/raid1/www/Hosts/bankrupt/TCRLA_Public/181019.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
Friday, October 19, 2018, Vol. 19, No. 208
Headlines
A R G E N T I N A
ARGENTINA: Inflation Hits Record Level in September
B A R B A D O S
BARBADOS: S&P Lowers Local Currency Rating to 'D' on Debt Exchange
B R A Z I L
JBS INVESTMENTS II: S&P Rates New $500MM Sr. Unsec. Notes 'BB-'
JBS SA: Moody Raises Corp. Family Rating to Ba3, Outlook Stable
MINERVA SA: Fitch Affirms BB- LT IDRs, Outlook Stable
C O S T A R I C A
REVENTAZON FINANCE: Fitch Affirms BB+ on $135MM Fixed-Rate Notes
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Bus Drivers Cancel Protest Over Fuel Prices
P U E R T O R I C O
SEARS HOLDINGS: Bankruptcy Court Approves First Day Motions
SEARS HOLDINGS: Whirlpool Says Sears Less Than 2% of Net Sales
SEARS HOLDINGS: Kimco Realty's Exposure Limited to 14 Leases
SEARS HOLDINGS: Seritage Says 70% of Income Now From Other Tenants
V E N E Z U E L A
VENEZUELA: Says Ecuadorian President Lied About Scale of Migration
X X X X X X X X X
LATAM: Recovery in Region Has Lost Momentum, IMF Says
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A R G E N T I N A
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ARGENTINA: Inflation Hits Record Level in September
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The Latin American Herald reports that Argentina's inflation
reached 6.5 percent in September, a record level this year and one
of the highest rates since the 2001-2002 financial crisis.
Argentina's national statistics agency said in a report that
September's inflation represented a 40.5 percent increase compared
to last year's rate, leading to a 32.4-percent accumulated
inflation in the first nine months of 2018, according to The Latin
American Herald.
September's inflation rate was affected by the peso's 96.3 percent
drop in value against the dollar during 2018, the report notes.
Argentina's inflation is now close to the level reached during the
2001-2002 financial meltdown, which led to an accumulated
inflation of 40.9 percent in 2002, the report relays.
According to the results of a survey carried out last month in
Greater Buenos Aires by a pair of think tanks, the depreciation of
the peso and the rise in prices has led to a decrease in
consumption.
The report notes that thirty-four percent of respondents said they
had reduced their consumption of milk products; 54 percent of meat
products; 63 percent of fruits and vegetables; 44 percent of
carbonated drinks and juices; 69 percent of recreational
activities; 39 percent of fuels, and 23 percent of medicines.
"There are people who don't have enough money and must reduce
their expenses. We are not doing well. I am not earning what I
used to. Our income does not follow inflation, so we earn less
and spend more. It is that simple," said Julian Riveros, an
electrician from Buenos Aires, the report discloses.
While the conservative government of President Mauricio Macri has
insisted that it is committed to reducing inflation, its policies
have not been very effective, with an inflation rate of 40 percent
in 2016 and 24.8 percent last year, the report notes.
Analysts consulted by Argentina's central bank have increased
their inflation estimates for this year to 44.8 percent, the
report adds.
As reported in the Troubled Company Reporter-Latin America on
Sept. 4, 2018, S&P Global Ratings placed on Aug. 31, 2018, its
'B+' long-term and 'B' short-term sovereign credit ratings on
Argentina on CreditWatch with negative implications. At the same
time, S&P placed its 'raAA' national scale rating on CreditWatch
negative and affirmed its 'BB-' transfer and convertibility
assessment. The CreditWatch negative reflects the risk of
worsening creditworthiness due to potentially weakened
implementation of the government's strategy to stabilize the
economy. Exchange rate volatility, as shown by recent pressure on
the Argentine currency, could jeopardize the effective
implementation of economic adjustment measures, absent further
steps to boost investor confidence. Consequently, S&P Global
Ratings corrected its short-term ratings on Argentina
by removing them from CreditWatch with negative implications.
Fitch Ratings affirmed on May 8, 2018, Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'B' and revised
the Outlook to Stable from Positive.
On December 4, 2017, Moody's Investors Service upgraded the
Government of Argentina's local and foreign currency issuer and
senior unsecured ratings to B2 from B3. The senior unsecured
shelves were upgraded to (P)B2 from (P)B3. The outlook on the
ratings is stable. At the same time, Argentina's short-term
rating was affirmed at Not Prime (NP). The senior unsecured
ratings for unrestructured debt were affirmed at Ca and the
unrestructured senior unsecured shelf affirmed at (P)Ca.
As previously reported by the TCR-LA, Argentina defaulted on some
of its debt late July 30, 2014, after expiration of a 30- grace
period on a US$539 million interest payment. Earlier that ,
talks with a court-appointed mediator ended without resolving a
standoff between the country and a group of hedge funds seeking
full payment on bonds that the country had defaulted on in 2001.
A U.S. judge had ruled that the interest payment couldn't be made
unless the hedge funds led by Elliott Management Corp., got the
US$1.5 billion they claimed. The country hasn't been able to
access international credit markets since its US$95 billion
default 13 years ago. On March 30, 2016, Argentina's Congress
passed a bill that will allow the government to repay holders of
debt that the South American country defaulted on in 2001,
including a group of litigating hedge funds that won judgments
in a New York court. The bill passed by a vote of 54-16.
===============
B A R B A D O S
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BARBADOS: S&P Lowers Local Currency Rating to 'D' on Debt Exchange
------------------------------------------------------------------
On Oct. 17, 2018, S&P Global Ratings lowered its issue-level
ratings on Barbados' local currency issues outstanding to 'D'
(default) from 'CC'. At the same time, S&P Global Ratings affirmed
its 'SD/SD' (selective default) long- and short-term foreign and
local currency sovereign credit ratings on the country, and its
'D' (default) ratings on Barbados' rated foreign-currency issues.
Finally, S&P Global Ratings affirmed its 'CC' transfer and
convertibility assessment on the country.
RATIONALE
The Barbados government closed the exchange offer period for its
local currency debt exchange, announced nearly full acceptance of
the offer terms by creditors, and confirmed its intention to issue
new debt under the exchange by Oct. 31, 2018. All local currency
treasury bills, treasury notes, debentures, loans, certain
government arrears, and debt owned by state-owned enterprises and
other entities that receive transfers from the state budget fall
within the scope of the exchange. Therefore, and in accordance
with S&P's criteria, "Rating Implications Of Exchange Offers And
Similar Restructurings, Update," it has lowered the issue-level
ratings to 'D' from 'CC' on the following issues:
-- Bds$40.225 mil 9.00% debenture due Oct. 31, 2018
-- Bds$25 mil 5.88% debenture due Nov. 30, 2018
-- Bds$100 mil 8.50% debenture due Dec. 31, 2018
-- Bds$20 mil 5.88% debenture due Dec. 31, 2018
-- Bds$45 mil 6.00% debenture due Oct. 31, 2020
-- Bds$45 mil 6.25% debenture due Oct. 31, 2022
-- Bds$60 mil 6.25% debenture due Dec. 31, 2022
-- Bds$100 mil 7.25% debenture due June 30, 2025
-- Bds$40 mil 7.75% debenture due Dec. 31, 2025
-- Bds$100 mil 7.50% debenture due June 30, 2026
S&P said, "Our 'SD' sovereign long- and short-term foreign and
local currency ratings on Barbados reflect the government's missed
debt service payments on its foreign and local currency debt.
"We expect the government to issue new debt under its Barbados
dollar-denominated debt exchange by the end of October 2018, and
continue engaging in dialogue with external creditors to commence
a foreign currency-denominated debt exchange in the near term.
Once the respective exchange offers are complete, and we are able
to conduct a forward-looking review that takes into account the
benefits from the exchanges, as well as any other interim
developments, we will change the respective issuer and issue
ratings, in accordance with the "Rating Implications Of Exchange
Offers And Similar Restructurings, Update" criteria. At that time,
we will analyze the sovereign's general credit standing, most
likely raising the issuer credit rating to the 'CCC' or low 'B'
categories."
The benefits that Barbados will gain following the exchanges,
along with implementation of its Barbados Economic Recovery and
Transformation plan, will form part of the government's strategy
to meet the targets set out under the Extended Fund Facility (EFF)
approved by the IMF board Oct. 1, 2018. Following the EFF's
approval, the IMF disbursed US$49 million to Barbados. The
remaining US$241 million is scheduled to be disbursed over the
next four years, following biannual IMF reviews and surveillance
of the program's performance. To meet its goal of reducing its
debt burden to 60% of GDP by 2033, the government aims to execute
consistent primary surpluses of 6% of GDP annually from the 2019-
2020 fiscal year. In addition to IMF financing, the government
expects to receive budget support from the Inter-American
Development Bank and the Caribbean Development Bank.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee by
the primary analyst had been distributed in a timely manner and
was sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts. The committee
agreed that "key rating factor" had improved/deteriorated and that
the "key rating factor" had improved/deteriorated. All other key
rating factors were unchanged. The chair ensured every voting
member was given the opportunity to articulate his/her opinion.
The chair or designee reviewed the draft report to ensure
consistency with the Committee decision. The views and the
decision of the rating committee are summarized in the above
rationale and outlook. The weighting of all rating factors is
described in the methodology used in this rating action.
RATINGS LIST
Downgraded
To From
Barbados
Senior unsecured D CC
Ratings Affirmed
Barbados
Sovereign credit rating SD/--/SD
Transfer and convertibility assessment
Local currency CC
Senior unsecured D
SD--Selective default.
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B R A Z I L
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JBS INVESTMENTS II: S&P Rates New $500MM Sr. Unsec. Notes 'BB-'
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating to JBS
Investments II Gmbh's proposed $500 million senior unsecured
notes. S&P also assigned a '4' recovery rating to the proposed
notes, which indicates average recovery expectation of 30%-50%
(rounded estimate 40%) in the event of default.
JBS Investments II is a financial vehicle that JBS S.A. (BB-
/Positive/--) owns, and the latter will fully and unconditionally
guaranteed the notes. JBS will use the proceeds, along with its
cash position, to fund the tender offers of its outstanding 2020
notes and of up to $500 million of JBS USA Lux's 2021 notes,
extending debt maturities.
Recovery Analysis
S&P has assigned a recovery rating of '4' to the proposed senior
unsecured notes, with an average recovery (rounded estimate 40%).
Key analytical factors
S&P said, "Our hypothetical default scenario would occur in 2022
amid a combination of high grain prices, shortages of livestock,
high cattle prices, a weak demand scenario for meat in general,
and a tighter access to credit markets.
"We have valued JBS using a 6x multiple applied to our projected
emergence-level EBITDA of $2.9 billion, arriving at a stressed
enterprise value of $17.7 billion."
Simulated default assumptions
-- Simulated year of default: 2022
-- EBITDA at emergence: R$2.9 billion EBITDA multiple: 6.0x
-- Estimated gross enterprise value (EV): R$17.7 billion
Simplified waterfall
-- Net EV, after 5% of administrative expenses: R$16.8 billion
-- Priority debt: R$2.9 billion (ACC lines)
-- Senior secured debt: R$50 million (FINAME and FINEP lines)
-- Senior unsecured debt: R$32.2 billion (including the
deficiency claims from JBS USA's debt, which JBS guarantees)
-- Recovery expectations for unsecured debt: 40%
RATINGS LIST
JBS S.A.
Issuer credit rating BB-/Positive/--
Ratings Assigned
JBS Investments II Gmbh
Senior unsecured BB-
Recovery rating 4(40%)
JBS SA: Moody Raises Corp. Family Rating to Ba3, Outlook Stable
---------------------------------------------------------------
Moody's Investors Service upgraded JBS S.A.'s corporate family
rating to Ba3 from B1 and the senior unsecured ratings of its
wholly-owned subsidiary JBS USA Lux S.A. to Ba3 from B1. The
senior secured bank facility under JBS USA Lux S.A. was upgraded
to Ba2 from Ba3. The outlook for all ratings is stable.
At the same time, Moody's assigned a Ba3 rating to the proposed
senior unsecured notes to be issued by JBS Investments II GmbH and
fully guaranteed by JBS S.A. Net proceeds will be primarily used
for a tender offer of the JBS S.A. 2020 notes, as well as other
general corporate purposes. The rating of the notes assumes that
the final transaction documents will not be materially different
from draft legal documentation reviewed by Moody's to date and
assume that these agreements are legally valid, binding and
enforceable.
Ratings actions:
Issuer: JBS S.A.
LT Corporate Family Rating: upgraded to Ba3 from B1
Issuer: JBS USA Lux S.A.
$500 million GTD global notes due 2021: upgraded to Ba3 from B1
$650 million GTD global notes due 2021: upgraded to Ba3 from B1
$3300 million GTD secured term loan due 2022: upgraded to Ba2 from
Ba3
$750 million GTD global notes due 2024: upgraded to Ba3 from B1
$900 million GTD global notes due 2025: upgraded to Ba3 from B1
$900 million GTD global notes due 2028: upgraded to Ba3 from B1
Issuer: JBS Investments II GmbH
Proposed $500 million senior unsecured notes: Ba3
The outlook for all ratings is stable
RATINGS RATIONALE
The upgrade of JBS' corporate family rating to Ba3 was triggered
by the improvement in credit profile following the recent
transactions aiming at reducing the amount of debt levels through
2021 and extending debt maturities. The initiatives include a BRL2
billion pre-payment under the company's normalization agreement
with Brazilian banks, the up to USD 1.5 billion tender offers for
the 2020 and 2021 notes, the renewal of USD 900 million revolving
credit facilities in the US, and a new AUD$200 million committed
line in Australia. In total JBS will amortize up to USD 1 billion
in debt, while maintaining cash balances at around BRL 12 billion
and generating positive free cash flows. Moody's expects to see
leverage, measured by total debt to EBITDA, including Moody's
standard adjustments, declining from 4.4x in the last twelve
months ending June 2018 to 3.5x by the end of 2019.
Liquidity has been the most relevant risk during 2017, after the
outbreak of the corruption scandals in Brazil involving JBS SA,
its parent company J&F, and their executives. Accordingly, JBS has
taken the necessary steps to address such risk by negotiating an
aggregate amount of BRL 12.2 billion in short term debt
instruments with banks under the so-called "normalization
agreement". At the end of June 2018, short-term debt represented
only 7% of total debt. The BRL 2 billion pre-payment of the 2019
and 2020 amortizations under the normalization agreement and the
tender offers, if successful, will further improve the company's
debt amortization schedule and its liquidity cushion.
JBS ratings continue to be supported by the strength of its global
operations as the world's largest protein producer and its
substantial diversification across protein segments, geographies
and markets. JBS strategy to increase its global footprint into
higher value added processed food segments has improved its
business profile and will lead to stable or higher operating
margins and cash flows overtime.
The ratings are constrained by the risks regarding a series of
judicial processes and investigations, which can directly or
indirectly involve JBS and its shareholders. The Leniency
Agreement as entered into by its controlling owner, J&F
Investimentos S.A. ("J&F"), includes a total fine of BRL 10.3
billion to be paid by J&F, is the most relevant. Currently the
Leniency is being investigated by the Brazilian Attorney General
for possible breaches. However, despite the investigation in
regarding the agreement's validity, the provisions of the leniency
agreement continue to hold and it have not prevented the company,
nor its J&F, from executing asset sales or renegotiating debt with
banks. The rating also reflects the inherent volatility of the
protein industry, which is subject to risk factors such as weather
conditions, diseases, supply imbalances, and global trade
variables, along with the company's history of aggressive growth
via acquisitions.
Proceeds from the proposed bond issuance will be primarily used
for liability management, and JBS has announced a tender offer for
its $1 billion notes due in 2020, as well as other general
corporate purposes.
The stable outlook reflects the expectation that JBS will maintain
a prudent approach to liquidity and continue to generate positive
free cash flow, while maintaining strong operating performance.
The outlook also incorporates its expectation that the evolution
of existing judicial processes and investigations will not
jeopardize JBS' liquidity or the company's access to capital
markets.
An upgrade of JBS' ratings will require further reduction in event
risks, represented by existing litigations, including the
maintenance of the J&F Investimentos (J&F) Leniency Agreement. An
upgrade would also require additional improvements in the
company's capital structure, most specifically the reduction of
its debt maturities in 2021 and 2022, while maintaining an
adequate cash balance to meet the requirements of its operations
and debt obligations. The ability to growth inorganically without
jeopardizing liquidity or leverage is another important
consideration for an upgrade. Quantitatively, an upgrade would
require JBS adjusted total debt to EBITDA to remain below 3.5x and
the cash flow from operations (CFO)/net debt ratio to be above
20%.
The ratings or outlook could suffer negative pressure should
events that can increase liquidity risk occur, or if JBS'
operations deteriorate, weakening cash flows as such CFO/net debt
remains below 15% on a sustained basis. A negative action could be
prompted by persistently high leverage, with total debt to EBITDA
above 4.2x and weakening interest coverage, with EBITA/interest
expense maintained below 2x.
The principal methodology used in these ratings was Global Protein
and Agriculture Industry published in June 2017.
Headquartered in Sao Paulo, Brazil, JBS S.A. (JBS) is the world's
largest protein producer in terms of revenues, slaughter capacity
and production. The company is the leader in beef, chicken and
leather, and the second largest pork producer in the US. The
company has a presence in over 100 countries, with large scale and
diversification.
In the last 12 months ended June 2018, JBS S.A. reported
consolidated revenues of BRL 169 billion ($51.1 billion), with
adjusted EBITDA margin of 8.9%. JBS USA Lux S.A. (B1 stable)("US
beef"), which represents the beef and lamb operations in the US,
Canada and Australia, is the largest business segment, accounting
for 43% of total revenue during the first half of the year;
Pilgrim's Pride Corporation (Ba3 stable) including Moy Park (US
poultry), accounts for 22% of total revenue, while the US pork
business contributes 12%. JBS S.A. Brasil ("beef Brazil")
represents 14% of total revenue in the same period. Brazil-based
Seara, which comprises poultry, pork and processed foods
operations, is responsible for 9% of revenue.
MINERVA SA: Fitch Affirms BB- LT IDRs, Outlook Stable
-----------------------------------------------------
Fitch Ratings has affirmed Minerva S.A.'s Long-Term Foreign and
Local Currency Issuer Default Ratings at 'BB-'. The Rating Outlook
remains Stable.
Minerva's ratings reflect the company's solid profitability,
strong position in the export market, and healthy liquidity
position. The ratings also reflect its expectations for an
improvement in the company's credit profile due to the upcoming
BRL1billion capital increase and management's plan to list its
foreign subsidiaries in early 2019. Minerva's ratings are tempered
by the volatility of FCF and its rapid expansion.
KEY RATING DRIVERS
Capital Increase and IPO: Minerva intends to do a capital increase
of up to BRL1 billion in November 2018 and to use cash proceeds to
reduce debt. The main shareholders Salic (UK) Limited (21.4%) and
VDQ Holdings S.A. (28.2%) have committed to support this
transaction, which guarantees a minimum of BRL0.5 billion.
Assuming full subscription, Fitch estimates that the transaction
would improve Minerva's net leverage ratio by about 1x. Minerva
also intends to do an IPO of its foreign subsidiaries in early
2019, which could result in an additional BRL1 billion of debt
reduction. Fitch sees the impact upon leverage to be less than 1x,
depending on the percentage of float and cash flow leakage to
minority interests.
Deleveraging Expected: Fitch expects Minerva net leverage to reach
about 4x by year-end 2018 from 5.2x as of FYE17 (4.7x pro forma
the EBITDA of Mercosul assets). Minerva credit metrics were
pressured by high working capital requirements following the
acquisition of JBS' Mercosul operations in 2017. Fitch expects
Minerva to reduce net leverage due to the upcoming capital
increase and the weak Brazilian Real against the U.S. dollar.
Fitch expects Minerva's FCF to be positive in 2018 due to
increased EBITDA driven by volume growth, improved working capital
management and stable capex.
Product Concentration Risks: Minerva operates solely in the beef
business in South American countries and is, therefore, less
diversified from a product and geographic standpoint than
Brazilian-based protein company JBS S.A. Minerva has operations in
several countries including Paraguay, Uruguay, Argentina, and
Colombia. The company aims to list in Chile its foreign
subsidiaries in 2019. Fitch estimates that those operations
represent about 35% of Minerva total EBITDA in 2019. 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.
Good Margins: Minerva's sales and earnings are subject to periodic
volatility caused by changes in input costs and protein prices due
to supply and demand dynamics of commodity meat. The company has
had the highest EBITDA margin in the beef sector over the last two
years. Fitch expects the company's annual EBITDA margin to remain
in the 9%-9.5% range over the next few years due to the
consolidation of the recent acquisitions.
Favorable Operating Outlook: Global beef fundamentals are expected
to remain positive in the next couple years for Brazilian
producers due to steady global demand, limited global beef supply
and ample livestock supply in Brazil.
DERIVATION SUMMARY
Minerva ratings reflect its solid business profile and geographic
diversification as a pure play in the beef industry with a large
presence in South America. The company is smaller than its peers
such as Marfrig Global Food S.A. (BB-/Stable) and JBS S.A. (BB-
/Stable). Minerva is less diversified from a product standpoint
than JBS (BB-/Stable) as the company is mainly a beef processor in
South America. Minerva competitive advantages include its location
in a favorable cattle growing environment and relationship with
farmers, customers and distributors.
The ratings are supported by Minerva strong liquidity position
with cash sufficient to amortize its debt through 2026, high
profitability for the sector due to export. Leverage is high for
the ratings, but Fitch factors the capital increase and the
support of its main shareholders that will participate in the
company's capital increase to reduce leverage toward 4x in 2018
and toward 3x in 2019 assuming the company successfully completes
the capital increase and the IPO. The net leverage is higher than
JBS net leverage.
The ratings are tempered by the volatility of FCF due to its rapid
expansion. 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
-- EBITDA margin in the range of 9%-9.5% over the next two
years;
-- Capital increase of about BRL1 billion in 2018;
-- Negative FX impact of about BRL1 billion;
-- Net debt/ EBITDA trending toward 4x by FYE18.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
-- Additional geographic diversification and/or improved product
mix;
-- Sustainable Positive FCF generation;
-- Substantial decreases in gross and net leverage to below 4.5x
and 3.0x, respectively, on a sustained basis.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
-- The sharp contraction of Minerva's performance;
-- Increased net leverage above 4.0x and 4.5x on a sustained
basis.
LIQUIDITY
Strong Liquidity: Minerva's liquidity is strong. As of June 30,
2018, cash and cash equivalent totaled BRL4.2 billion and short-
term debt of about BRL2.8 billion. On the same date, total debt
was BRL11 billion of which 25% was short-term debt. Cash policy is
to hold enough cash to cover three months of cattle purchase with
a minimum of BRL2.8 billion-BRL3 billion to run business
considering political uncertainties in Brazil. The company has
been buying back its bonds in the market.
FULL LIST OF RATING ACTIONS
Fitch affirms the following ratings:
Minerva S.A.:
-- Long-Term Foreign and Local Currency IDR at 'BB-'; Outlook
Stable;
-- National Long-Term Rating at 'A(bra)'; Outlook Stable.
Minerva Luxembourg S.A.:
-- Senior unsecured notes due 2026, 2028 and perpetual at 'BB-'.
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C O S T A R I C A
===================
REVENTAZON FINANCE: Fitch Affirms BB+ on $135MM Fixed-Rate Notes
----------------------------------------------------------------
Fitch Ratings has affirmed Reventazon Finance Trust's USD135
million fixed-rate notes at 'BB+sf'.
Fitch's rating addresses the timely payment of interest and
ultimate payment of principal at legal maturity and does not
include any potential acceleration amounts. The Rating Outlook is
Negative.
KEY RATING DRIVERS
Reliance on ICE Lease Payments: The notes are backed by 100%
participation interest on the Inter-American Development Bank's
(IDB) B-loan acquired through a participation agreement, which
gives the right to receive payments under IDB's B-loan. Instituto
Costarricense de Electricidad (ICE) lease payments from a non-
cancellable financial lease agreement for the operation and
maintenance of the hydropower plant will cover all payments on the
loan.
Credit Quality of ICE: Given the unconditional and irrevocable
nature of the lease payments, Fitch views the credit risk of these
payments as linked to ICE's credit quality. On July 20, 2018,
Fitch affirmed ICE's Long-Term, Foreign-Currency Issuer Default
Rating (IDR) at 'BB' and revised the Rating Outlook to Negative
from Stable. Grupo ICE's ratings are supported by its linkage to
the sovereign rating of Costa Rica (Foreign- and Local-Currency
IDRs BB/Negative), which stems from the company's government
ownership and the implicit and explicit expectation of government
support.
Strength of the Lease Payments: To determine the strength of the
lease payment obligation, Fitch considered the role of IDB as
lender of record of the obligation being covered by ICE's payments
tied to ICE's ownership structure. As the IDB will continue to be
the lender of record and administer IDB's B-loan, Fitch believes
the holders of the rated notes will benefit from the B-loan
preferential, de facto, status provided by IDB. Because of this
benefit, the credit quality of the payment obligation is
considered to be in line to other obligations of Costa Rica with
the IDB and therefore was notched upward from ICE's IDR.
Preferred Creditor Status of IDB to Costa Rica: Historically,
sovereigns have prioritized certain obligations, such as
obligations from multilateral development banks (MDBs), when the
government cannot service all of the country's external debt.
While the B-loan is not a direct obligation of the sovereign,
Fitch believes treatment of the IDB as a preferred creditor
extends to ICE as the debtor, since ICE is a strategic government-
owned entity that receives underlying sovereign support.
Although Costa Rica has defaulted in the past (1981), neither the
sovereign nor ICE have ever defaulted on debt issued by a
preferred creditor. Currently, IDB's share of Costa Rica's
external debt is 16.4% and historically has been within 12% to
13%, which makes it an essential preferred creditor for the
country.
Adequate Liquidity: The rated fixed-rate notes benefit from a debt
service reserve account equivalent to the next principal and
interest payment due amount. This liquidity provides certainty in
case the transaction is exposed to temporary liquidity shock. As
of August 2018, external account balance stands at close to
USD22.21 million, which covers debt service on the November 2018
issued notes payment.
Criteria Variation: Fitch's "Single- and Multi-Name Credit Linked
Notes Rating Criteria," dated July 19, 2018, establishes that the
credit quality of the primary risk contributors in a credit linked
notes (CLNs) transaction is typically determined by an IDR
assigned by Fitch. However, in some situations, a committee would
consider using the actual bond rating (e.g. senior unsecured
rating, subordinate rating) of an asset in place of the IDR.
For this transaction, it has been determined that the credit
quality of the primary risk contributor is not commensurate with
the IDR or any particular bond rating of the obligor, as sovereign
ratings do not directly address all forms of obligations. To
determine the credit quality of the sovereign obligation, and its
notching from the sovereign IDR, the agency incorporates
perspectives from its sovereign group. During the analysis, it was
determined that the appropriate notching uplift from the primary
risk contributor would be one notch.
RATING SENSITIVITIES
A downgrade of ICE, tied to a rating of the sovereign, may trigger
a downgrade of the transaction's rating. However, a rating action
of ICE not tied to a rating downgrade of the sovereign may not
trigger a rating action on the notes if Fitch's view on the
strength of the payment obligation is not affected by such rating
action. Additionally, changes in Fitch's view of the treatment of
the IDB as a preferred creditor may trigger a rating action on the
notes.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third-party due diligence was provided to or reviewed by Fitch
in relation to this rating action.
Fitch has affirmed the following ratings:
-- $135,000,000 fixed-rate notes at 'BB+sf'; Outlook Negative.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Bus Drivers Cancel Protest Over Fuel Prices
---------------------------------------------------------------
EFE News reports that the Fenatrano union representing Dominican
bus drivers suspended a march scheduled for Oct. 10 in Santo
Domingo to demand a reduction in fuel prices.
Fenatrano leader Juan Hubieres told the press that the decision
was taken to prevent outsiders from infiltrating the protest and
committing acts of vandalism to discredit the drivers, according
to EFE News.
Residents of the Dominican capital woke up Oct. 10 to a heavy
police and military presence in anticipation of the protest, the
report notes.
Officials and transport executives criticized Fenatrano for
convening the protest, insisting that talks were already under way
to address the problems facing the sector, the report relays.
Fenatrano still plans to organize a march to the National Palace
on Oct. 24, Hubieres, the report says.
A strike by Fenatrano drivers caused chaos in the capital and the
surrounding province of Santo Domingo, leaving hundreds of
commuters stranded, the report adds.
As reported in the Troubled Company Reporter-Latin America on
Sept. 24, 2018, Fitch Ratings affirmed Dominican Republic's
Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook.
======================
P U E R T O R I C O
======================
SEARS HOLDINGS: Bankruptcy Court Approves First Day Motions
-----------------------------------------------------------
Sears Holdings Corporation on Oct. 15, 2018, disclosed that the
U.S. Bankruptcy Court for the Southern District of New York
granted interim approval of all the Company's first day motions
related to its voluntary Chapter 11 restructuring. Collectively,
the approvals by the Court immediately improve the Company's
liquidity position and allow Holdings to continue its business
operations throughout the financial restructuring process.
The Court entered an order granting the Company authorization to
access its $300 million in senior priming debtor-in-possession
("DIP") financing from its senior secured asset-based revolving
lenders. The Company also received authorization to continue
paying employee wages and benefits, and to honor member programs
including warranties and promotions.
"The Court's approval of our First Day motions is an important
step forward in our financial restructuring process that will
allow the Company to continue operating in the normal course and
providing our customers and members with trusted service," said
Robert A. Riecker, Chief Financial Officer, and member of the
Office of the Chief Executive. "Our stores, online and mobile
platforms, and related businesses are open and we continue to
offer our customers and members the brands and products they want.
We look forward to continuing to engage in productive discussions
with our creditors and other stakeholders to pursue a plan of
reorganization as expeditiously as possible."
About Sears Holdings
Sears Holdings Corporation (NASDAQ: SHLD) --
http://www.searsholdings.com/-- began as a mail ordering catalog
company in 1887 and became the world's largest retailer in the
1960s. At its peak, Sears was present in almost every big mall
across the U.S., and sold everything from toys and auto parts to
mail-order homes. Sears claims to be is a market leader in the
appliance, tool, lawn and garden, fitness equipment, and
automotive repair and maintenance retail sectors.
Sears and Kmart merged to form Sears Holdings in 2005 when they
had 3,500 US stores between them. Kmart emerged in 2005 from its
own bankruptcy.
Unable to keep up with online stores and other brick-and-mortar
retailers, a long series of store closings has left it with 687
retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin
Islands as of mid-October 2018. The Company employs 68,000
individuals, of whom 32,000 are full-time employees.
As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total
assets, $11.33 billion in total liabilities and a total deficit of
$4.40 billion.
Unable to cover a $134 million debt payment due Oct. 15, 2018,
Sears Holdings Corporation and 49 subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15,
2018.
The Hon. Robert D. Drain is the case judge.
Weil, Gotshal & Manges LLP is serving as legal counsel, M-III
Partners is serving as restructuring advisor, and Lazard Freres &
Co. LLC is serving as investment banker to Holdings. DLA Piper
LLP is the real estate advisor. Prime Clerk is the claims and
noticing agent.
SEARS HOLDINGS: Whirlpool Says Sears Less Than 2% of Net Sales
--------------------------------------------------------------
Whirlpool Corporation on Oct. 15, 2018, confirmed the recently
announced Sears Holdings Corporation ("Sears") bankruptcy will
have a very limited impact on Whirlpool's results of operations.
As of Sept. 30, 2018, approximately $30 million or 1% of
Whirlpool's aggregate accounts receivable exposure was related to
Sears, and Whirlpool had an immaterial amount of Sears-related
inventory. In addition, net sales to Sears represented less than
2% of Whirlpool's global net sales.
In the past, when faced with a potential volume reduction from any
one particular segment of the trade distribution network,
Whirlpool has been able to offset such declines with increased
sales through a broad distribution network.
"Our products are sold where consumers want to shop with
distribution across all big-box retailers, the homebuilding
channel and independent retailers," said Joe Liotine, President,
Whirlpool Corporation North America. "We will continue to provide
a great array of product offerings and services that meet consumer
needs, offering strong brands that deliver innovation to consumers
every day."
Whirlpool does not anticipate this bankruptcy will have any impact
on our full-year 2018 EPS guidance or financial results over the
long term. Further updates will be provided on Whirlpool's
conference call to discuss third-quarter financial results.
About Whirlpool Corporation
Whirlpool Corporation is the world's leading major home appliance
company, with approximately $21 billion in annual sales, 92,000
employees and 70 manufacturing and technology research centers in
2017. The company markets Whirlpool, KitchenAid, Maytag, Consul,
Brastemp, Amana, Bauknecht, Jenn-Air, Indesit and other major
brand
names in nearly every country throughout the world.
About Sears Holdings
Sears Holdings Corporation (NASDAQ: SHLD) --
http://www.searsholdings.com/-- began as a mail ordering catalog
company in 1887 and became the world's largest retailer in the
1960s. At its peak, Sears was present in almost every big mall
across the U.S., and sold everything from toys and auto parts to
mail-order homes. Sears claims to be is a market leader in the
appliance, tool, lawn and garden, fitness equipment, and
automotive repair and maintenance retail sectors.
Sears and Kmart merged to form Sears Holdings in 2005 when they
had 3,500 US stores between them. Kmart emerged in 2005 from its
own bankruptcy.
Unable to keep up with online stores and other brick-and-mortar
retailers, a long series of store closings has left it with 687
retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin
Islands as of mid-October 2018. The Company employs 68,000
individuals, of whom 32,000 are full-time employees.
As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total
assets, $11.33 billion in total liabilities and a total deficit of
$4.40 billion.
Unable to cover a $134 million debt payment due Oct. 15, 2018,
Sears Holdings Corporation and 49 subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15,
2018.
The Hon. Robert D. Drain is the case judge.
Weil, Gotshal & Manges LLP is serving as legal counsel, M-III
Partners is serving as restructuring advisor, and Lazard Freres &
Co. LLC is serving as investment banker to Holdings. DLA Piper
LLP is the real estate advisor. Prime Clerk is the claims and
noticing agent.
SEARS HOLDINGS: Kimco Realty's Exposure Limited to 14 Leases
------------------------------------------------------------
Kimco Realty Corp. on Oct. 15, 2018, disclosed that it expects to
benefit from considerable mark-to-market and long-term
redevelopment opportunities in the wake of the recently announced
Sears Holdings ("Sears/Kmart") bankruptcy filing. Overall,
Kimco's exposure is limited to 14 leases (three Sears and eleven
Kmart, one of which is subleased to At Home), representing just
0.6% of annualized base rent and 1.9% of the company's total gross
leasable area.
"The announcement may afford us the long-awaited opportunity to
recapture boxes with significant mark-to-market potential in our
core markets, and sparks several new redevelopment opportunities
within our portfolio," said Conor Flynn, Kimco's Chief Executive
Officer. "Given the highly favorable demographics of these
locations, along with the continued demand for well-located, high-
quality real estate, we expect to build on our past success in
creating value by
re-tenanting and redeveloping these below-market anchor spaces and
activating underutilized parking fields."
Sears/Kmart pays among the lowest rents of any tenant in Kimco's
portfolio. The 14 Sears/Kmart leases have an average base rent of
$5.25 per square foot, which is significantly below the company's
portfolio average of $15.95. Demographics across the 14 locations
are desirable, with a population of 129,000 within a three-mile
radius with an average household income of $88,000.
Select opportunities include:
* Whittwood Town Center, an infill site in the densely
populated Los Angeles suburb of Whittier, California, serving a
population of approximately 175,000 within a three-mile radius
with an average household income of over $93,000.
* Bridgehampton Commons in Bridgehampton, New York, serving the
affluent Hamptons community, with an average household income of
over $193,000 in a three-mile radius.
* Kendale Lakes Plaza in Miami, Florida, with a population of
215,000 within a three-mile radius in this strong South Florida
market.
Since 2015, Kimco has proactively reduced its overall exposure to
Sears/Kmart and has recognized the benefits of recapturing eight
Sears/Kmart locations, achieving an average rent spread of 211%.
The recaptures triggered the redevelopment of four of those
centers, including:
* Hylan Plaza in Staten Island, New York, where a former Kmart
has been demolished to make way for The Boulevard, Kimco's $186
million Signature Series redevelopment scheduled to open in 2020,
featuring tenants such as Alamo Drafthouse, Marshalls, Ulta, LA
Fitness and ShopRite, which replaced Kmart at a rent spread of
727%.
* Vermont-Slauson Shopping Center in Los Angeles, California,
where a former Kmart was re-leased to Ross Dress for Less and dd's
Discounts for a total rent spread of 748%.
* Bayhill Plaza in Orlando, Florida, where a Kmart box was
re-tenanted with a PGA Superstore and Ross Dress for Less for a
total rent spread of 127%.
* Fullerton Plaza in Baltimore, Maryland, where Kmart was
replaced by Weis Markets for a rent spread of 191%.
About Kimco
Kimco Realty Corp. -- http://www.kimcorealty.com/-- is a real
estate investment trust (REIT) headquartered in New Hyde Park,
N.Y., that is one of North America's largest publicly traded
owners and operators of open-air shopping centers. As of
September 30, 2018, the company owned interests in 450 U.S.
shopping centers comprising 78 million square feet of leasable
space primarily concentrated in the top major metropolitan
markets. Publicly traded on the NYSE since 1991, and included in
the S&P 500 Index, the company has specialized in shopping center
acquisitions, development and management for 60 years.
About Sears Holdings
Sears Holdings Corporation (NASDAQ: SHLD) --
http://www.searsholdings.com/-- began as a mail ordering catalog
company in 1887 and became the world's largest retailer in the
1960s. At its peak, Sears was present in almost every big mall
across the U.S., and sold everything from toys and auto parts to
mail-order homes. Sears claims to be is a market leader in the
appliance, tool, lawn and garden, fitness equipment, and
automotive repair and maintenance retail sectors.
Sears and Kmart merged to form Sears Holdings in 2005 when they
had 3,500 US stores between them. Kmart emerged in 2005 from its
own bankruptcy.
Unable to keep up with online stores and other brick-and-mortar
retailers, a long series of store closings has left it with 687
retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin
Islands as of mid-October 2018. The Company employs 68,000
individuals, of whom 32,000 are full-time employees.
As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total
assets, $11.33 billion in total liabilities and a total deficit of
$4.40 billion.
Unable to cover a $134 million debt payment due Oct. 15, 2018,
Sears Holdings Corporation and 49 subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15,
2018.
The Hon. Robert D. Drain is the case judge.
Weil, Gotshal & Manges LLP is serving as legal counsel, M-III
Partners is serving as restructuring advisor, and Lazard Freres &
Co. LLC is serving as investment banker to Holdings. DLA Piper
LLP is the real estate advisor. Prime Clerk is the claims and
noticing agent.
SEARS HOLDINGS: Seritage Says 70% of Income Now From Other Tenants
------------------------------------------------------------------
Seritage Growth Properties on Oct. 15, 2018, provided a business
update related to the recent announcement by Sears Holdings
Corporation that Sears Holdings has filed for Chapter 11
bankruptcy protection.
"All of our capital investment, leasing and development activity
over the last three years is unlocking substantial value, and has
significantly diversified our income stream with approximately 70%
of our signed leased income now coming from diversified, non-Sears
tenants," said Benjamin Schall, President and Chief Executive
Officer. "We have $1 billion of cash and committed capital under
our Term Loan facility, which provides us the funds to complete
all of our on-going redevelopment projects and cover reductions in
cash flow that may result from the potential disruption in Sears
income. The completion of our redevelopment projects brings our
signed leased income on-line and will replace any potential lost
income from Sears Holdings."
"Our go-forward strategy remains as it has been -- to unlock
substantial value through investment of capital and the intensive
redevelopment of our well-located buildings and land," continued
Mr. Schall. "All of our active projects will continue
uninterrupted, and we are excited to further build our pipeline of
redevelopment activity by partnering with growing retailers and
users, mixed-use developers and institutional capital allocators."
Additional comments from Mr. Schall can be found in our "Letter
from our Chief Executive Officer" dated October 15, 2018 and filed
on Form 8-K with the Securities and Exchange Commission.
Development Activities
* Announced Projects: as of September 30, 2018, the Company had
completed or commenced 94 redevelopment projects, representing
over $1.4 billion of total investment, and will proceed
uninterrupted with all active and underway projects. The
Company's share of remaining spending at these projects is
approximately $880 million which is expected to be funded with
cash on hand and committed borrowing facilities. This capital is
being invested at targeted incremental returns of approximately
11% and is creating significant value for our shareholders.
* Development Pipeline: the Company will continue to build its
pipeline of redevelopment opportunities through the activation of
the remainder of its portfolio for higher and better uses much in
the same way it has since its inception in July 2015. The scale
and quality of the Company's portfolio, combined with its unique
redevelopment platform and control over its real estate, provide
Seritage with competitive advantages that will allow it to
continue as an industry leader in transforming retail real estate
around the country.
Leasing Activities
* Signed Not Opened Leases: the Company has sufficient liquidity
to complete all underway projects and, as such, the Company is
positioned to fulfill all of its commitments to tenants under
signed but not opened ("SNO") leases. As of September 30, 2018,
the Company had 156 SNO leases representing $75.0 million of
annual base rent, including the Company's proportional share of
its unconsolidated joint ventures, the majority of which is
expected to steadily come on line throughout the next 24 months.
* Lease Up at Underway Projects: completing all underway projects
includes the lease-up of remaining unleased space at these
projects. The Company projects an additional $80 million of
rental income, including the Company's proportional share of its
inconsolidated joint ventures, can be generated as these projects
are stabilized without allocating additional capital beyond the
$880 million referenced above [1] .
Seritage Liquidity
* Cash on Hand: as of September 30, 2018, the Company had
approximately $580 million of cash on hand. This capital is
available to fund on-going development activities, as well as
adverse impacts to operating cash flow that may result from
potential reductions of rental income under the Master Lease with
Sears Holdings.
* Incremental Funding Facility: the Company's $2.0 billion term
loan facility (the "Term Loan Facility") includes a committed $400
million incremental funding facility. This capital would also be
available, subject to certain conditions, to fund announced and
future redevelopment activities.
* Asset Monetization: the Company will continue to
opportunistically pursue select asset monetization and new joint
ventures that support the Company's value creation activities.
* Common Stock Dividends: the Company expects to maintain its
current common stock dividend policy of making distributions that
approximate taxable income so as to retain as much free cash flow
as possible for reinvestment back into the portfolio. To the
extent estimated taxable income falls meaningfully below current
distribution levels (approximately $55 million annually), as a
result of reduced income under the Master Lease or reduced capital
gains from asset monetization activities, the Board of Trustees
may consider adjustments to common stock dividend amounts. Any
reduction of the common dividend would be made to allow the
Company to reinvest the capital retained into future redevelopment
projects at accretive returns.
* Preferred Stock Dividends: the Company expects to continue
paying
dividends ($4.9 million annually) on its preferred shares.
Master Leases with Sears Holdings
* Remaining Exposure: as of September 30, 2018, including the
effect of all previously exercised recapture and termination
activity, Sears Holdings was a tenant in 82 properties under the
Master Lease and 20 properties under the JV Master Leases
representing an aggregate of 12.4 million square feet and $61.2
million of annual base rent, or 31.4% of all base rent under
signed leases.
* Impact of Re-Leasing Spreads: the 3.5x to 4.5x rental uplift
that Company has historically achieved upon re-leasing space
formerly occupied by Sears Holdings allows it to recover all the
rental income generated from Sears Holdings by re-leasing only
25-35% of the formerly occupied space and deploying the capital
required to bring the rental income online.
Term Loan Facility with Berkshire Hathaway
* Loan Status: there is no direct impact of Sears Holdings'
bankruptcy filing, or a potential rejection of the Master Lease,
on the Company's Term Loan Facility. Specifically, such
occurrences will not result in an event of default, mandatory
amortization, cash flow sweep or any similar provision.
* Financial Metrics: the Term Loan Facility includes certain
financial metrics, including fixed charge coverage ratios,
leverage ratios and a minimum net worth, that could be negatively
impacted by a loss of revenue from Sears Holdings. A failure to
satisfy any of these financial metrics will require the Company to
seek lender approval to monetize assets via sale or joint venture
and also provide the lender the right to request mortgages on its
real estate collateral, but will not result in an event of
default, mandatory amortization, cash flow sweep or any similar
provision.
The Company is monitoring, and will continue to monitor, Sears
Holdings' bankruptcy proceedings and the impact on its business.
By their nature, bankruptcy proceedings and their outcomes are
subject to uncertainty. For more information regarding the same,
refer to the risk factors relating to Sears Holdings in our
periodic filings with the Securities and Exchange Commission.
About Sears Holdings
Sears Holdings Corporation (NASDAQ: SHLD) --
http://www.searsholdings.com/-- began as a mail ordering catalog
company in 1887 and became the world's largest retailer in the
1960s. At its peak, Sears was present in almost every big mall
across the U.S., and sold everything from toys and auto parts to
mail-order homes. Sears claims to be is a market leader in the
appliance, tool, lawn and garden, fitness equipment, and
automotive repair and maintenance retail sectors.
Sears and Kmart merged to form Sears Holdings in 2005 when they
had 3,500 US stores between them. Kmart emerged in 2005 from its
own bankruptcy.
Unable to keep up with online stores and other brick-and-mortar
retailers, a long series of store closings has left it with 687
retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin
Islands as of mid-October 2018. The Company employs 68,000
individuals, of whom 32,000 are full-time employees.
As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total
assets, $11.33 billion in total liabilities and a total deficit of
$4.40 billion.
Unable to cover a $134 million debt payment due Oct. 15, 2018,
Sears Holdings Corporation and 49 subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15,
2018.
The Hon. Robert D. Drain is the case judge.
Weil, Gotshal & Manges LLP is serving as legal counsel, M-III
Partners is serving as restructuring advisor, and Lazard Freres &
Co. LLC is serving as investment banker to Holdings. DLA Piper
LLP is the real estate advisor. Prime Clerk is the claims and
noticing agent.
=================
V E N E Z U E L A
=================
VENEZUELA: Says Ecuadorian President Lied About Scale of Migration
------------------------------------------------------------------
latinxtoday.com reported that Venezuela's minister of
communications said that Ecuadorian President Lenin Moreno lied
when claiming that 6,000 Venezuelans are arriving each day in
Ecuador due to the economic crisis in the oil-rich nation.
"He said that 6,000 sick Venezuelans were arriving in his country
each day and that one million had already arrived, a figure that
would only be possible if 140 buses left every day from Venezuela
during the last seven years," Jorge Rodriguez told a press
conference, according to latinxtoday.
latinxtoday added that the minister also criticized Ecuador's
foreign ministry, which has likewise presented figures about
Venezuelan migration that are, according to Rodriguez, highly
exaggerated.
In his speech, the Ecuadorian president urged Latin American
nations to support and be "sympathetic" with Venezuelan migrants,
latinxtoday cites.
"Children arrive with measles, diphtheria, poliomyelitis. Pregnant
women arrive who have not had a checkup. We have provided 50,000
vaccines to those defenseless and beautiful children and we have
provided thousands of checkups for the more than one million
Venezuelan brothers and sisters who have left their homes to find
better opportunities," Moreno said, latinxtoday relays.
Rodriguez responded by saying that "85 percent of Venezuelans who
are now in Peru, Ecuador, Colombia, Chile and Argentina wish to
return to Venezuela. They are tired of the hate crimes, of the
xenophobia, of the racism," latinxtoday points out.
As reported in the Troubled Company Reporter-Latin America on
June 1, 2018, S&P Global Ratings, in May 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'.
=================
X X X X X X X X X
=================
LATAM: Recovery in Region Has Lost Momentum, IMF Says
-----------------------------------------------------
The International Monetary Fund (IMF) relays that the Regional
Economic Outlook for the Western Hemisphere marked down its growth
forecasts for Latin America and the Caribbean to 1.2 percent in
2018 and 2.2 percent in 2019, from the May 2018 forecasts of 2.0
percent and 2.8 percent, respectively.
IMF cites that the moderating recovery is underpinned by divergent
growth outcomes across the region. In some of the region's largest
economies, the recovery has slowed sharply, as country-specific
characteristics amplify the impact of growing trade tensions and
tightening monetary conditions.
Moreover, higher global oil prices coupled with increased
political uncertainty have dampened the near-term outlook in
several economies in Central America, IMF adds.
There are bright spots to the outlook, however, IMF says. Better
terms-of-trade over the past year and improvements in consumer and
business confidence have boosted the growth prospects in some
Andean economies (such as Colombia, Chile, and Peru) and activity
is recovering in the Caribbean, reflecting the uptick in tourism
owing to robust U.S. growth.
Investment Pickup
"Despite the slowdown in regional economic activity, private
investment is showing signs of life," Alejandro Werner, Director
of the IMF's Western Hemisphere Department, told a press
conference in Bali, Indonesia.
Having contracted for three years in a row, private investment in
Latin America and the Caribbean is estimated to have stopped being
a major drag to growth in 2017 and is gaining further strength.
In the last quarter of 2017 and the first quarter of 2018, the
contribution of investment to growth in the region turned positive
and is projected to continue supporting the recovery this year and
next.
Nevertheless, investment levels are expected to remain below the
levels observed in other regions, which would be explained in part
by low saving rates. In this regard, prospects for long-term
growth in the region remain modest, at 2.8 percent.
Regional Mix
In Argentina, the economy is expected to contract this year and
next. But, the authorities' new push for stabilization should
improve macroeconomic prospects in the medium run.
In Brazil, short-term growth prospects are weighed down by the
effects of the truckers' strike in May, the recent tightening of
financial conditions, and the uncertainty surrounding the October
elections.
Growth prospects in Chile have been upgraded due to the ongoing
strong rebound of business and consumer confidence.
In Colombia, the economic recovery continues to be driven by
higher oil prices.
Robust external demand for both traditional and nontraditional
exports have provided a fillip to growth prospects in Peru.
There is still no end in sight to the economic and humanitarian
crisis in Venezuela.
In Mexico, despite a preliminary trade deal with the United States
and Canada, lingering uncertainty on the final agreement and tight
financial conditions suggest the economy will recover gradually.
Growth in Central America has shown signs of deceleration since
the beginning of 2018, driven by worsening terms of trade and
subdued domestic demand.
Economic prospects for the Caribbean are improving. Growth in the
region is expected to firm up this year and next, supported by
robust U.S. and global growth. Reconstruction from the devastating
hurricanes of 2017 in some tourism-dependent countries has been
largely delayed so far but is expected to pick up in 2019. Rising
commodity prices and production are projected to lead to stronger
growth for commodity exporters.
Risks to The Outlook
A slowdown in global trade, owing to a range of factors - including
rising protectionism, an escalation of ongoing trade disputes,
fluctuations in energy prices, and an abrupt tightening of global
financial conditions - could undermine the nascent recovery and
further reduce long-term growth prospects in Latin America and the
Caribbean.
Regional and domestic risks have also intensified since the
spring, and include political risks, regional spillovers, and the
recurrence of extreme weather events, such as hurricanes in the
Caribbean.
Policy Priorities
Limited room in the budget. Latin America and the Caribbean
countries continue to carry primary deficits that exceed debt-
stabilizing levels, limiting the scope for government support.
Higher energy prices and continued depreciation limit the room to
maneuver interest rate policy. Credible policy frameworks should
guide policies and expectations over time, to protect the recovery
from a less benign external environment.
Exchange rate flexibility remains critical. With external dollar
financing needs being relatively high in some countries and
capital flows ebbing, policymakers in the region should be
prepared for further capital outflow pressures. In this regard,
exchange rate flexibility (where applicable) will remain key.
Foreign exchange intervention should be limited to containing
excess volatility in the event of disorderly market conditions.
Implementing key reforms can build growth with widespread
benefits. Despite the increased downside risks, many countries in
the region should continue to focus on much-needed structural
reforms that would boost productive capacity and help build
strong, durable, and inclusive growth over the medium term.
Reforms should focus on increasing saving and investment rates,
reducing misallocation of resources, making labor markets more
flexible, liberalizing trade, reducing informal labor markets, and
improving the business climate.
***********
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
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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
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***********
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.
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