/raid1/www/Hosts/bankrupt/TCRLA_Public/170724.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
Monday, July 24, 2017, Vol. 18, No. 145
Headlines
A R G E N T I N A
YPF SA: Fitch to Rate Proposed Sr. Unsecured Bond Issue 'B/RR4'
B R A Z I L
BRAZIL: Main Business Lobby Blasts Hike in Fuel Tax
JSL SA: Fitch Keeps BB Rating to Proposed US$325MM Notes
MASISA SA: Fitch Affirms B+ IDR; Outlook Negative
OI SA: Board Approves $2.5 Billion Capital Raise Plan
SAO PAULO: Fitch Affirms BB Long-Term IDR on Strong Economy
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Moody's Hikes LT Issuer Rating to Ba3
J A M A I C A
SANDALS RESORTS: Asks Wall Street for Help to Finance New Hotels
M E X I C O
BANCO ATLANTIDA: S&P Assigns 'BB-' Issuer Credit Ratings
INVERSIONES ATLANTIDA: S&P Raises ICR & Sr. Notes Rating to 'B+'
N I C A R A G U A
NICARAGUA: Moody's Affirms B2 Issuer Ratings; Outlook Positive
P U E R T O R I C O
AES PUERTO RICO: PREPA Downgrade No Impact on Fitch's C Rating
BAILEY'S EXPRESS: Wants to Use Bankwell Bank's Cash Collateral
EMPLOYEES RETIREMENT: Fitch Lowers Rating on Pension Bonds to D
MINI MASTER: Disclosure Statement Hearing Set for Sept. 13
SHORT BARK: Has Interim OK to Obtain DIP Financing & Use Cash
T R I N I D A D & T O B A G O
TRINIDAD & TOBAGO: Peg Oil at US$40
TRINIDAD & TOBAGO: One-Cent Coin Demonetization Underway
X X X X X X X X X
* BOND PRICING: For the Week From July 17 to July 21, 2017
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A R G E N T I N A
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YPF SA: Fitch to Rate Proposed Sr. Unsecured Bond Issue 'B/RR4'
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Fitch Ratings expects to assign a rating of 'B(EXP)/RR4' to YPF
S.A.'s (YPF) proposed senior unsecured bond issuance of up to
USD750 million notes due 2027. The company expects to use the
proceeds to fund capital investments in Argentina and working
capital requirements. The notes will rank pari passu in priority
of payment with all other YPF senior unsecured debt. The notes
would be rated the same as all of YPF's senior unsecured
obligations.
YPF's ratings reflect its strong linkage with the credit quality
of the Republic of Argentina and the company's relatively low
reserve life. YPF's 'B' Long-term ratings are linked to
Argentina's sovereign rating, which has Long-term Local (LC) and
Foreign Currency (FC) Issuer Default Rating (IDRs) of 'B'/ Stable
Outlook.
Fitch has assigned a country ceiling of 'B' to the Republic of
Argentina, which limits the foreign currency rating of most
Argentine corporates. Country Ceilings are designed to reflect the
risks associated with sovereigns placing restrictions on private
sector corporates, which may prevent them from converting LC to
any FC under a stress scenario, and/or may not allow the transfer
of FC abroad to service FC debt obligations.
The 'RR4' Recovery Rating for the company's senior unsecured notes
outstanding reflects an average expected recovery given default
and is in line with the RR soft cap established for Argentine
corporates.
KEY RATING DRIVERS
LINKAGE TO SOVEREIGN: YPF's ratings reflect the close linkage with
the Republic of Argentina resulting from the company's ownership
structure as well as recent government interventions. The Republic
of Argentina controls the company through its 51% participation
after it nationalized the company on April 2012. Following this
action, the company's strategy and business decisions are governed
by the Republic. The Argentine government has a history of
significant interference in the oil and gas sector. Historically,
government regulations maintained domestic crude oil prices
significantly below world prices. These same regulations kept
Argentine crude oil prices above global prices during the global
oil price decline observed during the last two years. Fitch
expects oil domestic prices to converge to international prices by
the end of 2017.
FAVORABLE ENVIRONMENT FOR VACA MUERTA: Fitch believes the price
environment for natural gas (NG) in Argentina will remain
favorable and that subsidies should remain at least until 2020. On
January 2017, the Argentine government agreed to extend existing
natural gas (NG) subsidies. Domestic prices for NG will remain
high at USD7.5 per million Btu (MMBtu) for new production, more
than twice the NG prices in the U.S. The Argentine government
attempts to attract major oil and gas companies to invest in
exploration and production in Argentina's prolific Vaca Muerta
shale basin.
LOW HYDROCARBON RESERVE LIFE: The ratings consider the company's
relatively weak operating metrics characterized by a low reserve
life. As of year-end 2016, YPF reported proved reserves (1P) of
1,113 million barrels of oil equivalent (boe) and average
production of 577,000 boe per day (boe/d) with 52% of the
production related to liquids. In 2016, proved developed reserves
totaled 815 mmboe, representing 73% of total reserves, in the
upper range of the 60% to 80% that Fitch considers adequate. In
2016 and after three years of reserve replacement ratios (RRR)
above 100%, 1P reserves decreased 9%.
The decline in domestic prices led YPF to reduce capex investments
during this year resulting in a RRR of 46%. Based on production
trends the company's reserve life is low at 5.3 years, well below
Fitch's ideal range of 10 years. Fitch believes the favorable
environment for NG prices in Argentina would incentivize
investments in the Neuquen basin that could result in an increase
in reserves, which would allow the company to maintain a five to
six year reserve life. Fitch believes YPF's low reserve life could
create significant operational challenges in the medium to long
term and gives the company limited flexibility to reduce capex
investments in order to increase upstream reserves/production.
YPF's ability to develop mature fields and non-conventional
resources will be key to the success of its long term investment
plan to maintain reserves and increase production.
STABLE OPERATING METRICS: As expected, output remained relatively
flat during 2016 with an average production of 575,000 boe/d. YPF
continued its intensive drilling program with a focus on non-
conventional formations, and the company's lifting cost decreased
to USD11per barrel from USD16 per barrel observed in 2015 due to
the depreciation of the Argentine peso and better terms with
suppliers. Additionally, during the 2016, YPF significantly
reduced the costs of drilling horizontal wells in Loma Campana to
USD8.2 million per well from USD13.6 million observed in 2015 and
USD16.6 million in 2014. These cost reductions mitigated the
decline in domestic prices. As oil prices converge to
international prices, Fitch expects the company to focus on
reducing costs to remain competitive
STRONG BUSINESS POSITION: Fitch expects the company to continue to
solidify its market leadership in Argentina. YPF benefits from a
strong business position supported by its vertically integrated
operations and dominant market presence in the Argentine
hydrocarbons' market. Fitch anticipates that YPF will continue to
exercise an active role in domestic fuel and gas supply. In the
downstream segment, where YPF enjoys a 55% market share of
domestic gasoline and diesel sales, the company benefits from
relatively high prices for refined products in Argentina.
STRONG FINANCIAL PROFILE: YPF maintains a strong financial
profile, which Fitch views as in line with a 'BB' on a standalone
basis. YPF has relatively solid credit protection metrics,
characterized by moderate leverage and a manageable debt
amortization schedule. The company reported approximately USD4.1
billion of adjusted EBITDA and USD9.5 billion of debt as of last
twelve months ended March 2017. This translates into a Fitch
calculated financial leverage ratio of approximately 2.3x. YPF's
leverage as measured by total proven reserves (1P) to total debt
is high at USD8.5 of debt per barrel of 1P.
MANAGEABLE CAPEX PLAN: YPF reduced its capex investments during
2016 as a result of lower prices and lower cash flow generation.
Capex investments for 2016 were approximately 36% lower in dollar
terms compared with 2015, mostly due to lower investments in the
upstream segment. Fitch expects the company to slightly reduce
capex investments during 2017. Nevertheless, despite the
reductions in capex investments during 2016 - 2017, Fitch expects
the company to continue with its initial ambitious capex program
to maintain stable production and increase production in the
following years.
DERIVATION SUMMARY
YPF's ratings are supported by its leading position in the
Argentine energy market and its strategic importance for the
country. The company's ratings are constrained by the credit
quality of the Republic of Argentina given that the government
controls the company through its 51% participation and its
strategy and business decisions are governed by the Republic.
YPF's 'B' ratings are linked to the sovereign rating of Argentina,
which has long-term LC and FC IDRs of 'B' with a Stable Outlook.
To a lesser degree, the ratings also reflect the company's weak
operating metrics reflected in a low reserve life of approximately
five years.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for YPF include:
-- Production remains flat during the rating period;
-- Realized oil prices of USD60/bbl for 2017, decreasing to mid-
USD50's by the end of 2017 as domestic prices converge to
international prices.
-- Fitch's oil price assumptions per barrel of Brent of USD
55/bbl for 2018, USD60/bbl for 2019 and USD65/bbl in the long
term;
-- Natural gas prices subsidies remain until 2020;
-- Capex slightly decreasing in 2017 and then increasing during
2018 - 2020.
RATING SENSITIVITIES
YPF's ratings could be negatively affected by a combination of the
following: a downgrade of the Republic of Argentina's ratings; a
significant deterioration of credit metrics; and/or the adoption
of adverse public policies that can affect the company's business
performance in any of its business segments.
A positive rating action could occur as the result of an upgrade
of the sovereign rating.
LIQUIDITY
YPF's cash and cash equivalents totaled USD1.23 billion as of
March 2017, which compares favorably with debt maturities of
USD1.4 billion due in 2017. The company's liquidity position is
further strengthened by the USD650 million government bonds (BONAR
2020) related to the 2015 Plan Gas receivables. The company's
liquidity position is considered adequate to cover its short-term
debt.
The company has been successful accessing the local and
international markets, and given that the company is controlled by
the Argentine government, Fitch does not anticipate any
difficulties for the company to tap the local or international
debt markets in order to refinance short-term debt.
FULL LIST OF RATING ACTIONS
Fitch currently rates YPF S.A. as follows:
-- Long-Term Foreign Currency IDR 'B'; Outlook Stable;
-- Long-Term Local Currency IDR 'B'; Outlook Stable;
-- Sr. Unsecured Notes 'B'/'RR4'.
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B R A Z I L
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BRAZIL: Main Business Lobby Blasts Hike in Fuel Tax
---------------------------------------------------
EFE News reports that the Sao Paulo State Federation of Industries
(Fiesp), Brazil's most influential employers' group, mounted a
protest on Friday against President Michel Temer's decision to
increase taxes on fuels.
The demonstration over the hike in levies on gasoline, diesel and
ethanol took the form of giant inflatable yellow ducks outside the
Fiesp headquarters on Avenida Paulista in the heart of Sao Paulo's
financial district, according to EFE News.
"We are outraged by the announcement of the rise in taxes on
fuels," Fiesp leader Paulo Skaf said in a statement, EFE News
cites. "It is harmful for society as a whole."
Temer's administration said that the hike was "absolutely
necessary to preserve austerity and to sustain the Brazilian
economy's course of recovery," the report relays.
The tax increase is expected to boost the price of gasoline at the
pump by 0.41 reais (13 cents) per liter, or roughly 52 cents a
gallon.
JSL SA: Fitch Keeps BB Rating to Proposed US$325MM Notes
--------------------------------------------------------
Fitch Ratings has assigned a 'BB(EXP)' rating to the proposed
USD325 million senior unsecured notes due in 2024 to be issued by
JSL Europe. JSL S.A (JSL) will unconditionally and irrevocably
guarantee the issuance. The bond will not be guaranteed by Movida
Participacoes S.A., JSL's 65.6% owned car rental subsidiary. This
subsidiary accounts for 26% of the company's consolidated EBITDA
and 19% of its debt.
Proceeds from these notes will be used for debt refinancing and
for general corporate purposes. Fitch currently rates JSL's Long-
Term Foreign and Local Currency Issuer Default Ratings (IDR)
'BB'/Stable Outlook.
JSL's ratings reflect its strong business profile, supported by a
leading position in the Brazilian logistics industry and
diversified portfolio of products. The company's cash flow
generation has been improving despite the recession in Brazil.
Fitch's base case scenario projects that JSL's leverage ratio, as
measured by FFO Adjusted Leverage, will remain below 2.5x in the
next two years. Fitch expects JSL to pursue managed growth for
Movida and does not incorporate material dividends from this
subsidiary in its projections.
KEY RATING DRIVERS
Prominent Market Position and Diversified Portfolio
JSL has a leading position in the Brazilian logistics industry
with a diversified portfolio of services with relevant presence in
multiple sectors of the economy. The company's services include:
supply chain management (38% of its gross revenue), car rental and
fleet management (33%), outsourcing of fleet and equipment (16%),
passenger transportation (8%) and general cargo transportation
(5%). JSL's strong market position, coupled with long-term
contracts for most of its revenues, minimizes its exposure to more
volatile economic cycles. The company's significant operating
scale has made it an important purchaser of light vehicles and
trucks, giving it a significant amount of bargaining power versus
other competitors in the industry.
Solid Operating Cash Flow Generation
JSL has been efficiently expanding its business profitability
while maintaining solid growth. The integration of its business
and cross-selling opportunities has supported gains of scale,
benefiting its operating margins. Between 2013 and the latest-12-
month period (LTM) ended March 31, 2017, JSL's net revenue
increased by 43%, to BRL6.8 billion. During the same period, the
company's EBITDA grew to BRL1.1 billion from BRL705 million while
its funds from operations (FFO) rose to BRL2.0 billion from BRL892
million.
More Rational Capex Growth to Alleviate FCF
BRL2.6 billion of gross capital expenditures led to a negative FCF
of BRL332 million during the LTM ended March 31, 2017.
FCF is expected to remain negative in the range of BRL100 million
to BRL200 million in the next two years. JSL has the flexibility
to improve FCF by reducing growth capex, as most of its capital
investments are geared toward increasing the size of its
fleet/equipment and are linked to specific contracts. Considering
only renewal capex, JSL's operating cash flow generation is
sufficient to support these investments. Excluding growth capex,
JSL generated BRL935 million of positive FCF during LTM March 31,
2017.
Moderate Leverage
JSL's leverage, as measured by FFO adjusted leverage, was 2.4x as
of LTM March 31, 2017. This FFO ratio is considered low for the
rating category. Fitch does not expect a material reduction in the
near term with leverage expected to be around 2.3x in 2017.
Fitch's calculation of EBITDA does not add-back the non-cash cost
of the vehicles sold. As a result, leverage as measured by EBITDA
is higher than leverage measured by FFO. In Fitch's base case,
JSL's net debt to EBITDA ratio will remain around 4.0x to 4.5x in
the next few years.
DERIVATION SUMMARY
Given the nature of its business, Fitch believes JSL has an above-
average ability versus its 'BB' rated peers to post free cash flow
(FCF) generation, given its flexibility to postpone capital
expenditures related to new vehicles. The company's relatively
higher leverage and weaker financial flexibility are key
differentiators to Localiza Rent a Car S.A (Long-term Foreign
Currency IDR BB+; Local Currency IDR 'BBB'; National Long-Term
Rating 'AAA(bra)').
KEY ASSUMPTIONS
-- Mid-single-digit revenue growth in 2017;
-- FFO margins at around 23%;
-- Net Capex at around BRL650 million in the next two years;
-- Cash balance remains sound compared to short-term debt;
-- Dividends at 25% net income;
-- No large-scale M&A activity.
RATING SENSITIVITIES
Positive: Future developments that could lead to a positive rating
action:
-- FFO Adjusted Net Leverage below 2.0x on a sustained basis;
-- FFO Margin above 27%, on a sustained basis;
-- Solid and consistent operating results from its retail rent a
car business (Movida).
Negative: Future developments that may, individually or
collectively, lead to a negative rating action:
-- FFO net adjusted leverage consistently above 3.0x;
-- Deterioration of sound liquidity compared to short-term debt,
leading to refinancing risk exposure.
-- Deterioration in Used Car Sale in Brazil and/or in the
coverage ratio fleet value-to-net value to below 1.0x;
-- Large debt-funded M&A acquisition or entering into a new
business in the logistics sector that adversely impacts JSL's
capital structure on a sustained basis or increases its
business risk exposure;
-- Secured debt relative to FFO above 2.0x could lead to a
downgrade of the unsecured debt.
LIQUIDITY
JSL's has a solid consolidated liquidity position, recently
benefited by the BRL506 million raised by Movida, which is not a
guarantor of the bond, during its recent IPO. On a consolidated
basis, JSL has BRL1.4 billion of cash and BRL1.6 billion of short-
term debt. Excluding Movida's cash and short-term debt, JSL's cash
relative to liquidity position is adequate with BRL867 million of
cash and BRL975 million of short-term debt.
Liquidity could easily be enhanced by debt that would be
collateralized by vehicles. The market value of the fleet managed
by JSL is BRL5.3 billion. Of this figure BRL2.3 billion relates to
vehicles held outside of Movida. Only 21% of the value of these
vehicles has been used as collateral for loans.
JSL has a recurring need for debt refinancing, since its debt
schedule amortization is still concentrated in the next three
years. Up until year-end 2018 JSL has BRL2.7 billion of debt
coming due (BRL1.8 billion excluding Movida).
As of March 31, 2017, JSL reported total debt of BRL6.3 billion
(BRL5.1 billion excluding Movida).
Currently, about 26% of JSL's debt is secured. The company's debt
profile is mainly composed of FINAME operations (20%), banking
credit lines (28%), debentures (24%), and leasing operations (6%).
FULL LIST OF RATING ACTIONS
Fitch rates JSL as follows:
JSL S.A.
-- Long-Term Foreign Currency IDR 'BB';
-- Long-Term Local currency IDR 'BB';
-- National Long-Term Rating 'AA-(bra)';
-- Local Debentures 'AA-(bra)'.
The Rating Outlook is Stable.
MASISA SA: Fitch Affirms B+ IDR; Outlook Negative
-------------------------------------------------
Fitch Ratings has affirmed the Foreign and Local Currency Issuer
Default Ratings (IDRs) of Masisa S.A. at 'B+' and National long-
term rating at 'BBB(cl)'. The Rating Outlook remains Negative.
KEY RATING DRIVERS
The affirmation of the ratings follows the announcement that
Masisa signed an agreement to sell its Argentine industrial unit
for USD155 million. The loss of EBITDA generation from Argentina
more than offsets the debt reduction with the proceeds from the
asset sale, and lower interest expenses. As a result, the
deleveraging impact of this sale will be limited. On a pro forma
basis, excluding only Argentina, net leverage would be 5.2x, or
6.2x excluding Venezuela. These numbers compare with 5.4x and
6.2x, respectively, during the LTM ended March 2017.
Masisa signed the agreement to sell the industrial business unit
of Masisa Argentina to EGGER Holzwerkstoffe GmbH (EGGER, Austria)
for USD155 million on July 17th. Proceeds will be used to reduce
the company's indebtedness. The transaction includes the sale of
about 280,000 m3 of MDF's annual production capacity, 165,000 m3
of particleboard, 274,000 m3 of melamine, and 74,000 m3 of MDF
mouldings.
The company also announced its intention to sell its industrial
assets in Mexico and Brazil. It will concentrate its business
strategy on value-added board products in the Andean Region,
Central America, the United States, Canada and other export
markets. Masisa believes it could generate more than USD500
million from these sales, including the USD155 million from
Argentina's operation, which is expected to be used to reduce
debt.
These asset sales would lower Masisa's leverage to more
conservative levels of 3x, or 4x excluding Venezuela. Negatively,
they would weaken the company's geographic diversification, making
it more susceptible to downturns in one market.
DERIVATION SUMMARY
Masisa has diversified operations in Latin America, with a
presence in Chile, Brazil, Mexico, Argentina and Venezuela. Masisa
is one of the largest producers of wood boards in Latin America,
with 3.5 million cubic meters of installed capacity of particle
boards, MDP and MDF and 691,000 cubic meters of sawn wood
installed capacity. Masisa is exposed to exchange controls in its
Venezuelan operations, although its operations are self-sufficient
in the country.
Masisa's main competitors are Brazil's Duratex (not rated), the
leader in the segment in Latin America, and the Chilean Celulose
Arauco ('BBB'/Negative Outlook). In Latin America, Masisa is the
second-largest player in terms of production capacity of boards,
while Arauco is the second-largest market pulp company in the
world. Among the Latin America forestry products companies, like
Celulosa Arauco, Empresas CMPC, Fibria, Suzano and Klabin, Masisa
is more exposed to the economic weakness in Latin America, and has
higher leverage and has a more limited liquidity position.
KEY ASSUMPTIONS
Fitch's key assumptions within its ratings case for the issuer
include:
- Sale of industrial assets in Argentina for USD155 million in
2017. Proceeds will be used to amortize debt.
- No impact on leverage ratios following the sale assets in
Argentina.
- Fitch did not consider the potential sale of industrial assets
in Mexico and Brazil.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
-- The conclusion of the divestitures of Argentina, Brazil and
Mexico, improving capital structure and reducing net
debt/recurring EBITDA, excluding Venezuela, to below 5.0x,
would likely result in a revision of the rating Outlook to
Stable.
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
-- Net debt/recurring EBITDA ratio, excluding Venezuela, above
7.0x.
LIQUIDITY
Masisa's liquidity position is manageable for operational purposes
with USD107 million of cash and equivalents, of which only USD0.5
million was held in Venezuela as of March 31, 2017, compared with
USD64 million as of Dec. 31, 2016. Masisa made a non-recurring
sale of non-core assets for USD62 million in 2016, which benefited
the company's liquidity.
In February 2017, Masisa disbursed a USD65 million long-term loan
in a Club Deal up to USD100 million due in five years. Proceeds
will be used to extend debt maturity profile, reducing refinancing
risk in the short term. As of March 31, 2017, Masisa had USD142
million of debt maturing up to end 2017 and USD59 million in 2018.
The company has higher debt maturities of USD258 million in 2019.
FULL LIST OF RATING ACTIONS
Fitch has affirmed the following ratings:
-- Long-Term Foreign and Local Currency IDRs at 'B+';
-- National scale rating of Bond Lines at 'BBB(cl)';
-- Long-term National Scale rating at 'BBB(cl)';
-- USD200 million senior unsecured 9.5% notes due 2019 at
'B+/RR4'; the notes are unconditionally guaranteed by Forestal
Tornagaleones and Masisa Forestal;
-- National Short-term rating at 'N2(cl)'.
-- National Equity rating at 'First Class Level 3(cl)'.
The Rating Outlook remains Negative.
OI SA: Board Approves $2.5 Billion Capital Raise Plan
-----------------------------------------------------
Tatiana Bautzer at Reuters reports that the board of Oi SA
approved a plan to raise BRL8 billion (US$2.5 billion) in fresh
capital from shareholders and investors as a way to accelerate the
Brazilian wireless carrier's emergence from bankruptcy.
In a statement, Oi said the terms of the capital raise will be
discussed with creditors and proceeds will be used to raise the
carrier's investments in broadband and wireless coverage,
according to Reuters.
Oi SA Chief Executive Officer Marco Schroeder said the capital
raise will allow a new cycle of investments and growth at Oi,
which filed for Brazil's largest bankruptcy protection a year ago,
the report notes.
Reuters first reported the capital hike plan on June 9, the report
adds.
About Oi SA
Headquartered in Rio de Janeiro, and operating almost exclusively
within Brazil, the Oi Group provides services like fixed-line data
transmission and network usage for phones, internet, and cable,
Wi-Fi hot-spots in public areas, and mobile phone and data
services, and employs approximately 142,000 direct and indirect
employees.
On June 20, 2016, pursuant to Brazilian Law No. 11.101/05 (the
"Brazilian Bankruptcy Law"), Oi S.A. and certain of its
subsidiaries filed for recuperas judicial (judicial
reorganization) in Brazil.
On June 21, 2016, OI SA and its affiliates Telemar Norte Leste
S.A. and Oi Brasil Holdings Cooperatief U.A. commenced Chapter 15
proceedings (Bankr. S.D.N.Y. Lead Case No. 16-11791). Ojas N.
Shah, as foreign representative, signed the petitions.
Coop and PTIF are also subject to proceedings in the Netherlands.
The Chapter 15 cases are assigned to Judge Sean H. Lane.
In the Chapter 15 cases, the Debtors are represented by John K.
Cunningham, Esq., and Mark P. Franke, Esq., at White & Case LLP,
in New York; and Jason N. Zakia, Esq., Richard S. Kebrdle, Esq.,
and Laura L. Femino, Esq., at White & Case LLP, in Miami, Florida.
On July 22, 2016, the New York Court recognized the Brazilian
Proceedings as foreign main proceedings with respect to the
Chapter 15 Debtors, and granted certain additional related relief.
SAO PAULO: Fitch Affirms BB Long-Term IDR on Strong Economy
-----------------------------------------------------------
Fitch Rating has affirmed the Long-Term Issuer Default Rating of
the Brazilian state of Sao Paulo (IDR) at 'BB'. The Outlook is
Negative, reflecting the Negative Outlook of the sovereign. The
ratings of Sao Paulo are capped by the Brazilian sovereign. Fitch
has also affirmed Sao Paulo's National long-term rating at
'AA(bra)'/Stable Outlook.
KEY RATING DRIVERS
The affirmation of the state of Sao Paulo's ratings reflects its
strong economy, which accounts for about one-third of the
Brazilian GDP. The ratings are based on an adequate fiscal
performance when compared to Brazilian state peers in the same
rating category with better fiscal autonomy. The ratings are also
underpinned by the fact that Sao Paulo's most important creditor
is the federal government.
Contrary to Fitch expectation, Sao Paulo has been able to sustain
operating margins close to 5%. In 2016, operating margins reached
6.2%. This reflects the state's ability to keep operating
expenditure under control even during severe economic conditions.
According to Fitch, the state should be able to generate margins
of around 5% until 2019, provided the national economy recovers.
Fitch expects Brazil to deliver mild economic growth in 2017
(0.5%), which should translate into 3.4% growth in the state's tax
collections. Fitch notes that the state benefits from above-
average fiscal autonomy, since tax collections represented 69.9%
of operating revenues in 2016. The prolonged economic recession in
the last four years has translated into a poor performance in tax
collections, especially for Sao Paulo, whose economy is more
influenced by the industrial sector, which accounts for 1/3 of the
state collected Imposto Sobre Circulacao de Mercadorias e Servicos
(ICMS) tax.
Given the reduction in credit approvals since 2015, Sao Paulo's
financial debt decreased in 2016. Direct debt over current balance
dropped to 3.6 years from 7.6 years registered in 2015, also
reflecting a lower amount of debt in foreign currency, which
corresponded to 6.5% of total debt (12.1% for the average of 27
Brazilian states).
Operating as a cash-based fund, the annual financial shortage of
the local pension system increased 7.1% in 2016 (6.3% official
inflation), reaching BRL17.110 billion, or 8.3% of the state's
operating revenues. Sao Paulo has not raised the contribution rate
of employees, which is currently at the equivalent of 11% of their
salaries. Fitch acknowledges that pension payments have formed a
significant portion of personnel expenditures (38.4% in 2016).
Fitch considers Sao Paulo's liquidity as adequate, with no short-
term concerns. There was a reduction in the amount of unpaid
commercial short-term liabilities to 5.3% of operating revenues in
2016 (8% in 2015). The short-term obligations are mainly composed
of personnel payments and investments. Outstanding cash of
BRL23.543 billion covered 69.9% of the state's obligations due in
2017.
RATING SENSITIVITIES
Rating Actions Linked to the Sovereign: Any rating action
affecting the Federative Republic of Brazil, currently rated
'BB'/Negative, will exert a direct impact on Sao Paulo's ratings.
Fiscal Performance and Debt: A significant and consistent
deterioration in operating margin coupled with a higher level of
financial debt expressed by a direct debt exceeding 10 years of
the current balance could generate negative pressure on Sao
Paulo's ratings.
KEY ASSUMPTIONS
-- Fitch assumes a higher level of sovereign support for Sao
Paulo in comparison to that apparently granted to other
Brazilian states even considering the weak institutional
framework, given that Sao Paulo's most relevant creditor and
guarantor is the federal government, in addition to the
state's prominent economic position in the country;
-- Fitch expects to see some progress on the government's
legislative agenda especially the items affecting subnationals
such as pension reform and additional federal debt relief.
The full list of rating actions is:
State of Sao Paulo:
-- Foreign Currency Long-Term IDR affirmed at 'BB'; Negative
Outlook;
-- Foreign Currency Short-Term IDR affirmed at 'B';
-- Local Currency Long-Term IDR affirmed at 'BB'; Negative
Outlook;
-- Local Currency Short-Term IDR affirmed at 'B';
-- National Long-term rating affirmed at 'AA(bra); Stable
Outlook;
-- National Short-term rating affirmed at 'F1+(bra)'.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Moody's Hikes LT Issuer Rating to Ba3
---------------------------------------------------------
Moody's Investors Service has upgraded the Dominican Republic's
long term issuer and debt ratings to Ba3 from B1 and changed the
outlook to stable from positive, based on the following key
drivers:
(1) The Dominican Republic's continued robust growth outlook
compared to rating peers, coupled with a reduction in
external risks as current account deficits have declined and
international reserves have increased.
(2) The reduction in fiscal deficits over the last four years and
Moody's expectation that fiscal deficits will remain shy of
3% of GDP, supported by fiscal restraint and reduced
transfers to the electricity sector.
Moody's has also raised the Dominican Republic's long-term
foreign-currency bond ceiling to Ba1 from Ba2, and the long-term
foreign-currency bank deposit ceiling to B1 from B2. The short-
term foreign-currency deposit and bond ceilings remain unchanged
at Not Prime (NP). Finally, the long-term local-currency bond and
deposit ceilings have been raised to Baa3 from Ba1.
RATINGS RATIONALE
RATIONALE FOR THE UPGRADE TO Ba3
CONTINUED ROBUST GROWTH OUTLOOK AND LOWER EXTERNAL RISKS
Over the last decade, the Dominican Republic has grown faster than
other Caribbean islands in Moody's rated universe, growing at an
average 5.8% annually from 2006 to 2016 compared to a median of 1%
in the Caribbean. In 2016 real GDP grew 6.6%, the highest rate in
Latin America and the Caribbean for a third consecutive year. Last
year's performance was supported largely by services (mainly
tourism) and construction.
The strength and competitiveness of the Dominican Republic's
tourism industry, which currently contributes around 17.3% of GDP,
and 15.9% of total employment, is likely to continue to support
medium term growth prospects. Tourist arrivals last year grew 6.4%
relative to 2015 and total arrivals have increased to 6 million a
year from 4.6 million in 2012. Future prospects remain strong due
to investment in infrastructure during the last 5 years, coupled
with cost competitiveness aided by a flexible exchange rate.
High growth is reflected in the rise in GDP per-capita to $16,049
(2016 data, PPP), higher than the median for Ba-rated sovereigns
($14,493) and more than twice the median of the B-rated category
($6,844). Economic growth and targeted social spending over the
last four years has helped reduce poverty and unemployment,
improving economic resilience.
Growth has been accompanied by a reduction in external risks,
although these have not been eliminated. Thanks to lower oil
prices and strong growth in tourism and remittances, current
account deficits have shrunk over the past seven years to 1.4% of
GDP in 2016 from 7.6% in 2010, the lowest level in 11 years.
International reserves have risen steadily since 2014, and now
cover 3.9 months of imports. Even though it is likely that current
account deficits will widen with any increase in oil prices,
Moody's expects them to peak at 2.5%-3.0% of GDP, which would be
significantly lower than their levels of 6%-7% of GDP reported in
the early 2010's. The reduction in the oil and gas import bill to
3% of GDP last year from 6% to 8% of GDP in 2012-14 was helped by
lower global oil prices but also owes significantly to other
contributing factors that will endure through potential oil price
fluctuations. First, there will be a reduction in oil and gas
dependence due to the construction of Punta Catalina, a coal-based
electricity plant which will become operational in 2018. In
addition, gold exports, which were almost zero in 2012, have begun
to contribute to exports since 2013 with the construction of a
Barrick gold mine. Gold exports amounted to $1.56 billion in 2016,
around 2% of GDP, and the IMF expects gold exports to represent on
average 1.4% of GDP in the next four years.
FISCAL RESTRAINT AND REDUCED TRANSFERS TO ELECTRICITY SECTOR
SUPPORT FISCAL POSITION
The Medina administration, which assumed power in 2012 and was
reelected in May 2016, has maintained gradual fiscal
consolidation, reducing the fiscal deficit to 2.8% of GDP last
year, from a peak of 6.6% during the 2012 election year. Last year
was also the first time in ten years that the non-financial public
sector reported a primary surplus of 0.1% of GDP, from a deficit
of 0.4% of GDP in 2015.
Moody's expects fiscal deficits to continue to be stable at around
3% of GDP in the next two to three years. The construction of
Punta Catalina, coupled with the completion of other smaller
projects by 2020, should reduce the transfers from the central
government to the electricity companies to $500 million a year
from materially higher levels, with a peak in 2012 of $1.2
billion. Punta Catalina is also expected to partially solve the
country's issues with electricity shortages and high energy
prices, as it will supply with 720 MW of energy, equivalent to 30%
of demand.
Moderate fiscal deficits and high real GDP growth will limit the
increase in government debt ratios which Moody's forecasts at
38.7% this year and 39% in 2018. Government debt to GDP ratios in
the Dominican Republic have been lower than the B-median for the
past decade and lower than the Ba3-median since 2014.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects Moody's views that the Ba3 rating
captures the balance of risks to Dominican Republic's credit
profile. Moody's expects economic growth to remain robust and
balance of payments risks to be contained. At the same time,
Moody's doesn't expect meaningful reductions in government debt
levels nor the implementation of structural reforms that would
further strengthen the fiscal frameworks. Despite recent
improvements, the Dominican Republic continues to face challenges,
related to its external balances as well as low government
revenues. More than 70% of government debt is denominated in
foreign currencies and interest payments consume 19.6% of
government revenues.
WHAT COULD MOVE THE RATING DOWN
A weakening of external finances that results in a substantial
decrease of foreign exchange reserves and/or a structural
deterioration in the current account deficit could put downward
pressure on the rating. Material fiscal slippage that reverses
progress on consolidation and leads to continued increases in debt
levels or funding costs could also lead to a lower rating.
WHAT COULD MOVE THE RATING UP
The sovereign rating could face upward pressure if there were to
be material strengthening of the balance of payments and external
liquidity position. A decline in the share of government debt
denominated in foreign currency, or an improvement in debt
affordability indicators, driven by a reduction in debt levels or
an increase in government revenues, could also lead to an
improvement in credit quality. The implementation of fiscal and
structural reforms that demonstrate rising institutional strength
would also support the credit profile.
GDP per capita (PPP basis, US$): 16,049 (2016 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 6.6% (2016 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 1.7% (2016 Actual)
Gen. Gov. Financial Balance/GDP: -2.8% (2016 Actual) (also known
as Fiscal Balance)
Current Account Balance/GDP: -1.4% (2016 Actual) (also known as
External Balance)
External debt/GDP: 40.8% (2016 Actual)
Level of economic development: Low level of economic resilience
Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.
On July 19, 2017, a rating committee was called to discuss the
rating of the Dominican Republic, Government of. The main points
raised during the discussion were: The issuer's economic
fundamentals, including its economic strength, have materially
increased. The issuer's fiscal or financial strength, including
its debt profile, has materially increased. The issuer has become
less susceptible to event risks.
The principal methodology used in these ratings was Sovereign Bond
Ratings published in December 2016.
The weighting of all rating factors is described in the
methodology used in this credit rating action, if applicable.
=============
J A M A I C A
=============
SANDALS RESORTS: Asks Wall Street for Help to Finance New Hotels
----------------------------------------------------------------
RJR News reports that Jamaican hotel chain Sandals Resorts
International is looking to Wall Street to help finance as many as
a dozen new Caribbean hotels.
Adam Stewart, CEO of Sandals, told Bloomberg the company is not
for sale and has no immediate plans to go public, according to RJR
News.
Instead, it is looking beyond Caribbean banks it has traditionally
used, to fund the biggest expansion in its history, the report
notes.
The company is in talks with Deutsche bank and others to raise
money as it weighs the new projects, including four hotels it
plans to build next year, the report adds.
===========
M E X I C O
===========
BANCO ATLANTIDA: S&P Assigns 'BB-' Issuer Credit Ratings
--------------------------------------------------------
S&P Global Ratings assigned its 'BB-' long-term and 'B' short-term
global scale issuer credit rating on Banco Atlantida, S.A. The
outlook is stable.
The rating on Banco Atlantida reflects its historical operating
revenue stability and its leading position in the Honduran
financial system. S&P said, "The rating on the bank incorporates
our forecasted average risk-adjusted capital(RAC) ratio of 5.14%
for the next 18-24 months. In our view, the bank has maintained
sound asset quality metrics that are in line with those of the
Honduran financial system." Banco Atlantida also has a diversified
funding structure that provides enough liquidity to cover its
short-term maturities.
INVERSIONES ATLANTIDA: S&P Raises ICR & Sr. Notes Rating to 'B+'
---------------------------------------------------------------
S&P Global Ratings upgraded its long-term global scale issuer
credit (ICR) on Inversiones Atlantida S.A. and its issue-level
ratings on the bank's senior unsecured notes of up to $150 million
rating to 'B+' from 'B'. The outlook on the ICR is stable.
The upgrade to 'B+' from 'B' follows the action on the Honduras
global sovereign rating. S&P said, "The sovereign upgrade reflects
Honduras' fiscal flexibility improvement as a result of a track
record of disciplined public finance policies, and our expectation
that government's commitment to fiscal responsibility will prevent
a ramping up in spending during the current electoral process.
"The stable outlook on Inversiones Atlantida for the next 12
months continues to reflect that on the sovereign because the
ratings on the latter constrain the group's credit worthiness. We
also expect Inversiones Atlantida's capital generation from its
subsidiaries will be enough to compensate the expected growth,
aimed at maintaining an RAC around 6.2%."
=================
N I C A R A G U A
=================
NICARAGUA: Moody's Affirms B2 Issuer Ratings; Outlook Positive
--------------------------------------------------------------
Moody's Investors Service has affirmed the government of
Nicaragua's B2 foreign and local currency issuer ratings and
changed the outlook to positive from stable.
RATINGS RATIONALE
Two key drivers underpin the positive outlook:
1) Continued fiscal stability and favorable economic prospects
relative to peers, despite a significant decline in financial
flows from Venezuela
2) Moody's expectation that authorities' macroeconomic policies
will mitigate the impact of potential future external shocks, and
support the strengthening of the sovereign credit profile
The affirmation of the B2 rating reflects credit strengths
including strong economic growth, a policy framework geared
towards maintaining macro-economic stability as well as lower-
than-peers debt and interest burdens. These strengths balance the
credit challenges posed by low per capita income and a high share
of foreign currency denominated government debt.
Nicaragua's long-term local currency country risk ceilings remain
unchanged at Ba3. The foreign currency bond ceiling and the
foreign currency bank deposit ceiling also remain unchanged at
B1/NP and B3/NP, respectively.
RATIONALE FOR THE CHANGE TO POSITIVE OUTLOOK
-- FIRST DRIVER: CONTINUING FISCAL STABILITY AND FAVORABLE
MACROECONOMIC PROSPECTS AS VENEZUELAN FINANCIAL FLOWS DIMINISH
Despite the significant decline in net financial flows from
Venezuela, authorities have maintained fiscal stability over the
past two years and maintained an operating environment that offers
favorable prospects for growth and the external accounts.
Under the Petrocaribe initiative, Nicaragua has benefited since
2008 from both loans and foreign direct investment (FDI) from
Venezuela. These loans financed some off-budgetary social and
investment spending. Social spending represented about one third
of the loans received, and was mainly directed towards subsidies
and social transfers.
At their height in 2010-11, these loans represented 5.9% of GDP,
falling to 4.0% in 2014 and 0.7% in 2016. An apparent reliance on
financial flows from Venezuela posed a constraint on the sovereign
credit profile because of the negative fiscal and economic
implications of a potential decline and cessation in these flows.
However, although there has indeed been a decline in these flows,
actions taken by the government have limited the fiscal impact of
this decline. Off-balance sheet social spending fell to 0.3% of
GDP in 2016 from 2.0% in 2012-13. This off-balance sheet spending
was only partly absorbed into the government's balance sheet, due
to lower costs associated with transportation subsidies as oil
prices remained low as well as net cuts in social spending
programs. These expenditure cuts helped contain the general
government's deficit at a moderate level of about 2% of GDP before
grants are included.
Meanwhile, although FDI from Venezuela has also declined in recent
years -- falling to 0.9% of GDP in 2016 from 1.6% in 2012 --
Nicaragua has been able to attract investment from other
countries, diversifying the sources of investment and leaving net
FDI levels relatively constant as a share of GDP. This, in turn,
has ensured that a significant portion of the country's current
account deficit remains financed by net FDI flows, thus reducing
the reliance on external debt. In addition, FDI flows are likely
to support growth. Higher investment over the past decade has
supported productivity gains in the economy, elevating potential
growth to 4.5-5.0%.
Given the resilience of Nicaragua's credit metrics to an external
shock in the form of declining financial flows from Venezuela, the
positive outlook reflects Moody's views that if fiscal stability
and robust growth is maintained over the outlook horizon,
Nicaragua's sovereign credit profile will strengthen to levels
consistent with a higher rating.
-- SECOND DRIVER: EXPECTATION OF GOVERNMENT POLICIES TO MITIGATE
DOMESTIC AND EXTERNAL RISKS
The second driver of the outlook change is Moody's expectation
that the government will take action to mitigate the potential
risks that could stem from (1) the deterioration in the Social
Security Institute's (INSS) financial position, (2) the enactment
in the United States of the Nicaraguan Investment Conditionality
Act (NICA), and (3) a continued decline in inflows from Venezuela.
Authorities estimate that due to rising deficits of the INSS --
the entity that provides pensions, disability insurance and some
health services to the general population -- it will deplete its
liquid reserves by 2019 without any policy changes. In such event
the central government would likely need to provide financial
assistance to INSS. However, Moody's expectation is that over the
outlook horizon of 12-18 months the government is likely to pursue
pension reforms that would support the sustainability of INSS over
the medium- to long-term.
Another potential risk to Nicaragua's growth and external profile
is the Nicaraguan Investment Conditionality Act (NICA) in the
United States, which would direct US representatives to oppose
loans to be provided by multilateral development banks (MDBs)
where the US is a member until the Nicaraguan government takes
actions to improve the control of corruption and increase
elections' transparency among other measures. Although there is
little certainty around whether the NICA will be passed, were it
to be passed it could affect financing from MDBs -- Nicaragua's
main funding source -- as well as investor confidence in
Nicaragua, weighing on FDI and economic growth. Moody's baseline
expectation is that should the NICA materialize, the government
will take policy actions to reduce the fiscal impact of
potentially lower loans from MDBs and to support investor
confidence. If this baseline expectation were met, the passage of
the NICA would be a temporary shock that would not impose lasting
damage to Nicaragua's credit profile.
Moody's also expects that Venezuelan cooperation flows will
continue to decrease over the coming years and that, as has been
the case in recent years, authorities will pursue policies that
diminish their potentially negative fiscal impact.
WHAT COULD CHANGE THE RATING - UP
Nicaragua's ratings could be upgraded if: (i) fiscal measures are
undertaken to improve the financial position of the social
security body and lower potential costs for the central
government, (ii) authorities respond to potential external shocks,
such as the NICA and a continued decline in Venezuelan support, in
ways that maintain Nicaragua's economic, fiscal and external
metrics at levels that indicate a continued strengthening of its
sovereign credit profile.
WHAT COULD CHANGE THE RATING - DOWN
The positive outlook could return to a stable outlook if (i) the
NICA is enacted and no adjustment measures are undertaken, (ii) if
the social security's financial position continues to deteriorate
and this is left unaddressed, and/or (iii) there is a
deterioration in the external accounts due to a shock from a
declining Venezuelan support or a significant reduction in
external financing from other sources.
GDP per capita (PPP basis, US$): 5,452 (2016 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 4.7% (2016 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 3.1% (2016 Actual)
Gen. Gov. Financial Balance/GDP: -2.3% (2016 Actual) (also known
as Fiscal Balance)
Current Account Balance/GDP: -8.6% (2016 Actual) (also known as
External Balance)
External debt/GDP: 77.8% (2016 Actual)
Level of economic development: Low level of economic resilience
Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.
On July 19, 2017, a rating committee was called to discuss the
rating of the Nicaragua, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have materially increased. The
issuer's fiscal or financial strength, including its debt profile,
has not materially changed. The issuer has become less susceptible
to event risks.
The principal methodology used in these ratings was Sovereign Bond
Ratings published in December 2016.
The weighting of all rating factors is described in the
methodology used in this credit rating action, if applicable.
======================
P U E R T O R I C O
======================
AES PUERTO RICO: PREPA Downgrade No Impact on Fitch's C Rating
--------------------------------------------------------------
AES Puerto Rico L.P.'s ('C'/ Negative Watch) ratings are not
immediately impacted by the downgrade of the Puerto Rico Electric
Authority's (PREPA) ratings to 'D' on July 6, 2017, according to
Fitch Ratings.
PREPA is the revenue counterparty under AES PR's power purchase
agreement (PPA) and its rating has constrained AES PR's ratings in
the past. PREPA commenced the insolvency proceedings under Title
III of the Puerto Rico Oversight, Management, and Economic
Stability Act (PROMESA) on July 2, 2017 and failed to pay
principal and interest due on its revenue bonds on July 3, 2017.
Following these developments, on July 6, 2017, Fitch downgraded
PREPA's Long-Term Issuer Default Rating (IDR) and power revenue
bond ratings to 'D' from 'C'.
PREPA's initiation of insolvency proceedings represents a
technical default under AES PR's financing documents; however, the
bondholders have not declared a default or initiated any action.
The project sponsor notes that the bondholders recognize that the
project's unique position in the Puerto Rico's power market
suggests that PREPA may continue to make payments to the project.
Fitch also notes that the project has sufficient liquidity at hand
to meet its upcoming debt obligations in August 2017.
PREPA continues to purchase power and make payments to AES PR
under the PPA, albeit with some delays. PREPA needs the power
supplied by AES PR, as it is Puerto Rico's lowest cost power
producer. This dependence was made clear through the press release
issued by PREPA on July 14, 2017 warning about negative
consequences to the cost and stability of power supply in the
absence of AES PR. Nevertheless, there is a risk that PREPA will
try to renegotiate the PPA, adversely affecting AES PR's cash
flows.
Fitch will continue monitoring PREPA's IDR and debt restructuring
plans; its performance under the PPA with resulting impact on AES
PR, and any PPA restructuring efforts.
Fitch affirmed AES PR's 'C'/Negative Watch on June 1, 2017,
reflecting the credit quality of PREPA.
BAILEY'S EXPRESS: Wants to Use Bankwell Bank's Cash Collateral
--------------------------------------------------------------
Bailey's Express, Inc., seeks authorization from the U.S.
Bankruptcy Court for the District of Connecticut to use through
Aug. 12, 2017, cash collateral in which Bankwell Bank has a
perfected first priority security interest to meet the Debtor's
ongoing financing needs.
The Debtor will use the cash collateral solely to fund its
ordinary course business operations. The Debtor says that given
the purported encumbrances upon substantially all of its assets,
it will be unable to continue its business operations absent some
form of immediate relief from the Court. Without immediate
relief, the Debtor will be unable to fund the day-to-day
operations that are essential to the Debtor's continued existence
as a going concern to the detriment of its estate. The Debtor
will not have sufficient funds to cover the expenses that will
accrue until a final hearing could be held on the motion. Thus,
without authorization to use cash collateral on an immediate
basis, the Debtor would be forced to convert its case to Chapter
7, which would cause irreparable harm to its estate.
As adequate protection for any cash collateral expended by the
Debtor pursuant to the Interim Order, Bankwell will receive,
pursuant to Sections 361(1) and 363(e) of the U.S. Bankruptcy
Code, a first lien to secure an amount of Bankwell's claims equal
to (i) the amount of cash collateral actually expended by the
Debtor; and (ii) an amount equaling the aggregate decline in the
value of the Bankwell prepetition collateral, on all personal
property and assets of the Debtor, of any kind or nature
whatsoever, whether now owned or hereafter acquired by any Debtor,
and all proceeds, rents or profits thereof.
Bankwell will have an allowed administrative expense claim in an
amount equal to the amount of cash collateral actually expended by
Debtor pursuant to this Order, which claim will have the highest
administrative priority under Sections 503(b), 507(a)(1) and
507(b) of the Code, and the claim will have priority over, and be
senior to, all other administrative claims.
A copy of the Debtor's request is available at:
http://bankrupt.com/misc/ctb17-31042-3.pdf
About Bailey's Express
Headquartered in Middletown, Connecticut, Bailey's Express --
http://www.baileysxpress.com/-- is a Connecticut-based less than
truckload carrier. It provides service across the nation and is
dedicated in helping Connecticut, Massachusetts and Rhode Island
companies market their products throughout the U.S. including
Hawaii and Alaska. The Debtor has distribution points in
Charlotte, Dallas, Denver, Easton, Fontana, Indianapolis,
Jacksonville, Memphis, Neenah, Phoenix, Salt Lake City and Toledo.
It also provides service to Mexico, Puerto Rico & Canada.
Bailey's Express filed for Chapter 11 bankruptcy protection
(Bankr. D. Conn. Case No. 17-31042) on July 13, 2017, estimating
its assets and liabilities at between $1 million and $10 million.
The petition was signed by David Allen, chief financial officer.
Judge Ann M. Nevins presides over the case.
Elizabeth J. Austin, Esq., and Jessica Grossarth Kennedy, Esq., at
Pullman & Comley, LLC, serves as the Debtor's bankruptcy counsel.
EMPLOYEES RETIREMENT: Fitch Lowers Rating on Pension Bonds to D
----------------------------------------------------------------
Fitch Ratings has downgraded the rating on the following bonds
issued by the Employees Retirement System of Puerto Rico (ERS) to
'D' from 'C' and removed from Rating Watch Negative, to reflect
the failure to make timely payment of interest on its due date:
-- Senior pension funding bonds, series 2008A, 2008B, 2008C.
As a result of the application of the automatic stay in the ERS'
Title III bankruptcy-like proceedings under PROMESA, the ERS
missed the scheduled July 1st interest payment, but will make the
payment pursuant to a stipulation approved by an order from the
U.S. District Court Judge overseeing the Title III proceeding. The
'D' rating reflects the failure to make payment on the scheduled
due date under the contractual terms of the obligation. The
stipulation requires payment of monthly interest from certain
"pre-petition" funds through Oct. 1st. The stipulation further
provides that the Commonwealth will cause certain amounts to be
deposited on certain agreed-upon dates into a "post-petition"
account, and the distribution of those amounts will be subject to
the judge's future orders regarding the validity, perfection and
enforceability of the ERS bondholders' liens.
The Commonwealth's Issuer Default Rating (IDR) remains 'RD',
indicating that the issuer has defaulted on a select class of its
debt.
RATING SENSITIVITIES
The ratings on the bonds have reached the lowest level on Fitch's
rating scale. Fitch expects to re-examine the commonwealth's
credit profile once debt restructuring plans become more clear.
MINI MASTER: Disclosure Statement Hearing Set for Sept. 13
----------------------------------------------------------
The U.S. Bankruptcy Court in Puerto Rico is set to hold a hearing
on September 13, at 9:00 a.m., to consider approval of the
disclosure statement, which explains the Chapter 11 plan of
reorganization for Mini Master Concrete Services Inc.
Objections to the disclosure statement must be filed not less than
14 days prior to the hearing.
Under the plan, creditors holding allowed Class 4 general
unsecured claims will be paid their pro-rata share from a $50,000
carve-out to be reserved from the proceeds of the sale of the
company's assets. The estimated amount of allowed claim for this
class is $932,374.48.
About Mini Master Concrete Services
Mini Master Concrete Services, Inc. filed a Chapter 11 bankruptcy
petition (Bankr. D.P.R. Case No. 16-09956) on December 22, 2016.
Judge Mildred Caban Flores over the case. Charles A. Cuprill, PCS
Law Offices, represents the Debtor as counsel.
The Debtor disclosed total assets of $15.78 million and total
liabilities of $5.46 million. The petition was signed by Carmen
M. Betancourt, president.
On April 28, 2017, the Debtor filed a disclosure statement, which
explains its proposed Chapter 11 plan of reorganization.
SHORT BARK: Has Interim OK to Obtain DIP Financing & Use Cash
-------------------------------------------------------------
The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District
of Delaware has authorized, on an interim basis, Short Bark
Industries, Inc., to obtain secured post-petition factoring and
financing and use of cash collateral in order for the Debtor to
continue its operations and pay payroll.
A hearing on the DIP financing and cash collateral use will be
held on Aug. 19, 2017, at 9:30 a.m. prevailing Eastern Time.
The Debtor wants authorization for it to enter into and obtain
secured post-petition factoring, consisting of, among others:
(1) the purchase by LSQ Funding Group, LLC, as purchaser, of
certain of the Debtor's accounts and (b) an over-advance
above the purchase in subsection (a) above, up to a
combined aggregate maximum amount not to exceed $237,844
to be used solely for payroll and payroll taxes and for
the payment to certain vendors for the emergency period;
(2) grant LSQ the DIP liens and DIP superpriority claims to
secure the DIP financing;
(3) authorization for the Debtor to use cash collateral in
which LSQ has an interest solely for payroll and payroll
taxes and for the payment to certain vendors; and
(4) grant LSQ the replacement liens and pre-petition
superpriority claims to the extent of any pre-petition
diminution in value of LSQ's interest in the pre-petition
collateral as adequate protection for the granting of the
DIP liens to LSQ, the use of cash collatera, and for the
imposition of the automatic stay.
The Debtor has a critical need to obtain the DIP financing and use
the collateral and cash collateral in order to permit, among other
things, the orderly continuation of the operation of its
businesses and to make payroll.
The Debtor is unable to obtain financing on more favorable terms
from sources other than LSQ and is unable to obtain adequate
unsecured credit allowable under Section 503(b)(1) of the U.S.
Bankruptcy Code as an administrative expense. The Debtor is also
unable to obtain secured credit without the Debtor granting to LSQ
the DIP liens and superpriority claims.
Pursuant to the prepetition documents, the Debtor was indebted to
LSQ in the approximate amount of $9,853,433 plus accrued and
accruing interest, costs, expenses, fees, other charges and other
obligations.
To secure the prepetition obligations, the Debtor granted security
interests and liens to LSQ upon all of the Debtor's personal
property and fixtures, and proceeds thereof.
The Debtor is authorized to sell to LSQ certain accounts of the
Debtor and incur indebtedness and use cash collateral in the
aggregate maximum amount not to exceed $237,844 on an emergency
interim basis pending the interim hearing on the Debtor's request,
which will be used solely for payroll and payroll taxes and for
payment of certain vendors.
A copy of the Interim Order is available at:
http://bankrupt.com/misc/deb17-11502-21.pdf
About Short Bark Industries
Short Bark Industries, Inc. -- http://www.shortbark.com/--
provides military apparels for the Department of Defense, law
enforcement industry. The Company's current or previously
manufactured items in the military category include but are not
limited to military MOLLE, medium and large rucksacks, assault
packs, IWCS, ACU, ABU, BDU, helmet covers, FROG, A2CU and more.
The Company offers men and boys suits, over garments, bag, and
coats. Short Bark Industries holds over 120,000+ square feet of
manufacturing capacity with operations in Florida, Puerto Rico and
Tennessee.
The Company and one other affiliate sought bankruptcy protection
on July 10, 2017 (Bankr. D. Del., Case No. 17-11501 and Case No.
17-11502). The petition was signed by Phil Williams, CEO and
Chairman.
The Debtors estimated total assets of $10 million to $50 million
and total liabilities of $10 million to $50 million.
Bielli & Klauder, LLC, serves as lead bankruptcy counsel to the
Debtors.
================================
T R I N I D A D & T O B A G O
================================
TRINIDAD & TOBAGO: Peg Oil at US$40
-----------------------------------
Trinidad and Tobago Newsday reports that the American Chamber of
Commerce (Amcham) has suggested Government peg the 2017/2018
budget to an oil price of US$40 per barrel, with a hedge of US$35
and maintain the budgeted gas price at US$2 per mmbtu. It also
recommended that government review margins afforded to petroleum
dealers, peddlers and retailers and implement a mechanism to
automatically calculate said margins, according to Trinidad and
Tobago Newsday.
Service station dealers have vociferously complained that the
price set by the Government for the various fuels cut into their
margins, leaving them no room to cover their expenses, the report
notes.
The report relays that the recommendations are contained in a list
released by Amcham in which the business body said that it is
concerned about the country's growing debt burden and believes
that the curtailment of spending should be an area of high
priority.
It suggested government begin formulation and adoption of fiscal
rules (in the area of debt, budget balance, expenditure, and
revenue) immediately and have them implemented no later than
fiscal 2019, the report notes.
Amcham said debt that will be incurred due to Government-to-
Government arrangements with delayed repayment terms or moratorium
periods needs to be explicitly stated and monitored as part of
Total Public Sector Debt, the report notes. It said that
overdrafts of the exchequer account should also be included in
this calculation, the report says.
It called for the implementation of an effective transfer pricing
regime after stakeholder consultation and similarly for Government
to involve stakeholders in the re-introduction of the property
tax, particularly on industrial property, the report notes.
It wants a procedure for an Advanced Tax Ruling System;
Alternative Dispute Resolution of Tax Disputes and suggests that
the Minister of Finance review plans for the imposition of an
Online Purchase Tax (OPT) and replace it with the $10 Airway Bill
fee, observing that legislation for the Airway Bill fee is already
in place, the report discloses.
According to Amcham, the imposition of both the OPT & Airway Bill
fee would be onerous for companies which depend on just in time
delivery of goods, the report says.
The business body recommended that Government reclassify ICTS and
internet enablers such as smartphone devices under the Computer
Laptop and Tablet Duty Exemption category as part of the public
sector digitisation project; and promote the use of alternate,
technology-based channels for the delivery of Government services
with a view to deriving improved cost and efficiency profiles
going forward, the report adds.
In the area of National Security, Amcham says the negative impact
of crime is far-reaching and every day the social, psychological
and economic consequences are borne by communities, businesses and
the country as a whole, the report notes.
It is calling on Government to take steps to secure the
appointment of a Commissioner of Police; provide an update on
initiatives for the electronic monitoring of offenders and
establish a DNA bank; strengthen the Fraud Squad and the Cyber
Crime Unit; address the shortcomings at the Forensic Science
Centre; implement adequate support mechanisms for victims and
officers and implement recommendations for Prison Reform as well
as bring forward legislation related to the fight against crime,
the report adds.
TRINIDAD & TOBAGO: One-Cent Coin Demonetization Underway
--------------------------------------------------------
RJR News reports that the Central Bank advised the public that
rounding up or down on transactions is voluntary until the one
cent coin is demonetized and ceases to be legal tender.
In a statement, the bank said that from July 1, 2017, it stopped
issuing one cent coins, requiring merchants and vendors to round
the final price on transactions up or down to the nearest five
cents, according to RJR News.
This means a transaction requiring a payment of $1 or $1.02 will
be rounded down to $1 while transactions which require payments of
$1.03 or $1.04 will be rounded up to $1.05. On the other hand,
transactions which require payments of $1.06 or $1.07 will be
rounded down to $1.05 and payments from $1.08 to $1.09 up to
$1.10, the report notes.
The Central Bank said that when the one cent coin is no longer
accepted as legal tender, regulations will be introduced to
enforce rounding, the report relays. In the meantime, the bank is
asking vendors and consumers to accept the rounding of final
payments in a consistent and transparent manner, the report says.
It says that vendors and merchants should indicate that rounding
is in effect through signs in the store and get the agreement of
the consumer before proceeding with the transaction, the report
notes.
According to the Central Bank, if the consumer refuses rounding,
the vendor should provide exact change or the consumer should pay
the exact amount for the goods or service or pay for them using
cheques or credit or debit cards or simply refuse the transaction,
the report discloses.
In a statement, the bank says that as long as the one cent coin
remains legal tender, rounding does not apply to transactions
where the customer has one cent coins and is able to pay the exact
amount of the transaction, nor does it apply in cases where the
customer is able to pay with non-cash methods such as cheques,
debit, credit or prepaid cards, the report relays.
Also exempt are cases involving individual prices of a product or
service where the prices on individual items do not have to be
changed or to duties, taxes or charges which are to be calculated
in the exact amount before rounding, the report adds.
=================
X X X X X X X X X
=================
* BOND PRICING: For the Week From July 17 to July 21, 2017
----------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
BA-CA Finance Cayman Lt 0.518 62.07 KY EUR
CSN Islands XII Corp 7 68 BR USD
CSN Islands XII Corp 7 67.75 BR USD
Decimo Primer Fideicomi 4.54 52.63 10/25/2041 PA USD
Decimo Primer Fideicomi 6 63.5 10/25/2041 PA USD
Dolomite Capital Ltd 13.26 67.2 12/20/2019 CN ZAR
Empresa de Telecomunica 7 73.14 1/17/2023 CO COP
Empresa de Telecomunica 7 73.14 1/17/2023 CO COP
ESFG International Ltd 5.75 0.66 KY EUR
General Shopping Financ 10 72.5 KY USD
General Shopping Financ 10 71.7 KY USD
Global A&T Electronics 10 74 2/1/2019 SG USD
Global A&T Electronics 10 74.5 2/1/2019 SG USD
Global A&T Electronics 10 65.5 2/1/2019 SG USD
Global A&T Electronics 10 65 2/1/2019 SG USD
Gol Finance 8.75 63 BR USD
Gol Finance 8.75 63.88 BR USD
Gol Linhas Aereas SA 10.75 34.63 2/12/2023 BR USD
Gol Linhas Aereas SA 10.75 34.63 2/12/2023 BR USD
Inversora Electrica de 6.5 55 9/26/2017 AR USD
Inversora Electrica de 6.5 55 9/26/2017 AR USD
MIE Holdings Corp 7.5 75.16 4/25/2019 HK USD
MIE Holdings Corp 7.5 75.26 4/25/2019 HK USD
NB Finance Ltd/Cayman I 3.88 58.01 2/7/2035 KY EUR
Newland International P 9.5 19.88 7/3/2017 PA USD
Newland International P 9.5 19.88 7/3/2017 PA USD
Noble Holding Internati 5.25 72.98 3/15/2042 KY USD
Ocean Rig UDW Inc 7.25 39 4/1/2019 CY USD
Ocean Rig UDW Inc 7.25 38 4/1/2019 CY USD
Odebrecht Drilling Norb 6.35 48.5 6/30/2021 KY USD
Odebrecht Drilling Norb 6.35 47.25 6/30/2021 KY USD
Odebrecht Finance Ltd 7.5 49 KY USD
Odebrecht Finance Ltd 4.3 48.29 4/25/2025 KY USD
Odebrecht Finance Ltd 7.12 48.2 6/26/2042 KY USD
Odebrecht Finance Ltd 5.25 46.15 6/27/2029 KY USD
Odebrecht Finance Ltd 7 57.02 4/21/2020 KY USD
Odebrecht Finance Ltd 5.12 53.51 6/26/2022 KY USD
Odebrecht Finance Ltd 8.25 70.88 4/25/2018 KY BRL
Odebrecht Finance Ltd 6 51.47 4/5/2023 KY USD
Odebrecht Finance Ltd 5.25 45.92 6/27/2029 KY USD
Odebrecht Finance Ltd 7.1 47.82 6/26/2042 KY USD
Odebrecht Finance Ltd 7.5 49.25 KY USD
Odebrecht Finance Ltd 4.3 48.39 4/25/2025 KY USD
Odebrecht Finance Ltd 6 51.77 4/5/2023 KY USD
Odebrecht Finance Ltd 8.2 70.88 4/25/2018 KY BRL
Odebrecht Finance Ltd 7 56.85 4/21/2020 KY USD
Odebrecht Finance Ltd 5.1 52.99 6/26/2022 KY USD
Odebrecht Offshore Dril 6.6 39.64 10/1/2022 KY USD
Odebrecht Offshore Dril 6.7 36.44 10/1/2022 KY USD
Odebrecht Offshore Dril 6.6 38.79 10/1/2022 KY USD
Odebrecht Offshore Dril 6.7 38.75 10/1/2022 KY USD
Petroleos de Venezuela 12.75 67.19 2/17/2022 VE USD
Petroleos de Venezuela 9 58.28 11/17/2021 VE USD
Petroleos de Venezuela 6 40.32 5/16/2024 VE USD
Petroleos de Venezuela 9.75 50.15 5/17/2035 VE USD
Petroleos de Venezuela 6 38.22 11/15/2026 VE USD
Petroleos de Venezuela 5.37 37.39 4/12/2027 VE USD
Petroleos de Venezuela 5.5 37.1 4/12/2037 VE USD
Petroleos de Venezuela 6 41.25 10/28/2022 VE USD
Petroleos de Venezuela 6 40.01 5/16/2024 VE USD
Petroleos de Venezuela 9 58.11 11/17/2021 VE USD
Petroleos de Venezuela 6 38.13 11/15/2026 VE USD
Petroleos de Venezuela 12.75 67.2 2/17/2022 VE USD
Petroleos de Venezuela 9.75 49.94 5/17/2035 VE USD
Polarcus Ltd 5.6 60 3/30/2022 AE USD
Siem Offshore Inc 5.8 49.75 1/30/2018 NO NOK
Siem Offshore Inc 5.59 50.25 3/28/2019 NO NOK
STB Finance Cayman Ltd 2.04 58.35 KY JPY
Sylph Ltd 2.36 50.93 9/25/2036 KY USD
Uruguay Notas del Tesor 5.25 68.02 12/29/2021 UY UYU
US Capital Funding IV L 1.25 51.35 12/1/2039 KY USD
US Capital Funding IV L 1.25 51.35 12/1/2039 KY USD
USJ Acucar e Alcool SA 9.87 67.5 11/9/2019 BR USD
USJ Acucar e Alcool SA 9.87 65.75 11/9/2019 BR USD
Venezuela Government In 9.25 48.75 5/7/2028 VE USD
Venezuela Government In 13.63 82.58 8/15/2018 VE USD
Venezuela Government In 9 51.75 5/7/2023 VE USD
Venezuela Government In 9.37 49 1/13/2034 VE USD
Venezuela Government In 7 71.88 12/1/2018 VE USD
Venezuela Government In 9.25 52 9/15/2027 VE USD
Venezuela Government In 7.65 46.38 4/21/2025 VE USD
Venezuela Government In 13.63 82.58 8/15/2018 VE USD
Venezuela Government In 7.75 61.75 10/13/2019 VE USD
Venezuela Government In 11.95 58.13 8/5/2031 VE USD
Venezuela Government In 6 53.75 12/9/2020 VE USD
Venezuela Government In 12.75 67 8/23/2022 VE USD
Venezuela Government In 7 44 3/31/2038 VE USD
Venezuela Government In 6.5 36.53 12/29/2036 VE USD
Venezuela Government In 8.25 47.75 10/13/2024 VE USD
Venezuela Government In 11.75 57.75 10/21/2026 VE USD
Venezuela Government TI 5.25 69.59 3/21/2019 VE USD
***********
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, 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 * * *