/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180828.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, August 28, 2018, Vol. 19, No. 170 Headlines A R G E N T I N A AES ARGENTINA : Fitch Affirms 'B' LT FC IDR, Outlook Stable B R A Z I L JBS SA: Aims to Continue Reducing Debt JBS SA: Incurs BRL826.9 Million Net Loss in Second Quarter MARFRIG GLOBAL: Fitch Affirms 'BB-' LT IDRs, Outlook Stable NACION SEGUROS: Fitch Affirms 'B' IFS Rating, Outlook Stable OI SA: Fitch Assigns 'B-'/'RR4' Rating on Sr. Unsec. Notes OI SA: Owners to Focus on Improving Business Before Selling Stakes J A M A I C A DIGICEL LIMITED: Fitch Cuts LT FC IDR to 'B-', Outlook Negative JAMAICA: Opposition Chides Gov't for Floating Exchange Rate Policy S U R I N A M E SURINAME: Fitch Affirms 'B-' Long-Term IDR, Outlook Stable T R I N I D A D & T O B A G O TRINIDAD & TOBAGO: Economic Growth Prediction Below Estimates V E N E Z U E L A VENEZUELA: Maduro Sets Up Internal Commerce Ministry - - - - - ================= A R G E N T I N A ================= AES ARGENTINA: Fitch Affirms 'B' LT FC IDR, Outlook Stable ---------------------------------------------------------- Fitch Ratings downgraded the Local Currency Issuer Default Ratings (LC IDRs) of four Argentine utilities to 'B' from 'BB-', removed the ratings from Rating Watch Negative and assigned a Stable Outlook. Fitch has also affirmed the four utilities' Foreign Currency IDRs at 'B' with Stable Rating Outlooks. The utilities included in Fitch's rating actions are: -- AES Argentina Generacion S.A.; -- Capex S.A.; -- Genneia S.A.; -- Pampa Energia S.A. The downgrade of the LC IDRs to 'B' reflects the increased reliance on the Argentine government (B/Stable) subsidies to Compania Administradora del Mercado Mayorista Electrico (CAMMESA), in order to fund the deficit caused by disparity between Argentine Peso tariffs charged to end-users and US Dollar linked fees paid to generation companies. On Aug. 1, 2018, the Ministry of Energy announced tariff increase of 24% for residential users and 40% for industrial/large users. Fitch estimates the announced tariff increases will be in insufficient to reverse the deficit increase caused by the Argentine Peso depreciation thus far in 2018 by 60% against the U.S. dollar since the start of the year. In conjunction with downgrading the LC IDRs, Fitch affirmed the four utilities' Foreign Currency IDRs at 'B' with Stable Rating Outlooks. The FC IDRs reflect the country's high inflation and economic volatility, a weak albeit improved external liquidity position and large fiscal and current account deficits implying heavy external borrowing, but from a favorable starting point in terms of leverage. These weaknesses are balanced by structural strengths including high per capita income, a large and diversified economy and improved governance scores. The senior unsecured notes downgrade to 'B'/'RR4' from 'B+'/'RR3' for AES Argentina, Capex, Genneia and Pampa Energia is due to the downgrade of their LC IDRs to the same level as their FC IDRs, which per Fitch's "Country-Specific Treatment of Recovery Ratings" criteria no longer allows for a rating uplift for these obligations. Previously, the two-notch differential between the FC and LC IDRs, allowed a one notch uplift from the FC IDR for recovery. The associated Argentine corporates are now capped at an average recovery rating of 'RR4', as Argentina, per the aforementioned criteria, is categorized within Group D having a soft cap at 'RR4', which assumes a recovery in the range of 31% to 50% although a bespoke recovery analysis for each of these companies yields a higher than 70% recovery given a default. KEY RATING DRIVERS Insufficient Tariff Adjustments: Fitch believes the tariff adjustments announced on Aug. 1, 2018, although a positive step, do not adequately offset the increased need for government support, caused by the Argentine Peso deprecation in 2018. Fitch's estimates the proposed tariffs that average an increase of 24% for residential users and 40% for large & industrial consumers result in cash inflows from end-user to CAMMESA of approximately ARS119.1 billion or USD4.6 billion, down from USD5.6 billion in 2017, when applying Fitch's average 2018 exchange rate of USD/ARS 26.10. Fitch estimates the cost of electricity for the sector to CAMMESA will be approximately USD8.7 billion in 2018, when applying the implied monomic price of USD62.10 MWh in 2017 to the pro rata net generation of 140.3 TWh with an installed capacity of 37.4GWs. With a cost of USD8.7 billion, the pro forma USD4.6 billion of cash inflow from the tariff increase results in a pro forma deficit of 53% or USD 4.6 billion. Thus far, the government reported transferring USD1.84 billion in funds between May (USD639 million) and June (USD1.2 billion) to CAMMESA. The downgrade of the LC IDRs to 'B' in line with the sovereign rating is reflective of the systems increased dependency when compared to 2017, to its ultimate counterparty, the Argentine government. Fitch does not expect the system will reverse to being a self-sustainable and balanced system in the short to medium term, as Fitch's believes it will be politically and economically difficult for the government to increase tariffs sufficiently to cover the costs to generation companies, and the recent tariff adjustments did not address the system's vulnerability to potential Argentine Peso depreciation. System Vulnerable to Peso Depreciation: Fitch believes continued Argentine peso depreciation will increase the government funded energy subsidies. Fitch estimates a 1% depreciation in the Argentine peso to the U.S. dollar results in an approximate increase in the annual deficit of nearly USD45.0 million, all other factors being held equal. In order for the system to be balanced, the regulatory frameworks must reflect either an FX pass through to end-users or an adjustment in the remuneration fees paid the generation companies. Otherwise, the system remains vulnerable to the volatile Argentine Peso. Uncertain Regulatory Environment: Fitch believes Argentina's current economic and political environment increases the uncertainty that the current administration will be able to effectively implement the required electricity regulatory tariff adjustments in order for the system to be self-sustainable. The companies' operate in a highly strategic sector where the government both has a role as the price/tariff regulator and also controls subsidies for industry players. Electricity prices continue to remain sub-optimal compared with other countries in the region and, given the current macroeconomic challenges Argentina is facing, there is further uncertainty. Fitch assumes the current administration continues to be committed to and prioritizes developing a long-term sustainable regulatory environment, moving toward a more unregulated market and reducing the deficit. Counterparty Exposure: Argentine generation companies depend on payments from CAMMESA, which acts as an agent on behalf of an association representing agents of electricity generators, transmission, distribution and large consumers or the wholesale market participants (Mercado Mayorista Electrico or MEM). Although since late 2016, CAMMESA's payment track record has been consistent and on time (every 42 days), historically; payments have been volatile given that the agency depends partially on the Argentine government for funds to make payments. Electric companies in Argentina are exposed to potential delays in payment from CAMMESA and also to risks in fuel supply, as the government's agency centralizes the country's fuel imports. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- The Argentine government will continue to subsidize at least 50% of the Electricity sector to assure CAMMESA payments are made within 42 days; -- No material regulatory adjustments to tariffs until after the 2019 Presidential Election. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- An upgrade to the ratings of Argentina could result in a positive rating action. -- Given the issuer's high dependence on the subsidies by CAMMESA from the Treasury, any further regulatory developments leading to a more independent market less reliant on support from the Argentine government could positively affect the company's collections/cash flow. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A downgrade to the ratings of Argentina could result in a negative rating action. FULL LIST OF RATING ACTIONS Fitch has taken the following rating actions: AES Argentina S.A. -- LT FC IDR affirmed at 'B'; Outlook Stable; -- LC LT IDR downgraded to 'B' from BB-'; removed from Rating Watch Negative and assigned a Stable Outlook; -- Long-term senior unsecured notes due 2024 downgraded to 'B'/'RR4' from B+'/'RR3' and removed Rating Watch Negative. Capex S.A. -- LT FC IDR affirmed at 'B'; Outlook Stable; -- LC LT IDR downgraded to 'B' from BB-'; removed from Rating Watch Negative and assigned a Stable Outlook; -- International senior unsecured bond ratings downgraded to 'B'/'RR4' from B+'/'RR3' and removed Rating Watch Negative. Genneia S.A. -- LT FC IDR affirmed at 'B'; Outlook Stable; -- LC LT IDR downgraded to 'B' from BB-'; removed from Rating Watch Negative and assigned a Stable Outlook; -- International senior unsecured bond ratings downgraded to 'B'/'RR4' from B+'/'RR3'and removed Rating Watch Negative. Pampa Energia S.A. -- LT FC IDR affirmed at 'B'; Outlook Stable; -- LC LT IDR downgraded to 'B' from BB-'; removed from Rating Watch Negative and assigned a Stable Outlook; -- International senior unsecured bond ratings downgraded to 'B'/'RR4' from B+'/'RR3' and removed Rating Watch Negative. =========== B R A Z I L =========== JBS SA: Aims to Continue Reducing Debt -------------------------------------- Trevor Reid at Greenley Tribune reports that despite reporting a net loss for the second quarter of 2018, JBS S.A. officials maintained optimism about the company's net debt reduction as they seek to continue deleveraging the company. JBS S.A. reported a net loss from the second quarter of 2018 of BRL826.89 million, equivalent to $211.81 million, according to Greenley Tribune. In the second quarter of 2017, the company reported a net income of BRL474.8 million, or $121.62 million, the report notes. Company officials attributed much of the challenging second quarter this year to the Brazilian truckers' strike, which JBS officials believe had an equivalent $28.92 million impact on its Seara operations in Brazil, the report relays. From late May to early June, more than 500,000 Brazilian truckers went on strike and blockaded roads in protest of high domestic oil prices, the report notes. JBS Brazil president Wesley Batista said in a call to investors that they expect most of the strike's impact on the company was reported in the second quarter results, the report discloses. "We think that . . . . there will be very little residual effect on the following quarters," he said, the report says. JBS USA president Andre Nogueira said the quarter showed the benefits of JBS's strategy to diversify its products and markets, the report notes. The company's beef operations in the U.S. generated a net revenue of $5.6 billion in the second quarter of 2018, compared to $5.53 billion the same time last year, the report relays. Officials said U.S. beef operations were bolstered by greater capital availability and strong demand for beef in domestic U.S. and export markets, the report says. U.S. beef exports grew more than 26 percent in 2018, the report notes. Growth improved particularly in the company's organic, grass-fed and natural businesses, the report discloses. With a target of reducing the company's leverage to 2x by the end of 2019, company officials don't see merger or acquisition activity in the near future, the report relays. JBS S.A. Chief Operating Officer Gilberto Tomazoni said that could change, hinging on the company's litigation with the Department of Justice to have an initial public offering in the U.S, the report notes. "Maybe after we are able to make IPO in the U.S., we start a new phase of JBS," Mr. Tomazoni said, the report discloses. "That could be M&A activity. Today, we are just focused on deleveraging the company," he added. As reported in the Troubled Company Reporter-Latin America on May 22, 2018, Moody's Investors Service upgraded JBS S.A. (JBS)'s corporate family rating to B1 from B3. At the same time, the senior unsecured ratings of its wholly-owned subsidiary JBS USA Lux S.A. ("JBS USA") were upgraded to B1 from B2 and its senior secured ratings to Ba3 from B1. The outlook for all ratings is stable. JBS SA: Incurs BRL826.9MM Net Loss in 2Q as Truckers Strike ----------------------------------------------------------- Ana Mano at Reuters reports that Brazilian meatpacker JBS SA posted a wider-than-expected net loss in the second quarter as a truckers strike in May and a sharp rise in currency-related charges affected the results. In a securities filing, JBS reported a BRL826.9 million ($213.88 million) net loss in the period, greater than the BRL144 million loss in a Thomson Reuters consensus estimate. The company booked a one-off BRL113 million loss related to the truckers' strike, which paralyzed Brazil's roads for 11 days, and a 113 percent rise in total financial expenses to BRL4.72 billion in the quarter, according to the filing, according to Reuters. Issues affecting JBS's Seara processed food division in Brazil and its pork and chicken businesses in the United States also weighed, the filing showed, the report notes. Seara's net revenue fell by 5.4 percent to BRL4 billion after a Russian ban on Brazilian pork meat imports and the effects of the truckers' strike reduced sales volumes, the report relays. Exports at Seara fell by 19 percent last quarter, it said, the report notes. The report discloses that ongoing pressure on JBS's U.S. pork business also hit the company, which reported a 6.3 percent drop in net revenue at that division to $1.43 billion. At the same time, JBS's Pilgrim's Pride division recorded the sharpest margin contraction of all its units, a 6.35 basis point fall, the filing showed, the report says. In a note to clients, Barclays analysts Benjamin Theurer and Antonio Hernandez had anticipated results could be affected by the weak chicken consumption environment in the United States and weaknesses at the Seara and the U.S. pork businesses, the report adds. As reported in the Troubled Company Reporter-Latin America on May 22, 2018, Moody's Investors Service upgraded JBS S.A. (JBS)'s corporate family rating to B1 from B3. At the same time, the senior unsecured ratings of its wholly-owned subsidiary JBS USA Lux S.A. ("JBS USA") were upgraded to B1 from B2 and its senior secured ratings to Ba3 from B1. The outlook for all ratings is stable. MARFRIG GLOBAL: Fitch Affirms 'BB-' LT IDRs, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed Marfrig Global Foods S.A.'s (Marfrig) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB-', its National Scale rating at 'A(bra)', and Marfrig Holdings (Europe) and MARB BondCo PLC's senior unsecured notes at 'BB-' following the announced sale of Keystone Foods to Tyson Foods (rated BBB/Stable) for $2.4 billion. The Rating Outlook is Stable. Overall, Fitch views the transaction as positive and expects it to strengthen Marfrig's credit profile within the 'BB-' rating level at/or near to its positive rating triggers. After the conclusion of both transactions (Keystone sale and the acquisition of National Beef), Marfrig's capital structure will improve by reducing net debt by approximately $0.8 billion, which is somewhat offset by a higher business risk profile related to Marfrig's focus on the commodity beef business. Effectively, Marfrig has substituted the recently acquired National Beef for Keystone in the company's business mix; some of the higher commodity beef risks are offset by the lack of historical correlation between the U.S. and Brazilian cattle cycles. Further, Marfrig will own 51% of much larger National Beef versus 100% of Keystone, and although National Beef's EBITDA will be consolidated 100%, there will be cash flow leakage due to substantial minority interests. The impact of this leakage on cash flow will be somewhat offset by expected higher capex needs at Keystone versus National Beef's capex needs. KEY RATING DRIVERS Keystone Sale Accelerates Deleveraging: Fitch expects Marfrig's net leverage to improve upon completion of the Keystone divestment assuming cash proceeds are used to repay debt. Fitch estimates that pro forma net debt/EBITDA could decrease to below 3x (including minorities dividends paid to minorities and factoring) from 5.1x as of fiscal year-end 2017 (FYE17); Fitch expects Marfrig's pro forma EBITDA to reach about USD0.8 billion-USD0.9 billion. The company increased its slaughtering capacity to 35,000 heads/day from about 23,000 heads/day in 2017 due to the acquisition of National Beef Packing Company, LLC's (National Beef) two large processing facilities that are located in Liberal and Dodge City, KS. Keystone Foods Divestments: On Aug. 20, 2018, Marfrig announced the divestment of Keystone to Tyson Foods for a total enterprise value (EV) of USD2.2 billion (USD1.4 billion of cash received) or about 10x EBITDA. All assets of Keystone will be sold, except for the beef patty processing plant located in North Baltimore, OH, which is one of the largest hamburger plants in the United States. The transaction is expected to be concluded in the coming months and is subject to BNDESPar approval and regulatory approval in the U.S. and Asia. The Keystone divestment follows Marfrig's acquisition of 51% of the membership interests in National Beef for a total amount of USD969 million in June 2018 that was financed by a bridge loan. National Beef is the fourth-largest beef processor in the United States and accounts for about 13% of the U.S. cattle slaughtering capacity. Product Concentration: While helping the company reducing leverage, this sale would increase the company's product concentration and therefore business risk, as Keystone provided relatively stable cash flow. Keystone generated most of its revenues through the sale of processed poultry products in the U.S. to McDonald's. Geographical Diversification: Marfrig's ratings incorporate the company's geographic diversification in the volatile protein commodity industry. Fitch estimates that about 62% of EBITDA will be generated from National Beef and the remaining in South America (mostly in Brazil). The geographic diversification helps to reduce risks related to disease, trade restrictions, and currency fluctuation. Beef Outlook: Marfrig's competitive advantages stem from a favorable environment to raise cattle in Brazil and the U.S., the large scale of operations and long-term relationship with farmers, customers, and distributors. Global beef fundamentals are expected to remain positive in the next couple years for Brazilian and U.S. producers due to increased demand and better cattle availability. Global beef production is forecast to grow by nearly 2% in 2018 according to the USDA. Among the significant industry risks are a downturn in the economy of a given export market, the imposition of increased tariffs or sanitary barriers, and strikes or other events that may affect the availability of ports and transportation. DERIVATION SUMMARY Marfrig ratings reflect its solid business profile and geographic diversification as a pure play in the beef industry with a large presence in South America (notably Brazil) and in the U.S. with National Beef. Marfrig is well positioned to compete in the global protein industry due to its size and geographic diversification. The business compares favorably regarding size with its regional peer Minerva S.A. (BB-/Stable), which is mainly a beef processor in South America. JBS S.A. (BB-/Stable) and Tyson Foods (BBB/Stable) enjoy a higher level of scale of operations, stronger FCF, and higher product and geographical diversification than Marfrig. JBS's rating is constrained but ongoing litigation issues. Regarding net leverage, Marfrig compares favorably to Minerva (BB-) assuming the sale of Keystone and debt repayment with cash proceeds. However, Marfrig EBITDA includes a large part of minorities' interest and the company is subject to a put option after five years from minorities' shareholders. Leverage is higher than Tyson. There is no parent-subsidiary linkage, and no Country Ceiling constraint and operating environment influence were in effect for the ratings. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Pro forma of net debt of about BRL8 billion as of FYE18; -- Acquisition of National Beef and divestment of Keystone. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Sustainable and positive FCF; -- Substantial decrease in gross and net leverage to below 4.5x and 3.0x, respectively, on a sustained basis; -- Conclusion of the Keystone transaction and debt repayment. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Negative FCF on a sustained basis; -- Net leverage above 4.5x on a sustainable basis. LIQUIDITY Adequate Liquidity: As of June 30, 2018, Marfrig had about USD1.5 billion of cash and cash equivalent compared to BR1.7 billion of short-term debt. The short-term debt is mainly related to the bridge loan for the acquisition of National Beef (about USD0.9 billion), the 2019 senior unsecured notes (USD0.5 billion) and trade finance lines. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Marfrig Global Foods S.A. -- Long-Term Foreign and Local Currency IDR at 'BB-'; -- National Long-Term Rating at 'A(bra)'; The Rating Outlook is Stable. Marfrig Holdings (Europe) B.V. -- Senior unsecured notes due 2019, 2021, 2023 at 'BB-'. MARB BondCo PLC -- Senior unsecured notes due 2024 and 2025 at 'BB-'. NACION SEGUROS: Fitch Affirms 'B' IFS Rating, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed the Insurer Financial Strength (IFS) rating of Nacion Seguros S.A., Nacion Seguros de Retiro S.A. and Nacion Reaseguros S.A. at 'B'. The Rating Outlooks are Stable. The Nacion insurance companies are owned by Banco de la Nacion Argentina (BNA). BNA is a large, state-owned bank whose liabilities are guaranteed by the Argentinian government. The bank plays an important social role and supports government policies. Fitch rates Argentina's Long-Term Foreign Currency Issuer Default Rating (IDR) 'B'/Outlook Stable. While Fitch does not provide public ratings on BNA, its creditworthiness is tied to that of its owner. KEY RATING DRIVERS The Nacion Insurers' ratings consider BNA's support and operational integration. The insurers benefit from BNA's large distribution channels, whose leadership position within the Argentine banking industry allows them to reach a large number of customers. Nacion Seguros is the seventh largest insurer in terms of written premiums and had a market share of 3.9%. The company's business model is based on offering commodity-type products. Low insurance penetration and reduced consumer confidence in the local economy strongly limits organic growth as well as the development of new products. Therefore, growth levels are primarily determined by inflationary adjustments. The operating results of Nacion Seguros compare favorably to peers. During 2017, the company made adjustments in its subscription processes, pricing, and resolution of outstanding claims (on trial), which combined with an improvement in its cost structure led to improved operating ratios. As of June 2018, its combined ratio was 95.5%, in line with expectations. Net income for the period was ARS 1,472 million, and the profitability ratios (11.8% ROAA and 39.4% ROAE) were favorable in relation to its local peers. Capital exposure to severity events are adequately covered through reinsurance contracts with strong international reinsurers and with its related reinsurer Nacion Reaseguros. Leverage ratios have benefited from the retention of earnings. Net equity exceeds minimum regulatory capital ratio by 1.4x. As of June 2018, the total liability over equity ratio was 2.1x, slightly lower than last year's (2.3x). Nacion Retiro has a strong pension market position but with limited real growth opportunities. As of June 2018, its business mainly consisted of the run off of pension policies acquired before the reform of 2008, while written premiums were principally composed by collective retirement products, associated with benefits granted by BNA to its employees. It is important to note that 96% of the total GWP was associated to government related companies, supporting the relevance of this company for the group. Nacion Retiro's net results grew by 61% as of June 2018. Due to the concentration on pension products, this growth is explained by the increase in their financial income, while its operating results remain negative. Nacion Retiro also has ample utilities retention policies, which allows it to maintain favorable capitalization ratios. Its equity over minimum regulatory capital ratio of 3.6x, as of June 2018, remained stable compared to previous years. Organic equity growth has kept leverage ratios limited and in line with its comparable regional peers. Regulatory restrictions over the investments and the Argentinean shallow financial market, led to a concentration of investments in the local market, especially in government instruments. As a consequence of this the insurance company exhibits a high mismatch of durations between liabilities and asset flows. The financial investments yield is competitive and much higher than the minimum regulatory requirements (witness rate). Fitch believes that even if there is reinvestment risk (asset-liabilities mismatch), it should not constitute a significant threat to the company's solvency. Nacion Reaseguros maintains a suitable business profile, positioning itself as a mid-size reinsurance company in the local industry. In 2017, a new regulation opened the local reinsurance industry to international competition, which incentivized Nacion Reaseguros to expand its operations in the local market beyond its affiliate. The company's capitalization ratios are adequate, and enable it to face unexpected volatility in their incurred claims. Equity growth is organic driven by retention of its earnings, which are dependent on the company's financial income. In applying Fitch's insurance criteria regarding the impact of ownership on Nacion Insurers' ratings, Fitch considered how the ratings would theoretically be impacted under Fitch's bank support criteria. Fitch's insurance criteria is principles-based regarding ownership, and the referenced bank criteria was used to help inform Fitch's judgment in applying those principles. RATING SENSITIVITIES Changes in Fitch's evaluation of BNA's capacity and/or its willingness to support the Nacion insurance companies would result in changes to the current ratings. Changes to Argentina's sovereign rating can also have an impact on the Nacion insurance ratings. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Nacion Seguros S.A -- IFS rating at 'B'; Outlook Stable. Nacion Reaseguros S.A -- IFS rating at 'B'; Outlook Stable. Nacion Seguros de Retiro S.A -- IFS rating at 'B'; Outlook Stable. OI SA: Fitch Assigns 'B-'/'RR4' Rating on Sr. Unsec. Notes ---------------------------------------------------------- Fitch Ratings has assigned a 'B-'/'RR4' rating to Oi's senior unsecured PIK toggle notes due 2025. These ratings incorporate Fitch's Country-Specific Treatment of Recovery Ratings, which caps the notes at 'RR4', resulting in a rating equal to Oi's Issuer Default Rating (IDR) of 'B-'/Stable. Fitch previously withdrew the ratings on Oi's senior notes and debentures that were outstanding prior to the debt exchange. The ratings reflect improvements to Oi's financial profile after the conclusion of the Judicial Reorganization Plan, principally the large reduction in debt from BRL54.5 billion to BRL26.8 billion (Fitch-adjusted), and the extension of maturities and deferral of interest payments. The elimination of the company's debt overhang, along with a planned BRL4 billion capital increase and its current cash position, will enable it to make sorely needed investments in its broadband and mobile networks. The ratings also reflect Oi's still weak operating performance and challenged competitive position. Its competitors have made large strides in mobile and broadband, and the company's turnaround prospects remain uncertain. The Stable Outlook reflects Fitch's expectation that Oi will maintain moderate levels of leverage as it invests heavily in improvements and seeks to regain market share. KEY RATING DRIVERS Improved Capital Structure: Following the ratification of the Judicial Reorganization Plan, Oi's capital structure has improved. Senior unsecured bondholders agreed to an 80% haircut in exchange for new seven-year notes and 72% of the company's equity. The remaining creditors agreed to a grace period of five or more years on principal payments and four or more years on interest payments, which will be capitalized. These moves led to a reduction in gross debt from approximately BRL54.5 billion to BRL 26.8B, while net debt has decreased from R$49 billion to R$20 billion. Per Fitch's methodology, these figures reflect total principal due, rather than the fair value of debt that Oi reports. As of March 2018 the company reported BRL13.5 billion on balance sheet debt, to which Fitch adds back the fair value adjustment of BRL13.4 billion. Other claimants (e.g. ANATEL) also had their claims reduced. Finally, the company aims to raise BRL4 billion in equity capital this year. Challenged Competitive Position: Oi's competitors have made significant advances while the company dealt with its reorganization. According to data from the telecom regulator ANATEL, the company's broadband market share has declined from 30% to 23.5% in a growing market. Similarly, the company's mobile market share has declined as the company has struggled to add post-paid subscribers. The company holds the #2 position in fixed line telephony, though long-term prospects for that service continue to decline. The company anticipates a downward trend in the B2B market, and also lags its competitors in market share. Positively, Pay TV is proving more resilient, representing a small but growing piece of Oi's revenue. Declining Revenues, Improving Profitability: The decline in revenues has been even more severe than the loss of subscribers. In 2017 Oi's net revenues fell 8.5%, from BRL26 billion to BRL 23.8 billion. These results can be seen across segments with residential fixed at -2%, mobility at -3%, and B2B at -15%. This downward trend continued into 2018, with 1Q2018 net revenues 2.7% below 4Q2017 and 8% below 1Q2017. On the plus side, Oi's various cost initiatives appear to be paying off, as routine OpEx declined 9% in 2017. Fitch forecasts EBITDA margins will steadily increase from 2017 levels of 26.3% to approximately 28.5% over the medium term. Given the competitive Brazilian environment, Fitch believes EBITDA expansion is more likely to come from cost measures rather than rapid top-line growth in the near term. Manageable Leverage: Oi's total adjusted net debt to EBITDAR, including capitalized rental expenses, has declined to 3.7x as of March 31, 2018; coverage ratios of 6.2x (if including non-cash capitalized interest expenses) are not meaningful in the near term due to the interest grace periods. Fitch evaluates debt based on principal due (BRL26.8B) rather than on adjusted fair value of debt (BRL 13.5B) that Oi reports under IFRS in its financial statements. Fitch also capitalizes Oi's rental expense of BRL1.6 billion using a 5.0x multiple, resulting in an additional BRL8 billion in lease-equivalent debt. Fitch forecasts this adjusted net leverage will rise modestly in the near term as the company invests substantially in network upgrades. Fitch considers Oi's leverage to be low to moderate for its rating category, especially when incorporating the extension of principal repayments. Ultimately, Oi's turnaround prospects hinge on their ability to convert network investment into subscribers now that their debt restructuring has been completed. High CapEx Dampens Cash Flows: Oi's investments have been restricted by their weak financial condition over the last several years. Capital Intensity is forecasted to rise from 18% of revenues to approximately 30% this year, as Oi makes needed investments to regain network competitiveness and match the breadth and depth of competitor offerings. In total, Fitch expects capital expenditures of approximately BRL 21 billion in the next three years, which will keep FCF negative over that timeframe. As network investment is a key pillar in Oi's turnaround, the company has limited room to reduce CapEx. Fitch forecasts negative FCF over this time period. Following the initial heavy investment schedule, CapEx is expected to moderate to BRL5 billion in 2021. DERIVATION SUMMARY Fitch's Aug. 13, 2018 upgrade of Oi's Long-Term Foreign and Local Currency IDRs to 'B-'/Stable reflects its restructured financial profile and the uncertain outlook for its turnaround strategy. The company's total adjusted net debt to EBITDAR of 3.7x, including capitalized rental expenses and adjusted for total principal due, is lower than the majority of regional telecoms in the 'B' category and is expected to rise moderately as the company invests heavily in its network. The ratings are constrained by Oi's weakened competitive position after years of underinvestment in critical 4G and broadband network infrastructure. In the near term, Oi will be challenged to compete on quality as they complete their network upgrades, which will further pressure profitability. The dynamics of the highly competitive Brazilian differ from those facing more highly levered peers, such as Cable & Wireless (BB-) and Digicel (B), which operate in diversified duopoly markets. The company also lacks the market power of Telecom Argentina (B) in its sole market. When compared with U.S. peers, Oi's status as the number 4 mobile player is similar to Sprint Corporation (B+/Rating Watch Positive) in the USA in that they lack scale to challenge the leaders. The Recovery Ratings for Oi's senior unsecured notes is capped at 'RR4' by Brazil's treatment in Fitch's Country-Specific Recovery Ratings, resulting in rating equal with the issuer's IDR. KEY ASSUMPTIONS -- Revenues to decline modestly in 2018 before returning to low single digit growth; -- Capital expenditures of approximately R$ 7 billion over the next three years; -- EBITDA margins rising to 28.5%; -- Equity increase of R$ 4 billion in 2019; -- No dividend distributions. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action -- Higher than expected ARPU and RGU growth, leading to revenue growth above 5%, and improved market share, along with EBITDA margins expansion over 30%. Developments that May, Individually or Collectively, Lead to Negative Rating Action -- Lower than expected ARPU and RGU growth leading to deteriorating or flat revenues and worsening market share, along with any EBITDA margin contraction; -- Inability to secure equity increase of R$4 billion. LIQUIDITY Oi's liquidity profile is adequate following the judicial reorganization. Its debt restructuring has led to a decrease in gross debt to approximately BRL26.8 at face value (BRL13.5 billion at fair value) and low debt service payments over the next five years. In addition to the debt and equity exchanges, the maturities of the existing debt instruments, primarily bank debt, have been extended. Oi doesn't face any significant maturities until 2025. However, its high investment needs and negative free cash flows significantly restrict financial flexibility. Fitch considers that Oi's limited access to bank credit lines and debt capital markets are somewhat mitigated by its cash position of BRL6.1 billion as of March 2018. The company is in the process of raising additional equity capital and may raise cash through vendor financing and asset sales to fund CapEx. FULL LIST OF RATING ACTIONS Fitch has assigned the following ratings: Oi S.A. -- Senior unsecured notes due 2025 'B-'/'RR4'. OI SA: Owners to Focus on Improving Business Before Selling Stakes ------------------------------------------------------------------ Tatiana Bautzer and Carolina Mandl at Reuters report that the distressed asset investment firms that are Brazilian telecom Oi SA's top shareholders will focus on improving the company's mobile and broadband operations instead of a near-term sale of their stakes, two sources with knowledge of the matter said. Brazil's largest fixed-line telecoms carrier is expected to complete a BRL4 billion ($1 billion) capital raise by year-end, and management will use proceeds to accelerate investments in broadband and mobile networks, according to Reuters. Investors have warmed to the company since bondholders scored the first major victory in a Brazilian bankruptcy proceeding after three years of battles with shareholders, the report notes. That left funds including Solus Alternative Asset Management LP, GoldenTree Asset Management LP and York Capital Management Global Advisors LLC in control, the report relays. Investment firms fought for the right to boost their shares by participating in the capital raise, Reuters reported last month. Oi sought court protection from its creditors two years ago in Latin America's largest-ever bankruptcy proceeding, the report adds. ============= J A M A I C A ============= DIGICEL LIMITED: Fitch Cuts LT FC IDR to 'B-', Outlook Negative --------------------------------------------------------------- Fitch Ratings has downgraded the Long-Term Foreign Currency Issuer Default Ratings (IDRs) for Digicel Group Limited (DGL) and its subsidiaries Digicel Limited (DL) and Digicel International Finance Limited (DIFL) to 'B-'/Outlook Negative from 'B'/Outlook Stable. Fitch has concurrently downgraded the issuers' debt issuances to 'CCC+'/'RR5' from 'B-'/RR5 (DGL), to 'B-'/'RR4' from 'B'/'RR4' (DL), to 'B-'/'RR4' from 'B+'/'RR3' (DIFL). The downgrades reflect the sustained increase in leverage as debt has risen while revenues and profitability have declined. As of March 31, 2018, the company's net debt, including capitalized operating rentals, stands at 7.0x EBITDAR. The instrument downgrades incorporate the subordination of the companies' various debt instruments, i.e. the structural seniority of DIFL and DL over DGL. Fitch's Country-Specific Treatment of Recovery Ratings caps DIFL and DL ratings at 'RR4', resulting in no uplift from the issuers' IDRs, while the projected 'RR5' for the DGL notes results in a one notch downgrade from the issuer's IDR. The Negative Outlook is due to the uncertainties regarding the company's ability to successfully execute its inorganic deleveraging strategy in the near term. Digicel's competitive position remains strong, operating as the #1 or #2 player in a well-diversified set of countries. The company's high leverage, FX exposure in the absence of effective hedging, and persistent negative FCF generation are key credit concerns. KEY RATING DRIVERS Persistently High Leverage: Digicel has high leverage for the 'B' category. The company's leverage has increased due to negative FCF generation caused by high capex amid ongoing EBITDAR contraction. Digicel's adjusted net EBITDAR leverage stands at 7.0x as of March 2018, up from 6.3x a year earlier. Material improvement in leverage ratios with sustainable FCF generation in the short to medium term is critical for the company to mitigate any refinancing risk ahead of its bond maturities of USD5.7 billion during FY2021-FY2023. Fitch forecasts an improvement in leverage ratios going forward to approximately 6.3x by FY2021 as the company implements cost saving measures and sells assets. Fitch forecasts nominal revenue growth to be offset by a certain level of dollar appreciation. Leading Margins, Low Cash Flows: The company's EBITDA margins are very strong and have consistently topped 40%. However, Digicel's FCF has remained in negative territory in recent years mainly due to high capex for network investments. Beginning in 2014, Digicel's CapEx rose from 13% of revenues to an average of 21% FY2015-FY2018. As a result, FCF have been negative over the same time frame. Going forward, CapEx is expected to average 14%-15% of revenues, which will reduce pressures on FCF. Fitch forecasts minor but positive FCF generation (less than 1%), absent any foreign exchange changes, from FY2019-FY2021. FX Exposure Compounds Issues: Digicel's performance has been adversely impacted by the appreciation of the U.S. dollar. Digicel is subject to FX mismatch as its debt is 95% USD-denominated, against 50% of EBITDA generation in in U.S. dollars or currencies pegged to the U.S. dollar. Fitch Macro Intelligence projects continued appreciation of the dollar against Digicel's basket of currencies, which will continue to weigh on the company's cash flow generation and its ability to service debt obligations. Fitch projects that continued dollar appreciation will reduce Digicel's annual revenues and EBITDA by approximately USD220 million and USD100 million, respectively, by 2021. Group Structure Drives Recovery Rates: DGL's USD3 billion notes are subordinated to DL's USD2.3 billion senior unsecured notes, which are subordinated to DIFL's USD1.4 billion senior secured term loans and revolver. This structure reflects DIFL's status as the holding company for the group's Caribbean assets, which comprise the majority of the group's revenues and EBITDA. DL, in turn, is a holding company for DIFL, as well as majority of the group's ownership of DHCAL, the holding company for the Panamanian business. Finally, DGL is the ultimate parent company for DL and DPL, which acts as the holding company for the group's operating assets in the Pacific. Bespoke recovery analysis results in recoveries of 'RR1' for the DIFL and DL debt; however, Fitch's Country-Specific Treatment of Recovery Ratings caps these at 'RR4', resulting in no uplift. The DGL notes recovery is projected at 'RR5', resulting in a one notch differential. Strong Business Profile: The majority of Digicel's businesses operate in a series of duopoly markets. Their competitive position is strong, as they control greater than 50% market share in the majority of these markets. Pricing is expected to remain rational in the near term and Fitch does not believe the risk of a sizable new entrant to be high, given the relatively small size of each market and the relative maturity in some of its mobile markets. Under this environment, Fitch expects the company's position to remain stable over the medium term. Digicel's investments in network upgrades should enhance network competitiveness in the coming years. Finally, Digicel appointed a new management team in 2018 with significant experience in restructuring and turnaround situations. Diverse Revenue Streams: Ongoing revenue diversification away from traditional mobile voice is positive as the revenue proportion of mobile voice fell from to 40% FY2018 from 50% FY2017 from 56% a year ago. The contribution from mobile data should continue to steadily increase over the medium term, mitigating negative pressures on the voice ARPU, which has suffered from competitive pressures and reduced mobile termination rates in some markets. In addition, Digicel's recent strategic focus on cable/broadband, along with business solutions, should enable further revenue diversification as it continues to connect more homes on its established networks. DERIVATION SUMMARY Digicel's solid business profile, with leading mobile market shares in its well-diversified operational geographies supported by network competitiveness, is considered strong for a 'B' rating category. However, Digicel's financial profile is materially weaker than its regional diversified telecom peers in the speculative grade rating categories, including Millicom International (BB+), and Cable & Wireless (BB-). Digicel's adjusted net EBITDAR leverage of 7.0x is considered high for the 'B' rating category. The company faces larges debt maturities in each of 2020, 2021, and 2022, each of which represents significant refinancing risk. Due to a change in Fitch's Country-Specific Treatment of Recovery Ratings, Fitch caps Digicel's debt instruments at 'RR4', resulting in no uplift from the issuers' IDRs. Strong parent-subsidiary linkage exists among Digicel group companies based on intra-group cash flow movement to service debt at its holding company level, resulting in a same IDR level for DGL, DL, and DIFL. No country ceiling or operating environment influence was in effect for the ratings. KEY ASSUMPTIONS -- Mobile revenues growth and business solutions growth in low to mid-single-digits; cable & broadband growth in the mid-single-digits; -- Continued appreciation of the U.S. dollar against a basket of currencies; -- Capital intensity 14%-15% of revenues; -- Benefits from restructuring program to increase EBITDA margins by 1%-2% in near term; -- No dividend payments to controlling shareholder; -- Successful debt refinancings at 150bp premium to current base rates. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action -- Material EBITDAR deleveraging below 6.0x on a sustained basis due to organic and inorganic measures. Developments that May, Individually or Collectively, Lead to Negative Rating Action -- Continued erosion in revenue growth rates, or unfavorable FX movements that further hamper revenue growth and cash flow generation; -- Inability to execute planned inorganic deleveraging strategy or reposition the company for successful refinancing in the near term. LIQUIDITY Fitch considers the company's liquidity to be inadequate, given the small cash cushion relative to debt burden and the persistently negative FCF. Digicel's total unadjusted debt stands at USD 6.8 billion, having increased from USD 6.4 billion YoY. At the same time, Digicel held readily available cash equivalent to USD158 million, significantly lower than its historical levels. Interest expenses of USD456 million in FY2018 were almost 50% of EBITDA, and upcoming interest payments will further pressure Digicel's liquidity position. The company faces a series of principal debt maturities each year from 2020-2022, which represents significant refinancing risk. FULL LIST OF RATING ACTIONS Fitch has downgraded the following ratings: Digicel Group Limited -- Long-Term Foreign Currency IDR to 'B-'/Outlook Negative from 'B'/Outlook Stable; -- 2020 and 2022 notes to 'CCC+'/'RR5' from 'B-'/'RR5'. Digicel Limited -- Long-Term Foreign Currency IDR to 'B-'/Outlook Negative from 'B'/Outlook Stable; -- 2021 and 2023 notes to 'B-'/'RR4' from 'B'/'RR4'. Digicel International Finance Limited -- Long-Term Foreign Currency IDR to 'B-'/Outlook Negative from 'B'/Outlook Stable; -- Term Loan and Credit Facility to 'B-'/'RR4' from 'B+'/'RR3'. The two notch downgrade of DIFL's debt reflects changes to Fitch's Country-Specific Treatment of Recovery Ratings. The new criteria's methodology caps the recovery ratings on DIFL's and DL's debt to RR4, resulting in a rating equal the issuers' IDR. JAMAICA: Opposition Chides Gov't for Floating Exchange Rate Policy ------------------------------------------------------------------ RJR News reports that the Parliamentary Opposition has issued a statement lashing out at the Holness administration and expressing major concerns over its adoption of a new floating exchange rate policy. Mark Golding, Opposition Spokesman on Finance and Planning, said under the Government's new exchange rate policy, it appears the BOJ is no longer able to manage the foreign exchange market to promote stability, predictability and confidence, according to RJR News reports. The report notes that he said the new policy has, therefore, facilitated the rapid depreciation of the Jamaican dollar, so that in the three months, June to August, the local currency has fallen in value by more than nine per cent from J$126.38 to J$137.96 against the US dollar. Mr. Golding argued that this rapid movement of the local currency has created a sense of chaos and fear, after years of hard-won and cherished stability, the report relays. He pointed out that private sector, including small and medium sized enterprises, are now crying out as the situation now threatens viability, the report adds. As reported in the Troubled Company Reporter-Latin America on Feb. 5, 2018, Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B' and has revised the Rating Outlook to Positive from Stable. =============== S U R I N A M E =============== SURINAME: Fitch Affirms 'B-' Long-Term IDR, Outlook Stable ---------------------------------------------------------- Fitch Ratings has affirmed Suriname's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B-'. The Rating Outlook is Stable. KEY RATING DRIVERS The ratings reflect Suriname's weak public finances relative to 'B' peers, external vulnerabilities resulting from high commodity dependence amid limited external buffers, macro policy framework weaknesses, recent macro instability, and contingent liabilities in the financial system. Mining sector activity is supporting growth, while commodity revenues are contributing to a gradual narrowing of the fiscal deficit and a strengthening of the balance of payments. Fitch expects a slower pace of fiscal consolidation during 2018 - 2020 compared to the agency's expectations at the last review in February, with greater reliance on commodity revenue gains as opposed to structural measures. The Bouterse administration postponed indefinitely the introduction of a value-added tax (VAT) in 1H18, which was expected to raise annual net tax revenues by 2pp of GDP per year. Fitch expects Suriname's central government (CG) deficit to narrow from 7.9% of GDP in 2017 to 6.1% in 2018 and 5.4% in 2020, driven by stronger oil and gold export performance. The baseline scenario assumes moderate wage adjustments and fiscal slippage ahead of the May 2020 parliamentary elections, a fall in average borrowing costs following a 2018 liability management operation, and no structural consolidation measures. The CG has increased its reliance on domestic and short-term financing sources in 2017-2018. Of gross financing needs (CG balance plus medium-term amortizations) of USD560 million (16.7% of GDP) in 2017, the CG obtained 5.4% of GDP net domestic financing mostly in treasury bills and notes placed with banks. The CG secured 2.8% of GDP net external financing in 2017 principally from commercial and bilateral sources at a higher cost than its traditional multilateral credits. Multilateral disbursements remain restricted; net disbursements were negative for January-May 2018 and only USD7 million for 2017. Fitch projects the government's gross financing needs at USD374 million and USD418 million (10.3% and 10.7% of GDP) for 2018 and 2019, respectively. Fitch expects the CG to use at least USD114.1 million of the USD337.5 million proceeds from a one-off transaction with state-owned oil company Staatsolie to reduce the stock of domestic treasury securities and prepay USD46.5 million in external commercial debt. (Staatsolie prepaid a CG loan and purchased gold mine shares from the CG after refinancing its liabilities through an international syndicated loan in May.) Fitch also estimates net external financing of USD50 million (1.4% of GDP) from China and other sources. In 2019, Fitch expects the government to tap the domestic market and that external commercial financing costs would remain elevated. Suriname's public debt dynamics are weaker than the current 'B' median and vulnerable to shocks. Fitch expects that the loan prepayments will result in a one-off fall in CG debt/GDP to 62.9% at year-end 2018 from 71.1% in 2017. However, primary deficits and financing costs are expected to lift the CG debt burden to 66% in 2020. CG debt/GDP and the interest/revenue ratio (16.5% in 2017) are both above the current 'B' medians. Public debt sustainability is highly vulnerable to fiscal, real interest rate and exchange rate shocks. More than three-quarters of CG debt is denominated in foreign currency. External finances are a weakness relative to 'B' category. External vulnerabilities include Suriname's high commodity export dependence at 84.5% of current external receipts (CXR) and its weak sovereign net foreign asset position, forecast at -41.5% of GDP in 2018 compared to the current 'B' median of 13.2%. The central bank is slowly rebuilding its international reserve buffer, which covers 3.2 months of current external payments, closer to the current 'B' median of 3.9 months; however, it provides limited cushion to absorb commodity price shocks, in Fitch's opinion. An upturn in commodity prices and production is improving the current account position. Fitch expects stronger gold and oil export performance and mining investment to sustain the current account balance plus net FDI/GDP in surplus at 3.6% of GDP in 2018. Net external debt/CXR is projected to decrease to 47.3% in 2018 below the current 'B' median at 60%. Greater CG external borrowing at market rates (9.0% to 9.25%) and some at less than 24-month maturities have weakened Suriname's external debt service ratio to 17.6% of CXR relative to the current 'B' median at 11.7% in 2018. However, Staatsolie's refinancing of its external debt at better terms in May, and the CG's prepayment and pre-financing of some external debt service, partially mitigates near-term liquidity risk. Suriname's macro performance is recovering but lags the current 'B' median. Fitch expects mining investment to lift economic growth to 2.7% in 2018, following the recovery to 1.5% in 2017. Inflation moderated to 22% in 2017, down from 55% in 2016 following the exchange rate devaluation. Fitch expects inflation to average 7% in 2018, amid SRD-USD stability and absent large fuel import price shocks. Financial system stability is a weakness, although gradually improving. The capital adequacy ratio of the country's largest bank is rising but remains well below the central bank's 10% regulatory minimum. Tepid private credit demand limits broader banking system profitability and internal capital generation. Suriname's structural factors are neutral to the 'B' category. The country's governance ranking, social indicators and per capita GDP exceed the current 'B' median; however, its ease of doing business, limited economic diversification, and weak macro policy framework are rating constraints. SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Suriname a score equivalent to a rating of 'B' on the Long-Term Foreign-Currency (LT FC) IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR of 'B-' by applying its QO, relative to rated peers, as follows: -- Public finances: The introduction of -1 notch reflects the failure to enact fiscal consolidation policies and the emergence of multilateral financing constraints. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within its criteria that are not fully quantifiable and/or not fully reflected in the SRM. RATING SENSITIVITIES The Outlook is Stable. The main factors that could lead to a positive rating action, individually or collectively include: -- Consolidation of public finances that places central government debt on a downward path. -- Strengthening of the external balance sheet and liquidity buffers. -- Stronger investment and economic growth prospects. The main factors that could lead to a negative rating action, individually or collectively include: -- Worsening of financing constraints. -- Weakening of the sovereign's external debt service capacity. KEY ASSUMPTIONS Fitch assumes global economic growth and international oil prices evolve according to its quarterly Global Economic Outlook forecasts and that international gold prices remain near current levels during 2018 - 2020. Fitch has affirmed the following: -- Long-Term Foreign-Currency IDR at 'B-'; Outlook Stable; -- Long-Term Local-Currency IDR at 'B-'; Outlook Stable; -- Short-Term Foreign-Currency IDR at 'B'; -- Short-Term Local-Currency IDR at 'B'; -- Country Ceiling at 'B-'; -- Issue ratings on long-term senior unsecured foreign-currency bonds affirmed 'B-'. ================================ T R I N I D A D & T O B A G O ================================ TRINIDAD & TOBAGO: Economic Growth Prediction Below Estimates ------------------------------------------------------------- Trinidad Express reports that the Economic Commission for Latin America and the Caribbean (ECLAC) is predicting that the T&T economy will grow by some 1.5% in 2018, which is below estimates for the performance of the domestic economy provided by Finance Minister Colm Imbert. The report notes that in delivering the mid-year budget review on May 10, Imbert said: "After a long and discouraging period of economic decline, we are now witnessing a welcome upturn. Early estimates are indicative of a growth forecast of 2.0 per cent in 2018 and 2.2 per cent in 2019, rising to 2.5 per cent in 2020. And contrary to the negative commentary of uniformed spokespersons, who speak without having any facts, the turnaround is being driven by economic expansion in both the energy and non-energy sectors." ================= V E N E Z U E L A ================= VENEZUELA: Maduro Sets Up Internal Commerce Ministry ---------------------------------------------------- EFE News reports that the president of Venezuela disclosed the setting up of the Ministry of Internal Commerce and an economic vice-presidency within the ruling United Socialist Party of Venezuela (PSUV). "We need a thriving economy. We need a very powerful internal market and very well-organized internal trade, so I have decided to create the Ministry of Internal Commerce as the governing body as the Congress has proposed to me," President Nicolas Maduro said during an event with leaders of the party, according to EFE News. As reported in the Troubled Company Reporter-Latin America on June 1, 2018, S&P Global Ratings, on May 29, 2018, removed its long- and short-term local currency sovereign credit ratings on Venezuela from CreditWatch with negative implications and affirmed them at 'CCC- /C'. The outlook on the long-term local currency rating is negative. At the same time, S&P affirmed its 'SD/D' long- and short-term foreign currency sovereign credit ratings on Venezuela. S&P's transfer and convertibility assessment remains at 'CC'. *********** 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, Psyche A. Castillon, 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 * * *