/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180514.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, May 14, 2018, Vol. 19, No. 94 Headlines A R G E N T I N A COMPANIA LATINOAMERICANA: S&P Places 'B-' CCR on Watch Neg. B R A Z I L BRAZIL: New Minister Hopeful Legislation Can Pass Before Elections QGOG CONSTELLATION: S&P Lowers Corp Credit Rating to 'D' D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Prices Up 4.05% in Last 12Mo, Paced by Oil DOMINICAN REPUBLIC: Securities Chief Says IPOs Coming Soon J A M A I C A JAMAICA: Tourism Minister and JMEA to Address Concerns M E X I C O FINCOMUN SERVICIOS: S&P Affirms Then Withdraws 'B+/B' ICRs P U E R T O R I C O FIRSTBANK PUERTO RICO: Fitch Affirms 'B-' LT Issuer Default Rating POPULAR INC: Fitch Affirms 'BB-' Issuer Default Rating S T. V I N C E N T & T H E G R E N A D I N E S ST. VINCENT & THE GRENADINES: Moody's Affirms B3 Ratings X X X X X X X X X LATAM: Scraps $2 Billion Worth of Bond Sales as U.S. Rates Jump * BOND PRICING: For the Week From May 7 to May 11, 2018 - - - - - ================= A R G E N T I N A ================= COMPANIA LATINOAMERICANA: S&P Places 'B-' CCR on Watch Neg. ----------------------------------------------------------- S&P Global Ratings placed its 'B-' corporate credit and issue- level ratings on CLISA - Compania Latinoamericana de Infraestructura & Servicios S.A. on CreditWatch negative. S&P said, "The CreditWatch placement reflects our view that CLISA's cash flow generation and liquidity could face higher pressures due to the steep slide of the Argentine peso, rising interest rates, and the rising reputation risks following the judicial investigations of the main shareholder." The central bank's increase of reference interest rate to 40% from 27% will raise interest expense on the company's debt in pesos, which totals about ARP1.8 billion and represents around 22% of total debt (excluding fiscal obligations). Moreover, Argentine peso weakened around 12% against the dollar in the past two weeks, impacting the remaining 78% of the company's debt, which is mainly composed of the $300 million senior unsecured bonds due 2023. S&P said, "We believe these factors will increase the company's annual interest expense to around ARP1.75 billion in 2018 from ARP1.28 billion in 2017. In addition, if fiscal turbulence in Argentina persists, our forecasted debt to EBITDA for CLISA should reach 3.5x-4.0x in 2018 from our previous expectation of 3.0x-3.5x, while interest coverage should drop below 2.0x. This would imply a reduced financial flexibility for Clisa, given the incurrence covenants under its bond indenture. Those include a maximum of 3.5x net debt to consolidated EBITDA and a minimum of 2.0x consolidated EBITDA to consolidated net interest expenses." Exacerbating these trends, the recent prosecution by local authorities of the company's main shareholder could raise reputational risks for CLISA. This generates uncertainty over the company's ability to refinance its short-term obligations, which represent around 30% of consolidated debt. In addition, CLISA could run into problems replenishing backlog at its engineering and construction business, and managing working capital. These factors could further pressure the company's free cash flow generation. =========== B R A Z I L =========== BRAZIL: New Minister Hopeful Legislation Can Pass Before Elections ------------------------------------------------------------------ Paulo Trevisani at The Wall Street Journal reports that Brazilian efforts to reform the economy have lost momentum, but Congress is still likely to pass some market-friendly legislation before October elections, the country's new finance minister, Eduardo Guardia, said. A pension overhaul considered key to keep the country solvent was shelved earlier this year and bills to privatize money-losing power company Eletrobras, reduce consumer-credit risk, simplify corporate tax and modernize bankruptcy have lost steam as Brazilian lawmakers turn their focus toward the election, according to The Wall Street Journal. Mr. Guardia said it is too early to throw in the towel on all those proposals, the report notes. "I want people to know that we are working hard to get things done," he said in an interview. "Nothing is easy, but things are moving forward," he added. Outside his office, though, few believe much can be done ahead of the elections. Underscoring the risks of delaying reform, early polls show market-friendly candidates lagging populist firebrands, one of the factors behind this year's 10% currency depreciation, the report notes. "There is still a tough economic agenda to be dealt with," said Zeina Latif, chief-economist at XP Investimentos in Sao Paulo, the report relays. "The next president will need political skills to get it done." Mr. Guardia was sworn in last month, replacing Henrique Meirelles in the job after serving as the former finance minister's executive secretary, the report notes. Mr. Meirelles left to prepare to run for president, the report says. Mr. Meirelles held the position since early 2016, when President Michel Temer took office following the impeachment of leftist leader Dilma Rousseff, the report discloses. Mr. Temer's government had some early legislative successes, pushing legislation curbing public spending though Congress in 2016 and loosening labor regulations last year, the report relays. But the reform push sputtered as dozens of political leaders were enmeshed in the sprawling graft scandal known as Operation Car Wash and as the election approached, the report notes. "I had hoped we'd be moving faster on the reforms at this point," said Jose Augusto Fernandes, a board member at Brazil's National Confederation of Industry, expressing doubt anything else meaningful can pass before the election, the report relays. Congress did move earlier on some key issues, note the report. The Journal said the Lower House approved a bill creating a consumer credit-rating system, which is expected to reduce borrowing costs. The bill will go to the Senate, the report relays. Also in the Lower House, a bill defining rules for Eletrobras privatization was set in motion, an early step Mr. Guardia saluted as meaningful progress, saying a share offer could happen in the next few months, the report adds. The minister also said the government is nearing a breakthrough in negotiations with state oil giant Petroleo Brasileiro SA, or Petrobras, over contract issues barring the auction of oil reserves estimated to hold as much as 7 billion barrels along Brazil's shore, the report discloses. He expressed hopes bidding could attract at least $40 billion in investment, the report says. "This shows the country is doing its homework," the report quoted Mr. Guardia as saying. He said the privatization is fundamental to ensure the company can attain a financial position solid enough to ensure Brazilians won't face blackouts in the future, the report notes. He said the result will be a reduction in utility bills, the report relays. "All we need to do is to explain our project to lawmakers," he added, notes the report. As reported in the Troubled Company Reporter-Latin America on Feb. 28, 2018, Fitch Ratings has downgraded Brazil's Long-Term Foreign Currency Issuer Default Rating (IDR) to 'BB-' from 'BB' and revised the Rating Outlook to Stable from Negative. QGOG CONSTELLATION: S&P Lowers Corp Credit Rating to 'D' -------------------------------------------------------- S&P Global Ratings lowered its corporate credit rating on QGOG Constellation S.A. to 'D' from 'B'. S&P said, "At the same time, we're lowering our issue-level ratings on the company's 2019 and 2024 notes to 'D' from 'B' and to 'D' from 'B+', respectively. We're also withdrawing our recovery ratings on the 2019 and 2024 notes, and will reassess recovery once the company presents a new capital structure." S&P said, "We're lowering our ratings to 'D' because QGOG Constellation announced it will miss the payment of the cash interest payments on the 2019 and 2024 senior notes due on May 9, 2018. QGOG Constellation will use the 30-day grace period defined under the terms of the notes in order to advance ongoing negotiations with its key lenders to re-profile the group's debt. The idle capacity of the offshore drilling market has not only sharply reduced charter daily rates, but also caused some postponements for new tender offers from oil and gas (O&G) producers, thus creating a highly competitive environment in this market. As such, most of QGOG Constellation's projects are currently uncontracted or near contractual maturity. In this context, QGOG Constellation decided to restructure the group's debt, since it would need several positive market developments in order to make the current capital structure sustainable. In spite of the company's current cash position, which is more than sufficient to comply with the abovementioned interest payments, we believe that QGOG Constellation won't make the payments within the 30-day grace period under the original terms and conditions, which is tantamount to default." =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Prices Up 4.05% in Last 12Mo, Paced by Oil -------------------------------------------------------------- Dominican Today reports that inflation has climbed at a faster pace during the last 12 months, after the inter-annual rate closed at 4.05%, measured from April 2017 to the same month this year, according to data published by Dominican Republic's Central Bank. A year earlier, the annualized consumer prices had climbed 3.51%, according to Dominican Today. The rise in oil prices in the domestic market, as well as increases in alcoholic beverages and tobacco, have led to an acceleration in consumer prices over the last year, the report notes. Based on Central Bank figures, the price of alcoholic beverages and tobacco jumped 6.4% in 12 months, while transportation, a group that reflects the impact of higher oil prices, rose 5.3% in that same period, the report relays. Meanwhile, the prices of food and non-alcoholic beverages and education posted increases of 5% in the last year, according to Central Bank figures, the report adds. As reported in the Troubled Company Reporter-Latin America on April 23, 2018, S&P Global Ratings affirmed its 'BB-/B' long- and short-term sovereign credit ratings on the Dominican Republic. The outlook remains stable. The transfer and convertibility (T&C) assessment is unchanged at 'BB+'. DOMINICAN REPUBLIC: Securities Chief Says IPOs Coming Soon ---------------------------------------------------------- Dominican Today reports that securities superintendent, Gabriel Castro, said the debt market's development has continued its sustained growth and greater dynamism. "We have approved four new public offers, more pension fund administrators, and we're currently working with the first offers of stocks to the market," the report quoted Mr. Castro as saying. The official, speaking after a mass too mark the agency's 15th anniversary, said he expects the market's pace will continue, after posting 20 percent growth last year, the report notes. As reported in the Troubled Company Reporter-Latin America on April 23, 2018, S&P Global Ratings affirmed its 'BB-/B' long- and short-term sovereign credit ratings on the Dominican Republic. The outlook remains stable. The transfer and convertibility (T&C) assessment is unchanged at 'BB+'. ============= J A M A I C A ============= JAMAICA: Tourism Minister and JMEA to Address Concerns ------------------------------------------------------ RJR News reports that a meeting is slated to take place between Tourism Minister Edmund Bartlett and President of the Jamaica Manufacturers and Exporters Association Metry Seaga to address concerns raised about a comment made by the Cabinet member. Minister Bartlett, in response to complaints that Spanish hoteliers are not engaging local manufacturers in business, recently said he cannot tell investors who to do business with, according to RJR News. Minister Bartlett said manufacturers should focus on improving the quality of their products and their ability to supply the tourism market with what it needs, the report notes. The JMA, in response, said Bartlett's comments constituted a blatant disregard for the manufacturing sector, the report relays. "The truth is Minister Bartlett and myself have spoken and I think we are going to meet, hopefully before too long to ensure that anything that was said is not seen in an inflamatory way. We are not happy with what he said," the report quoted Mr. Seaga as saying. As reported in the Troubled Company Reporter-Latin America on Feb. 5, 2018, Fitch Ratings has affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B' and has revised the Rating Outlook to Positive from Stable. =========== M E X I C O =========== FINCOMUN SERVICIOS: S&P Affirms Then Withdraws 'B+/B' ICRs ---------------------------------------------------------- S&P Global Ratings affirmed its 'B+/B' global scale and its 'mxBBB-/mxA-3' national scale issuer credit ratings on FinComun Servicios Financieros Comunitarios (FinComun), with a negative outlook on both scales. At the same time, it withdrew all ratings on the company at the issuer's request. FinComun's operating and financial performance haven't changed significantly from our assumptions in the last publication. The ratings reflect the lender's weaker-than-average asset quality metrics and considerably lower reserve coverage (measured by loans loss reserves to nonperforming assets) than those of its closest peers. This is mainly due to exposure to the weak quality of its payroll loans to government employees. However, S&P expects gradual improvements in FinComun's asset quality and efficiency thanks to the auto correction program, which the domestic regulator had imposed, and scaling back the payroll lending to government employees. Likewise, the ratings incorporate FinComun's ineffective operating strategy during the past few years. This was evident in the sharp growth of payroll lending to government employees,and led to an ongoing reorganization of the company. S&P said, "The ratings also incorporate Fincomun's reliance on only two business lines for revenue, which leaves the latter susceptible, in our view, to a downturn in either of those businesses. On the other hand, we view FinComun's capital and earnings as credit strength due to a projected risk-adjusted capital ratio of around 9.7% for 2018, including an expected MXN50 million capital injection in June 2018. Finally, our ratings incorporate our below-average funding assessment stemming from FinComun's lack of access to the central bank's credit lines, but sufficient liquidity to cover short-term obligations." S&P said, "We believe the 'mxBBB-' national scale rating is commensurate with other Mexican issuers rated at the same rating level, considering FinComun's size and business diversification, its deteriorated asset quality metrics, and the challenges the company will face over the next 12 months." The negative outlook reflected a one-in-three chance of a downgrade as a result of FinComun's weakened risk position. If the company doesn't comply with the corrective plan and its asset quality metrics don't keep improving, FinComun's risk position will weaken and impair its overall credit profile. ====================== P U E R T O R I C O ====================== FIRSTBANK PUERTO RICO: Fitch Affirms 'B-' LT Issuer Default Rating ------------------------------------------------------------------ Fitch Ratings has affirmed the ratings for First Bancorp (FBP), including its 'B-' Long-Term Issuer Default Rating (IDR), 'B' Short-Term IDR and 'b-' Viability Rating (VR). In addition, the ratings have been removed from Negative Watch and assigned a Stable Rating Outlook. Fitch placed FBP's ratings on Rating Watch Negative on Oct. 5, 2017, due to the uncertainty of the impact caused by Hurricanes Irma and Maria on Puerto Rico in September 2017. KEY RATING DRIVERS IDRs and VRs Fitch believes the initial impact on FBP from hurricanes Irma and Maria was manageable, and disclosures from the U.S. Federal Government and the Commonwealth of Puerto Rico have brought greater visibility into the short-term impact of the storms, resulting in the removal of the Rating Watch Negative. The Stable Outlook reflects uncertainty over the medium- and long-term effects the hurricane may have on financial performance, which is already captured at the current rating level. Prior to the hurricanes, FBP's ratings had a Positive Outlook reflecting an improving overall financial profile, signaling that there was potential for upward rating momentum. FBP's ratings continue to be constrained by a challenging and uncertain operating environment. The hurricanes have complicated the Commonwealth of Puerto Rico's efforts to reverse outward migration, generate sustainable economic growth, and address its fiscal and debt imbalances. Additionally, the reduction in the federal corporate tax rate in the U.S. makes Puerto Rico less attractive on a relative basis. However, rebuilding efforts and a federal aid package from the U.S. government could have a positive short-to-medium-term impact on the island's economy. Longer-term prospects for the islands economy, outside the current rating time horizon, depend heavily on the effectiveness of fiscal and structural reforms. FPB's ratings are also constrained by poor asset quality relative to Puerto Rico peers and U.S. mainland banks. Although the hurricanes have not resulted in significant increases in nonperforming loans and net charge-offs to date relative to historical levels, Fitch believes that asset quality metrics could still deteriorate from current levels. Fitch notes that banks and other service providers in Puerto Rico provided temporary payment moratoriums to borrowers resulting in higher liquidity levels and reduced debt service obligations over the short term. These moratoriums have since expired and FBP's current ratings and outlook incorporate the possibility that credit quality could modestly worsen before it shows signs of improvement over the long term. Earnings performance has been in line with Fitch's expectations. For the first quarter of 2018 (1Q18), FBP reported net income of $33 million for an ROA of 1.10% and provision expense over the last two quarters has been generally in line with pre-hurricane periods. Fitch expects that earnings may also face headwinds going forward as FBP continues to work down its high levels of nonperforming assets. In Fitch's view, capital remains a rating strength and should provide an adequate buffer to potential losses stemming from credit quality deterioration. Based on a severe stress test incorporating reduced core earnings and significant increases in provisions, Fitch believes FBP's capital base is sufficient to withstand further credit deterioration and/or volatility. At 1Q18, FPB's TCE and CET1 stood at 14.8% and 19.2%, respectively, which are among the highest in Fitch's rated universe in the U.S. Given FBP's risk profile and uncertainties that remain regarding the Puerto Rico economy and hurricane impact, the company's higher capital ratios are viewed as prudent and supportive of the ratings. Although FBP's funding profile continues to be weak relative to higher rated banks, over the past several years, the company has reduced its reliance on noncore funding sources, particularly brokered deposits. In Fitch's view, this has notably improved the overall stability of its deposit base and funding profile. FBP continues to faces competition for deposits from locally based commercial banks, several U.S. and foreign banks, and over one-hundred cooperative banks, which limits deposit gathering abilities on the island and results in a higher cost of funds. In Fitch's view, the presents a modest constraint on FPB's rating over the long term. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Rating of '5' and Support Ratings Floor of 'NF' reflect Fitch's view that FBP is not considered systemically important, and therefore the probability of support is unlikely. The IDRs and VRs do not incorporate any support. LONG- AND SHORT-TERM DEPOSIT RATINGS FBP's uninsured deposit ratings at its subsidiary bank are rated one notch higher than FBP's IDR and senior unsecured debt rating because U.S. uninsured deposits benefit from depositor preference. U.S. depositor preference gives deposit liabilities superior recovery prospects in the event of default. HOLDING COMPANY FBP has a bank holding company (BHC) structure with the bank as the main subsidiary. IDRs and VRs are equalized with those of the operating company and bank, reflecting its role as the bank holding company, which is mandated in the U.S. to act as a source of strength for its bank subsidiaries. Double leverage is below 120% for the FBP parent company. RATING SENSITIVITIES IDRs and VRs FBP's operating environment is a higher influence on the ratings, and FBP's ratings are sensitive to changes in Fitch's view of the operating environment in Puerto Rico. However, given FBP's low rating level relative to Fitch's assessment of the operating environment in Puerto Rico, Fitch believes that a modest degree of deterioration in the island's operating environment over the longer term is already captured in FBP's current ratings. Fitch will continue to monitor data on Puerto Rico's economic and demographic trends to assess the medium- and long-term economic outlook on the island. Fitch believes FBP's ratings have upward rating potential given the significant improvements in the company's financial profile over the last several years. FBP's ratings could be upgraded should FBP's asset quality metrics, measured by nonperforming loans and net charge-offs, not deteriorate significantly from current levels over the next few quarters. Additionally, positive rating momentum could develop if FBP is able to maintain stable core earnings levels without increased reliance on short-term wholesale funding. FBP's current ratings incorporate an expectation that asset quality could deteriorate modestly from current levels. While not expected given FBP's strong capital levels, FBP's ratings could be downgraded if asset quality deteriorates significantly resulting in lower capital ratios relative to Puerto Rico and U.S. mainland peer banks. Also, while not envisioned over the outlook horizon, negative ratings pressure could develop if Fitch believes that the potential benefits of the planned structural and fiscal reforms in the recently approved fiscal plan will not be realized, resulting in a weaker operating environment. Conversely, positive rating action is possible if Fitch believes that the benefits from the planned structural and fiscal reforms will be effective resulting in a stronger operating environment. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Rating and Support Rating Floor are sensitive to Fitch's assumption around capacity to procure extraordinary support in case of need. HOLDING COMPANY If FBP became undercapitalized or increased double leverage significantly, there is the potential that Fitch could notch the holding company IDR and VR from the ratings of the operating companies. Fitch has affirmed the following ratings, removed the Rating Watch Negative, and assigned a Stable Rating Outlook: First BanCorp --Long-Term IDR at 'B-'; Outlook Stable; --Short-Term IDR at 'B'; --Viability Rating at 'b-'. FirstBank Puerto Rico --Long-Term IDR at 'B-'; Outlook Stable; --Long-term deposit at 'B'/'RR3'; --Short-Term IDR at 'B'; --Short-term Deposits at 'B'; --Viability at 'b-'. Fitch has affirmed the following ratings: First BanCorp --Support at '5'; --Support floor at 'NF'. FirstBank Puerto Rico --Support at '5'; --Support floor at 'NF'. POPULAR INC: Fitch Affirms 'BB-' Issuer Default Rating ------------------------------------------------------ Fitch Ratings has affirmed Popular Inc.'s (BPOP) 'BB-' Long-Term Issuer Default Rating (IDR), 'B' Short-Term IDR, and 'bb-' Viability Rating (VR). The ratings have been removed from Rating Watch Negative and assigned a Stable Rating Outlook. Fitch placed BPOP's ratings on Negative Watch on Oct. 5, 2017 due to the uncertainty of the impact of hurricanes Irma and Maria on Puerto Rico in September 2017. KEY RATING DRIVERS IDRS, VRs AND SENIOR DEBT Fitch believes the initial impact on BPOP from hurricanes Irma and Maria was manageable, and disclosures from the U.S. Federal Government and the Commonwealth of Puerto Rico have brought greater visibility into the short-term impact of the storms, resulting in the removal of the Rating Watch Negative. The Stable Outlook reflects uncertainty over the medium- and long-term effects the hurricane may have on financial performance, which is already captured at the current rating level. BPOP's ratings continue to be constrained by a challenging and uncertain operating environment. The hurricanes have complicated the Commonwealth of Puerto Rico's efforts to reverse outward migration, generate sustainable economic growth, and address its fiscal and debt imbalances. Additionally, the reduction in the federal corporate tax rate in the U.S. makes Puerto Rico less attractive on a relative basis. That said, rebuilding efforts and a federal aid package from the U.S. government could have a positive short- to medium-term impact on the island's economy. Longer-term prospects for the island's economy, outside the current Outlook horizon, depend heavily on the effectiveness of fiscal and structural reforms. BPOP's ratings are also constrained by poor asset quality relative to U.S. mainland banks. Although the hurricanes have not resulted in significant increases in nonperforming loans and net charge- offs to date relative to historical levels, Fitch believes that asset quality metrics could still experience deterioration. Banks and other service providers in Puerto Rico provided temporary payment moratoriums to borrowers resulting in higher liquidity levels and reduced debt service obligations over the short term. These moratoriums have since expired, and BPOP's current rating and Outlook incorporate the possibility that credit quality could modestly worsen before beginning to improve over the long term. Earnings performance has been in line with Fitch's expectations. BPOP's solid core earnings strength should provide an offset and help absorb future provisioning needs. For 1Q18, BPOP reported net income of $91m for an ROA of 0.84% despite a heightened provision expense of $71 million provision attributed largely to the estimated impact of the Hurricane Irma and Maria as well as a $12 million provision for the U.S. taxi medallion portfolio. In Fitch's view, capital remains a rating strength for BPOP and should provide an adequate buffer to potential losses stemming from credit quality deterioration. Based on a severe stress test incorporating reduced core earnings and significant increases in provisions, Fitch believes BPOP's capital base is sufficient to withstand further credit deterioration and/or volatility. For 1Q18, BPOP's TCE and CET1 stood at 9.7% and 16.8%, respectively, which are on the high end of Fitch's rated universe in the U.S. Given BPOP's risk profile and uncertainties that remain regarding the Puerto Rico economy and hurricane impact, Fitch views the company's higher capital ratios as prudent and supportive of ratings. Overall, compared to peers, BPOP has a leading deposit franchise and a solid funding profile driven by a favorable loan-to-deposit ratio. Since the hurricanes, weak loan demand in Puerto Rico coupled with increased deposits as a result of payment moratoriums offered by banks and other service providers on the island has pushed BPOP's loan to deposit ratio to 65% at 1Q18. Historically, BPOP's funding profile has been weaker when compared to U.S. bank peers given greater reliance on non-core funding sources. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Rating of '5' and Support Ratings Floor of 'NF' reflect Fitch's view that BPOP is not considered systemically important, and therefore the probability of support is unlikely. The IDRs and VRs do not incorporate any support. LONG- AND SHORT-TERM DEPOSIT RATINGS BPOP's uninsured deposit ratings at its subsidiary banks are rated one notch higher than BPOP's IDR and senior unsecured debt rating because U.S. uninsured deposits benefit from depositor preference. U.S. depositor preference gives deposit liabilities superior recovery prospects in the event of default. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Hybrid capital instruments issued by BPOP are notched down from the company's VR in accordance with Fitch's assessment of each instrument's respective non-performance and relative loss severity risk profiles, which may vary considerably. BPOP's preferred stock and trust preferred stock rating of 'B-' is three notches below its Viability Rating (VR) of 'bb-', in accordance with Fitch's assessment of the instruments' non-performance and loss severity risk profiles for issuers that have VRs rated below 'bb+'. HOLDING COMPANY BPOP has a bank holding company (BHC) structure with the bank as the main subsidiary. IDRs and VRs are equalized with those of the operating companies and banks, reflecting its role as the bank holding company, which is mandated in the U.S. to act as a source of strength for its bank subsidiaries. Double leverage is below 120% for the BPOP parent company. SUBSIDIARY AND AFFILIATED COMPANY All of the BPOP entities factor in a high probability of support from the parent. This reflects the fact that performing parent banks have very rarely allowed subsidiaries to default. It also considers the high level of integration, brand, management, financial and reputational incentives to avoid subsidiary defaults. RATING SENSITIVITIES IDRS, VRs AND SENIOR DEBT Fitch believes BPOP's ratings are solidly situated at the current levels and does not envision upward rating potential for the foreseeable future. BPOP's operating environment in Puerto Rico is an important influence on its ratings. Fitch will continue to monitor data on Puerto Rico's economic and demographic trends to assess the medium- and long-term economic outlook on the island. Negative rating pressure could develop if Fitch believes that the potential benefits of the planned structural and fiscal reforms in the recently approved fiscal plan will not be realized, resulting in a weaker operating environment. Conversely, positive rating momentum could build over time if Fitch believes that the benefits from the planned structural and fiscal reforms will be effective, resulting in a stronger operating environment. Fitch expects to receive additional clarity on the hurricanes' full impact on asset quality over the next few quarters. Incorporated into today's rating action is the expectation that there could be some additional asset quality deterioration stemming from the hurricanes. BPOP's Outlook could be revised to Negative from Stable if asset quality deteriorates significantly from current levels causing increased provisions that materially impact capital levels. The Support Rating and Support Rating Floor are sensitive to Fitch's assumption around capacity to procure extraordinary support in case of need. LONG- AND SHORT-TERM DEPOSIT RATINGS The ratings of long- and short-term deposits issued by BPOP subsidiaries are primarily sensitive to any change in the company's IDRs. Should the Long-Term IDR be downgraded, deposit ratings could be similarly affected. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES The ratings of hybrid securities are sensitive to any change in BPOP's VR or to changes in BPOP's propensity to make coupon payments that are permitted but not compulsory under the instruments' documentation. HOLDING COMPANY If BPOP became undercapitalized or increased double leverage significantly, Fitch could notch the holding company IDR and VR from the ratings of the operating companies. SUBSIDIARY AND AFFILIATED COMPANIES As the IDRs and VRs of the subsidiaries are equalized with those of BPOP to reflect support from their ultimate parent, they are sensitive to changes in the parent's propensity to provide support, which Fitch currently does not expect, or from changes in BPOP's IDRs. Fitch has affirmed the following ratings, removed the Rating Watch Negative, and assigned a Stable Rating Outlook: Popular, Inc. --Long-term IDR at 'BB-'; Outlook Stable --Senior unsecured at 'BB-'; --Short-term IDR at 'B'; --Short-term Debt at 'B'. --Viability rating at 'bb-'; --Preferred stock at 'B-'. Popular North America, Inc. --Long-term IDR at 'BB-'; Outlook Stable --Senior unsecured at 'BB-'; --Short-term IDR at 'B'; --Short-term Debt at at B --Viability rating at 'bb-'. Banco Popular North America --Long-term IDR at 'BB-'; Outlook Stable --Long-term deposits at 'BB'; --Short-term IDR at 'B'; --Short-term deposits at 'B'. --Viability rating at 'bb-'. Banco Popular de Puerto Rico --Long-term IDR at 'BB-'; Outlook Stable --Short-term IDR at 'B'; --Short-term deposits at 'B'; --Viability rating at 'bb-'. BanPonce Trust I --Trust preferred at 'B-'. Popular Capital Trust I --Trust preferred at 'B-'. Popular Capital Trust II --Trust preferred at 'B-'. Popular North America Capital Trust I --Trust preferred at 'B-'. Popular Capital Trust III --Trust preferred at 'B-' Fitch has affirmed the following ratings: Popular, Inc. --Support at '5'; --Support floor at 'NF'. Popular North America, Inc. --Support at '5'; --Support floor at 'NF'. Banco Popular North America --Support at '5'; --Support floor at 'NF'. Banco Popular de Puerto Rico --Support at '5'; --Support floor at 'NF'. ===================================================== S T. V I N C E N T & T H E G R E N A D I N E S ==================================---================ ST. VINCENT & THE GRENADINES: Moody's Affirms B3 Ratings -------------------------------------------------------- Moody's Investors Service has affirmed the Government of St Vincent and the Grenadines' B3 long-term issuer rating and maintained the stable outlook. Concurrently, Moody's affirmed St Vincent and the Grenadines' senior unsecured debt rating of B3 and its short-term rating of Not Prime (NP). The affirmation of the B3 ratings reflects the following factors: 1) Small open economy highly vulnerable to external shocks; 2) High government debt burden, in line with rated peers. The stable outlook captures Moody's expectations that growth will accelerate and the fiscal deficit will remain moderate over the next two years, conditions that will allow the government debt burden to remain broadly stable. St Vincent and the Grenadines' local-currency bond and deposit ceilings remains unchanged at Ba3. The foreign-currency bond and bank deposit ceilings also remain unchanged at Ba3/NP. RATINGS RATIONALE FIRST DRIVER -- SMALL ISLAND ECONOMY HIGHLY VULNERABLE TO EXTERNAL SHOCKS St Vincent's small economic scale and dependence on tourism- related activities make the sovereign particularly vulnerable to weather-related shocks -- and natural disasters. Like other Caribbean nations, St Vincent's economy is not diversified and it is highly dependent on tourism, which accounts for 23% of GDP, 22% of total employment, and 48% of export receipts last year. The country is highly susceptible to climate change and weather- related shocks. Small island economies such as St Vincent and the Grenadines are significantly more exposed than other countries since potential damage and associated costs from these type of events tends to be elevated in relation to GDP. This vulnerability explains St Vincent sluggish average GDP growth of just 0.6% between 2010 and 2017, which incorporates weather-related events in 2010, 2011 and 2013. After years of weak economic growth, St Vincent is poised for an economic recovery. Moody's expects real GDP to grow by more than 2% on average in 2018-19. Growth will benefit from the completion of the Argyle International Airport, which opened in February 2017, and will improve connectivity to key tourism source countries such as Canada and the United States. In addition to the opening of the airport, the development of the Canouan marina, the construction of a geothermal plant, and the reopening of a luxury hotel will support construction activities in the next few years and a pick-up in tourism activity over the medium term, once these infrastructure projects are completed. SECOND DRIVER -- HIGH GOVERNMENT DEBT BURDEN St Vincent's government debt burden is a key rating constraint, but consistent with B3-rated peers. At 64% of GDP at the end of 2017, government debt is the 16th highest among B-rated sovereigns, and above the B-rated median of 57% of GDP. Since 2008, government debt has increased by 26 percentage points of GDP, driven by a combination of disaster-related budgetary outlays, the construction of the Argyle International Airport, and low growth. Moody's expects the fiscal deficit to remain around 1.3% of GDP in 2018 and 2019, while the primary balance will remain in surplus, averaging 1.4% of GDP. Compared with the government's budget for 2018, Moody's forecasts a smaller fiscal deficit because the rating agency expects capital expenditures to fall short of budgeted amounts. Moody's expects the debt burden to remain broadly stable as real GDP growth accelerates to above 2% per year and fiscal deficits remain moderate. The government balance sheet is exposed to contingent liabilities arising from the debt of state-owned enterprises. Including the debt of state-owned enterprises increases public sector debt to more than 80% of GDP. Risks associated with a high government debt burden are somewhat offset by a debt profile which benefits from a large share of concessional debt with multilateral and bilateral creditors contracted at favorable terms, i.e., low interest rates, and long maturities. Commercial external debt is relatively small, at 7% of GDP, and consists of bonds and Treasury bills held by non- residents. The concessional nature of government debt has kept interest costs relatively low, with interest payments representing only 7.8% of government revenues in 2017, below the B-rated median of 9.2%. Relatively high debt ratio limits the government's financial flexibility to respond to adverse shocks, which tend to be recurrent given St Vincent's high incidence for hurricanes and tropical storms. To manage this condition, the government has begun building fiscal buffers with resources earmarked for natural disasters. The 2017 budget incorporated contributions to a Contingencies Fund, though the size of the contributions, at 0.5% of GDP, remain small. RATIONALE FOR STABLE OUTLOOK The stable outlook reflects Moody's expectations that fiscal deficits will remain low over the next two years and growth will accelerates, conditions that will allow government debt ratios to stabilize. WHAT COULD CHANGE THE RATING UP/DOWN There is limited potential for upward rating changes in the near term. Higher sustained economic growth combined with a faster pace of fiscal consolidation, would be credit positive and supportive of a higher rating. A significant improvement in the government's credit profile associated with a steady reduction in the debt-to- GDP ratio could place upward pressure on the rating. A deterioration in the government balance sheet, due to the materialization of contingent liabilities from state-owned enterprises, or increased commercial borrowing would be credit negative. Downward pressure on the rating would emerge if a large adverse shock, i.e., major hurricane, were to lead to a substantial deterioration of fiscal and debt metrics or jeopardize balance of payments sustainability. GDP per capita (PPP basis, US$): 11,190 (2016 Actual) (also known as Per Capita Income) Real GDP growth (% change): 0.8% (2016 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 1.0% (2016 Actual) Gen. Gov. Financial Balance/GDP: 0.6% (2016 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: -15.9% (2016 Actual) (also known as External Balance) External debt/GDP: 48.4% (2016 Actual) Level of economic development: Low level of economic resilience Default history: No default events (on bonds or loans) have been recorded since 1983. On April 26, 2018, a rating committee was called to discuss the rating of the Government of St. Vincent and the Grenadines. The main points raised during the discussion were: The issuer's fiscal or financial strength, including its debt profile, has increased. The issuer has become less susceptible to event risks. Other views raised included: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutional strength/ framework, have not materially changed. The issuer's governance and/or management, have not materially changed. The principal methodology used in these ratings was Sovereign Bond Ratings published in December 2016. ================= X X X X X X X X X ================= LATAM: Scraps $2 Billion Worth of Bond Sales as U.S. Rates Jump ---------------------------------------------------------------- Pablo Rosendo Gonzalez at Bloomberg News reports that the angst surrounding higher U.S. rates has spread to Latin America's bond market. Bloomberg News report that four South American companies postponed at least $2 billion of planned U.S. dollar bond sales, according to five people familiar with the situation. This happened in the wake of 10-year U.S. Treasury yields climbing above 3 percent for the first time in four years and the dollar hitting its strongest level since January, according to Bloomberg News. Argentina's Petroquimica Comodoro Rivadavia SA and Telecom Argentina SA, Colombia's Transportadora de Gas Internacional SA and Paraguay's Banco Regional SAECA, suspended their debt deals after investors demanded yields about 100 basis points higher than expected, said the people, who asked not to be named as talks were private, Bloomberg News relates. The banks working with the companies to arrange meetings with investors include Citigroup Inc., JPMorgan Chase & Co. and HSBC Holdings Plc, Bloomberg News says. While PCR, TGI and Banco Regional declined to comment, Telecom, Argentina's second biggest company, gave a reason for the postponement: the Federal Reserve, Bloomberg News discloses. "High volatility conditions in the market generated by the increase of 10-year T bond had a huge impact in all the emerging market planned sales, including Argentina," the company said in email, Bloomberg News notes. "We will postpone until markets normalize," they added. Amid the cancellations, Mexico's state-controlled oil company, Petroleos Mexicanos, has found an alternative country to sell bonds: Switzerland, Bloomberg News relays. Avoiding the U.S. volatility, it sold 365 million Swiss francs ($366 million) of bonds due in 2023 at a 1.75 percent yield after having initially offered 250 million Swiss francs of debt, according to a company press release, Bloomberg News adds. The sale was successfully completed "taking advantage of the window of opportunity presented in the financial market," Pemex said, Bloomberg News says. * BOND PRICING: For the Week From May 7 to May 11, 2018 ------------------------------------------------------- Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- BA-CA Finance Cayman Lt 0.518 62.07 KY EUR AES Tiete Energia SA 6.7842 1.109 4/15/2024 BR BRL Argentina Bogar Bonds 2 39.36 2/4/2018 AR ARS Automotores Gildemeister 8.25 73.25 5/24/2021 CL USD Automotores Gildemeister 6.75 67 1/15/2023 CL USD Automotores Gildemeister 8.25 73.25 5/24/2021 CL USD Automotores Gildemeister 6.75 65.5 1/15/2023 CL USD CA La Electricidad 8.5 63.664 4/10/2018 VE USD Caixa Geral De Depositos 1.439 63.167 KY EUR Caixa Geral De Depositos 1.469 KY EUR CSN Islands XII Corp 7 68 BR USD CSN Islands XII Corp 7 66.266 BR USD Decimo Primer Fideicomiso 6 53.225 10/25/2041 PA USD Decimo Primer 4.54 43.127 10/25/2041 PA USD Dolomite Capital 13.217 73.108 12/20/2019 CN ZAR Enel Americas SA 5.75 56.172 6/15/2022 CL CLP Gol Linhas Aereas SA 10.75 35.861 2/12/2023 BR USD Gol Linhas Aereas SA 10.75 35.601 2/12/2023 BR USD Inversora Electrica 6.5 67.625 9/26/2017 AR USD Inversora Electrica 6.5 67.625 9/26/2017 AR USD MIE Holdings Corp 7.5 64.78 4/25/2019 HK USD MIE Holdings Corp 7.5 64.982 4/25/2019 HK USD NB Finance Ltd 3.88 61.816 2/7/2035 KY EUR Noble Holding 7.7 74.433 4/1/2025 KY USD Noble Holding 5.25 56.279 3/15/2042 KY USD Noble Holding 8.7 71.881 4/1/2045 KY USD Noble Holding 6.2 60.129 8/1/2040 KY USD Noble Holding 6.05 58.38 3/1/2041 KY USD Odebrecht Finance Ltd 7.5 42.5 KY USD Odebrecht Finance Ltd 5.125 56.938 6/26/2022 KY USD Odebrecht Finance Ltd 7 68.053 4/21/2020 KY USD Odebrecht Finance Ltd 7.125 41.366 6/26/2042 KY USD Odebrecht Finance Ltd 4.375 40.002 4/25/2025 KY USD Odebrecht Finance Ltd 5.25 39.211 6/27/2029 KY USD Odebrecht Finance Ltd 6 44.75 4/5/2023 KY USD Odebrecht Finance Ltd 5.25 39.018 6/27/2029 KY USD Odebrecht Finance Ltd 7.5 42.95 KY USD Odebrecht Finance Ltd 4.375 40.363 4/25/2025 KY USD Odebrecht Finance Ltd 7.125 41.635 6/26/2042 KY USD Odebrecht Finance Ltd 6 52.625 4/5/2023 KY USD Odebrecht Finance Ltd 5.125 55.873 6/26/2022 KY USD Odebrecht Finance Ltd 7 67.368 4/21/2020 KY USD Petroleos de Venezuela 8.5 74.5 10/27/2020 VE USD Petroleos de Venezuela 6 30.458 5/16/2024 VE USD Petroleos de Venezuela 6 30.517 11/15/2026 VE USD Petroleos de Venezuela 9.75 35.677 5/17/2035 VE USD Petroleos de Venezuela 9 39.279 11/17/2021 VE USD Petroleos de Venezuela 5.375 30.267 4/12/2027 VE USD Petroleos de Venezuela 8.5 72.5 10/27/2020 VE USD Petroleos de Venezuela 12.75 45.278 2/17/2022 VE USD Petroleos de Venezuela 6 30.367 5/16/2024 VE USD Petroleos de Venezuela 6 30.387 11/15/2026 VE USD Petroleos de Venezuela 9 39.316 11/17/2021 VE USD Petroleos de Venezuela 9.75 35.893 5/17/2035 VE USD Petroleos de Venezuela 6 28.346 10/28/2022 VE USD Petroleos de Venezuela 5.5 30.123 4/12/2037 VE USD Petroleos de Venezuela 12.75 45.23 2/17/2022 VE USD Polarcus Ltd 5.6 75 3/30/2022 AE USD Provincia del Chubut 4 10/21/2019 AR USD Siem Offshore Inc 4.04527 69.5 10/30/2020 NO NOK Siem Offshore 3.75176 65.75 12/28/2021 NO NOK STB Finance 2.05771 56.243 KY JPY Sylph Ltd 2.367 64.438 9/25/2036 KY USD US Capital 1.63611 54.774 12/1/2039 KY USD US Capital 1.63611 54.774 12/1/2039 KY USD USJ Acucar 9.875 67 11/9/2019 BR USD USJ Acucar 9.875 67 11/9/2019 BR USD Venezuela 13.625 68.25 8/15/2018 VE USD Venezuela 7.75 44.065 10/13/2019 VE USD Venezuela 11.95 40.785 8/5/2031 VE USD Venezuela 12.75 45.19 8/23/2022 VE USD Venezuela 9.25 39.645 9/15/2027 VE USD Venezuela 11.75 40.005 10/21/2026 VE USD Venezuela 9 36.285 5/7/2023 VE USD Venezuela 9.375 37.69 1/13/2034 VE USD Venezuela 13.625 72.25 8/15/2018 VE USD Venezuela 7 34.23 3/31/2038 VE USD Venezuela 7 59.19 12/1/2018 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 2018. 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. . * * * End of Transmission * * *