progress in its operational and financial turnaround since early
2014, including reconfirming its position as a leader in its
advertising markets, and generating positive free cash flow in
2015 and 2016; (2) that Time Warner Inc. (Time Warner, Baa2
stable) has maintained a significant economic ownership in CME
since 2009 and extended further tangible support to CME; (3)
positive trends in CME's national advertising markets, which have
enabled deleveraging, and Moody's expectations that these markets
will be stable in the coming 12-18 months; and (4) the benefits
from refinancing transactions in February 2016 and March 2017
replacing CME's most expensive debt instruments, reducing interest
costs, extending the company's nearest maturing debt and reducing
foreign-exchange risk. However, the B2 CFR also considers: (1)
CME's high leverage (Moody's-adjusted) of 5.7x pro-forma for the
assets sale; (2) the company's historically volatile operating
performance, driven by the cyclical nature of its advertising-
dependent end-markets; and (3) modest foreign-exchange risk from
operations outside the euro area.
Moody's considers CME's liquidity position to be adequate for its
near-term operational and financing needs. As of March 31, 2017,
the company had cash and cash equivalents of USD91 million and
full access to a revolving credit facility of USD115 million.
However, Moody's note that this will reduce to USD50 million at
the earlier of the repayment of the 2018 loan and January 2018.
Following the repayment of CME's EUR250.8 million term loan due
November 2018, the company's next maturity will be its EUR235
million term loan due in November 2019.
RATIONALE FOR POSITIVE OUTLOOK
The positive outlook reflects the expected material decrease in
the company's financial debt and Moody's expectations of continued
operating momentum, which will bolster CME's key leverage and cash
flow coverage metrics over the next twelve months to levels toward
the stronger end of expected ranges for the current rating. The
positive outlook also anticipates that CME will not undertake any
material debt-financed acquisitions or shareholder distributions
while also assuming continued material support from Time Warner.
WHAT COULD CHANGE THE RATING UP / DOWN
Positive pressure on the rating could develop if CME's adjusted
gross debt/EBITDA (Moody's-adjusted) falls towards 5.0x and its
adjusted free cash flow/gross debt increases sustainably above 5%.
Conversely, downward pressure on the rating could develop if: (1)
CME's earnings or liquidity deteriorate; (2) its debt load
increases to the point that it is unable to generate sustainable
positive free cash flow; or (3) CME is unable to maintain leverage
(gross debt/EBITDA as adjusted by Moody's) below 7.0x. Any
indication that material support from Time Warner has weakened
would also negatively affect the rating.
The principal methodology used in these ratings was Media Industry
published in June 2017.
CME is a Bermuda-incorporated media and entertainment company. It
has broadcast operations in six CEE countries -- the Czech
Republic, Romania, Slovakia, Bulgaria, Slovenia and Croatia --
with an aggregate population of approximately 50 million people.
Launched in 1994, CME operates 36 television channels. For the
year ended December 31, 2016, the company reported net revenues of
$638 million and OIBDA of $150 million. CME's shares trade on the
NASDAQ stock market and the Prague Stock Exchange. Time Warner
(Baa2 stable), which owns a 47% voting interest and a 75% fully
diluted economic interest in CME, is the company's largest
shareholder.
===========
B R A Z I L
===========
BRASKEM SA: Moody's Puts Ba1 CFR Under Review for Downgrade
-----------------------------------------------------------
Moody's Investors Service has placed Braskem S.A. Ba1 corporate
family rating and the ratings on the foreign currency debt
issuances of Braskem Finance Ltd and Braskem America Finance
Company, fully guaranteed by Braskem S.A., under review for
downgrade.
Ratings Actions:
Issuer: Braskem S.A.
LT Corporate Family Rating, Placed Under Review for Downgrade,
currently Ba1
Issuer: Braskem America Finance Company
USD750 million GTD Global Senior Unsecured notes due 2041,
Placed Under Review for Downgrade, currently Ba1
Issuer: Braskem Finance Ltd
USD500 million GTD Global Senior Unsecured notes due 2018,
Placed Under Review for Downgrade, currently Ba1
USD750 million GTD Global Senior Unsecured notes due 2020,
Placed Under Review for Downgrade, currently Ba1
USD1000 million GTD Global Senior Unsecured notes due 2021,
Placed Under Review for Downgrade, currently Ba1
USD500 million GTD Global Senior Unsecured notes due 2022,
Placed Under Review for Downgrade, currently Ba1
USD750 million GTD Global Senior Unsecured notes due 2024,
Placed Under Review for Downgrade, currently Ba1
USD700 million GTD Global Senior Unsecured notes (perpetual),
Placed Under Review for Downgrade, currently Ba1
Outlook Actions:
Issuer: Braskem S.A:
-- Outlook, Changed To Under Review for Downgrade From Negative
Issuer: Braskem America Finance Company:
-- Outlook, Changed To Under Review for Downgrade From Negative
Issuer: Braskem Finance Ltd
-- Outlook, Changed To Under Review for Downgrade From Negative
RATINGS RATIONALE
The review for downgrade reflects the fact that Braskem has not
yet filed audited financial statements for fiscal-year 2016 and
Moody's concerns about potential liquidity pressures that could
arise as a consequence. Moody's acknowledges that the company is
working with its auditors to release these statements as soon as
possible.
On February 22, 2017, Braskem announced that it would postpone the
filing of audited financial statements related to the 2016 fiscal
year. The reason was the need for additional analysis of internal
processes and controls as a consequence of the conclusion of the
Global Settlement with authorities under the scope of the "Lava-
Jato" investigations announced on December 21, 2016. On March 28,
2017, Braskem announced that independent auditors had not yet
concluded their work regarding checks of internal processes and
controls, and once again postponed the filing of audited
financials.
Even though Braskem has released unaudited results for FY 2016 and
1Q17 on March 28 and May 15, respectively, the company is not in
compliance with CVM and SEC reporting regulations, as well as
under certain capital market debt agreements, which include the
release of audited annual statements by April 30, 2017. The SEC
has extended the filing deadline for the 20-F report until mid-
November 2017.
Extended delays in the release of audited annual financial
statements might lead bondholders to take actions that might lead
to a declaration of default, subject to a notification from the
holders of at least 25% of the principal amount outstanding for
each of the notes. If a declaration of default is received by the
company, Braskem has a 60-day grace period to publish audited
financial statements.
The review for downgrade will take into consideration: (a) the
ability of the company to publish audited financial statements
without any restrictions by independent auditors; and (b) material
changes to unaudited results released for FY 2016 and 1Q17.
Moody's aims to conclude the review within 90 days.
WHAT COULD CHANGE THE RATING UP / DOWN
Given the review for downgrade, Moody's believes an upgrade of the
Braskem's ratings is unlikely in the short term. Nevertheless, the
ratings could be confirmed if Braskem is able to address its near
term liquidity risks as a result of the non-publication of audited
financial statements, which also limits capital markets access.
Conversely, the ratings could be downgraded if Braskem remains
unable to file its audited financial statements. Furthermore, the
rating could be negatively affected if Braskem faces material
liabilities from litigations and class actions in addition to the
amount related to the Global Agreement signed in December 2016.
The principal methodology used in these ratings was Global
Chemical Industry Rating Methodology published in December 2013.
Braskem S.A. (Braskem) is the largest producer of thermoplastic
resins (Polyethylene, Polypropylene and Polyvinyl chloride) in the
Americas, with annual production capacity of 19 million tons.
Braskem also produces caustic soda, chlorine and basic
petrochemicals as ethylene, propylene, gasoline, among others. In
the LTM ended March 2017, Braskem reported consolidated net
revenues of BRL48.4 billion (USD14.7 billion).
COMPANHIA SIDERURGICA: Moody's Cuts Global Scale Rating to Caa2
---------------------------------------------------------------
Moody's America Latina has downgraded Companhia Siderurgica
Nacional S.A.-CSN's global scale rating to Caa2 from Caa1 and the
National Scale Rating (NSR) to Caa2.br from B3.br. The outlook
remains negative.
Ratings downgraded:
Issuer: Companhia Siderurgica Nacional S.A. - CSN
Corporate Family Rating (local currency): to Caa2 from Caa1 in
the global scale and to Caa2.br from B3.br in the national scale
The outlook for all ratings remains negative.
RATINGS RATIONALE
The downgrade reflects the tight liquidity position faced by CSN,
which is exacerbated by the fact that CSN has not yet filed
audited financial statements for fiscal-year 2016 and Moody's
concerns about potential liquidity pressures that could arise as a
consequence. Moody's acknowledges that the company is focusing on
actions that are under its control and working with its auditor to
release these statements over the next few months.
On March 27, 2017 CSN announced that it would postpone the filing
of audited financial statements related to the 2016 fiscal year.
The reason was the review of the accounting treatment determined
upon for the transaction carried out by CSN on November 30, 2015
for Congonhas MinÇrios, which resulted in the business combination
of mining and related logistics assets. This review will impact
the financial statements for the fiscal year ended on December 31,
2015, and will consequently impact the opening balances for 2016.
Even though CSN has released selected operating indicators for FY
2016 and 1Q17 on March 28 and May 15, respectively, the company is
not in compliance with CVM and SEC reporting regulations, as well
as under the terms of various debt agreements, which include the
provision of audited annual statements by March 31st and April
30th, 2017. CSN has been working with creditors which have
notified the company and has obtained waivers from them
accommodating the delay. An extended delay carries the risk that
creditors could take actions that lead to a declaration of
technical default, followed by payment acceleration after the
relevant cure period under the particular agreement. Besides, the
lack of audited financials limit the availability of adequate,
verified financial information to monitor the ratings.
The Caa2 ratings reflect primarily the challenges faced by CSN in
its key markets and segments and the likelihood that CSN's credit
metrics will slowly recover in the next 12 to 18 months, as well
as its unsustainable capital structure. Accordingly, the company
will need to rely either on asset sales, a capital increase or a
debt refinancing to reduce debt levels. Although Moody's believes
that the company is better-positioned than most of its global
peers to face the ups and downs of the cyclical steel industry
from an operational standpoint as a leading manufacturer of flat-
rolled steel in Brazil, with a favorable product mix focused on
value-added products, CSN's ratings are primarily constrained by
its weakened credit metrics, namely high leverage, low interest
coverage and deteriorated cash flow metrics. Still, Moody's
expects to see some improvement supported by a gradual recovery in
Brazil's steel industry and higher iron ore prices compared to the
low levels observed in late 2015/early 2016.
CSN had BRL5.4 billion in cash at the end of September 2016, and
BRL 5.1 billion at the end of March 2017. Although liquidity is
adequate to meet financial obligations during 2017 - about BRL 1.5
billion of debt amortizations, liquidity risk has increased, as
there are substantial debt amortizations from 2018 onwards.
Accordingly, CSN has BRL 5.6 billion in total debt amortizations
in 2018, BRL 7.2 billion in 2019 and BRL 8 billion in 2020,
including bank debt and bonds. The company announced in 2015 the
extension of BRL 2.57 billion of debt coming due in 2016 and 2017
with Caixa Economica Federal to 2018 through 2022, and BRL 2.2
billion of debt coming due in 2016 and 2017 with Banco do Brasil
to 2020 through 2022. These instruments will start to mature in
2018. Besides, CSN has USD1.95 billion in bonds maturing in 2019-
20. The company has been working with main creditors to address
those maturities and lengthen its amortization schedule, which, if
successful, will reduce the liquidity pressure. However, this
process may be delayed until CSN files audited financial
statements.
The negative outlook reflects Moody's expectations that market
conditions for steel producers in Brazil and iron ore producers
globally will remain challenging, with further risk to the
downside, and that credit metrics will likely remain pressured for
the next 12 to 18 months. The outlook also reflects the heightened
liquidity risks faced by CSN and its unsustainable capital
structure in a period of constrained cash flow generation.
The ratings could suffer additional negative pressure if the
company enters a debt restructuring process that entails
significant losses to creditors.
An upward rating movement would require CSN to adequate its
capital structure, with adjusted leverage trending towards 6.5x
total adjusted debt to Ebitda and interest coverage ratios
(measured by EBIT to Interest expenses) remain above 1.5x on a
sustainable basis. An adequate liquidity profile and operating
performance would be further considerations in a rating upgrade or
outlook change.
The principal methodology used in these ratings was Global Steel
Industry published in October 2012.
With an annual capacity of 7.1 million tons of crude steel,
Companhia Siderurgica Nacional ("CSN") is a vertically integrated,
low-cost producer of flat-rolled steel, including slabs, hot and
cold rolled steel, and a wide range of value-added steel products,
such as galvanized sheet and tinplate. In addition, the company
has downstream operations to produce customized products, pre-
painted steel and steel packaging. CSN sells its products to a
broad array of industries, including the automotive, capital
goods, packaging, construction and home appliance sectors. CSN
owns and operates cold rolling and galvanizing facilities in the
U.S. and Portugal, along with long steel assets in Germany through
its subsidiary Stahlwerk ThÅringen GmbH (SWT). The company also
has a long steel line (500,000 tons capacity) in the Volta Redonda
plant. Besides steel, CSN has operations in other segments, such
as iron ore, cement, logistics, port terminals and power
generation assets. CSN has not yet reported 2016 and 1Q17 audited
financial statements, but preliminary figures indicate revenues of
BRL 17.7 billion in the last twelve months ended March 2017
(USD5.4 billion).
CSN ISLANDS XI: Moody's Cuts Rating on US$750MM Notes to Caa2
-------------------------------------------------------------
Moody's Investors Service has downgraded to Caa2 from Caa1 the
foreign currency rating assigned to the senior unsecured notes of
CSN Islands XI Corporation, CSN Islands XII Corporation and CSN
Resources S.A. that are guaranteed by Companhia Siderurgica
Nacional (CSN). At the same time, Moody's America Latina
downgraded CSN's global scale rating to Caa2 from Caa1 and the
National Scale Rating (NSR) to Caa2.br from B3.br. The outlook
remains negative.
Ratings downgraded:
Issuer: CSN Islands XI Corporation
US$750 million 6.875% BACKED Senior Unsecured Notes Due 2019: to
Caa2 from Caa1
Issuer: CSN Islands XII Corporation (Cayman Islands)
US$1 billion 7.0% BACKED Senior Unsecured Perpetual Notes: to
Caa2 from Caa1
Issuer: CSN Resources S.A. (Luxembourg)
US$1.2 billion 6.5% BACKED Senior Unsecured Notes Due 2020: to
Caa2 from Caa1
The outlook for all ratings remains negative.
RATINGS RATIONALE
The downgrade reflects the tight liquidity position faced by CSN,
which is exacerbated by the fact that CSN has not yet filed
audited financial statements for fiscal-year 2016 and Moody's
concern about potential liquidity pressures that could arise as a
consequence. Moody's acknowledges that the company is focusing on
actions that are under its control and working with its auditor to
release these statements over the next few months.
On March 27, 2017, CSN announced that it would postpone the filing
of audited financial statements related to the 2016 fiscal year.
The reason was the review of the accounting treatment determined
upon for the transaction carried out by CSN on November 30, 2015
for Congonhas Minerios, which resulted in the business combination
of mining and related logistics assets. This review will impact
the financial statements for the fiscal year ended on December 31,
2015, and will consequently impact the opening balances for 2016.
Even though CSN has released selected operating indicators for FY
2016 and 1Q17 on March 28 and May 15, respectively, the company is
not in compliance with CVM and SEC reporting regulations, as well
as under the terms of various debt agreements, which include the
provision of audited annual statements by March 31 and April 30,
2017. CSN has been working with creditors, which have notified the
company and has obtained waivers from them accommodating the
delay. An extended delay carries the risk that creditors could
take actions that lead to a declaration of technical default,
followed by payment acceleration after the relevant cure period
under the particular agreement. Besides, the lack of audited
financials limit the availability of adequate, verified financial
information to monitor the ratings.
The Caa2 ratings reflect primarily the challenges faced by CSN in
its key markets and segments and the likelihood that CSN's credit
metrics will slowly recover in the next 12 to 18 months, as well
as its unsustainable capital structure. Accordingly, the company
will need to rely either on asset sales, a capital increase or a
debt refinancing to reduce debt levels. Although Moody's believes
that the company is better-positioned than most of its global
peers to face the ups and downs of the cyclical steel industry
from an operational standpoint as a leading manufacturer of flat-
rolled steel in Brazil, with a favorable product mix focused on
value-added products, CSN's ratings are primarily constrained by
its weakened credit metrics, namely high leverage, low interest
coverage and deteriorated cash flow metrics. Still, Moody's
expects to see some improvement supported by a gradual recovery in
Brazil's steel industry and higher iron ore prices compared to the
low levels observed in late 2015/early 2016.
CSN had BRL5.4 billion in cash at the end of September 2016, and
BRL 5.1 billion at the end of March 2017. Although liquidity is
adequate to meet financial obligations during 2017 - about BRL 1.5
billion of debt amortizations, liquidity risk has increased, as
there are substantial debt amortizations from 2018 onwards.
Accordingly, CSN has BRL 5.6 billion in total debt amortizations
in 2018, BRL 7.2 billion in 2019 and BRL 8 billion in 2020,
including bank debt and bonds. The company announced in 2015 the
extension of BRL 2.57 billion of debt coming due in 2016 and 2017
with Caixa Economica Federal to 2018 through 2022, and BRL 2.2
billion of debt coming due in 2016 and 2017 with Banco do Brasil
to 2020 through 2022. These instruments will start to mature in
2018. Besides, CSN has USD1.95 billion in bonds maturing in 2019-
20. The company has been working with main creditors to address
those maturities and lengthen its amortization schedule, which, if
successful, will reduce the liquidity pressure. However, this
process may be delayed until CSN files audited financial
statements.
The negative outlook reflects Moody's expectations that market
conditions for steel producers in Brazil and iron ore producers
globally will remain challenging, with further risk to the
downside, and that credit metrics will likely remain pressured for
the next 12 to 18 months. The outlook also reflects the heightened
liquidity risks faced by CSN and its unsustainable capital
structure in a period of constrained cash flow generation.
The ratings could suffer additional negative pressure if the
company enters a debt restructuring process that entails
significant losses to creditors.
An upward rating movement would require CSN to adequate its
capital structure, with adjusted leverage trending towards 6.5x
total adjusted debt to Ebitda and interest coverage ratios
(measured by EBIT to Interest expenses) remain above 1.5x on a
sustainable basis. An adequate liquidity profile and operating
performance would be further considerations in a rating upgrade or
outlook change.
The principal methodology used in these ratings was Global Steel
Industry published in October 2012.
With an annual capacity of 7.1 million tons of crude steel,
Companhia Siderurgica Nacional ("CSN") is a vertically integrated,
low-cost producer of flat-rolled steel, including slabs, hot and
cold rolled steel, and a wide range of value-added steel products,
such as galvanized sheet and tinplate. In addition, the company
has downstream operations to produce customized products, pre-
painted steel and steel packaging. CSN sells its products to a
broad array of industries, including the automotive, capital
goods, packaging, construction and home appliance sectors. CSN
owns and operates cold rolling and galvanizing facilities in the
U.S. and Portugal, along with long steel assets in Germany through
its subsidiary Stahlwerk Thuringen GmbH (SWT). The company also
has a long steel line (500,000 tons capacity) in the Volta Redonda
plant. Besides steel, CSN has operations in other segments, such
as iron ore, cement, logistics, port terminals and power
generation assets. CSN has not yet reported 2016 and 1Q17 audited
financial statements, but preliminary figures indicate revenues of
BRL 17.7 billion in the last twelve months ended March 2017
(USD5.4 billion).
===============
C O L O M B I A
===============
COLOMBIA: Seeks Renewed Relations With Cuba
-------------------------------------------
EFE News reports that Colombian President Juan Manuel Santos
started Monday an official visit to Cuba with an eye on
relaunching bilateral relations, with particular emphasis on
economic opportunities.
At the inauguration in Havana of a business forum of Cuban and
Colombian companies, Santos said that "Colombia is very interested
in investing here in Cuba, according to EFE News. For years,
Colombia has encouraged Colombians to invest abroad, and the
region where we have been most active is the Caribbean and Central
America," the report notes.
As reported in the Troubled Company Reporter-Latin America on
July 13, 2017, Colombia's creditworthiness could be pressured if
growth is lower than expected and higher fiscal deficits undermine
efforts to stabilize and gradually reduce the government's debt
burden, Fitch Ratings says.
CREDIVALORES-CREDISERVICIOS: Fitch Assigns B+ First Time IDR
------------------------------------------------------------
Fitch Ratings has assigned a first-time Long-Term Foreign Currency
Issuer Default Rating (IDR) of 'B+' and a Short-Term Foreign
Currency IDR of 'B' to Credivalores-Crediservicios S.A.S.
(Credivalores). The Rating Outlook is Stable.
KEY RATING DRIVERS
Credivalores' IDRs are highly influenced by the company profile
and asset quality metrics. The ratings also consider the company's
risk appetite, financial performance, funding profile and
capitalization.
Fitch recognizes Credivalores' long track record over the past 14
years of building its franchise throughout Colombia into the
largest non-bank financial institution whose business model
focuses primarily in the payroll-deductible lending business
(Libranza) segment while also growing its other main sources of
revenue through credit card lending and the financing of insurance
products. Despite Credivalores' strong position in the competitive
payroll and credit card industry, the company's focus on consumer
lending to low and middle income segments of the population and
limited market share in the overall financial system constrains
its ratings as its less diverse retail business model and limited
pricing power (due to regulatory interest rate caps on what
payroll lenders can charge) could increase the entity's
vulnerability to external factors and the operating environment.
With an impaired loan ratio averaging about 11% since 2014, asset
quality compares below its regional peers (sub-investment grade
finance and leasing companies). Nevertheless, the higher ratio is,
in part, to CV's policy of minimize write-offs even though
impaired loans over 360 days are fully provisioned. When adjusting
for Credivalores' policy of minimizing write-offs and the impact
of previous loan portfolio sales, the entity's loan quality ratios
are in-line with those of its Latin American peers and with local
Colombian peers. When excluding the non-performing loans (NPL)
over 360 days that are fully provisioned, the over-60 day NPL
ratio at Dec. 31, 2016 would be 3.43%.
Profitability, capitalization, funding and liquidity metrics are
adequate for the company's rating level in light of its consumer
sector concentration. Credivalores' profitability ratios have
recently been constrained when compared to peers in part by higher
interest rates for its funding , lower revenues following the
discontinuation of portfolio sales and the lower risk appetite
during the second half of 2016 during the 'Libranza Crisis'.
Additionally, higher provisioning expenses also weigh on
profitability. The rating also considers Credivalores' relatively
small capital base in absolute terms, however, this is mitigated
in part by Credivalores' ability access to multiple sources of
liquidity and funding both from its shareholders and from well-
known domestic and foreign lending institutions.
Fitch expects Credivalores financial performance to improve over
the medium term as the company's strategy is to continue to focus
on regions where there is less competition and to use its agility
and technological investments to provide a service level that
makes Credivalores' services attractive when compared to its
larger competitors. Over the medium term, the company also expects
to replace the lost revenues from portfolio sales with interest
income generated by the larger balance sheet along with higher fee
income. These factors are likely to result in a sustained
improvement in profitability although this is subject to the
strength of the operating environment, degree of competition and
unforeseen events.
RATING SENSITIVITIES
Credivalore's IDRs are sensitive, in general, to relevant changes
in its company profile and its credit metrics. Specifically, an
improvement in Credivalores' profitability that leads to
stabilization of pre-tax income to average assets greater than
1.5% could be positive for the company's long-term IDR. A
sustained deterioration in asset quality that reduces the
company's ability to absorb unexpected losses could be negative
for its ratings.
Fitch has assigned the following ratings:
Credivalores
-- Long-term IDR 'B+'; Outlook Stable;
-- Short-term IDR 'B'.
=============
J A M A I C A
=============
JAMAICA: Higher Food Prices Due to Flood Rains to Affect Inflation
------------------------------------------------------------------
RJR News reports that higher food prices triggered by the recent
flood rains are likely to affect inflation this month and August.
The Bank of Jamaica's short-term inflation analysis and forecast,
which was released, shows that inflation this month is expected to
mainly reflect higher prices for food and non-alcoholic beverages
as well as transportation, according to RJR News.
It said this is as a result of an increase in non-processed food
due to the impact of the flood rains on food prices and higher
petrol rates, the report notes.
Inflation in August is anticipated to primarily reflect increases
in food and non-alcoholic beverages as well as housing, water,
electricity and gas, the report notes. This has been linked to
expected increases in non-processed food prices and electricity
rates, the report relays.
Additionally, the Bank of Jamaica says inflationary impulses
should reflect a rise in seasonal demand associated with holidays
and back to school preparation, the report notes.
Inflation for the current fiscal year is forecast to fall within
the target range of four to six per cent, 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'.
=======
P E R U
=======
INKIA ENERGY: S&P Affirms BB CCR, Cuts Issue-Level Rating to BB-
----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' corporate credit rating on
Inkia Energy Ltd. At the same, we lowered issue-level ratings to
'BB-' from 'BB'. The outlook remains stable.
S&P said, "The corporate credit rating affirmation reflects our
expectation that the company's consolidated debt to EBITDA will
converge to 4x in the next two years, despite its peak at 5.9x as
of Dec. 31, 2016. In our view, Inkia's leverage should decrease to
a level that's still in line with an aggressive financial risk
profile, considering that its 545 megawatt (MW) hydroelectric
project, Cerro del Aguila, is still in its ramp-up phase."
As part of a strategy to optimize and diversify operations, Inkia
has approved the merger of the non-recourse financed Cerro del
Aguila with the 1,063 MW thermoelectric power plant, Kallpa
Generacion S.A. (not rated). S&P said, "In our view, Inkia could
achieve operational benefits through the merger given that the
balanced portfolio of hydro and thermal assets would allow the
company to mitigate the effects of seasonality on the
hydroelectric power generation business. The merger process is
currently in a 45-day waiting period until Aug. 8, 2017, during
which creditors of the two companies may lodge a complaint. Given
that the transaction should close in the short-term, we now
incorporate Cerro del Aguila's figures in our analysis of Inkia.
In the past, we used to deconsolidate Cerro del Aguila's debt for
analytical purposes, considering its non-recourse nature. The
consolidation of Cerro del Aguila weighed on Inkia's consolidated
metrics in 2016, considering that the subsidiary generated an
EBITDA of $30 million, while its financial debt was $593 million.
In 2017 and 2018, once the company is fully operational, we expect
Cerro del Aguila's EBITDA to increase close to $55 million and
$100 million, respectively."
The lower issue-level ratings reflect the structural subordination
of Inkia's $448 million senior unsecured debt in relation to the
subsidiaries' financial and operating obligations, which reach up
to $1,759 million, including Cerro del Aguila. In S&P's view,
although Inkia benefits from geographic and business
diversification, it's not sufficient to entirely mitigate the
structural subordination.
Inkia was incorporated in Bermuda in June 2007 as a special
purpose vehicle to acquire the power generation assets, property
of Globeleq Americas Ltd. in Latin America and the Caribbean. The
company is focused on expanding its asset base to further
consolidate itself as an energy conglomerate with a regional
footprint. Inkia has constructed and acquired more than 10 assets
in the generation segment, mainly in Peru, Chile, and the
Caribbean, increasing its capacity to 3,487 MW as of December 2016
from 549 MW of 2007, including all non-recourse financed projects.
The company sells about 85% of the energy its subsidiaries
generate to distribution companies and unregulated consumers under
long-term PPAs, and to a lesser extent to the spot market. Fuel
types include natural gas, hydroelectric resources, diesel, heavy
fuel oil, and just 2% of renewable through wind energy.
S&P said, "The stable outlook incorporates our expectation that
Inkia will generate an EBITDA in a range of $450-$500 million in
the next two years; its volatility should be low due to its
contractual base. Around 85% of its generation is contracted under
long term PPAs, and the distribution business benefits from highly
predictable payments. Our base case scenario considers that Inkia
will report a consolidated debt to EBITDA ratio of around 4x and
EBITDA interest coverage higher than 3x, including a conservative
level of investments of $150 million per year.
"We could lower the ratings, in the next two years if the
company's financial performance deteriorates, for example, due to
a sharp fall in EBITDA that could stem from lower efficiency
levels or from higher-than-expected exposure to the spot market,
or if higher-than-expected levels of debt result in adjusted debt
to EBITDA greater than 5x or EBITDA interest coverage lower than
2x."
A potential upgrade would depend mainly on an improvement in main
credit metrics, for example, if adjusted debt to EBITDA drops
below 4x, EBITDA interest coverage remains higher than 3x and FFO
to debt surpasses 20% in a consistent manner in the next two
years.
======================
P U E R T O R I C O
======================
INMOBILIARIA LEGUISAMO: Triangle Reo Won't Get Paid Under Plan
--------------------------------------------------------------
Inmobiliaria Leguisamo Inc. filed with the U.S. Bankruptcy Court
for the District of Puerto Rico an amended disclosure statement
dated July 5, 2017, referring to the Debtor's plan of
reorganization.
Class 4 Unsecured Claims include:
a. Triangle Reo PR Corp - unsecured portion of claim No.1
in the amount of $2,151,806.92. This claim will receive
no distribution as per liquidation value is zero.
b. CRIM - unsecured portion of claim No. 2, filed on
June 20, 2016, in the amount of $465.41. The Debtor will
be paid pro rata payment monthly during the life of the
Plan for five years.
This class is impaired.
The funds to execute the plan will be obtained from revenue of the
business operations.
The Amended Disclosure Statement is available at:
http://bankrupt.com/misc/prb16-00123-179.pdf
About Inmobiliaria Leguisamo
Inmobiliaria Leguisamo Inc. owns a commercial building in
Mayaguez, Puerto Rico.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D.P.R. Case No. 16-00123) on Jan. 13, 2016. The
Debtor is represented by Nydia Gonzalez Ortiz, Esq., at Santiago &
Gonzalez Law, LLC.
PANADERIA Y REPOSTERIA: Hires J. I. Rivera Gonzales as Accountant
-----------------------------------------------------------------
Panaderia Y Reposteria Pontevedra, Inc., seeks authorization from
the U.S. Bankruptcy Court for the District of Puerto Rico to
employ Jacqueline I. Rivera Gonzales as accountant.
The Debtor requires the Accountant to:
a. close its book as of the date of the filing of this
case, and open new books as of the next day thereafter;
b. prepare the periodic statements of its operations as
required by there of the court; and
c. prepare and file its state and federal tax return
every month quarter and/or every year (IVU, 941PR,
SUTA,SINOT, FUTA, RETAINERS, etc), including the electronic
payments as required;
d. prepare the General Ledger and Disbursement Register;
e. reconcile the account;
f. prepare Interim Financial Statements for each semester and
Certified Financial Statements for each tax return to be
submitted every year on or before April 14th;
g. provide tax and management counseling;
h. represent in taxes investigations;
i. prepare weekly payroll;
j. prepare bank reconciliations;
k. distribute income and expenses of the corporation
accordingly; and
l. prepare monthly operating reports to be submitted on or
before the 20th of each month.
The Accountant will bill on the basis of $350 monthly. The
Accountant will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Jacqueline I. Rivera Gonzales, CPA, 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 Debtor and its estates.
The Accountant may be reached at:
Jacqueline I. Rivera Gonzales, CPA
PO BOX 9074
Ponce, PR 00732
Tel: 787-843-1679
Fax: 787-812-0187
E-mail: Holyrivera@gmail.com
About Panaderia Y Reposteria
Panaderia Y Reposteria Pontevedra Inc. sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 17-
01280) on February 27, 2017. The petition was signed by Carlos R.
Rodriguez Torres, president.
At the time of the filing, the Debtor estimated assets of less
than $500,000 and liabilities of less than $1 million.
The Debtor hired Modesto Bigas Law Office as counsel.
================================
T R I N I D A D & T O B A G O
================================
TRINIDAD GUARDIAN: Chairman Dismisses Job Cut Rumors
----------------------------------------------------
Sasha Harrinanan at Trinidad and Tobago Newsday reports that
rumors of impending job cuts at the Trinidad Guardian newspaper
were dismissed by Chairman and CEO of the ANSA McAl Group of
Companies (ANSA McAl), A. Norman Sabga. The newspaper is a
division of Guardian Media Limited (GML), one of the companies
owned by ANSA McAl, according to Trinidad and Tobago Newsday.
"We've put in a new IT (Information Technology) system, which I
believe has gone into certain media houses, which automates the
procedure and the planning of the paper. Based on that, it
streamlines the operations and there's been some cuts there.
Beyond that I have not been told about any further cuts," Mr.
Sabga told reporters, the report notes.
Asked again about job cuts at Guardian, including several persons
in the sub-editing and archives departments, the ANSA McAl
chairman reiterated that he knew nothing of the sort, the report
relays.
"I didn't say there were cuts coming. You (reporter) said there
were cuts coming. I said that the cuts have happened and I am not
aware that there are further cuts on the horizon," Mr. Sabga
declared, the report relays.
The report discloses that GML's unaudited accounts for the
ninemonth period ended September 30, 2016, recorded a sharp drop
in profit before tax (PBT) compared to the previous year. The
company's PBT as of the third quarter (Q3) of 2016 was TT $7.8
million, a significant drop from the $36.7 million GML earned in
PBT for the same period in 2015, the report relays. The company
also reported a drop in generated revenue, down from $159.6
million last year to $119.4 million as of Q3 in 2016, the report
says. Without making specific reference to the above financial
data, Mr. Sabga said, "It has been a rough year for (GML) and our
expenses have jumped significantly." He then called on GML's staff
to work with management to improve the company's performance, he
added.
"We do need to look at the organization, to rally the troops to do
more, to do better. Understand that we are in a difficult period
and call on our staff to help us weather this storm and to
continue to improve the organization going forward," the report
relays. Asked by Newsday what expenses he was referring to, Mr.
Sabga replied, "The majority is people. The headcount swole (SI
C) significantly in the last three or four years," the report
adds.
=================
V E N E Z U E L A
=================
VENEZUELA: Opposition Plans Parallel Government
-----------------------------------------------
Kejal Vyas and Anatoly Kurmanaev at The Wall Street Journal report
that Venezuelan President Nicolas Maduro came under growing
pressure Monday as the opposition announced plans for a parallel
government and U.S. President Donald Trump warned of sanctions if
his government moves ahead with plans to rewrite the constitution.
"It's time for the zero hour," the vice president of congress,
Freddy Guevara, said at a news conference flanked by other foes of
Mr. Maduro, according to The Wall Street Journal.
The report notes that Mr. Guevara called for a 24-hour strike on
Thursday, a day before lawmakers in the opposition-controlled
National Assembly are scheduled to name replacements for some of
the magistrates allied to Mr. Maduro on the country's top court.
The opposition's new strategy came as the Trump administration
said it would impose "swift economic actions" if Mr. Maduro goes
ahead with a planned election on July 30 to the constituent
assembly charged with rewriting the constitution, the report
relays.
"The United States will not stand by as Venezuela crumbles,"
President Trump said in a statement, the report discloses. The
president said Venezuelans' "strong and courageous actions
continue to be ignored by a bad leader who dreams of becoming a
dictator," the report notes.
People familiar with the discussions in the White House say the
administration has been pondering sanctioning Venezuela's state-
controlled oil company and its executives or taking an even
tougher measure, such as finding a way to curtail the oil revenues
on which Mr. Maduro's government depends, the report relays.
"My sense is there's an intensive review on a variety of options,"
said Michael Shifter, president of the Inter-American Dialogue, a
policy group in Washington that tracks Venezuela, the report
notes. "I wouldn't be surprised about discussions on very severe
measures against the Venezuelan government. If so, I hope they do
more good than harm," Mr. Shifter added.
The report notes that the Trump administration hasn't publicly
commented on the scope of its potential sanctions against
Venezuela.
More than 7.5 million Venezuelans at home and abroad cast ballots
on Sunday in an unofficial plebiscite organized by the opposition
to serve as a mass repudiation of the unpopular Mr. Maduro's
efforts to create a constituent assembly on July 30 that would
redraft the constitution, the report relays. The opposition,
along with international human-rights groups and several
governments, say the move is an attempt by the increasingly
authoritarian leader to seize more power and bypass elections, the
report says.
Voters were presented with three questions. More than 98% of
those who voted were against the government on the constitution
redo, urged the holding of general elections and demanded that the
military, which has helped Mr. Maduro by cracking down on
protesters during three months of deadly civil unrest, abide by
the law, the report notes.
Mr. Guevara and other opposition leaders said they were working to
create a "government of national unity," an alliance between
longtime government foes and dissidents from within Mr. Maduro's
ruling Socialist Party, the report discloses. Some formerly loyal
lieutenants in the government have openly broken with Mr. Maduro
recently, saying he rules in a dictatorial manner, the report
relays.
"This path that we're forced to take carries risk," opposition
lawmaker Juan Andres Mejia said, regarding the creation of
parallel institutions, the report notes. "This state of national
unity will not be recognized by everyone. The important thing is
for it to be recognized by the people," he added.
Mr. Maduro has alleged that all actions by the opposition amount
to an effort to dislodge him undemocratically, the report says.
His rivals are calling for immediate general elections that polls
show the president and his allies would lose, the report relays.
The country is racked by sky-high inflation, chronic food
shortages, rampant crime and an economy in contraction, making the
government unpopular with four out of five Venezuelans, recent
polls said, the report notes.
The report relays that the turnout in Sunday's unofficial
plebiscite was below the 7.7 million votes that put the opposition
in control of congress in 2015. But organized with scant
resources and without the support of state electoral authorities,
the vote still provided a boost for the opposition as pressure
mounts on Mr. Maduro to resolve Venezuela's debilitating economic
and political crisis, the report notes.
Farmers and business leaders expressed cautious support for the
opposition's call for the strike, the report discloses.
Gabriela Lopez, a manicurist from a working class Caracas
neighborhood of Catia, said business has fallen so much at her
nail salon that it is almost not worth her showing up, the report
notes. "You might as well go on strike, if it gives any chance of
getting rid of this government," she said, the report relays.
The report discloses that Francisco Martinez, head of Venezuela's
powerful business lobby, Fedecamaras, said members would be
permitted to join the strike call. Celso Fantinel, vice president
of Venezuela's agriculture association, Fedeagro, which grows
about 75% of local crops, said that while not all farmers could
abandon planting season, "we will come out to protest and to
support the opposition," the report relays.
The report notes that threats of a strike have had mixed results
for detractors of Venezuela's ruling Socialist Party. In 2003,
Mr. Maduro's mentor and predecessor, the late Hugo Ch†vez,
defeated a monthslong strike called by the opposition and
Fedecameras, an event that polarized the nation and paved the way
for the government to radicalize its leftist revolution, the
report recalls.
But with the Maduro administration now in dire financial straits
and with record-low approval amid allegations of corruption and
mismanagement, both the government and the opposition are raising
the ante, the report notes.
If Mr. Maduro does go ahead with the new assembly, "it will
represent a new apex in the country's ongoing political crisis,"
said Risa Grais-Targow, a Washington-based analyst at the
consulting firm Eurasia Group, the report says. Any such
institution would have limited backing and be inherently unstable,
likely increasing street protests, she said, the report adds.
"The country is on an inevitable path to a negotiated transition
that prompts real regime change," Ms. Grais-Targow said, the
report says.
As reported on Troubled Company Reporter-Latin America on July 13,
2017, S&P Global Ratings lowered its long-term foreign and local
currency sovereign credit ratings on the Bolivarian Republic of
Venezuela to 'CCC-' from 'CCC'. The outlook on the long-term
ratings is negative. S&P said, "We affirmed our 'C' short-term
foreign and local currency sovereign ratings. In addition, we
lowered our transfer and convertibility assessment on the
sovereign to 'CCC-' from 'CCC'."
VENEZUELA: Investors Preparing for End Game Look to Cheapest Bonds
------------------------------------------------------------------
Christine Jenkins at Bloomberg News reports that with political
and social tension in Venezuela on the rise, investors should
prepare for the "end game" by seeking out the country's lowest-
priced debt, according to Deutsche Bank AG.
The cheapest bonds -- which generally carry longer maturities --
will provide the best return in a scenario under which Venezuela
defaults and is forced to restructure, Hongtao Jiang, a strategist
at the bank, wrote in a report, according to Bloomberg News. The
report notes that Mr. Jiang said while he doesn't expect Venezuela
to stop payments this year, it's a possibility that bond buyers
need to be prepared for.
"Severe financing stress and increasing difficulty in raising
fresh money have pushed Venezuela significantly closer to the
edge," the report quoted Mr. Jiang as saying. "More and more
investors have begun to engage with us recently in discussing
potential restructuring scenarios," Mr. Jiang added.
Bloomberg News relays that four months of organized protests
against President Nicolas Maduro's administration have left almost
100 people dead, and demonstrations continue against the
government's plans to rewrite the constitution and give more power
to the presidency. Almost 7.2 million Venezuelans lined up for a
symbolic vote of dissent, Bloomberg News relays. Foreign reserves
have fallen to levels not seen in 15 years amid low oil prices and
a collapse in the domestic economy, Bloomberg News says.
Bloomberg News notes that Mr. Jiang recommends Venezuela
government bonds due in 2025 and 2038, as well as notes from the
state oil company that mature in 2020, 2027 and 2037.
A restructuring would likely entail a substantial haircut to the
nominal amount and delayed repayment, but current investors won't
necessarily see a substantial loss except for the high-priced
bonds with shorter maturities, Deutsche Bank said, Bloomberg News
relays. The recovery value could be 43 cents on the dollar for
sovereign debt and 35 cents for the oil company's bonds, Bloomberg
News adds.
As reported on Troubled Company Reporter-Latin America on July 13,
2017, S&P Global Ratings lowered its long-term foreign and local
currency sovereign credit ratings on the Bolivarian Republic of
Venezuela to 'CCC-' from 'CCC'. The outlook on the long-term
ratings is negative. S&P said, "We affirmed our 'C' short-term
foreign and local currency sovereign ratings. In addition, we
lowered our transfer and convertibility assessment on the
sovereign to 'CCC-' from 'CCC'."
***********
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.
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