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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                     L A T I N   A M E R I C A

               Wednesday, December 19, 2018, Vol. 19, No. 251


                            Headlines



B A R B A D O S

BARBADOS: Economy Too Dependent on Banks, Persaud Says


B R A Z I L

ATENTO LUXO: Fitch Affirms BB IDR & BB on $400MM Secured Notes
CONSTELLATION OIL: Fitch Lowers Issuer Default Rating to D


B R I T I S H   V I R G I N   I S L A N D S

GEOPHYSICAL SUBSTRATA: S&P Gives Prelim. 'B' Issuer Credit Rating


C O S T A   R I C A

COSTA RICA: IMF Says Economic Growth Moderated in 2nd Half Year


D O M I N I C A N   R E P U B L I C

* DOMINICAN REPUBLIC: Economic Activity Grows 6.9%, Bank Says


J A M A I C A

JAMAICA: Not Interested in Becoming a Casino Destination


M E X I C O

RASSINI AUTOMOTRIZ: Fitch Lowers LT IDRs to BB-, Outlook Stable


P A R A G U A Y

PARAGUAY: Fitch Hikes LT IDRs to BB+ & Alters Outlook to Stable


U R U G U A Y

URUGUAY: Economy Remains Resilient, IMF Says


                            - - - - -


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B A R B A D O S
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BARBADOS: Economy Too Dependent on Banks, Persaud Says
------------------------------------------------------
RJR News reports that Professor Avinash Persaud, Barbados' special
envoy on Investment and Financial Services, said the country's
financial system is too dependent on commercial banks, is
unbalanced, narrow, and not good at mobilizing domestic savings
for domestic investment.

Mr. Persaud argued that a heavy dependence on the banks must
change if the economy is to grow and new jobs created, according
to RJR News.

Professor Persaud also suggested that Barbados' bank loans to bank
deposits are too low for macroeconomic stability and growth, the
report adds.

As reported in the Troubled Company Reporter-Latin America on
Nov. 22, 2018, S&P Global Ratings raised its long- and short-
term local currency sovereign credit ratings on Barbados to 'B-/B'
from 'SD/SD' (selective default). At the same time, S&P Global
Ratings assigned its 'B-' issue-level rating to Barbados' long-
term debt issued in its debt exchange. S&P Global Ratings also
affirmed its 'SD/SD' long- and short-term foreign currency credit
ratings on the country, and its 'D' (default) ratings on Barbados'
foreign-currency issues. Finally, S&P Global Ratings raised its
transfer and convertibility assessment on the country to 'B-' from
'CC'.



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B R A Z I L
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ATENTO LUXO: Fitch Affirms BB IDR & BB on $400MM Secured Notes
--------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Foreign-Currency Issuer
Default Rating for Atento Luxco 1 S.A. at 'BB'/ Outlook Stable.
Fitch has also affirmed Atento's USD400 million senior secured
notes at 'BB' and Atento Brasil S.A.'s (Atento Brasil) Long-term
national scale rating at 'AA(bra)'/Outlook Stable.

The ratings reflect Atento's business position, scale and
operating expertise as the fourth-largest player in the global
customer relation management (CRM) and business process
outsourcing (BPO) industry, with a well-established long-term
client relationship and geographical diversification. Atento's
business position enables the company to support EBITDAR margins
at adequate levels for the industry and modest positive free cash
flow (FCF) over the medium term. Fitch also expects the company to
keep a moderate net adjusted leverage at the 2.5x to 3.0x range,
as well as a manageable debt maturity profile and robust liquidity
position.

The ratings are tempered by the moderate to high-risk industry
profile, which has been challenged by technological changes that
somehow limits CRM growth perspectives; the intrinsic client
concentration of the business; and the lack of minimum volumes in
contracts and intense competition. Atento's Country Ceiling is
'A', equal to the lowest country ceiling from the group of
countries where Atento operates, for which the sum of total local
currency and hard currency cash flow generation is sufficient to
cover hard currency gross interest expense in Fitch's forecast
horizon, in accordance with Fitch's "Non-financial Corporates
Exceeding the Country Ceiling Rating Criteria".

KEY RATING DRIVERS

Strong Competitive Position: Atento's business profile benefits
from proven operating expertise, long-term customer relationships,
high contract renovation rates, and a robust scale, which supports
the company's strong competitive position. Atento is the largest
provider of CRM and BPO services in Latin America and one the top
five providers globally based on revenues. Fitch believes Atento
has 17% of contact center outsourcing services market share in
Latin America and 25% in Brazil, a position sustained by contract
renovation rates over 95% and a loyal client base. More than 80%
of clients have been with the company for over five years.

Atento's size and operating expertise allow for economies of scale
and partially mitigate price competition to deliver operating
margins in line with its main global competitors. The company's
geographical diversification helps smooth the impact of economic
deceleration in a particular market and enables it to exchange
solutions and services among the countries where it operates.

Consistent Operating Performance: Fitch expects Atento to continue
delivering mildly positive FCFs and low double digit operating
margins. Fitch forecasts Atento's average FCFs of USD25 million
and EBITDAR margins of around 14% -15% during the next three
years, slightly lower than historical averages despite long-term
margin pressure trends within this industry. The company's
challenge is to manage its service portfolio and increase its
higher value-added services in order to mitigate margin pressure.
As of the last-12-months (LTM) ended Sept. 30, 2018, the group
reported EBITDAR margins of 14%, in line with the 13.7% registered
in FY2017, and negative FCF of USD9 million, impacted by Brazilian
operations' poor performance.

High Customer Concentration and Industry Risk: Fitch believes
client concentration is one of Atento's main risks. In this
industry, the top 10 clients easily surpass 70% of revenues, of
which some have very strong bargain power to settle commercial
terms. The company generates approximately 38% of total revenue
from Telefonica Group (Telefonica S.A.; BBB/Stable), posing risk
in the case of volume reduction. Fitch believes this risk is
partially mitigated by the Master Service Agreement (MSA) with
Telefonica, which guarantees an inflation-adjusted revenue stream
until 2021 (2023 in Brazil and Spain), and the slow but ongoing
expansion of non-Telefonica clients.

The industry presents high operating leverage, driven by salaries
and rent costs, where a permanent reduction in volumes, which
demands capacity adjustments, usually results in heavy labour and
rent related severance payments. Additionally, charging fines from
contracts suspensions with large clients has historically been
difficult. Competition is also intense, and clients tend to
diversify outsourcing providers to avoid being dependent on one
supplier.

Challenging Long-Term Trends: Fitch expects margins and top line
growth to be constrained due to technology changes and market
dynamics that have altered the contact center service industry
structure, as companies develop in-house solutions and digital
channels to substitute mainly CRM voice services. As a result, the
industry revenue model, still based on head-account charge, is
suffering as voice service is gradually losing share for digital
channels, where the same attendant can interact with multiple
consumers at the same time. To cope with these challenges, Atento
has focused on improving its BPO service offering and increasing
its portfolio of middle market companies, where CRM services are
still under penetrated, mainly in Latin America.

Adequate Capital Structure: Fitch forecasts Atento's net adjusted
leverage, measured by net adjusted debt/EBITDAR, to be in the 3.0x
to 2.5x range, over the medium term, despite its recent peak, due
to an increase in Brazilian rental expenses during the 2H17 and
1H18 time frames, and lower EBITDA margins for that market in the
same period. Fitch forecasts that rental expense will represent
around 4% of the company's total sales, and that EBITDA margins
will be at low double digit levels after capacity adjustments in
the Brazilian operations. As of the LTM ended Sept. 30, 2018,
Atento's net adjusted leverage was 3.5x with total adjusted debt
of USD950 million, mainly composed of the USD576 million lease-
equivalent debt and USD393 million senior secured bonds.

Brazilian Performance Remains Crucial: The Brazilian operation is
strategically important for Atento, contributing to approximately
48% of the LTM revenue and EBITDA, and driving the overall
performance of the group. Fitch expects Brazil to remain the most
important market for Atento during the next three years,
delivering margins at the low double digits range. In 1H18,
Brazilian poor operating performance, due to excess capacity
adjustments and lower than expected demand, delivered EBITDA
margins around 8%, dragging down Atento's consolidated margin in
the same period. Fitch believes the labour reforms in Brazil will
have a positive effect for CRM/BPO providers in terms of service
demand, as companies are now allowed to outsource unrestrictedly.

DERIVATION SUMMARY

Atento has delivered EBITDA margins of around 11%, in the low end
of margins reported by other players such as Convergys and
Teleperformance, which perform within the 11% - 15% margin range
and register higher revenue per workstation, influenced by the
geographies in which they operate.

Atento should present positive FCFs and leverage and liquidity
ratios close to those of 'BBB-' companies; however, its business
and operating industry risks result in lower IDRs. Compared to
Sodexo S.A. (BBB+/Stable), Atento has a weaker market position,
lower business diversification and much higher client
concentration. In addition, Fitch believes Atento has lower
financial flexibility and a weaker financial structure compared to
Sodexo, due to Atento's slightly higher leverage and lower cash
covered ratio. This is despite the two companies having similar
profitability levels. Compared to Natura (BB/Stable), Atento has
higher business risk, balanced by a more conservative capital
structure and marginally better liquidity position. Natura
operates in a market where brand recognition matters, and where
price competition is less intense. Natura also has higher
operating margins and a diverse consumer base.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  -- Number of workstations (WS) at 92,700 in 2018 and 90,900 in
     2019;

  -- Rental expenses at 4% and 3.8% of net sales in 2018 and 2019,
     respectively;

  -- Capex at 3.5% of net revenues in 2018 and 4% in 2019;

  -- Dividends pay-out rate of 25% from 2019 onwards.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  -- Reduction of customer concentration from Telefonica to less
     than 20%, without compromising revenues;

  -- Expansion of cash generation from investment grade countries;

  -- Increase in value-added solutions that reflect in better
     consolidated margins and higher switching costs.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  -- Increase in net adjusted leverage above 3.5x, on a sustained
     basis;

  -- Readily-available-cash to short-term debt ratio below 1.0x;

  -- Reduction in volumes leading to persistent EBITDAR margins
     below 13%;

  -- Weakening of Telefonica's credit profile;

  -- Signs that digital solution is cannibalizing revenues and
     margins, affecting its credit metrics

LIQUIDITY

Solid Liquidity: Atento has a solid liquidity position and
reasonable financial flexibility. Fitch believes Atento will
remain committed to proper liability management to mitigate
refinancing risks related to its bullet senior secured bonds, due
in 2022, and to a solid liquidity profile going forward, with a
cash-covered ratio of over 2.0x. Currency mismatch risks, related
to its senior secured bond, are mitigated by fully hedged coupon
payments; however, principal is not hedged. On Sept. 30, 2018, the
company's cash position of USD97 million covered its short-term
debt of USD44 million in 2.2x. Liquidity is reinforced by USD100
million from three committed revolving credit facilities, proven
access to debt and equity markets, established bank relationships,
and expected positive FCFs during the next three years.

FULL LIST OF RATING ACTIONS

Fitch has affirmed the following ratings:

Atento Luxco 1 S.A.

  -- Long-Term Foreign-Currency IDR at 'BB';

  -- USD400 million senior secured notes due 2022 at 'BB'.

Atento Brasil S.A.

  -- National Scale Rating at 'AA(bra)'.

The Rating Outlook is Stable.


CONSTELLATION OIL: Fitch Lowers Issuer Default Rating to D
----------------------------------------------------------
Fitch Ratings has downgraded Constellation Oil Services Holding
S.A.'s Issuer Default Rating to 'D' from 'RD'. Fitch has affirmed
the existing ratings for Constellation's senior notes.

KEY RATING DRIVERS

The downgrades reflect Constellation's filing for a request for
judicial reorganization with the Court of the State of Rio de
Janeiro, as disclosed by the company on Dec. 6, 2018.

DERIVATION SUMMARY

Constellation's ratings are driven by the company's bankruptcy
filing on Dec. 6, 2018.

KEY ASSUMPTIONS

Fitch believes that the court will accept Constellation's filings.

RATING SENSITIVITIES

The company's ratings have reached the lowest level on Fitch's
rating scale. An upgrade is unlikely at this time given the
group's judicial reorganization filing.

LIQUIDITY

The senior secured notes due in 2024, rated 'C'/'RR4', reflect
average recovery prospects in the event of default. Securities
rated 'RR4' have characteristics consistent with securities
historically recovering 31% - 50% of current principal and related
interest. Constellation's senior unsecured notes, with Recovery
Ratings of 'RR6', represent average recovery prospects of 0%-10%
given default.

FULL LIST OF RATING ACTIONS

Fitch has downgraded Constellation Oil Services Holding S.A. as
follows:

  -- Foreign and Local Currency Long Term IDRs to 'D' from 'RD'

Fitch has affirmed the following notes:

  -- Sr. Secured notes due 2024 at 'C'/'RR4';

  -- Sr. Unsecured notes due 2019 at 'C'/'RR6'.



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B R I T I S H   V I R G I N   I S L A N D S
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GEOPHYSICAL SUBSTRATA: S&P Gives Prelim. 'B' Issuer Credit Rating
-----------------------------------------------------------------
S&P Global Ratings said it has assigned its 'B' preliminary long-
term issuer credit rating to Geophysical Substrata Ltd. The
outlook is stable.

S&P said, "At the same time, we assigned our preliminary 'B' long-
term issue rating to the company's senior unsecured notes under
its proposed US$400 million medium-term note (MTN) program. The
issue rating is subject to our review of the final issuance
documents."

Geophysical is a holding company based in the British Virgin
Islands. Geophysical has interests in oilfield services through
SDP Services Ltd. and in business process outsourcing (BPO)
services through iEnergizer Ltd.

S&P said, "Our preliminary rating reflects Geophysical's small
scale, limited market share, and single weak customer in the
oilfield services business. The company's sizable related-party
advances and distributions in the past weigh on its credit
profile. Tempering these weaknesses are the company's steady
operating cash flows, revenue diversity from two uncorrelated
business segments, and margins that are better than the industry
average.

"Our preliminary rating is based on our expectation that
Geophysical will raise debt to fund its planned capital
expenditure at SDP Services and fully refinance the long-term debt
outstanding at iEnergizer."

The small scale of both its subsidiaries constrains Geophysical's
overall scale. iEnergizer has limited market share in the highly
competitive BPO services industry in India. Also, the company's
limited service offerings result in lower client and revenue
diversity relative to larger domestic peers such as Genpact Ltd.
In addition, SDP Services has a small fleet of 15 rigs and single
site operations in India. This places it in a weaker position than
peers such as Pioneer Energy Services Corp., which has 24 rigs and
higher geographic diversity.

Another key constraint is Geophysical's concentration to a single
client. SDP Services leases its rigs to a single client, Focus
Energy Ltd., an operator of five oil and gas blocks in the states
of Gujarat and Rajasthan in India. In addition, SDP Services has
lumpy cash flows and a long receivable cycle from the client.
Focus Energy itself is a very small player with only about 7%
participating interest in the RJ-ON/06 block, the site of SDP
Services' operations. In our view, Focus Energy is a weak
counterparty, given its very high leverage with a debt-to-EBITDA
ratio of more than 6x at the end of fiscal 2018 (year ended March
31).

SDP Services' long-standing relationship with Focus Energy, with
long-term, take-or-pay contracts that provide good revenue
visibility, temper the client concentration risk. SDP Services
also benefits from its stable track record of operations and entry
barriers, given its dominant position in the region.

S&P said, "We believe Geophysical's revenue diversity from two
uncorrelated business segments will remain a strength.
iEnergizer's stable operating performance partially offsets the
weakness in the oilfield services business. We expect the high-
margin back office services and real-time processing businesses to
drive iEnergizer's revenue growth over the next one to two years,
rather than content delivery. The company's operating performance
has stabilized over the past 12-18 months with new customer wins
across these business segments. The addition of new customers has
also lowered the business' client concentration risk while fueling
growth. The company's top two clients contributed less than 20% of
its nearly US$155 million revenue in fiscal 2018, down from 24% in
fiscal 2017. We do not see the risk of any significant client loss
for iEnergizer in the next 12 months, given that none of the
company's key client contracts are up for renewal over the next
few quarters."

Geophysical will likely sustain its profitability at 45%-50% over
the next three years driven by robust profitability in the
oilfield services business. S&P said, "We expect SDP Services to
be the key driver of Geophysical's business profile and to
contribute 60%-70% of its EBITDA going forward. SDP Services'
above-average EBITDA margin is attributable to the dry-lease
contracts with Focus Energy. Given that these contracts are long
term (expiring through 2023), we expect SDP Services to sustain
its margins." iEnergizer's EBITDA margin of 22%-24% is also above
the industry average and higher than that of some of its domestic
Indian peers. The company has historically earned good margins
from its access to a large low-cost workforce from India and its
high seat utilization. iEnergizer's efforts to improve business
diversity with greater focus on digital and online dissemination
of content should further support its profitability.

S&P said, "We anticipate that Geophysical's leverage will remain
high over the next 12-24 months due to substantial capital
expenditure in the oilfield services business. We estimate the
company will raise about US$350 million of debt in fiscal 2019 to
fund this capital expenditure and repay iEnergizer's outstanding
term loan." Even with stable margins, the interest outgo on such
incremental debt will restrict Geophysical's ratio of funds from
operations (FFO) to debt at 23%-28% over the next two years, lower
than the 51% in fiscal 2018.

The subsidiaries' cash flows will remain fully accessible to
Geophysical by way of dividends to meet its debt servicing
requirements. S&P siad, "We expect SDP Services' free cash flows
to be negative due to its capital expenditure on new rigs and
other oilfield services equipment over the next two years.
However, iEnergizer will generate healthy operating cash flows
over this period. We expect iEnergizer to refinance the
outstanding US$45 million loan due in April 2019 to allow dividend
distribution (currently restricted under the loan covenants) to
support debt servicing at Geophysical."

S&P said, "Geophysical's healthy accumulated cash will underpin
its credit profile over the next two years. We estimate the
company to have more than US$400 million in accumulated cash at
the end of fiscal 2019, gradually reducing to US$300 million-
US$325 million over the next two years as capital expenditure at
SDP Services accelerates. Other than the dividend payout to
minority shareholders of iEnergizer of about US$3 million
annually, Geophysical is unlikely to make any other shareholder or
related party distributions over the next two years. However, the
company's history of sizable related-party advances and
distributions remain a risk to our base-case assumption. At the
end of fiscal 2018, Geophysical had more than US$400 million
outstanding in advances to related parties.

"The stable outlook reflects our view that Geophysical will
maintain its robust profitability and steady operating cash flows
over the next 12-18 months. We also believe the company will not
undertake any large-scale debt-funded capital expenditure beyond
our base-case expectations. This will result in EBITDA interest
coverage remaining above 2x and the company not facing any
liquidity pressure.

"We may lower our rating on Geophysical if the company faces
liquidity pressure or its EBITDA interest coverage approaches 2x
on a sustained basis. This could happen if: (1) the company's
oilfield services business or software services business loses
clients resulting in a material decline in revenues; or (2) the
company takes on debt to fund growth significantly beyond our
expectations or make substantial related party distributions,
investments, or advances.

"We are unlikely to upgrade Geophysical over the next 12-18 months
given its very small scale, high concentration to a weak
counterparty, and large debt-funded investment plan. However, we
may raise our rating on the company if: (1) we expect the company
to maintain a debt-free status; or (2) the financial position of
the counterparty significantly improves resulting in steady cash
flows and the company commits to not undertaking any significant
related party distributions, investment, or advances."



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C O S T A   R I C A
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COSTA RICA: IMF Says Economic Growth Moderated in 2nd Half Year
---------------------------------------------------------------
An International Monetary Fund (IMF) team led by Ravi Balakrishnan
visited San Jose, Costa Rica, from December 4 to 11 to discuss
recent economic developments, the fiscal reform, and the overall
macro and financial outlook.  The mission held fruitful
discussions with Central Bank Governor Rodrigo Cubero, Finance
Minister Rocio Aguilar, members of the Legislative Assembly, other
senior government officials, and representatives of the financial
and private sectors. At the end of the visit, Mr. Balakrishnan
issued the following statement:

"Economic growth has moderated in the second half of the year,
with the monthly economic activity index (IMAE) only rising by 2.7
percent in 2018Q3, compared with 3.9 percent in 2018Q2 (yoy).
Consumer confidence also declined to its lowest level in November
since records began in 2002. The slowdown reflects multiple shocks
buffeting the Costa Rican economy, including a three-month public-
sector strike against fiscal adjustment efforts, spillovers from
the Nicaraguan crisis, rising global interest rates, and the
significant uncertainty that surrounded the fiscal reform. Against
this backdrop, the mission forecasts growth of 2.6 percent in
2018. Inflation should remain at the lower end of the 2-4 percent
target range as 2018 closes, although inflation expectations did
breach the upper limit of the band in November given expected
pass-through of the recent colon depreciation.

"The mission welcomes the recent passage of the fiscal reform
bill, which constitutes a critical step towards restoring
confidence and, if fully implemented, re-establishing fiscal
sustainability. The reform not only represents efforts on the
revenue and expenditure fronts, but more importantly, of
expenditures controls in the future. In a context of further
expected hikes in U.S. interest rates in 2019, the large fiscal
imbalance continues to be the main risk to macroeconomic
stability. Indeed, central government debt is expected to reach 53
percent of GDP by end-2018. Given this, to maximize the confidence
effects from the fiscal reform, it will be important to ensure its
timely implementation and clearly communicate financing plans for
2019 and beyond. Additional front-loaded fiscal adjustment would
help reduce funding needs in the short term and further improve
debt dynamics. The mission welcomes the broad consensus on using
the OECD accession process as a catalyst for boosting
competitiveness and employment.

"The mission would like to thank the authorities for their warm
hospitality and all stakeholders for the candid discussions. The
team looks forward to returning in February 2019 to conduct the
Article IV Consultation."

As reported in the Troubled Company Reporter-Latin America on
Dec. 10, 2018, Moody's Investors Service downgraded the Government
of Costa Rica's long-term issuer and senior unsecured bond ratings
to B1 from Ba2 and changed its rating outlook to negative,
concluding the review for downgrade that was initiated on October
18, 2018.



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D O M I N I C A N   R E P U B L I C
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* DOMINICAN REPUBLIC: Economic Activity Grows 6.9%, Bank Says
-------------------------------------------------------------
Dominican Today reports that last October, the Dominican Republic
economy achieved a very healthy growth of 6.9%, according to IMAE
(Monthly Indicator of Economic Activity).  This trend shows that
the Dominican Republic's gross domestic product (GDP) is
increasing above its potential, maintaining regional leadership
throughout Latin America, according to Dominican Today.

The sectors of construction, manufacturing of free zones,
communications, education, and agriculture were the fastest
growing in the first 10 months of this year, the report notes.

According to the statistics of the IMAE and the National Accounts
Department of the Central Bank (BCRD), the construction sector was
the most dynamic between January and October, which is reflected
in the growth of construction of homes and other buildings carried
out by the industry, the report relays.  Due to financial
arrangements, affordable housing was chosen over private household
construction, 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.



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J A M A I C A
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JAMAICA: Not Interested in Becoming a Casino Destination
--------------------------------------------------------
Caribbean360.com reports that Minister of Tourism Edmund Bartlett
says that while Jamaica will open its first regulated casino in
2020, the island is not slated to become a casino destination.

"The fact is that casinos are not a requirement for Jamaica's
growth, but within the context of the integrated development
model, casino gaming is a driver for exponential growth. We do not
see Jamaica ever becoming known as a casino destination, but
rather a destination in which casino gaming is available," he
said, according to Caribbean360.com.

He added that Jamaica has shied away from gaming as a structured
path of the tourism experience for several reasons, the report
notes.

"One of which has been the experiences that we have looked at in
other places and we have seen some of the attendant negatives, and
we question very much whether or not we would be able, ourselves,
to manage and be able to deal with the negative impact of it," Mr.
Bartlett pointed out, the report relays.

He noted that while there were also religious considerations, a
decision was made to explore the area, "because it does provide a
lucrative element of the tourism product and it has the potential
to drive growth to a level that would put Jamaica where it ought
to be in terms of the level required to generate additional gross
domestic product (GDP)," the report says.

Minister Bartlett said that as a tourism product, casino gaming is
expected to contribute two per cent of GDP to the economy, the
report discloses.

Statistics show that 4.3 million visitors went to Jamaica last
year, even without the lure of a casino, the report says.

"Casinos should represent no more than 20 per cent of the value of
the experience that is offered as the integrated development
arrangement," the report quoted Mr. Bartlett as saying.

With the consideration that three casino gaming licenses will be
granted, the Minister outlined that construction of at least 1,000
rooms and US$1 billion in investment have been laid down as
minimum for a casino license, the report notes.

Florida attorney-at-law Bruce Liebman said that casinos present
"great opportunity" for the island if presented in an integrated
format, which includes entertainment, condominiums, and shopping,
along with golf courses, the report says.

"Get [casinos] on the ocean with your beautiful beaches and you
will be ahead of Florida [in terms of casino profitability], and I
believe that is a beautiful opportunity," he added.

Minister Bartlett and Liebman were speaking at a seminar on
'Hospitality Industry and Casino Operator's Guide to Managing US
Liability Issues from the Caribbean', hosted by Kaufman Dolovic
and Voluck in collaboration with the Montego Bay-based law offices
of Clayton Morgan and Company. Liebman and associate attorney,
Michel Morgan, made presentations at the seminar on how to deal
with hotel and casino legal liability matters, the report adds.



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M E X I C O
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RASSINI AUTOMOTRIZ: Fitch Lowers LT IDRs to BB-, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has downgraded Rassini Automotriz, S.A. de C.V.'s
Foreign- and Local-Currency Long-Term Issuer Default Ratings to
'BB-' from 'BB'. Concurrently, Fitch has removed the Rating Watch
Negative and assigned a Stable Rating Outlook.

The downgrade reflects the weakening of RA's capital structure
resulting from the acquisition of 52% of the shares of RA's parent
company, Rassini, S.A.B. de C.V., by GGI INV SPV, S.A.P.I. of C.V.
GGI, which is owned by Rassini's controlling shareholders, will
now hold approximately 98% of Rassini's shares post the tender
offer. The completion of this transaction weakens RA's credit
profile as it is being financed with the proceeds of a loan of up
to USD485 million guaranteed by RA's main operating subsidiaries.
As a result, Rassini's net leverage will increase to close to 3x
from 0.6x as of third-quarter 2018 when accounting for the
guaranteed debt.

KEY RATING DRIVERS

Strong Business Position: RA, a subsidiary of Rassini,
manufactures suspension and brake components for light and heavy
vehicles, with leading positions in North America and Brazil. The
company's main product line, leaf springs, which accounted for 57%
of total sales as of the last nine months ended Sept. 30, 2018,
has historically had a dominant market position in North America.

Product Diversification Positive: Rassini was awarded new brakes
contracts over the last several years that have allowed the brakes
division to post fast revenue growth, reducing Rassini's
dependence on leaf springs. This division has been an increasing
contributor to Rassini's EBITDA as the company has increased brake
rotor production and machining capabilities to meet demand.
Reported sales volumes have grown 5% year to date, and grew 5% in
2017 and 9% in 2016.

Customer and Regional Concentration: Rassini is considered an
essential supplier to several original equipment manufacturers
(OEMs), including General Motors Co., Fiat Chrysler Automobiles
N.V. and Ford Motor Co. Detroit's Big Three OEMs represented 76%
of Rassini's total revenues during 2017; North America accounted
for 90% and 95% of Rassini's total revenues and EBITDA,
respectively. Regional and customer concentration have increased
in recent years due to organic growth in North America.

Stable FFO Generation: The company is expected to generate FFO of
about USD110 million in 2018, which compares with USD120 million
during 2017. Modest declines in FFO are mainly the result of an
extraordinary contract in 2017 as well as high cash taxes in 2018.
Rassini's FFO is not expected to strengthen materially in the near
term due to slowing North American vehicle production growth.

DERIVATION SUMMARY

Rassini's business profile and scale is similar to companies such
as Tupy (BB/Stable). Both companies have operations primarily in
North America and Brazil. Rassini's concentration in North America
at around 90% of revenue compares unfavorably with peers. Although
Tupy has concentrations to the North American market above 60% and
some exposure to South America, it has diversified its revenue
sources to Europe. Rassini's exposure to Detroit's Big Three OEMs
is high at around 75% and compares unfavorably with Tupy's more
diversified customer portfolio. Positively, Rassini's operating
EBITDA is slightly higher at around USD170 million relative to
USD140 million of Tupy. Rassini's business profile, particularly
in leaf springs is considered stronger than Tupy's given Rassini's
dominant market share in that product line. Rassini's net leverage
is about 1x lower than Tupy. The company's liquidity position
relative to upcoming debt maturities, is primarily supported by
expectations of continued cash flow generation and low leverage.
Larger peers such as Nemak (BBB-) or Dana Inc. (BB+) enjoy greater
financial market and banking access, hold greater product,
customer and geographic diversification and typically hold
committed credit facilities or large cash balances relative to
short-term obligations.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  -- Consolidated volumes remain relatively flat over the
     intermediate term;

  -- Rassini's EBITDA above USD160 million over the intermediate
     term;

  -- Total debt/EBITDA considering guaranteed debt around 3.0x
     over the next 12-18 months and declining over the
     intermediate term;

  -- Rassini remains FCF positive over the intermediate term

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  -- Significantly larger scale;

  -- Increased customer or geographic diversification;

  -- Expectations of sustained net leverage levels considering
     guaranteed debt below 1.5x or 2x on a gross basis; and

  -- Strong liquidity profile.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  -- Expectations of lower volumes and profitability as a result
     of material deterioration in North American light vehicle
     demand or market share loss;

  -- Expectations of sustained net leverage considering guaranteed
     debt above 2.5x or gross leverage above 3x in 2020 or beyond
     would pressure the rating;

  -- Weak operating cash flow and deteriorating liquidity.

LIQUIDITY

Adequate Liquidity: Rassini's liquidity is adequate and primarily
supported by solid cash flow generation, which should allow the
company to manage pro forma debt maturities. Rassini's readily
available cash is estimated by Fitch at USD43 million and cash
flow from operations at about USD110 million over the intermediate
term. Rassini uses receivable factoring facilities on average in
an amount of USD40 million. Fitch treats these facilities as debt
as immediate replacement funding is required if the receivables
financing shuts down or eligible receivables decline in quality
and the facility ceases to fund ongoing receivables. Fitch
includes the SPV debt for debt and ratio calculations since the
operating companies of Rassini would be guarantors of the SPV's
debt.

FULL LIST OF RATING ACTIONS

Fitch has downgraded the following ratings:

  -- Foreign-currency, long-term Issuer Default Rating (IDR) to
     'BB-' from 'BB';

  -- Local-currency, long-term IDR to 'BB-' from 'BB'.

The Rating Outlook is Stable.



===============
P A R A G U A Y
===============


PARAGUAY: Fitch Hikes LT IDRs to BB+ & Alters Outlook to Stable
---------------------------------------------------------------
Fitch Ratings has upgraded Paraguay's Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDRs) to 'BB+' from 'BB'.
The Rating Outlook on the Long-Term IDRs is revised to Stable from
Positive.

KEY RATING DRIVERS

The upgrade of Paraguay's ratings reflects the sovereign's
demonstrated resilience to external shocks, favourable growth
performance combined with evidence of economic diversification,
strengthened external buffers and continued commitment to
macroeconomic discipline. Paraguay's general government debt to
GDP is the lowest in the 'BB' category, estimated at close to 17%
of GDP in 2018.

Paraguay's growth has averaged 4.3% over the last five years
despite numerous external shocks including a deep recession in
neighbouring Brazil in 2015-2016, the fall in commodity prices in
2014-2015 and most recently economic volatility and the sharp
depreciation in the Argentinean peso in 2018. Fitch forecasts
Paraguay's economy to grow by 4.2% in 2018, down from 5.2% in
2017. The economy is expected to continue to grow favourably at
3.9% in 2019-2020. The overall economy has slowly diversified both
in terms of higher value-added agricultural production (such as
soybean oil processing) as well as new sectors such as "maquila"
manufacturing tied to the Brazilian markets (especially automobile
production).

Paraguay's government has developed a track record of prudent and
consistent macroeconomic policies. Low fiscal deficits (or
surpluses) have resulted in low debt to GDP ratio, and this fiscal
discipline has been further institutionalized with the
implementation of the Fiscal Responsibility Law since 2014 that
limits the fiscal deficit of 1.5% of GDP. Furthermore, the central
bank began implementing an inflation targeting regime in 2011 that
has anchored inflation expectations and delivered low inflation
and it has allowed the exchange rate to serve as a shock absorber,
although high dollarization constrains the flexibility and
efficacy of these policies. Fitch expects inflation to average 4%
over the next two years, at the centre of the central bank's 4%+/-
2% target.

President Mario Abdo was elected president in April 2018 and took
office in August. Key priorities are improving institutions,
health, education and infrastructure. However, he faces a more
divided Congress as well as divisions within his own Colorado
Party. Overall, his government has pledged macroeconomic policy
continuity from prior governments.

The central bank of Paraguay revised its national income accounts
in 2018, updating the base year to 2014 from 1994. The revision
resulted in 30% larger nominal GDP relative to the previous
series. Many of Paraguay's key indicators improved as a result --
such as GDP per capita and debt to GDP. The revision also shows
much lower volatility in real GDP growth, better highlighting the
stability of the economy.

External accounts remain solid, supported by large current account
surpluses in 2016-2017 of 3.5% of GDP. Fitch expects a surge in
imports to lead to lower current account surpluses of 0.6% of GDP
in 2018 and balanced positions in 2019-2020. International reserve
coverage has risen over the last five years to over six months of
current external payments, which help mitigate vulnerabilities
from commodity dependence and high financial dollarization. Net
external debt to GDP fell to 16% in 2018, down from over 100% in
2008.

A large part of the external debt is related to Itaipu and Yacreta
dams (jointly owned by Paraguay and Brazil and Argentina,
respectively). Debt related to the Itaipu dam has been amortizing
yearly and is expected to be fully paid off by 2022. As of 2018,
Paraguay will formally recognize a USD4 billion debt to Argentina
related to the Yacyreta dam jointly owned by the two countries,
but Fitch believes the fiscal impact of this will remain
manageable given the long grace period and maturity of the agreed
repayment.

Fitch expects Paraguay's central government fiscal deficit to
reach 1.5% of GDP in 2019 (the upper limit of the government's
FRL), up from 1.1% of GDP in 2018. Over the medium term, spending
pressures, especially wages, could build. The government is
studying a possible tax reform aimed at funding the government's
priorities in health and education while meeting its commitment to
the FRL. Furthermore, Paraguay's government could see a fiscal
windfall in 2022 due to the cash flow that will be freed up when
Itaipu pays off its debt, although the terms of an agreement need
to be negotiated with Brazil beginning next year.

The general government debt to GDP is the lowest in the 'BB'
category at 17% of GDP versus the current 'BB' median of 46%.
Fitch expects debt to gradually rise to 18.1% of GDP by 2020.
Nearly 80% of Paraguay's debt is denominated in foreign currency,
exposing the debt ratio to foreign exchange rate volatility. Over
10% of government revenues are denominated in USD from the
hydroelectric dams, partially mitigating the foreign exchange rate
risk. However, the high reliance on external debt highlights
Paraguay's shallow local capital market and limited domestic
financing options. The government has made some progress in
issuing local-currency instruments at longer tenors, albeit for
relatively small amounts thus far.

Structural factors remain Paraguay's key rating constraints,
reflected in governance indicators and GDP per capita that are
well below 'BB' medians, although both factors have been on an
improving trend. A low revenue base relative to peers, shallow
domestic capital markets and a high share of foreign currency in
total public debt are additional constraints.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)

Fitch's proprietary SRM assigns Paraguay a score equivalent to a
rating of 'BB' 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 by applying its QO, relative
to rated peers, as follows:

  - Macroeconomic: +1 notch, to reflect Paraguay's long track
    record of prudent and consistent macroeconomic policies.

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 main factors that could individually or collectively lead to
an upgrade include:

  -- Higher economic growth (in the context of macro stability)
     that increases prospects for GDP per capita convergence with
     higher rated sovereigns.

  -- Continued improvement in governance indicators.

  -- Improvements in revenue generation and development of the
     local capital market that strengthen fiscal flexibility.

The main factors that could individually or collectively lead to a
downgrade include:

  -- A sustained deterioration in the country's economic prospects
     and external accounts, for example due to a fall in commodity
     prices.

  -- A sustained fiscal deterioration in the context of financing
     constraints.

KEY ASSUMPTIONS

Fitch assumes 2.2% growth in Brazil in 2019, while Argentina
remains in recession with -1.7% contraction.

Fitch has taken the following rating actions on Paraguay:

  -- Long-Term Foreign-Currency IDR upgraded to 'BB+' from 'BB';
     Outlook revised to Stable from Positive;

  -- Long-Term Local-Currency IDR upgraded to 'BB+' from 'BB';
     Outlook revised to Stable from Positive;

  -- Short-Term Foreign-Currency IDR affirmed at 'B';

  -- Short-Term Local-Currency IDR affirmed at 'B';

  -- Country Ceiling affirmed at 'BB+';

  -- Issue ratings on long-term senior unsecured foreign-currency
     bonds upgraded to 'BB+' from 'BB'.



=============
U R U G U A Y
=============


URUGUAY: Economy Remains Resilient, IMF Says
--------------------------------------------
The International Monetary Fund (IMF) staff issued a concluding
statement on Uruguay.

A Concluding Statement describes the preliminary findings of IMF
staff at the end of an official staff visit (or 'mission'), in
most cases to a member country. Missions are undertaken as part of
regular (usually annual) consultations under Article IV of the
IMF's Articles of Agreement, in the context of a request to use
IMF resources (borrow from the IMF), as part of discussions of
staff monitored programs, or as part of other staff monitoring of
economic developments.

The IMF stated these findings:

1. Uruguay's economy remains resilient, reflecting its strong
institutions, prudent policies, and large buffers. In a
deteriorating external environment, Uruguay has successfully
differentiated itself from its neighbors, thanks to progress in
export market diversification, a prudent and coordinated public-
sector asset-liability management, pre-financing of sizeable
external financing needs, lower banking sector vulnerabilities,
and ample reserves. As a result, public sector borrowing costs
have remained subdued despite significant depreciation pressures,
and although growth has slowed, it remains positive.

2. Maintaining its resilience and differentiated status is a
priority in the more turbulent regional and global context.
Uruguay is well positioned to weather the worsening external
environment. Nevertheless, maintaining its resilience will hinge
on the credibility of economic policies. This calls for actions to
strengthen the fiscal and monetary anchors by putting debt on a
firm downward trajectory and reducing inflation to within the
target band. Over the medium term, the authorities should use
Uruguay's institutional advantages to improve the fiscal and
monetary policy frameworks and implement further structural
reforms to support growth, and as well as safeguard the social
gains of the past decade. Policies should be targeted to improve
low investment, address declining employment, and strengthen
educational outcomes.

                       Recent Developments

3. After a strong 2017, growth has moderated. Economic activity
grew by 2.4 percent in the first half of the year, after expanding
by 2.7 percent in 2017. While consumption has continued to support
domestic demand, private investment has remained sluggish. On the
production side, manufacturing activity has remained weak,
excluding the impact of the reopening of the oil refinery.
Furthermore, a severe drought in the first quarter led to lower
yields of summer crops (particularly soybeans). Labor market
outcomes are weak, with unemployment fluctuating between 8 and 9
percent.

4. Inflation has risen above the target range, partly reflecting
temporary factors. In 2017, inflation fell to 6.6 percent, ending
up within the central bank's 3-to-7-percent target range for the
first time since 2010, due to earlier monetary policy tightening
and peso appreciation. However, it has exceeded the target since
May 2018 and currently stands at 8 percent reflecting the impact
of drought, peso depreciation, and higher fuel prices. Despite the
reduction in monetary indicative references (in July and October),
staff estimates that monetary conditions are not yet sufficiently
tight, given that real short and medium-term rates remain lower
than the guidance offered by Taylor rules and neutral rates (while
they can increase further as monetary policy works through its
lags). At the same time, medium-term inflation expectations are
somewhat above the target range.

5. Fiscal deficit reduction has stalled, and the time to reach the
target of 2.5 percent of GDP has been extended to 2020. In 2017,
the overall fiscal deficit (which includes the central bank
interest payments) was 3.5 percent of GDP, an improvement of 0.3
percentage points relative to 2016. The current budget envisages a
deficit of 3.3 percent of GDP in 2018 (up from a previous
objective of 2.9 percent of GDP) and 2.8 percent of GDP in 2019
(up from 2.5 percent of GDP). This relaxation is an appropriate
counter-cyclical measure, and if these objectives and the new 2020
target were met, public debt would decline gradually. Although,
the 12-month rolling fiscal deficit stood at 2.9 percent of GDP,
excluding the effects of transactions related to cincuentones, it
amounted to 3.8 percent of GDP in October, suggesting that
attainment of the 2018 objective, which does not include these
transactions, is difficult.

6. The current account has weakened but remains in surplus. The
current account has posted surpluses since 2016 -- although recent
revisions reduced them -- reflecting the record tourism inflows
from Argentina, a slowdown in imports associated with weak
investment, and a lower oil import bill. The surplus shrunk in the
second quarter of 2018 (to 0.2 percent of GDP from 0.7 percent of
GDP in 2017) because of higher oil prices, lower exports to
neighboring countries facing difficulties (tourism to Argentina
and goods to Brazil), lower agricultural exports due to the
drought, and negative investment income.

7. Capital inflows, also affected by the inclusion of the
merchanting activities, have been volatile. More recently, the
high-frequency data point to portfolio outflows as seen in many
emerging markets. The authorities ably took advantage of favorable
financing conditions through mid-2018 by issuing bonds in global
markets at long maturities.

8. The peso has depreciated by about 14 percent since April, and
official foreign exchange reserves have declined. In response to
depreciation pressures, the central bank started to intervene in
August. Overall, gross reserves declined from $17.9 billion to
$15.5 billion, but at 26 percent of GDP they remain substantially
above prudential norms. About $0.5 billion of this decline
reflects repurchases of central bank paper to accommodate a
portfolio reallocation by pension funds, in response to non-
resident capital outflows, to avoid undue exchange rate
volatility.

                       Outlook and Risks

9. Uruguay's economy has been decoupling from regional trends.
Uruguay's business cycle is less correlated with Argentina than in
the past, with smaller direct financial sector linkages and China
rising as a key trading partner. Nevertheless, both Argentina and
Brazil remain important counterparts, and bilateral trade flows
are sensitive to exchange rate movements.

10. The near-term outlook has worsened but remains stable relative
to its neighbors. Growth is expected to moderate further to 2.1
percent in 2018 and 1.9 percent in 2019. This reflects (i) a
slowdown in consumption in the second half of 2018 due peso
depreciation against the U.S. dollar, and to declining confidence
and real wages; and (ii) a decline in tourism revenue and goods
exports in the first half of 2019 -- due to the expected
contraction in Argentina and to the appreciation of the currency
against its regional partners. At the same time, the expected
rebound of agriculture from this year's drought will support
growth. Further, private investment, after contracting for four
years in a row, is expected to gradually recover. In subsequent
years, the economy is expected to grow slightly above potential,
gradually closing the output gap. The current account is expected
to register a small deficit in 2018 (-0.2 percent of GDP). Staff
assesses that the external position is broadly consistent with
fundamentals, with the current account balance slightly exceeding
its norm in 2018.

11. In 2019, inflation is expected to moderate but, at 7.5
percent, remain above the central bank's ceiling of the target
range, established by the Macroeconomic Policy Coordination
Committee. As the pass-through of the depreciation and the impact
of the drought wear off, the recent monetary tightening works
through its lags, and the output gap widens, inflation is expected
to gradually decline. Many of the of the ongoing multi-year wage
negotiations are closing in line with the guidelines -- which
continue to eschew indexation and will put nominal wage increases
on a declining path -- , thereby anchoring nontradable prices and
tempering inflation inertia. However, with medium-term inflation
expectations above target, inflation is projected to stay at 7
percent beyond 2019, the upper limit of the central bank's target
range.

12. There are both sizeable downside and upside risks to the
outlook, given the more difficult external environment and large
infrastructure projects. An abrupt tightening in global financial
conditions, caused by a sharp increase in international risk
premia coupled with a further strengthening of the U.S. dollar,
could have negative repercussions for Uruguay's economy. A further
slowdown in trading partners could also worsen the growth outlook.
At the same time, prudent macroeconomic policies and strong
institutions have improved Uruguay's ability to withstand regional
shocks and plans for the construction of a large cellulose plant,
an associated railway system, and other infrastructure projects
are a major upside risk. Over the medium-term, low investment and
declining employment, if not reversed, could lower potential
growth.

                        Policy Recommendations

A. Maintaining Fiscal Sustainability

13. Excluding the impact of the transfers related to cincuentones,
the authorities' overall fiscal deficit target of 2.5% of GDP is
difficult to reach by 2020 without additional measures. [1] Staff
projects an overall fiscal deficit (without the cincuentones
transfers) of 3.7 percent of GDP in 2018. In 2019 and 2020, the
fiscal deficit is projected to decline by 0.2 percentage points
per year due to a reduction in sterilization costs and lower
current expenditures in line with the results of the ongoing wage
negotiations. Thereafter, the overall fiscal deficit (without
cincuentones) is projected to remain at 3.3 percent of GDP in the
absence of additional measures.

14. Transactions related to cincuentones will improve the fiscal
deficit in the near term but are estimated to weaken the
government balance sheet after 5 years. In October 2018, the
public pension system received a transfer of about 1 percent of
GDP in the context of a law introducing changes to the pension
system. These funds are recorded as revenue, consistent with IMF
methodology, and thus lower the fiscal deficit. Moreover, this
will also lower the stock of public debt but not significantly
alter the public financing needs, as the additional revenues were
placed in a trust fund ring-fenced for 6 years. Transfers will
continue over the next three years, leading to further reductions
in the fiscal deficit. These transactions were transparently
recorded and communicated by the authorities in the relevant
sections of fiscal accounts, and the authorities are presently
calculating the resulting changes in the expected pension
contributions and expenditures. Authorities estimate that after 5
years this operation will weaken the government's balance sheet
since the additional pension liabilities will exceed the
additional revenues and that the burden on the public pension
system from this operation will be about 4 percent of GDP (in net
present value terms over the next 30 years).

15. While next year's gross financing needs are manageable,
Uruguay should remain vigilant in the context of increasing global
financial market volatility. Under the baseline scenario, debt of
the non-financial public sector is projected to reach 54 percent
of GDP in 2018 and to stabilize at 53 percent thereafter. [2]
Large financing needs for 2019 are expected be to comfortably met
in the context of coordinated public-sector asset-liability
management, stable local currency funding from domestic
institutional base (particularly after this year's introduction of
wage-indexed bonds), the authorities' pre-financing policy, and
sufficient buffers (in the form of nonfinancial-public-sector
liquid assets and contingent credit lines). The debt level are
below the relevant benchmarks but remain elevated. Uruguay's
sovereign risk spreads were not affected by the recent exchange
rate volatility episodes, but the fiscal position has worsened
since then and, historically, Uruguay has been sensitive to
tightening global market conditions. In addition, despite recent
improvements, the share of debt in foreign currency held by non-
residents remains relatively high, leaving debt vulnerable to
exchange rate pressures. As a result, Uruguay's fiscal space --
the room for discretionary fiscal policy without endangering the
debt sustainability -- is at risk.

16. To maintain credibility and contain fiscal risks, it would be
prudent to introduce measures to put public debt on a firm
downward path. Delivering on the budgetary targets would reduce
debt of the non-financial public sector to 49 percent of GDP in 5
years and would lower it to the average level of 2012-14 (about 44
percent of GDP) in 10 years. However, this would require 0.8
percentage points of GDP in measures until 2020 (a total
adjustment of 1.2 percent of GDP) during a period of an economic
slowdown and elections, which could be hard to achieve. In this
context, the authorities should introduce measures of 0.3 percent
of GDP in 2019 (amounting to a 0.5 percent-of-GDP of total
adjustment in 2019), which would help put debt on a downward path,
thereby reinforcing commitment to fiscal sustainability.

17. Fiscal adjustment could come from reducing the elevated level
of current expenditures. This would allow to contain the impact of
fiscal adjustment on growth. In addition, the utility tariffs
should be adjusted in line with the cost structure and investment
needs of public enterprises. In the medium term, further
improvements in the efficiency of social spending will also be
required to create space for the needed increase in capital
spending.

18. Looking ahead, introducing a medium-term fiscal framework
supported by a binding fiscal rule would help engrain fiscal
anchor and sustainability. Under the current approach each
government outlines budgetary priorities for the duration of its
five-year term, leading to a lack of continuity and attendant
uncertainty towards the end of the period. A medium-term fiscal
framework would help strengthen multi-year fiscal discipline and
achieve policy objectives with a more efficient use of limited
resources. Even though the existing fiscal rule limits the annual
increase in net debt, it has not been binding due to the use of
escape clauses. An enhanced fiscal rule could include further
safeguards that limit the use of escape clauses, be anchored on a
medium-term debt objective, and focus on the nonfinancial public
sector to avoid volatility associated with the liquidity
management operations of the central bank.

19. Other medium-term fiscal priorities include addressing growing
pension spending and maintaining the financial health of public
enterprises. First, pension spending is high by regional
standards, reflecting both an aging society, the welcome almost
universal coverage, and constitutionally mandated wage indexation.
Reforms are needed to provide adequate pensions and maintain
coverage for future generations, while ensuring the sustainability
of the system. Reforms should be based on a comprehensive review
of the entire pension system, supported by an informed social
dialogue. Early action will help smooth the transition to a
revised system and reduce costs compared to a delayed response
when aging pressures become more acute. Second, continued
improvements in the management and profitability of public
enterprises -- an important component of the economy -- are
essential to strengthening the country's fiscal position. In this
context, ongoing efforts to enhance the governance structure,
risk-management practices, and the monitoring of their performance
in a more consolidated manner are welcome.

B. Lowering Inflation

20. Bringing inflation close to the middle of the central bank's
3-to-7 percent target range is important to anchor expectations.
With medium-term inflation expectations above the target range, a
further depreciation of the peso in the presence of remaining
widespread indexation could render convergence to the target range
more difficult. In this context, to anchor inflation expectations
to the middle of the target range, monetary indicative references
should be further tightened such that the short and medium-term
real rates increase further to within the range of staff's
estimated neutral rates.

21. In a longer-term perspective, the central bank is encouraged
to further strengthen its monetary policy framework. Conducting
monetary policy is challenging in the presence of a high
dollarization, low credit-to-GDP ratios, and remaining wage
indexation. Short-term interest rates remain volatile (due to
movements in money demand), inflation expectations track actual
inflation, and, in the past, inflation has persistently remained
above the target range. In this context, further improvements
could focus on strategies, instruments, and communication
practices to enhance the commitment to achieve targets, thereby
better anchoring inflation expectations. Ongoing discussions at
the central bank on further enhancing communication strategies and
reducing dollarization could be part of a review.

22. The exchange rate should remain the key shock absorber. Given
global trends of dollar appreciation and weaker capital flows to
emerging markets, the peso should continue to adjust in line with
fundamentals. Interventions should be reserved for addressing
disorderly market conditions, and reserve buffers should be kept
above or in line with prudential norms.

C. Maintaining Financial Sector Stability and Enhancing
Intermediation

23. The financial sector has fared well, but authorities should
continue monitoring the quality of banks' assets closely. Despite
the regional turmoil, the financial sector has remained resilient,
reflecting limited linkages to Argentina and enhanced supervision
since the 2002 crisis. With the improvements in regulatory capital
to risk-weighted assets ratio and bank profits, the banking sector
has comfortable buffers. Given exchange rate volatility,
supervision should continue to closely monitor banks' exposures.
In addition, the share of nonperforming loans has increased
somewhat, and, while still manageable, needs to be monitored. In
this regard, the recent adoption of the regulations on net stable
funding ratio -- requiring that the liquidity profiles of banks'
assets and liabilities be aligned -- is welcome.

24. The authorities are trying to boost financial inclusion,
including by leveraging advances in financial sector technology
(Fintech). Extensive dollarization and market segmentation limit
bank credit and make it expensive, especially in the peso market.
To improve financial inclusion, the authorities have been
implementing measures that aim at promoting electronic
transactions and competition in the banking sector (under the 2014
Financial Inclusion Law). Even though peer-to-peer lending remains
small, the authorities have introduced regulation in this area
aimed at protecting consumers and guarding against money
laundering. More broadly, the authorities' efforts to improve
financial inclusion and intermediation, while limiting risks --
including a successful e-peso pilot -- are welcome.

D. Enhancing Inclusive Growth and Competitiveness

25. Building on Uruguay's institutional strength, reaching the
goal of continued income convergence to advanced economy levels
needs further action. Uruguay has been one of the most stable
countries in the region, with low-income inequality and poverty.
However, facing low investment and declining employment, there is
consensus across the political spectrum that further efforts are
needed to ensure continued income convergence. These could include
creating fiscal space to close infrastructure gaps, improving
financial intermediation and the business environment to support
private investment, and reforming the education sector to enhance
human capital. These policies will also help further enhance
Uruguay's competitiveness. Uruguay has successfully diversified
its export products and destinations (mainly towards commodity-
based sectors and China) and raised its global market share in
many products. However, some manufacturing sectors lost market
share and are sensitive to exchange rate movements. Therefore,
continued efforts are needed to improve competitiveness, to
further diversify export products (including towards non-commodity
sectors to limit exposure to commodity price swings and supply
shocks), and to improve market access through multilateral and
bilateral free trade agreements.






                            ***********


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


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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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