/raid1/www/Hosts/bankrupt/TCRLA_Public/190527.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, May 27, 2019, Vol. 20, No. 105
Headlines
A R G E N T I N A
CUOTAS CENCOSUD VII: Moody's Rates ARS352,174 Certificates 'Csf'
B R A Z I L
BANCO DE BRASILIA: Fitch Puts 'BB-/B' IDRs on Watch Negative
BRAZIL: Fitch Affirms 'BB-' Foreign Currency IDR, Outlook Stable
ENERGIAS DO BRASIL: Moody's Affirms Ba2/Aa2.br CFRs, Outlook Stable
SAMARCO MINERACAO: To Postpone Talks Over $3.8-Bil. Debt
C O L O M B I A
AVIANCA HOLDINGS: United Airlines Shakes Up Leadership Amid Default
C O S T A R I C A
COSTA RICA: Rejects Military Option in Venezuela, Nicaragua
C U B A
CUBA: Faces Growing Economic Crisis
D O M I N I C A N R E P U B L I C
PUNTA CATALINA: Utility Bows to Protests, Will Pay Workers
P U E R T O R I C O
KONA GRILL: 2 Creditors Appointed New Committee Members
V I R G I N I S L A N D S
LIMORA INVESTMENTS: Chapter 15 Case Summary
X X X X X X X X
[*] BOND PRICING: For the Week May 20 to May 24, 2019
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A R G E N T I N A
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CUOTAS CENCOSUD VII: Moody's Rates ARS352,174 Certificates 'Csf'
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Moody's Latin America Agente de Calificacion de Riesgo has rated
Fideicomiso Financiero Cuotas Cencosud Serie VII. This transaction
will be issued by TMF Trust Company (Argentina) S.A. acting solely
in its capacity as issuer and trustee.
This credit rating is subject to the fulfillment of contingencies
that are highly likely to be completed, such as finalization of
documents and issuance of the securities. This credit rating is
based on certain information that may change prior to the
fulfillment of such contingencies, including market conditions,
financial projections, transaction structure, terms and conditions
of the issuance, characteristics of the underlying assets or
receivables, allocation of cash flows and of losses, performance
triggers, transaction counterparties and other information included
in the transaction documentation. Any pertinent change in such
information or additional information could result in a change of
this credit rating.
The full rating action for the "Fideicomiso Financiero Cuotas
Cencosud Serie VII" deal is as follows:
ARS442,253,630 in Class A Floating Rate Debt Securities (VDFA),
rated Aaa.ar (sf) (Argentine National Scale) and Ba3 (sf)
(Global Scale)
ARS5,289,412 in Class B Floating Rate Debt Securities (VDFB),
rated Caa1.ar (sf) (Argentine National Scale) and Caa3 (sf)
(Global Scale)
ARS24,760,326 in Class C Floating Rate Debt Securities (VDFC),
rated Ca.ar (sf) (Argentine National Scale) and Ca (sf)
(Global Scale)
ARS352,174 in Certificates (CP), rated C.ar (sf) (Argentine
National
Scale) and C (sf) (Global Scale)
RATINGS RATIONALE
The rated securities are payable from the cash flow derived from
the trust assets, which includes a static and amortizing pool of
approximately 146,229 eligible purchases in credit card
installments denominated in Argentine pesos and originated by
Cencosud Argentina S.A. ("Cencosud Argentina"), the local
subsidiary of Cencosud S.A. ("Cencosud" Baa3, Negative). Cencosud
is among Latin America's largest retailers, with presence in Chile,
Argentina, Peru, Colombia and Brazil. Only installments payable
after June 1st, 2019 will be assigned to the trust.
The assigned installments pertain to credit cards issued by
Cencosud Argentina. Cencosud credit cardholders can make purchases
in affiliated stores and split the payments in several monthly
installments bearing no interest. The monthly installments are
detailed in the cardholder's monthly credit card statements. Not
all installments due under a given credit card will be assigned to
the trust; a given credit card account may also have other
installments that do not serve as collateral for this transaction.
In this transaction, the minimum payment level of cardholders'
credit card monthly statement will always include 100% of the
installments assigned to the trust and due in that month.
Therefore, the trust will receive the expected cash flows without
any delays as long as the cardholder is considered a performing
obligor.
A reserve fund covering two times the next interest accrual of the
VDFA and VDFB will be funded using collections received on the
pool.
Moody's based the analysis on the following factors: (i) the strong
credit profile of Cencosud and Cencosud Argentina and their
position as key players in the retail sector of Argentina and the
region; (ii) the relatively short expected life of the notes; and
(iii) the strong performance of Cencosud's portfolio.
TRANSACTION STRUCTURE
The VDFA will bear a floating interest rate (BADLAR plus 150 bps).
The VDFA's interest rate will never be higher than 50.0% or lower
than 42.0%. The VDFB will bear a floating interest rate (BADLAR
plus 250 bps). The VDFB's interest rate will never be higher than
51.0% or lower than 43.0%. The VDFC will bear a floating interest
rate (BADLAR plus 350 bps). The VDFC's interest rate will never be
higher than 52.0% or lower than 44.0%.
Overall credit enhancement is comprised of: (i) subordination; ii)
overcollateralization and iii) a reserve fund. The transaction has
initial subordination levels of 24.7% for the VDFA, 23.8% for the
VDFB and 19.6% for the VDFC, calculated over the pool's
undiscounted principal balance.
Finally, the transaction has an estimated initial 40.3% of negative
annual excess spread, before considering losses, taxes or
prepayments and calculated at the interest rate cap for the notes.
As mentioned, the assigned monthly installments do not bear
interest. Available credit enhancement and a relatively short
estimated term of 8 months for Class A largely mitigate this risk.
Moody's analyzed the historical performance data of previous
transactions and the dynamic credit card portfolio of Cencosud
Argentina, ranging from January 2015 to February 2019.
The rating agency also analyzed the payment levels in the seller's
overall credit card dynamic portfolio, identifying a payment rate
(monthly payment / monthly balance) averaging 62.4% during the last
twelve months as of February 2019.
In assigning the ratings to this transaction, Moody's assumed a
lognormal distribution of losses for the static securitized pool
with a mean expected loss of 7.7% and a PCE of 16.0% (PCE, or the
portfolio credit enhancement, represents the credit enhancement
consistent with the highest rating achievable -i.e., the local
currency ceiling- in the country). These assumptions were derived
considering the historical performance of Cencosud's loan pools
prior transactions and the current macroeconomic context.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that may lead to a downgrade of the ratings include a
downgrade in Argentina's local currency ceiling and an increase in
delinquency levels beyond the level Moody's assumed when rating
this transaction. Although Moody's analyzed the historical
performance data of previous transactions and similar receivables
originated by Cencosud, the actual performance of the securitized
pool may be affected, among others, by the economic activity, high
inflation rates compared with nominal salaries increases and the
unemployment rate in Argentina.
Factors that may lead to an upgrade of the ratings include an
upgrade in Argentina's local currency ceiling and the building of
credit enhancement over time due to the turbo sequential payment
structure, when compared with the level of projected losses in the
securitized pool.
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B R A Z I L
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BANCO DE BRASILIA: Fitch Puts 'BB-/B' IDRs on Watch Negative
------------------------------------------------------------
Fitch Ratings has placed BRB - Banco de Brasilia S.A.'s Issuer
Default Ratings (IDRs), National Ratings and Viability Rating (VR)
on Rating Watch Negative.
KEY RATING DRIVERS
IDRS, NATIONAL RATINGS AND VR
Fitch has placed BRB's IDRs, National Ratings and VR on Negative
Watch because the bank has not yet published audited financial
statements for year-end 2018. The latest available audited
financial statements are from September 2018. The continued delay
in publication of audited financial statements constrains Fitch's
full assessment of the bank's financial metrics and overall credit
profile. The Negative Watch also reflects uncertainties stemming
from the ongoing forensic audit started in April 2019 by
PricewaterhouseCoopers (PwC).
The forensic audit's objective is to investigate potential
irregularities that could have taken place in the legal, financial,
procedural, and information systems and technology areas of the
bank in the past six years. The new management team, which is made
up of individuals with long track records in the banking sector,
has taken measures to enhance BRB's corporate governance, risk
management and internal controls. The forensic audit is part of
these initiatives.
SUPPORT RATING
BRB's Support Rating (SR) of '4' was not affected by the rating
action. The bank's SR reflects the limited probability of support
from its majority shareholder, the Government of the Federal
District (GDF). Fitch believes GDF would have a high willingness
but relatively limited capacity to support BRB, should the need
arise. BRB is strategically important for GDF, as it is the local
government's main financial agent, and it has a meaningful market
share in the state's loans and time deposits. In addition to its
commercial operations, BRB performs a policy role for the region
through lending operations that aim to promote development and
growth.
RATING SENSITIVITIES
IDRS, NATIONAL RATINGS AND VR
Fitch will resolve the Rating Watch Negative status as soon as
feasible after BRB publishes audited financial statements for
year-end 2018. Fitch could downgrade BRB's VR if audited December
2018 and/or March 2019 financial statements indicate a significant
deterioration in the bank's credit profile. BRB's VR would also be
negatively affected should the forensic audit conclude that
significant irregularities took place in the bank in the recent
past, leading to a material worsening of Fitch's assessment of the
bank's overall business and risk profile.
BRB's IDRs and National Ratings could be downgraded in the event of
a downgrade of the bank's VR. However, downside potential on the
bank's IDRs and National Ratings would be limited, due to the
expected support from GDF, unless Fitch changes materially its
assessment of GDF's propensity or ability to support BRB.
Fitch could affirm and remove BRB's ratings from Negative Watch if
audited financial statements for periods starting from December
2018 show that the bank's credit metrics are still commensurate
with its ratings and if the forensic audit's conclusions are not
material from a credit point of view. In this scenario, the
resulting Rating Outlook would depend on Fitch's assessment of the
medium-term prospects for the bank's business and financial
profile.
SUPPORT RATING
The SR is potentially sensitive to any change in assumptions around
the propensity or ability of GDF to provide timely support to the
bank, which is not Fitch's current base-case scenario.
Fitch has placed the following ratings for BRB on Rating Watch
Negative:
Long-term foreign- and local-currency IDRs 'BB-';
Short-term foreign- and local-currency IDRs 'B';
Long-term National Rating 'A+(bra)' ;
Short-term National Rating 'F1(bra)';
Viability Rating 'bb-'.
BRAZIL: Fitch Affirms 'BB-' Foreign Currency IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency
Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook.
KEY RATING DRIVERS
Brazil's ratings are constrained by the structural weaknesses in
its public finances and high government indebtedness, weak growth
prospects, a difficult political environment, and
corruption-related issues that have weighed on effective economic
policymaking and hampered progress on reforms. The ratings are
supported by Brazil's economic diversity and entrenched civil
institutions, with its per capita income higher than the 'BB'
median. The country's capacity to absorb external shocks is
underpinned by its flexible exchange rate, low external imbalances,
robust international reserves, a strong net sovereign external
creditor position, deep and developed domestic government debt
markets, and a low share of foreign currency debt in total
government debt.
The new Bolsonaro administration that took office in January 2019
intends to address some of the structural weaknesses in growth and
public finances. The government intends to deregulate the economy,
increase private sector participation through
concessions/privatizations, gradually open the economy to foreign
competition, and pursue the formal independence of the central
bank.
To tackle pension costs, the main projected source of deterioration
in public finances over the medium to long term, the government
proposed an ambitious reform (with projected savings of around
BRL1.2 trillion over a 10-year period) for the private and public
sector workers' regimes in February 2019. The changes are intended
to reduce the generosity of existing benefits, tighten retirement
criteria, increase the progressivity of benefits, improve
harmonization of benefits across regimes and reduce survivors'
benefits. The proposal would also raise the eligible age criteria
for receiving social assistance, reduce the scope for annual bonus
salary payments (Abono Salarial), introduce the possibility of a
defined contribution pension plan and lay the foundation for states
and local governments to follow through with similar changes in the
civil service pension scheme.
The scope and timing of these reform initiatives (particularly the
pension reform) is uncertain. Fragmentation in the Congress is a
large hurdle, and the new administration has not yet forged a
credible, effective and durable coalition for its reform agenda.
While Fitch believes that the chances of the pension reforms
passing appear higher than before the elections, given the level of
debate and the broader recognition from the political class for the
need for such reforms, delays and dilution of the reform are
likely. The quality (and hence the savings) of the reform will
depend on the ability of the administration to engage and mobilize
support in Congress. Idiosyncratic risks stemming from
corruption-related investigations could weigh on reform progress. A
complete failure to advance the reform cannot be ruled out.
Brazil's economy continues to under-perform, with economic growth
reaching only 1.1% in 2018. The impact of a truckers' strike, the
tightening of financial conditions arising from uncertainty around
the election cycle, and the adverse impact from the crisis in
Argentina (the destination of a significant share of Brazil's
manufactured exports) all affected growth. Fitch forecasts that
real GDP growth will reach 1.5% in 2019 and 2.5% in 2020 (revised
down from Fitch's March 2019 Global Economic Outlook projections of
2.1% and 2.7%, respectively) with downside risks. Uncertainty
around the government's capacity to execute on reforms, the
continuing adverse impact from the Argentine crisis, and the Vale
dam collapse earlier this year, are weighing on growth. This is in
spite of an accommodative monetary policy stance, the recovery in
banking credit growth, improved consumer and business confidence
and higher financial asset prices (stock market), and a reduction
in domestic bond yields since the elections.
Fiscal challenges continue to weigh heavily on the credit profile
and make Brazil vulnerable to shocks. Fitch's estimate of the
general government deficit remained high at around 8% of GDP in
2018 (compared with the current 'BB' median of -2.7% of GDP). Fitch
expects the government to meet its 2019 public sector primary
deficit target of BRL132 billion (1.8% of GDP). Fitch believes that
the passage of pension reform is necessary but not sufficient to
significantly improve the near-term outlook for public finances and
for complying with the spending cap in the coming years.
To complement the pension reform, the administration proposes
achieving savings through control of the public sector wage bill,
implementation of a less generous minimum wage growth formula and
reduction in subsidies. Room to cut discretionary spending has
narrowed significantly. Better fiscal outcomes than currently
projected are possible through higher non-recurrent revenues (for
example, through the signing bonus and future taxes/royalties
related to the auction of excess oil reserves as part of the
transfer of rights agreement with Petrobras). However, higher
non-recurrent revenues would not represent a structural improvement
in public finances.
Public sector debt dynamics remain adverse although the pace of
increase has slowed as a result of economic stabilization, some
fiscal consolidation and the impact of early repayment of BNDES
loans (a state development bank) to the Treasury below the line.
The general government debt burden reached 77.2% of GDP in 2018
(well above the current 'BB' median of 45% of GDP) and is forecast
to reach 80% of GDP in 2019. The government finances itself largely
on the domestic market in local currency but a relatively short
average maturity increases interest rate risks. Medium term debt
dynamics could also benefit from earlier repayments to the Treasury
on loans to BNDES or the materialization of non-recurrent revenues
that are not included in our baseline.
Brazil's macroeconomic environment is supported by moderate
inflation and contained current account deficits. IPCA inflation
reached 4.9% in April (compared to the central bank's target of
4.25%), and core and services inflation remains contained in the
context of a sluggish economic recovery. Fitch expects inflation to
end the year within the central bank's target. Inflation
expectations for 2019-2020 remain well anchored. These factors
coupled with a more benign US Fed interest rate path has given the
central bank the policy space to hold the benchmark interest rate
at a historically low level of 6.5% for a longer period of time.
Brazil's current account deficit (CAD) reached 0.8% of GDP in 2018
and was more than fully funded by foreign direct investment flows.
Fitch forecasts the CAD to deteriorate moderately and average 2% of
GDP in 2019-2020.
SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Brazil a score equivalent to a
rating of 'BBB-' on the Long-Term Foreign-Currency 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:
- Public Finances: -1 notch, to reflect Brazil's rapidly worsened
general government debt burden, which is expected to continue
increasing during the forecast period. Fiscal flexibility is
constrained by the highly rigid spending profile and a heavy tax
burden that makes an adjustment to shocks difficult.
- Structural Features: -2 notches, to reflect Brazil's challenging
political environment and corruption-related issues that have
hampered timely progress on reforms to improve confidence in the
medium-term trajectory of public finances. In addition, the Ease of
Doing Business indicator is weaker than the 'BB' median, reflecting
structural constraints to growth.
Fitch's SRM is the agency's proprietary multiple regression rating
models that employs 18 variables based on three-year centered
averages, including one year of forecasts, to produce a score
equivalent to an 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 our
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
RATING SENSITIVITIES
The main factors that, individually or collectively, could trigger
positive rating action are:
-- Improvement in the political environment that facilitates the
implementation of credible policy initiatives to address
medium-term public debt sustainability;
-- Fiscal consolidation and improved prospects for debt
stabilization;
-- Improved growth outlook amid continued macroeconomic
stability.
The main factors that, individually or collectively, could trigger
negative rating action are:
-- Lack of fiscal reform that is sufficient to support an
improvement in the fiscal and growth prospects, leading
to a rapid growth in the government debt burden that
threatens medium term public debt sustainability;
-- Deterioration in the sovereign's domestic and/or
external market borrowing conditions;
-- Erosion of international reserves buffer and the
broader external balance sheet.
KEY ASSUMPTIONS
Fitch assumes that China (an important trading partner for Brazil)
will be able to manage a gradual slowdown and is forecast to grow
at 6.1% in both 2019 and 2020. Argentina's economy will continue to
underperform in 2019-2020, with growth forecast to average -0.1%
during the period.
Fitch has affirmed the following:
Long-Term Foreign-Currency IDR at 'BB-'; Outlook Stable;
Long-Term Local-Currency IDR at 'BB-'; Outlook Stable;
Short-Term Foreign-Currency IDR at 'B';
Short-Term Local-Currency IDR at 'B';
Country Ceiling at 'BB';
Issue ratings on long-term senior unsecured foreign-currency
bonds at 'BB-';
Issue ratings on long-term senior unsecured local-currency
bonds at 'BB-'.
ENERGIAS DO BRASIL: Moody's Affirms Ba2/Aa2.br CFRs, Outlook Stable
-------------------------------------------------------------------
Moody's America Latina Ltda., has affirmed EDP -- Energias do
Brasil S.A.'s (EDB) corporate family ratings at Ba2 on global scale
rating and Aa2.br on the Brazilian national scale (NSR). At the
same time, Moody's upgraded EDB's senior unsecured debentures to
Ba2/Aa2.br from Ba3/A1.br. The outlook remains stable.
RATINGS RATIONALE
These rating actions reflect Moody's updated views on EDB's credit
profile amid the company's growing capital investments and evolving
capital structure.
EDB's Ba2/Aa2.br corporate family ratings reflect the company's
long operating track record in the Brazilian electricity sector,
with a diversified business portfolio that includes activities in
the electricity distribution, power generation, energy
commercialization and, more recently, electricity transmission
sectors. The ratings incorporate the company's robust financial
profile, adequate liquidity profile, access to diversified funding
sources and strong credit metrics. Moody's views Brazil's
regulatory framework for electricity companies as reasonably
well-developed and supportive. The ratings consider the benefits of
EDP - Energias de Portugal, S.A. (EDP - Portugal, Baa3 stable)
ownership of EDB on governance, but do not incorporate any uplift
for parental financial support.
EDB's global scale corporate family rating is constrained by the
Government of Brazil's (Ba2 stable) bond rating. Moody's notes the
company's intrinsic links with the sovereign credit quality because
of its local customer base and the regulated nature of its
business. EDB's credit profile is also tempered by the execution
risks associated with the development of its new transmission
assets through 2021 and the growing consolidated leverage to
support those investments. The ratings also incorporate Moody's
expectation of continued large capital spending requirements to
upgrade the distribution network and maintain or improve
qualitative of indicators of EDB's utilities following their
periodic regulatory reviews in 2019, in addition to a moderate
exposure to hydrological risks at the power generation
subsidiaries.
With these rating actions, EDB's senior unsecured debt ratings are
now at the same level as the company's corporate family ratings,
reflecting the limited amount of structural subordination that
currently exists within the consolidated organization. Moody's
notes that the holding company has a low level of debt relative to
total consolidated debt. The operating subsidiaries' also show
moderately low leverage. Importantly, we anticipate a reduction in
EDB's overall business risk profile and more diverse sources of
cash flow, limiting, in Moody's view, structural subordination
considerations.
As of March 31, 2019, EDB had long-term parent level debt
obligations of BRL554 million, or about 7% of EDB's consolidated
long-term total debt of approximately BRL7.5 billion, a substantial
decrease from the 21% observed in 2016. As a non-operating holding
company, EDB depends on cash distributions from its operating
subsidiaries to meet debt service. Despite the economic downturn
and unfavorable hydrologic conditions in recent years, operating
company dividends remained strong in the range of BRL500-800
million per year since 2016, solidly covering parent company debt
service. Over the next five years, Moody's expects that annual
dividends to the holding company will remain robust supporting both
the service on its existing debt and the bulk of equity
requirements for new developments.
EDB is committed to further improve its business diversification
through investments in transmission lines. In May 2017, the company
won four lots of power transmission licenses auctioned by Brazil's
National Electric Energy Agency (ANEEL), comprising 1,184 km of new
transmission lines involving about BRL3.1 billion investments
through 2022. In 2016, the company also won the auction for a 113
km project in the State of Espirito Santo, which began operations
in December 2018, 20 months before the regulatory schedule. EDB
expects the transmission business to represent around 22% of the
consolidated EBITDA by 2022. These new concessions are credit
positive for EDB because they provide the company with greater and
more stable cash flow generation owing to the availability-based
revenues provided by regulated contracts' 30-year terms.
On the other hand, EDB's consolidated leverage has been gradually
increasing with its growing investment rate, as indicated by a
Moody's calculated net debt-to-EBITDA ratio of 2.2x in 2018, up
from 1.9x in 2016. Moody's expect the EDP group's leverage will
peak over the next 12-18 months, but will remain below 2.5x. The
anticipated deterioration in credit metrics incorporates relatively
higher leverage to support sizable investments, tempered by a
combination of gradual economic recovery, favorable regulatory
tariff adjustments and a manageable exposure to hydrological risks.
EDB's consolidated credit metrics are expected to recover to
historical levels in 2022-2023.
RATINGS OUTLOOK
The stable outlook on EDB's ratings in line with that on Brazil's
sovereign rating, and it also reflects Moody's expectation that the
company's credit metrics will remain well positioned for the rating
category over the next 12 to 18 months, although relatively lower
than the historical levels.
WHAT COULD MOVE THE RATING UP/DOWN
EDB's global scale ratings are currently constrained by Brazil's
sovereign rating; therefore, a rating upgrade is unlike at this
time. A rating upgrade on the national scale or a change in outlook
to positive would depend on a sustained improvement in the
company's relevant credit metrics and liquidity profile, or a
material improvement in the regulatory frameworks under which EDB
operates. Quantitatively, the ratings could be upgraded if the
company's CFO pre-WC/debt ratio increases above 40% (26.3%, as of
2018 year-end), and the interest coverage stays above 4.5x (4.6x,
as of 2018 year-end), for a prolonged period.
Alternatively, the ratings could be downgraded if there is a
deterioration in EDB's credit metrics, for example, as a result of
weaker-than-anticipated growth in its electricity businesses or
higher than anticipated leverage. A perception of reduced support
from the regulatory framework to electricity companies in Brazil,
or material delays or cost overrun associated with its Greenfield
transmission investments would also drive negative pressure on
EDB's ratings. Quantitatively, the ratings could be downgraded if
the CFO pre-WC/debt falls below 20%, or the interest coverage stays
consistently below 3.0x. A sustainable increase in the proportion
of parent company debt above 15% or reduced flexibility in the
company's ability to upstream cash from its operating subsidiaries
could also result in negative pressure on EDB's senior unsecured
debt ratings.
LIST OF AFFECTED RATINGS
Issuer: EDP - Energias do Brasil S.A.
Affirmations:
Corporate Family Rating: Ba2 (global scale) and Aa2.br
(National Scale Rating)
Rating changes:
Senior Unsecured debentures due in September 2021 and 2024
(4th issuance): upgraded to Ba2/Aa2.br from Ba3/A1.br
Senior Unsecured debentures due in April 2022 (5th issuance):
upgraded to Ba2/Aa2.br from Ba3/A1.br
The outlook remains stable
COMPANY PROFILE
Headquartered in São Paulo, Brazil, EDP- Energias do Brasil S.A.
(EDB) is a nonoperational holding company, with activities in the
distribution, generation, commercialization and transmission of
electricity in Brazil. In 2018, the company distributed 24.7
terawatt hour of electricity per year to around 3.4 million clients
in the State of Sao Paulo (Ba2 stable) and the State of Espirito
Santo, and reported about 2.9 gigawatts of installed capacity in
six states. The company also holds concessions to develop 1,300
kilometers of transmission lines in five different states and has a
minority ownership stake of 23.56% in Centrais Eletricas de Santa
Catarina S.A. (Celesc, Ba3/A1.br positive), an electricity company
in the state of Santa Catarina. In 2018, EDB reported consolidated
net revenue of BRL12.8 billion, excluding BRL1.1 billion of
construction revenue, and net profit of BRL1.3 billion.
EDB is ultimately controlled by EDP - Portugal, through indirect
stakes amounting to 51.2% of EDB's equity capital.
SAMARCO MINERACAO: To Postpone Talks Over $3.8-Bil. Debt
--------------------------------------------------------
Pablo Rosendo Gonzalez at Bloomberg News reports that Samarco
Mineracao SA, the Brazilian mining venture that hasn't operated
since a deadly dam collapse in 2015, is postponing restructuring
talks for $3.8 billion of debt until at least November, according
to three people with knowledge of the plan.
Creditors of the company's $2.2 billion in defaulted bonds and $1.6
billion in loans and other obligations are agreeing to the delay
given the uncertainty around liabilities and fines the company may
be subject to, said the people, who asked not to be named as talks
are private, according to Bloomberg News. The venture, jointly
owned by Vale SA and BHP Group Ltd, won't have a clear idea on
those figures until the end of October, two of the people said,
Bloomberg News notes. The situation remains fluid and talks could
resume earlier if circumstances change, Bloomberg News relays.
The company's bonds due in 2022 and 2023 fell on the news.
The company, which had BRL 18.5 billion (US$4.6 billion) in total
debt as of Dec. 31, 2018, said the resumption of operations "will
require funding and an adequate restructuring of our financial
obligations, such as the debts under negotiation with our
creditors," according to a company filing, Bloomberg News relays.
"Samarco clarifies that no consensual agreement has yet been
reached and that it will resume negotiations in a timely manner."
Legal and financial advisers for the restructuring have been
informed that fees will be halted until further notice, starting
this month, Bloomberg News notes.
Brumadinho Dam Accident
Bloomberg discloses that talks between the company and creditors
started last November, with the company assuming fees for all the
parties involved. But negotiations were abruptly interrupted in
late January, when Vale suffered an even worse disaster at one of
its wholly-owned mines in Brumadinho, Minas Gerais state, Bloomberg
News cites.
The Brumadinho dam burst killed more than 240 people, while another
40, who remain missing, are presumed dead, Bloomberg News relays.
That surpassed a dam spill in 2015, which killed 19 people and
polluted waterways, and was at the time, considered Brazil's worst
environmental disaster, Bloomberg News notes.
The JV should clear necessary judicial hurdles to regain its
license by September. If approved, operations could resume by mid
to late 2020, Vale's Chief Financial Officer Luciano Siani Pires
said on a conference call with analysts, Bloomberg News relates.
JPMorgan Chase & Co., which is advising Samarco in the
restructuring, declined to comment. Other advisers include Clifford
Chance, FTI Consulting, Houlihan Lokey and Brazilian law firm Padis
Advogados, Bloomberg News says.
The price of Samarco's $1 billion of notes due in 2022 plunged more
than 30 percent after the Brumadinho accident to about 52 cents on
the dollar, Bloomberg News notes.
Distressed-debt funds including Solus Recovery Fund LP, York Total
Return LP and Silver Point Capital Fund LP, stepped in after buying
claims held by Japanese banks, Bloomberg News adds.
As reported in the Troubled Company Reporter-Latin America on June
1, 2017, S&P Global Ratings said it affirmed then withdrew its 'D'
(default) issuer and issue-level ratings on Samarco Mineracao S.A.
and its senior unsecured debt at the issuer's request.
===============
C O L O M B I A
===============
AVIANCA HOLDINGS: United Airlines Shakes Up Leadership Amid Default
-------------------------------------------------------------------
Reuters' Marcelo Rochabrun and Sanjana Shivdas, citing regulatory
filings, report that United Airlines launched a management overhaul
at Colombia's Avianca Holdings, removing top shareholder German
Efromovich from controlling the cash-strapped airline.
United, which is proposing a three-way joint business agreement
with Avianca and Panama's Copa, said the move follows a default by
Efromovich's holding company BRW Aviation on a $456 million loan it
made six months ago, according to Reuters.
The Chicago-based airline, part of United Continental Holdings Inc,
is seeking a deeper foothold in Latin America, which is considered
ripe for air travel growth, the report notes.
United's loan was backed by Efromovich's 51.5% stake in Avianca.
However, the U.S. airline's contract with its pilots restricts the
company from majority ownership in another carrier, the report
says. As a result, United is ceding voting rights to Kingsland
Holdings, the Colombian carrier's second-largest shareholder, the
report discloses.
Kingsland is controlled by Roberto Kriete, who was embroiled in a
long and bitter legal fight with Efromovich over the best strategy
for heavily indebted Avianca, the report says.
Another Efromovich carrier, Avianca Brasil, filed for bankruptcy
protection in December and its operations were suspended on Friday
by Brazil's civil aviation regulator ANAC, the report notes.
United said it was willing to loan up to $150 million to Avianca
Holdings, the report adds.
===================
C O S T A R I C A
===================
COSTA RICA: Rejects Military Option in Venezuela, Nicaragua
-----------------------------------------------------------
Costa Rican President Carlos Alvarado said in an interview with EFE
that a military option has no place in discussions on how to
resolve the political crises in Nicaragua and Venezuela.
Mr. Alvarado, who completed his first year in office on May 8, has
invested much of his time pushing through a tax overhaul that
Congress passed in December and bringing the crisis in Nicaragua --
and its migratory implications for Costa Rica -- to the attention
of the international community, according to EFE News.
=======
C U B A
=======
CUBA: Faces Growing Economic Crisis
-----------------------------------
EFE News reports that people standing in long lines to buy food in
Cuba has become so common that it has even become a joke.
Though jokes tend to ease the wait, there are also heated arguments
and even fights over a place in line, of which people take videos
and share them on social networks, making this pain a focus of
attention in Cuban society and a symbol of the country's growing
economic crisis, according to EFE News.
The report notes that restriction, imposed by the government on a
number of basic products to avoid hoarding, can meet its match in
Cuban guile, since many go to the supermarket with their children,
nieces and nephews and even pay a CUC (equivalent of a dollar) to
third parties to get the number of quotas they want of the desired
white meat.
The aggravated shortage of products is an indication of the
economic crisis that is beginning to hurt this country of 11.2
million inhabitants, whose diet depends between 60 and 70 percent
on imports, as is the case with chicken meat, the report relays.
To Cuba's endemic problems, such as the inefficiency of its
centralized economic model and the accumulation of debt, have been
recently added the toughening of the US embargo by the Donald Trump
administration and the instability of the Nicolas Maduro government
in Venezuela, supplier of half the island's fuel requirements, the
report discloses.
Flour, cooking oil, eggs, powdered milk and sausages have
practically disappeared from the supermarkets since late last year,
the report discloses.
As reported in the Troubled Company Reporter-Latin America on Dec.
12, 2017, Moody's Investors said that the credit profile of Cuba
(Caa2 stable) reflects significant credit challenges due to
diminished growth prospects as rapprochement with the United States
(Aaa stable) stalls. Other credit weaknesses constraining Cuba's
creditworthiness include limited access to external financing, a
high dependence on imported goods and, most importantly, a lack of
data transparency. Structural inefficiencies directly hinder
economic growth.
===================================
D O M I N I C A N R E P U B L I C
===================================
PUNTA CATALINA: Utility Bows to Protests, Will Pay Workers
----------------------------------------------------------
Dominican Today reports that the Executive Vice President of the
Dominican Corporation of State Electric Companies (CDEEE), Ruben
Jimenez Bichara, said that during construction of the Punta
Catalina power plant at times the payroll exceeded 10,000, but as
the work ended, the majority of workers has been laid off.
The announcement comes hundreds of current and former workers
staged various protest to demand the payment of owed bonuses,
according to Dominican Today.
Mr. Jimenez said that as a "form of gratification and social
contribution", Dominican President Danilo Medina authorized the
CDEEE so that Dominicans who worked in the CDEEE for up to one year
get a payment of 50% of their monthly salarya, the report relays.
He said that employees who worked for up to two years will get 65%
of a month's salary; those who worked up to three years will get
80% of a month's salary and those who have worked for over three
years will get a bonus of one month's salary, the report adds.
About Punta Catalina Plant
The Punta Catalina Thermoelectric Power Plant is a 770-megawatt
coal-fired power plant in Punta Catalina-Hatillo, Dominican
Republic. The construction of the plant is under the charge of the
Odebrecht-Tecnimont-Estrella consortium (a contractor group
composed of Italian company Maire Tecnimont SpA, Brazilian
contractor Construtora Norberto Odebrecht S.A, and Chile-based
Ingenieria Estrella SRL). Groundbreaking for the project,
estimated to cost US$2 billion, was held in late 2013. Unit 1 of
the Power Plant became operational on Feb. 27, 2019, with an
initial 36.5 megawatts to the national grid (SENI).
The Project has had its shares of financing delays and funding
scandal. In February 2017, a U.S. court discovered that main
contractor Odebrecht had paid $92 million in bribes to Dominican
officials between 2001 and 2014, as a means of securing a number of
contracts, including the contract to build the Punta Catalina
plant. The project's staff have pleaded with politicians to stand
behind continued construction work on the plant, despite the
corruption allegations. Some environmental groups also opposed the
plant construction, citing harmful impact on the Caribbean coasts
and climate in general.
The plant's parent company and sponsor is the Dominican Republic's
state electric utility, Corporacion Dominicana de Empresas
Electricas Estatales (CDEEE).
=====================
P U E R T O R I C O
=====================
KONA GRILL: 2 Creditors Appointed New Committee Members
-------------------------------------------------------
The Office of the U.S. Trustee on May 21 appointed two new members
to the official committee of unsecured creditors in the Chapter 11
cases of Kona Grill, Inc., and its affiliates.
The two unsecured creditors are:
(1) JFC International, Inc.
Attn: Mr. Hidetaka Iinuma
7101 E. Slauson Avenue
Los Angeles, CA 90040
Phone: 323-236-0291
(2) Washington Prime Group, Inc.
Attn: Stephen E. Ifeduba
180 West Broad Street
Columbus, OH 43215
Phone: 614-621-9000
The bankruptcy watchdog had earlier appointed The Taubman Company,
Brookfield Property REIT Inc., Edward Don & Company, Tracy Fortman
and True Worlds Foods, LLC, court filings show.
About Kona Grill
Kona Grill, Inc. -- https://www.konagrill.com/ -- owns and operates
27 casual dining restaurants in 18 states, as well as Puerto Rico,
serving contemporary American favorites, sushi, and alcoholic
beverages throughout the United States and Puerto Rico.
Kona Grill, Inc., and its subsidiaries sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. Del. Lead Case No.
19-10953) on April 30, 2019. As of Dec. 31, 2018, the Debtors'
total assets is $53,613,000 and total liabilities of $74,049,000.
The petition was signed by Christopher J. Wells, chief
restructuring officer.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP as counsel;
Piper Jaffray as investment banker; Alvarez & Marsal North America,
LLC as restructuring advisor and Epiq Corporate Restructuring, LLC
as claims and noticing agent.
===========================
V I R G I N I S L A N D S
===========================
LIMORA INVESTMENTS: Chapter 15 Case Summary
-------------------------------------------
Chapter 15 Debtor: Limora Investments Limited
P.O. Box 146
Road Town, Tortola
British Virgin Islands
Chapter 15 Petition Date: May 23, 2019
Court: United States Bankruptcy Court
Southern District of New York
(Manhattan)
Chapter 15 Case No.: 19-11678
Judge: Hon. Martin Glenn
Foreign Representatives: Alexander Lawson and Paul Pretlove
70 Harbour Drive
PO Box 2507, 2nd Floor
George Town, GC
Cayman Islands
Foreign Representatives'
Counsel: Madlyn Gleich Primoff, Esq.
FRESHFIELDS BRUCKHAUS DERINGER US LLP
601 Lexington Avenue, 31st Floor
New York, NY 10019-9710
Tel: 212-277-4000
Fax: 212-277-4001
Email: madlyn.primoff@freshfields.com
Estimated Assets: Unknown
Estimated Debts: Unknown
A full-text copy of the petition is available for free at:
http://bankrupt.com/misc/nysb19-11678.pdf
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week May 20 to May 24, 2019
-----------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD
Odebrecht Finance Ltd 7.0 17.0 4/21/2020 KY USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Empresa Provincial de 12.5 0.0 1/29/2020 AR USD
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Plaza SA 3.5 38.3 8/15/2020 CL CLP
Banco Security SA 3.0 5.6 7/1/2019 CL CLP
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Empresa de Transporte 4.3 30.9 7/15/2020 CL CLP
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
SACI Falabella 2.3 50.6 7/15/2020 CL CLP
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Banco Security SA 3.0 27.4 6/1/2021 CL CLP
Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP
Sociedad Austral de El 3.0 17.0 9/20/2019 CL CLP
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Esval SA 3.5 49.9 2/15/2026 CL CLP
*********
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 * * *