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/raid1/www/Hosts/bankrupt/TCRLA_Public/190315.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, March 15, 2019, Vol. 20, No. 54 Headlines B R A Z I L BANCO DO BRASIL: Moody's Rates Proposed Sr. Unsec. Notes 'Ba2' BANCO DO BRASIL: S&P Assigns 'BB-' Rating on New Sr. Unsec. Notes BLOOMIN' BRANDS: S&P Alters Outlook to Stable, Affirms 'BB' ICR JBS SA: JBS Compliance Trains Over 110 Thousand Employees in 2018 C H I L E AES GENER: Moody's Rates $450MM Junior Subordinated Notes 'Ba2' D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Central Bank Paints a Rosy Picture for the IMF DOMINICAN REPUBLIC: No Emergency From Drought Yet But Ration Water J A M A I C A JAMAICA: Non-financial Firms No Longer Required to File Assets Tax M E X I C O ALMACENADORA ACCEL: Moody's Affirms LT CFR at B2, Outlook Stable CEMEX S.A.B: Fitch Hikes IDRs & Senior Secured Notes Rating to 'BB' P U E R T O R I C O LA CANASTA: Unsecured Creditors to Get 30% Under Plan T R I N I D A D A N D T O B A G O PETROLEUM CO: Refinancing Plan Close for US$850MM Bullet Payment TRINIDAD & TOBAGO: Confident Over Dragon Gas Deal TRINIDAD & TOBAGO: TTFTC Seeks to Stop Anti-Competitive Practices V E N E Z U E L A VENEZUELA: Workout Pits Hot-Headed Newcomers Against Veterans - - - - - =========== B R A Z I L =========== BANCO DO BRASIL: Moody's Rates Proposed Sr. Unsec. Notes 'Ba2' -------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 long-term foreign currency senior debt rating to the proposed senior unsecured notes of Banco do Brasil S.A. (BB), acting through its Grand Cayman branch. The proposed notes, which are part of BB's USD 20 billion senior unsecured EMTN Program, will be denominated and settled in USD, and due in March 2024. The outlook on the debt rating is stable. The following ratings were assigned: Issuer: Banco Do Brasil S.A. (Cayman) - Senior Unsecured Regular Bond/Debenture, Assigned Ba2, stable RATINGS RATIONALE The Ba2 rating on the notes incorporates BB's steadily improving profitability and its stable and low-cost core deposit funding base. Over the past three years, there has been a marked improvement in BB's loan portfolio quality as it engaged in more disciplined corporate loan origination and maintained a predominant exposure to households mostly in the form of low-risk payroll and mortgage loans. As a result, non-performing loans have declined to 2.53% of gross loans in YE2018, from 3.7% in YE2016, while loan loss reserves remain healthy at 5.4% of gross loans. Brazil's gradual economic recovery will provide further support to asset quality, a credit positive. These strengths are balanced by the bank's lower capitalization compared to regional and global standards. Nevertheless, BB reported notable improvement in Moody's adjusted capital ratio of tangible common equity to adjusted risk weighted assets, which increased to 11.7% in December 2018, from just 6.8% three years before. In large part, lower risk weighted assets and declining credit costs boosted the capitalization ratio. BB's rating is at the same level as Brazil's Ba2 sovereign rating and the stable outlook on the bank's ratings is in line with the stable outlook on the sovereign rating. WHAT COULD CHANGE THE RATING -- DOWN/UP At the moment, there is limited upward pressure on BB's ratings owing to the stable outlook on its ratings, which is in line with the stable outlook on Brazil's sovereign rating. BB's ratings are effectively capped by Brazil's sovereign rating of Ba2 because of the strong credit interlinks between the sovereign and the bank. Negative pressure on BB's ratings could arise from a substantial deterioration in asset risk and profitability, leading to weaker capitalization. METHODOLOGY USED The principal methodology used in this rating was Banks published in August 2018. Banco do Brasil S.A., is headquartered in Brasilia, Brazil, and reported USD365.6 billion (BRL1,417 billion) in assets and USD25.7 billion (BRL99.7 billion) in shareholders' equity, as of December 2018. BANCO DO BRASIL: S&P Assigns 'BB-' Rating on New Sr. Unsec. Notes ----------------------------------------------------------------- S&P Global Ratings said that it assigned its 'BB-' issue-level rating to Banco do Brasil S.A.'s (BdB; BB-/Stable/B), through its Grand Cayman Branch, proposed fifth series of its euro medium-term senior unsecured notes. The offering will have five-year tenor and will be denominated in dollars. The rating on the notes reflects their pari passu ranking with the bank's other senior unsecured debt obligations. As a result, S&P rated them at the same level as its long-term issuer credit rating on the bank. Even though the exact amount is not yet defined, the notes should represent around 1% of BdB's total funding base. Therefore, S&P doesn't expect this issuance to change its view of the bank's above-average funding. S&P said, "Our long-term issuer credit rating on BdB is three notches lower than its stand-alone credit profile and is at the same level as the long-term foreign currency rating on Brazil. Under our criteria, it's unlikely that we'd assign an issuer credit rating on a bank that's above that on the sovereign, because the bank would have to demonstrate a capacity to maintain sufficient capital and liquidity to cover the significant stress that accompanies a sovereign default." Additionally, BdB has significant asset exposure to the sovereign, given that the bank's liquid assets are largely invested in sovereign bonds. RATINGS LIST Banco do Brasil S.A. Issuer credit BB-/Stable/B Rating Assigned Banco do Brasil S.A. Cayman Islands Branch Senior unsecured BB- BLOOMIN' BRANDS: S&P Alters Outlook to Stable, Affirms 'BB' ICR --------------------------------------------------------------- S&P Global Ratings on March 12 revised its outlook on U.S.-based Bloomin' Brands Inc. to stable from negative and affirmed all ratings, including the 'BB' issuer credit rating. "We expect continued revenue growth in 2019 driven by positive same-store sales at the core Outback Steakhouse, while operations in Brazil (about 10% of sales) continue to stabilize. The company's focus on store remodeling, relocations, and ongoing investments in off-premise capabilities should also support better overall sales trends across brands," S&P said. In addition, S&P expects sales leverage will largely offset commodity, labor, and transportation related inflationary headwinds, resulting in a modest increase in adjusted EBITDA margins in 2019. It also forecasts the EBITDA coverage ratio to remain in the low-4x range and debt to EBITDA to be around 4x at the end of fiscal 2019. The stable outlook reflects S&P's expectation that Bloomin's results will continue to improve in 2019, with modest credit metric improvement from EBITDA expansion rather than from meaningful debt reduction. S&P forecasts the EBITDA coverage ratio to remain in the low-4x range and debt to EBITDA to be around 4x at the end of fiscal 2019. "We could lower the ratings if we believe the EBITDA coverage ratio will decline to below 4x and debt to EBITDA will increase towards 4.5x for a sustained period. This could occur if sales contract at a low-single-digit rate and adjusted EBITDA margins decline by about 100 basis points (bps) in 2019 compared with our projection of 14.2%, due to persistent comparable sales weakening at Outback and other major brands, and/or significant commodity and labor costs increase," S&P said. S&P said it could raise the ratings if Bloomin' consistently executes on key operating initiatives with most of its major brands displaying consistent positive sales trends while profitability continues to improve, resulting in an EBITDA coverage ratio improving to 5x and above, and debt to EBITDA in the low-3x area. S&P said this could occur if sales increase at a high-single-digit rate and margins expand by at least 200 bps when compared with its forecast while debt remains generally flat. JBS SA: JBS Compliance Trains Over 110 Thousand Employees in 2018 ----------------------------------------------------------------- Transparency, reliability and scope. These have been the guiding principles of the JBS Compliance area on 2018. As a result, over 110 thousand employees in Brazil have undergone training on the JBS Code of Ethics and Conduct. In 2019, the main goal is to extend training course to encompass additional operations in other countries. "We launched 'Always Do the Right Thing' program, Faca Sempre o Certo, in 2017, which kicked off all the Company's other initiatives over the past two years. We have achieved solid results based on a robust communication process, new internal controls, training and efforts to reinforce and add value to ethical conduct in our day-to-day business activities. This year, we plan to further improve the program, which includes a new round of training courses on specific Code-related issues, going in to greater detail based on the participants' positions and risk areas," said Marcelo Proenca, JBS global Compliance director. Another major result for the Company in 2018 was the milestone it achieved with the launch of the JBS Ethics Line, Linha Etica JBS, in December. The service, which is entirely outsourced, protects and guarantees anonymity for both staff and the general public at JBS in Brazil and other countries where it operates. The channel is available 24 hours a day, seven days a week and is already available in 11 languages, having recently been launched in the USA, Australia, Uruguay and Argentina. "Based on the information we have received via the JBS Ethics Line, the Company has mapped the most frequently occurring situations, diagnosing issues specific to each business unit and developing an action plan to avoid repeat incidents," said Proenca. ========= C H I L E ========= AES GENER: Moody's Rates $450MM Junior Subordinated Notes 'Ba2' --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to AES Gener S.A.'s (Gener) proposed $450 million junior subordinated capital notes (hybrid notes) due in 2079. Gener plans to use the net proceeds raised in connection with this notes' issuance to fund the cash tender offer for its outstanding 8.375% junior subordinated capital notes due in 2073 (2073 notes; Ba2) announced on March 11, 2019. Gener also disclosed its intention to fully redeem any not tendered 2073 Notes. The terms of the new hybrids largely reflect the terms of the 2073 notes. RATINGS RATIONALE The Ba2 rating reflects the terms of the proposed Hybrids including a maturity of 60 years, its deeply subordinated position within Gener's capital structure where it will rank senior only to Gener's common shares and Gener's ability to defer coupons on a cumulative basis. Additionally, the instrument will not cross default with other debt of Gener, and investors will have limited rights regarding the ability to accelerate principal. As a result, Moody's rating affords the proposed notes preferred equivalent status although preferred shares have not been routinely issued by Chilean companies. In addition, Moody's considers the notes to have sufficient equity-like features to allow the Hybrid to receive Moody's hybrid securities basket "C" treatment which is equivalent to 50% equity and 50% debt for financial leverage purposes. This basket assessment only applies as long as Gener's senior unsecured rating remains investment grade. The two notch rating difference between Gener's senior Baa3 unsecured rating and the Ba2 Junior Subordinated Capital Notes is largely driven by Moody's understanding that while interest payments may be deferred under the Hybrid, more junior instruments in Gener's capital structure would be paid the Minimum Legally Required Dividend. This minimum dividend is required under the Issuer's by-laws and Article 79 of Law 18,046 of Chile on Stock Corporations which stipulates that unless unanimously agreed otherwise by the shareholders of all issued shares, listed corporations must distribute a cash dividend to their common shareholders on a yearly basis, pro-rated by the shares owned or the proportion established in the company's by-laws if there are preferred shares issued of at least 30% of the net consolidated profits from the previous year, except when accumulated losses from prior years need to be absorbed. Gener's Baa3 senior unsecured rating reflects its leading market position in Chile, some geographic diversification benefits, adequate liquidity profile and limited structural subordination considerations. It also factors in Gener's medium-term cash flows visibility which is underpinned by its overall balanced commercial policy and its economically efficient thermal-fired fleet. The Baa3 senior unsecured rating and negative outlook acknowledge the reduction of Gener's construction risk exposure following the renegotiation in May 2018 of the 531 MW Alto Maipo construction contract to fixed-price with Strabag SpA, and the US$300 million standby letter of credits provided by its parent company, Strabag AG. However, the remaining execution risk (the project is now expected to start operations at year-end 2020) of Alto Maipo, which has proven to be a challenging project, and Gener's growing exposure to re-contracting risk temper the rating. That said, the rating acknowledges some changes in the issuer's commercial policy as part of the corporate strategy of Gener's majority shareholder, AES Corp (Ba1 stable). For example, the implementation of the so-called "Greentegra" strategy. This includes offering customers a product mix that combines renewables (energy only) and thermal (energy and capacity) power supply while the long tenor of the new contracts will also lengthen Gener's average contracted life. Importantly, the credit assumes that Gener will fund any new growth initiatives in renewables in a manner that allows it to record a maximum debt to EBITDA of 4.0x and CFO pre-WC to debt of at least 18%. Moody's assumes that there is no material variation from the draft documents reviewed for the Hybrid being issued and that all legal agreements are legally valid, binding and enforceable. The principal methodology used in this rating was Unregulated Utilities and Power Companies published in May 2017. Headquartered in Santiago, Gener is the largest thermal generation company in the Chilean Sistema Energetico Nacional (SEN) that was created in November 2017 with the interconnection of the country's two largest electricity systems: Sistema Interconectado Central (SIC; 75% of the country's total installed capacity and demand) and Sistema Interconectado del Norte Grande (SING; approximately 23%). The group also operates in the Colombian interconnection system, via AES Chivor's 1,020MW hydro-generation capacity including its 19.5MW Tunjita run-of-the river mini-plant commissioned in 2017. Located in Salta, Argentina, the 643MW combined cycle gas turbine (CCGT) plant at Termoandes currently sells its output exclusively in the Argentinean SADI. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Central Bank Paints a Rosy Picture for the IMF ------------------------------------------------------------------ Dominican Today reports that an International Monetary Fund (IMF) delegation is visiting the country to evaluate Dominican Republic's macroeconomic performance and its perspectives. The delegation held a meeting with Dominican Central Bank officers, headed by Central banker Hector Valdez Albizu, according to Dominican Today. During the meeting, a review was made of the indicators that reflect the country's economic stability, "which ended 2018 with a growth of 7%, favored by the continuity of the positive effects after the release of the legal reserve in 2017, coupled with an excellent behavior of investment and private consumption, which accounted for more than 85% of the same growth," the Central Bank said in a press release, the report notes. 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. DOMINICAN REPUBLIC: No Emergency From Drought Yet But Ration Water ------------------------------------------------------------------ Dominican Today reports that the head of Santo Domingo's Aqueduct, Alejandro Montas, and of the dams and canals agency, Olgo Fernandez, affirmed that the country isn't under an emergency due to the drought yet but reiterated that water must be rationed. They said despite the critical situation of the reservoirs, there is still enough water to supply the population, according to Dominican Today. They stressed that only the Hatillo dam and the Valdesia-Jiguey-Aguacate complex, and the Las Barias reservoir are still at normal levels, the report notes. The report relays that Mr. Fernandez said Hatillo dam has enough water for 145 days, and 85 days in Valdesia's case. "We're not talking about emergency yet . . . if it does not rain, rivers cannot come with floods, it's a matter of climate change, that El Nino has covered all these areas, not just the Dominican Republic. You go to Costa Rica, which is a country with high rainfall, and there is a drought; you go to Ecuador and there is a drought, in Uruguay there is a drought, in Argentina, Mexico, in Colombia and Cuba there is a drought," the report quoted Mr. Fernandez as saying. Meanwhile, Mr. Montas said there is good news for Greater Santo Domingo's residents because rainfall increased the flow of the major aqueducts, the report adds. ============= J A M A I C A ============= JAMAICA: Non-financial Firms No Longer Required to File Assets Tax ------------------------------------------------------------------ RJR News reports that Tax Administration Jamaica (TAJ) is advising that non-financial institutions will no longer be required to make an Assets Tax Declaration using the AT01 Form, pending a proposed legislative change. This means that these companies will not be obligated to file an AT01 return form during this tax season on or before March 15, according to RJR News. The abolition of assets tax payable by non-financial institutions was proposed by Minister of Finance Dr. Nigel Clarke in his recent budget presentation of the Revenue Measures for the 2019/2020 financial year, the report notes. Dr. Clarke said the removal would take effect on April 1. As reported in the Troubled Company Reporter-Latin America on Sept. 27, 2018, S&P Global Ratings revised its outlook on Jamaica to positive from stable. At the same time, S&P Global Ratings affirmed its 'B' long- and short-term foreign and local currency sovereign credit ratings, and its 'B+' transfer and convertibility assessment on the country. =========== M E X I C O =========== ALMACENADORA ACCEL: Moody's Affirms LT CFR at B2, Outlook Stable ---------------------------------------------------------------- Moody's de Mexico S.A. de C.V. has affirmed all of Almacenadora Accel, S.A., Organizacion Auxiliar del Credito's (Almacenadora Accel, S.A.) (Accel) ratings, including the B2 global long-term corporate family and issuer ratings. The outlook remains stable. At the same time, Moody's has decided to withdraw the outlooks on Accel's Corporate Family and Issuer ratings for its own business reasons. This has no impact on the outlook for Accel. The following ratings of Almacenadora Accel, S.A. (807769824) were affirmed: - Long-term global local currency Corporate Family Rating: B2 - Long-term global local currency issuer rating: B2 - Short-term global local currency issuer rating: Not Prime - Long-term Mexican National Scale issuer rating: Ba1.mx - Short-term Mexican National Scale issuer rating: MX-4 Outlook, remains stable RATINGS RATIONALE Moody's said that the affirmation of Accel's ratings incorporates its limited earnings scale, weak profitability and modest business diversification. These challenges are partially offset by robust capitalization in light of its consistently low leverage. Accel's pre-tax earnings were a modest US$1.5 million for full year 2018, providing the company with a small buffer to withstand unexpected risk events. Earnings generation has been hindered by high maintenance and supervision costs, as well as by needed investments in storage facilities and technology. As a result, operating costs absorb nearly 95% of net revenues, reducing pre-tax margins to just about 7% in 2018, well below the its peers' 20%, approximately. The high operating outlays have also made pre-tax margins intrinsically volatile. Earnings scale is also affected by Accel's small size and declining market shares. With assets totaling MXN924 million (about US$47 million) by year-end 2018, Accel is the fourth largest player within the already small segment of regulated warehouses. The company's 12% market share of stored goods as of September 2018 has declined gradually from 15% by year-end 2014, amid substantial industry-wide growth in volumes. In addition, the company faces competition from other licensed warehousing companies, and in certain portions of its business, it also competes with unregulated warehouses that do not face the steep regulatory costs related to the warehousing license. Accel's credit challenges are in part mitigated by a sizable capital, given the size of its balance sheet and low leverage. Accel largely funds its operations with its own capital, which limits its reliance on borrowings or debt, a credit positive. The company's debt to EBITDA ratio would still be at a low of around 1.5x even if all its accounts payable were considered as debt. The coverage of accounts payable with retained cash flow minus capital expenditures is less strong, however, because of the sizeable dividend payouts and the recurrent investments to maintain and upgrade the storage facilities. Despite the current good overall leverage metrics, Moody's notes that were management to significantly leverage the firm's balance sheet, it would be credit negative because the modest earnings and cash-flow generation would significantly worsen the company's debt coverage metrics. Finally, Accel's ratings reflect its limited business diversification, with a focus on the warehousing of agricultural products, food and beverages. This exposes the company's profitability to seasonal volatility. WHAT COULD CHANGE THE RATING -- UP OR DOWN Accel's ratings would face upward pressure if its profitability stabilizes at higher levels, coupled with increased earnings diversification. Negative pressure on Accel's ratings would accumulate if its profitability were to deteriorate, or leverage were to increase substantially. Accel's Ba1.mx Mexican national scale issuer ratings maps from its global local-currency issuer rating of B2. The long-term Mexican National Scale rating of Ba1.mx indicates issuers or issues with a below-average creditworthiness relative to other domestic issuers. The principal methodology used in these ratings was Securities Industry Service Providers published in June 2018. CEMEX S.A.B: Fitch Hikes IDRs & Senior Secured Notes Rating to 'BB' ------------------------------------------------------------------- Fitch Ratings has upgraded the foreign and local currency Issuer Default Ratings (IDRs) of CEMEX, S.A.B. de C.V. (CEMEX) to 'BB' from 'BB-', as well as its senior secured notes to 'BB' from 'BB-'. Simultaneously, Fitch has assigned a 'BB' rating to EUR400 million of newly issued notes due 2026. The rating upgrades are supported by the strengthening of CEMEX's capital structure due to USD5 billion in debt reduction in the last three years, which was primarily funded with USD3.5 billion of FCF. Further factored into the rating actions is the refinancing of about USD7 billion of debt, which, combined with debt repayment and the conversion of USD325 million of convertible notes, has lowered interest payments by about USD200 million per year. In conjunction with this rating action, Fitch has also upgraded CEMEX's long-term national scale rating to 'A+(mex)' from 'A(mex); CEMEX's short-term national scale rating was affirmed at 'F1 (mex)'. The Rating Outlook is revised to Stable from Positive. KEY RATING DRIVERS Strong Business Position: CEMEX is one of the largest producers of cement in the world selling 69 million metric tons of cement during 2018. It is the leading cement producer in Mexico and one of the top cement producers in the U.S. CEMEX also has a large global presence in ready mix and aggregates with sales of 53 million cubic meters of ready mix and 149 million metric tons of aggregates in 2018. CEMEX's main geographic areas, in terms of EBITDA, include: Mexico (42%), Central and South America (15%), the U.S. (23%), Europe (13%), and Asia, Middle East and Africa (7%). The company's product and geographic diversification should soften the impact of anticipated weakness in the Mexican market during 2019. Strengthening Credit Profile: CEMEX achieved USD5 billion of gross debt reduction between 2015 and 2018 primarily due to robust positive FCF generation and asset sales, despite its EBITDA contracting to USD2.5 billion in 2017 and 2018 from USD2.7 in 2015 and 2016. The company's net asset sales were USD1.7 billion, which complemented USD3.5 billion of cumulative FCF since 2015 and USD523 million raised from the IPO of Cemex Philipines in 2016. Debt reduction going forward should occur through an additional round of asset sales as well as through the positive FCF generation, which Fitch estimates to be around USD400 million per year after dividends of approximately USD150 million per year. Net leverage is expected to decline to 3.9x in 2019 and 3.7x in 2020. This compares with 4.2x in 2018 and 4.4x in 2017. U.S. Market is Healthy: Spending on highway and street construction should advance in the mid-single digits in 2019 as the benefits of the long-term highway bill and states' initiatives to find additional funding for highway projects lead to more robust spending levels. Approved spending bills in some of CEMEX's key states such California and Texas should support cement demand in those markets. At the federal level, the budget deal signed in February included a 2% increase to USD45 billion for the federal-aid highway obligation ceiling, as called for by Fixing America's Surface Transportation Act. Fitch expects new home construction grow 2.9% in 2019 compared with 3.3% in 2018 as interest rate hikes slow and unemployment remains low. Private non-residential construction is forecast to grow a modest 1.0% in 2019 similar to the 1.2% registered in 2019. Mexican Market is Challenging: Fitch expects cement demand to contract by low-single digits in 2019 due to subdued investments triggered by policy uncertainty with few near-term catalysts, slowing economic growth and bleak forecast for cement intensive infrastructure spending. Over the next 2-3 years, informal residential construction, which accounts for about 35% of Mexican cement demand should grow due to increased purchasing power as a result of higher wages at the lower end of the pay scale, government subsidies and resilient remittance inflows from workers abroad. This would partially offset pressure in formal residential construction (about 23% of demand) and non-residential private construction (about 25%), which will slow amid lower economic growth and lower investment. A more pronounced deterioration of Mexico's economic landscape would be negative for CEMEX's as it would depress cement demand and increase price completion. These factors would pressure the company's cash flow generation and could result in negative rating actions. Sluggish EBITDA Generation: CEMEX's EBITDA remained flat at USD2.5 billion during 2018 compared with 2017. EBITDA growth in Mexico and the U.S. offset declines in South America and Central America, where EBITDA dropped 15% mainly due to more competition in Panama and Colombia. Demand for cement should accelerate in these countries driven by infrastructure and limit further pressure. Fitch does not forecast CEMEX's EBITDA to grow materially in the near term as projected U.S. EBITDA expansion will not be sufficient to offset pressure in the Mexican market in 2019 and lost EBITDA from asset divestments, which should carry over into 2020. Positive FCF: CEMEX generated USD720 million of FCF in 2018, which compares to USD946 million during 2017. Lower interest expense was offset by increased energy and distribution expenses, lower working capital recovery and higher expansion capex. Fitch anticipates the company will continue to generate positive FCF of around USD400 million per year over the next 2-3 years, which will be mostly used for debt reduction and to lesser extent equity share buybacks. Fitch's FCF projections include a dividend payment of around USD150 million per year starting in 2019 and gradually increasing capex. FX Exposure: CEMEX reported 92% of total debt was denominated in either U.S. dollars or Euros compared with about 35% of EBITDA generated in hard currency during 2018. CEMEX's main hard currency contributors are the company's operations in the U.S., the U.K. and in several Euro-based countries. Further, various fuel and energy prices, which tend to be dollar denominated, are an important portion of cement production costs. Somewhat mitigating resulting currency risk in Cemex's costs and revenues are long-term electricity agreements and hedging instruments. The company has historically been successful in maintaining U.S. dollar prices after steep currency depreciation in Mexico, its main market. DERIVATION SUMMARY CEMEX's ratings reflects its diversified business position across several large markets, notably Mexico, the U.S. and several European countries, its vertical integration and economies of scale, its improving credit profile, and positive FCF generation. CEMEX is the leading cement producer in Mexico. The company is also one of the top cement producers in the U.S. and the largest cement producer in Spain. CEMEX's closest comparisons are large global cement producers such as LafargeHolcim (BBB/Stable) and HeidelbergCement (BBB-/Stable), with whom CEMEX competes in several markets. LafargeHolcim, has the broadest geographic diversification with operations spanning Europe, North America, the Middle East and Africa, Latin America and Asia with not a single region representing more than more than 25%, or less than 18%, of EBITDA. This compares with HeidelbergCement at 35% of EBITDA generated in the U.S. and Canada, while its exposure to Europe is 34% and Asia is 20%. Latin America is CEMEX's largest region, representing about 60% of EBITDA, of which approximately 40% is generated in Mexico. The U.S. represented about 20% of CEMEX's EBITDA with the remainder from Europe at close to 15% and, to a lesser extent, Israel, Egypt and the Philippines, primarily. CEMEX's broader geographic diversification and larger scale compare well with regional building materials companies such as Martin Marrieta (BBB/Stable) and cement producers Votorantim Cimentos (BBB-/Stable) and InterCement Participacoes S.A. (B/Stable).Votorantim Cimentos (IDR BBB-/Stable), which has a dominant position in Brazil and operations in the U.S. and Canada and throughout the world, is of smaller scale and is not a direct peer, as its rating is tied to that of the Votorantim S.A., which includes mining, utilities and financial services subsidiaries. Martin Marrietta is focused in the U.S. and the Caribbean. InterCement's portfolio is weighted heavily toward volatile, emerging market countries such as Brazil, Argentina, Paraguay, and Mozambique, which leads to much greater cash flow uncertainty and higher exposure to FX risk when compared with CEMEX. From a financial perspective, CEMEX's ratings reflect its improving, yet weaker credit metrics when compared with its global peers, which are rated higher. Its net leverage is projected to fall below 4.0x in 2019, which is line with that expected of a 'BB' cement company with a global presence. CEMEX global scale, business position and access to funding contribute are all positive factors. CEMEX's FFO fixed-charge coverage is projected at 3x and is slightly below the 3.5x expected for a typical 'BB'-rated building materials issuer. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- U.S. cement sales volumes increase in the low-single digits in 2019 and 2020; -- Mexico cement sales decrease in the low-single digits in 2019 and stabilize in 2020; -- Consolidated sales volume growth of low single digits over the intermediate term; -- EBITDA expected at around USD2.4 billion in 2019 and 2020; -- Capex of approximately USD900 million in 2019 and growing slightly in 2020; -- Positive FCF generation in 2019 and 2020 primarily used for debt reduction; -- Mexican peso to U.S. dollar exchange rate to remains at around 20. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Net debt/EBITDA around 3.5x; -- Rising cement demand in international markets combined with robust cash flow generation in Mexico and U.S. that leads to significantly stronger EBITDA expectations; -- A meaningful strengthening of CEMEX's business position in markets outside Mexico that leads to expectations of growing operating cash flow generation. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A reduction in cement demand expectations in Mexico or the U.S. that leads to sustained prospects of net debt/ EBITDA significantly above 4x; -- Expectations of a pronounced deterioration of Mexico's economic environment that leads to a material contraction in EBITDA prospects. LIQUIDITY CEMEX's liquidity is adequate. Projected annual FCF of around USD400 million and USD824 million in committed credit maturing 2022 as of year-end 2018 sufficiently cover USD521 million convertible debt due in 2020 and about USD600 million in bank debt from CEMEX's 2017 credit agreement, which begins amortizing in 2020. The company paid USD365 million of convertible notes at their expiration in 2018 with cash. CEMEX has shown increasing access to bank debt and capital markets as shown by successful debt refinancing in 2016 and 2017, which totaled approximately USD4 billion in bank debt and USD2.7 billion in capital market debt, including EUR400 million of notes issued in March 2019. CEMEX should continue to proactively manage debt maturities of USD1.2 billion in 2021 and USD1.6 billion in 2022 supported by its gradual deleveraging capacity as well as by its good access to funding. FULL LIST OF RATING ACTIONS Fitch has upgraded the following ratings: CEMEX, S.A.B. de C.V. -- Long-Term Foreign-Currency and Long-Term Local-Currency IDRs to 'BB' from 'BB-'; -- Senior secured notes due 2023, 2024, 2025 and 2026 to 'BB' from 'BB-'; -- National scale Long-Term Rating to 'A+(mex)' from 'A(mex)'; The Rating Outlook is Stable. CEMEX Materials LLC, a limited liability company incorporated in the U.S. --Senior notes due 2025 to 'BB' from 'BB-'. CEMEX Finance LLC, a limited liability company incorporated in the U.S. --Senior secured notes due 2024 to 'BB' from 'BB-'. C5 Capital (SPV) Limited, a British Virgin Island restricted purpose company C8 Capital (SPV) Limited, a British Virgin Island restricted purpose company C10 Capital (SPV) Limited, a British Virgin Island restricted purpose company C-10 EUR Capital (SPV) Limited, a British Virgin Island restricted purpose company -- Senior secured perpetual notes to 'BB' from 'BB-'. Fitch has affirmed the following rating: CEMEX, S.A.B. de C.V. -- National scale Short-Term rating affirmed at 'F1(mex)'. Fitch has assigned the following rating: CEMEX, S.A.B. de C.V. -- Senior secured notes due 2026 'BB'. ===================== P U E R T O R I C O ===================== LA CANASTA: Unsecured Creditors to Get 30% Under Plan ----------------------------------------------------- La Canasta Inc. filed a proposed plan of reorganization and accompanying disclosure Statement. Class 4 - All other Unsecured Claims are impaired. The Debtor scheduled unsecured claims in the total amount of $1,293,218.15, including unsecured deficiency for PRCI, unsecured CRIM claims and PREPA. Thereafter, Proofs of Claim have been filed and the Debtor has reconciled claims in the total amount of $188,815.76. Members of this class will receive 30% payment of their allowed claims in a lump sum payment on the 2nd year of the Plan. Class 2 - Secured CRIM are impaired. This class shall consist of CRIM's secured claims against the Debtors. These claims refer to property taxes over all of the Debtors property taxes. Pursuant to the information provided in the Debtors' Schedules, CRIM is listed in the total amount of $95,961.07. CRIM's subsequently filed a Proof of Claim No. 1 listing its secured debt as $95,961.07 over the Debtor's real estate. This class will receive payment in full plus interest on the second year of the Plan. Class 3 - Secured Creditor: PRCI are impaired. This class shall consist of PRCI's allowed secured claim on account of certain loan agreements that were issued by and between BPPR and the Debtors. Thereafter, PRCI acquired the loan from BPPR and has continued to litigate against the Debtor. The Debtor listed PRCI's claim in total amount of $2,859,877.78. Pursuant to BPPR's claim in the previous bankruptcy case secured by a lien over two real estate properties of the Debtor. Thereafter, PRCI filed secured claim no. 3 in the amount of $3,547,430.64. Class 5 - Equity Security and/or other Interest Holders. This class includes all equity and interest holders who are the owners of the stock of the Debtor. This will not receive distribution under the plan until all senior classes are paid in full. Funding of the Plan will be from the sale of real estate properties and collection of account receivables. A full-text copy of the Disclosure Statement dated February 28, 2019, is available at https://tinyurl.com/y5zy9a5y from PacerMonitor.com at no charge. Based in Caguas, Puerto Rico, La Canasta Inc. is the fee simple owner of four properties in Caguas, Gurabo, and Juana Diaz, Puerto Rico having a total current value of $3.84 million. The Company filed a Chapter 11 Petition on (Bankr. D.P.R. Case No. 18-06453) on November 1, 2018, and is represented by Carmen D. Conde Torres, Esq., in San Juan, Puerto Rico. At the time of filing, the Debtor had total assets of $3,840,000 and total liabilities of $4,214,778. The petition was signed by Ricardo Rivera Irizarry, sub administrator. The Company previously sought bankruptcy protection on Nov. 26, 2014 (Bankr. D. P.R. Case No. 14-09826). ===================================== T R I N I D A D A N D T O B A G O ===================================== PETROLEUM CO: Refinancing Plan Close for US$850MM Bullet Payment ---------------------------------------------------------------- Trinidad Express reports that with about five months to go before the bullet payment on its US$850 million bond is due, Trinidad Petroleum Holdings (TPH), the successor holding company which replaced Petrotrin last year, is close to completing the refinancing of the bond. TPH Chairman Wilfred Espinet told the Express that it was always expected that the company would seek financing to deal with the bond payment when it becomes due. TRINIDAD & TOBAGO: Confident Over Dragon Gas Deal ------------------------------------------------- Ria Taitt at Trinidad Express reports that Trinidad and Tobago remains confident that the Dragon gas deal with Venezuela will become a reality. Energy Minister Franklin Khan, in response to a question from UNC Senator Tarbarqa Obika in the Senate, said the "projected pace" of the negotiations had been "adversely affected" by the domestic challenges in Venezuela, according to Trinidad Express. The report notes that Mr. Khan, in response to a question posed by Senator Gerald Ramdeen said while the original estimated time for first gas to arrive in T&T was in the latter part of 2021, that timeline had been pushed back. TRINIDAD & TOBAGO: TTFTC Seeks to Stop Anti-Competitive Practices ----------------------------------------------------------------- Leah Sorias at Trinidad Express reports that the Trinidad and Tobago Fair Trading Commission (TTFTC) is warning private and public sector companies to stop engaging in anti-competitive practices now or they will soon face legal jeopardy. The TTFTC is currently without power to take action against local companies trading unfairly, as specific parts of the Fair Trading Act, which enables it to do so, have not yet been proclaimed, according to Trinidad Express. But Commission chairman Dr. Ronald Ramkissoon is warning companies that the legislation will be fully proclaimed in the coming months, and once unfair activities are brought to the TTFTC's attention, it will take action, the report notes. ================= V E N E Z U E L A ================= VENEZUELA: Workout Pits Hot-Headed Newcomers Against Veterans ------------------------------------------------------------- Colby Smith and Robin Wigglesworth at The Financial Times report that as the political crisis in Venezuela rumbles on, a number of creditors are squaring up in what promises to be one of the most complicated debt restructurings in history. What will make a workout so tricky to resolve is not just the amount of IOUs sitting on the balance sheet of the South American nation, the fourth-largest economy in the region, but the diversity of its creditor base, according to The Financial Times. In recent months, some aggrieved lenders have filed lawsuits against the government and the state-owned oil company, Petroleos de Venezuela S.A. (PDVSA) PDVSA, sparking some unease from the rest, the report notes. The report relays that the split between creditors is partly contractual -- different breeds of investors have varying types of claims -- and partly generational, said Mitu Gulati, a law professor at Duke University in Durham, North Carolina, and an expert on sovereign debt. He noted that longer-established "distressed debt" veterans were holding off from legal action, while newer, brasher funds were rushing to the courthouse, the report notes. The report says that Russ Dallen of Caracas Capital, a boutique investment bank, said there were still a lot of assets up for grabs and obtaining court judgments sooner, rather than later, could give creditors a better shot at getting a piece of the pie. But others are less certain. "Sovereign litigation is brutal and tends to take a long time," pointed out one investor in a big group of bondholders that held at least $8 billion of debt, and was represented by Cleary Gottlieb, the venerable New York law firm. He is unimpressed with the new guard of hedge funds suing Venezuela, calling them "amateurs" who will make a messy situation even worse. "They've never done this before, and with the possibility of some kind of political transition and the ongoing humanitarian crisis, they look like assholes," the report relays. The report notes that of the six new lawsuits filed since December, one of the most recent comes from Dresser-Rand, a Texas-based oil-and-gas equipment manufacturer owned by Siemens, Europe's largest industrial conglomerate. In late February, it sued PDVSA for about $132m plus interest, costs and additional fees. The move was on the heels of hedge fund Contrarian Capital filing its own suit over $118m of defaulted promissory notes it snapped up from GE Capital in January, the report report relays. Hedge funds Brokwel Management, a mysterious firm registered to an address in Panama City, and Pharo Management, a $10 billion-in-assets fund based in London, are among others that have resorted to litigation, the report discloses. In a statement, Mr. Dresser-Rand said it was monitoring the situation in Venezuela, including the effects of recent sanctions imposed by the US government against PDVSA, the report notes. The company said it "stand[s] ready to assist the country with the refurbishment and maintenance of its power generation equipment if a mutual agreement can be reached," the report says. The claimants could be trying to emulate oil majors ConocoPhillips and Canadian gold-miner Crystallex -- which is backed by hedge fund Tenor Capital -- which sued Venezuela several years ago. They have since managed to wrest hundreds of millions of dollars from the country, at a time when it has more or less defaulted on all of its debt, the report notes. As reported in the Troubled Company Reporter-Latin America, 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'. ********* 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 2019. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *