/raid1/www/Hosts/bankrupt/TCRLA_Public/191028.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, October 28, 2019, Vol. 20, No. 215
Headlines
A R G E N T I N A
TELECOM ARGENTINA: Fitch Withdraws B- Rating on New Exchange Notes
B O L I V I A
[*] BOLIVIA: Morales Vows 2nd Round Vote if Fraud Found in Election
B R A Z I L
BRAZIL: Central Bank to Sell US$11.3BB from Reserves in November
M E X I C O
CUAUTLA: Moody's Withdraws 'Caa1' Issuer Rating
P U E R T O R I C O
AES PUERTO RICO: Fitch Affirms C Rating on $161MM Series A Bonds
PUERTO RICO: Unveils $20BB Plan to Revamp Island's Power Grid
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: AMCHAM Calls For Reality Amid Economic Woes
V E N E Z U E L A
CITGO PETROLEUM: Gets a U.S. Lifeline in Holding Off Creditors
X X X X X X X X
[*] BOND PRICING: For the Week October 21 to October 25, 2019
[*] LATAM: IDB Study Diagnoses Investment Promotion Agencies
- - - - -
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A R G E N T I N A
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TELECOM ARGENTINA: Fitch Withdraws B- Rating on New Exchange Notes
------------------------------------------------------------------
Fitch Ratings withdrawn the 'B-'/'RR2' rating on Telecom Argentina
S.A.'s proposed exchange notes, as the company has terminated the
transaction. The exchange offer was terminated due to a lack of
investor interest; the aggregate principal of 2025 notes to be
offered failed to reach the USD100 million threshold defined in the
exchange offer documents. The company will explore other avenues
for refinancing and extending its maturity profile ahead of the
2021 maturities.
The transaction included an offer to exchange existing 6.5% 2021
notes for new 9.0% 2025 notes, as well as a cash consideration and
a separate cash tender for the existing notes. As a result of the
cancellation, the existing notes that were tendered will be
returned to the holders, and no consideration or tender will be
paid.
There have been no other rating actions with regards to any of
Telecom Argentina's ratings, including the existing 2021 notes
(B-/RR2), the Long Term Foreign Currency Issuer Default Rating
(CCC), and the Long-Term Local Currency Issuer Default Rating
(BB-).
The ratings were withdrawn with the following reason: Forthcoming
Debt Issue/Transaction Carrying An Expected Rating Is No Longer
Expected to Proceed As Previously Envisaged.
KEY RATING DRIVERS
Key Rating Drivers are no longer relevant given the withdrawal.
=============
B O L I V I A
=============
[*] BOLIVIA: Morales Vows 2nd Round Vote if Fraud Found in Election
-------------------------------------------------------------------
Mitra Taj and Daniel Ramos at Reuters report that Bolivian
President Evo Morales vowed to hold a run-off election if fraud is
found in a vote count that gave him an outright win, but warned his
rural base would siege cities if they keep protesting his disputed
re-election to a fourth term.
Morales has faced nearly a week of street demonstrations in major
cities and growing international pressure to call a run-off vote
with his closest rival Carlos Mesa in order to restore credibility
to an election dogged by allegations of vote-rigging lobbed by the
opposition, according to Reuters.
Morales, Latin America's longest-serving president, is the lone
survivor of a group of fiery leftist leaders who took office in the
previous decade, most of whom have since been replaced by
right-leaning governments, the report notes.
He has overseen a rare period of economic and political stability
in South America's poorest country. But doubts raised by official
observers about the legitimacy of his first-round victory threaten
to dog his 2020-2025 term, the report relays.
In a speech in the region of Cochabamba, a bastion of rural
support, Morales invited countries in the region that have called
for him to hold a run-off vote -- the United States, Brazil,
Argentina, Colombia -- to take part in an audit of the official
tally, the report relays.
"Let's do an audit vote by vote," Morales said at a military event
broadcast on state TV. "I'll join (the audit). If there's fraud,
the next day we'll convene a second-round" election, he added in
comments broadcast on state TV, the report says.
But he later said at a different event in Cochabamba that a key
umbrella group of his social bases, Conalcam, plans to send his
supporters to choke off cities that have staged strikes against his
re-election, the report discloses.
"There's a plan," Morales said after meeting with the local
Conalcam committee. "If they want strikes, no problem. We'll join
them by sieging cities. Let's see if they can take it," Morales
told cheering crowds of supporters, the report relays.
The comments indicated that Morales, widely known as just "Evo" in
Bolivia, would adopt a tougher approach to criticism at home than
abroad, the report discloses.
"Evo's in an existential crisis politically," Bolivian political
analyst Marcelo Arequipa said, adding that his political party MAS
was split over how to proceed, the report notes. "He doesn't seem
to have a strategy," he added.
Mesa, a former president, said his supporters were forming a
commission to pressure the international community to not recognize
the election's results, the report relays.
Brazil, landlocked Bolivia's biggest trade partner, has already
said it would not recognize Morales' win until the regional group
Organization of American States (OAS) finishes an audit of the vote
count that has not yet started, the report notes.
The report relays that the European Union and Washington-based OAS,
both of whom sent observer missions to Bolivia, have also pushed
Morales to convene a second-round vote to ease recent unrest.
Venezuela, Cuba and Mexico have sent Morales congratulations on his
win.
Protesters blocked roads in parts of the highland capital of La
Paz, chanting "fraud" and waving Bolivia's red-yellow-and-green
flag as anti-government strikes continued in different cities, the
report notes.
'Scandalous Fraud'
The country's embattled electoral board, the Supreme Electoral
Tribunal (TSE), has denied any foul play and invited the OAS to
audit the official tally. But it has not said whether it would
accept the OAS' condition for the audit's conclusions to be
legally-binding, the report relays.
Peru, governed by a centrist president, said it would take part in
the audit at Bolivia's request and called for the process to be
carried out respecting Bolivian laws, the report notes.
The OAS in La Paz said that the audit would start around the middle
of next week, the report discloses.
The vote count by the TSE at 100% showed Morales had 47.08% of
votes versus Mesa's 36.51% in a crowded race of nine candidates,
the report notes. That gave him the 10-point lead needed to face
Mesa in a Dec. 15 second-round vote, when the opposition would
likely rally behind Mesa to defeat Morales, the report says.
The TSE sparked an uproar after the election when it halted
publication of a quick vote count that showed Morales headed to a
second-round with Mesa, the report relays. When the quick count
resumed after an outcry, it confirmed Morales' prediction that he
would pull off an outright win with the help of rural votes, the
report notes.
Mesa's campaign has also said that it has found 100,000 votes that
should have been annulled due to irregularities but instead swung
in Morales' favor, the report discloses.
As night fell on La Paz, Bolivians banged pots and pans from their
windows in a traditional form of protest, the report says.
"This is a scandalous fraud never seen before. That's why the
people are reacting," retiree Fredy Salinas, 67, said as he bought
vegetables in a market in La Paz, the report notes.
Morales said his detractors were "envious" of his achievements and
accused the opposition, without providing evidence, of trying to
stir up unrest to try to unseat him illegally. "With lies and
tricks they're trying to instigate hatred and racism," he added.
As reported in the Troubled Company Reporter-Latin America on
June 24, 2019, Fitch Ratings has affirmed Bolivia's Long-Term
Foreign Currency Issuer Default Rating at 'BB-' and revised its
Outlook to Negative from Stable.
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B R A Z I L
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BRAZIL: Central Bank to Sell US$11.3BB from Reserves in November
----------------------------------------------------------------
Richard Mann at Rio Times Online reports that after auctioning
US$26.9 billion (R$107.6 billion) of international reserves in
recent months, the Brazilian Central Bank (BC) will sell an
additional US$11.3 billion in the cash market in November.
The announcement was issued, October 24, by the monetary authority
after the markets closed, according to Rio Times Online.
The money will be used to renew traditional currency swap
contracts, the report adds.
About Brazil
The Federal Republic of Brazil is the largest country in Latin
America. Sao Paulo is the most populated city and Brasilia is the
capital. The federation is composed of the union of 26 states, the
Federal District and more than 5,000 municipalities. Its
government is headed by President Jair Bolsonaro. Among other
things, Brazil's government is led by corruption allegations.
Brazil has an advanced emerging economy. Amid growth in recent
decades, the country entered an ongoing recession in 2014 amid a
political corruption scandal and nationwide protests.
Standard & Poor's credit rating for Brazil stands at BB- with
stable outlook (January 2018). Moody's credit rating for Brazil was
last set at Ba2 with stable outlook (April 2018). Fitch's credit
rating for Brazil was last reported at BB- with stable outlook
(February 2018). DBRS's credit rating for Brazil is BB (low) with
stable outlook (March 2018).
===========
M E X I C O
===========
CUAUTLA: Moody's Withdraws 'Caa1' Issuer Rating
-----------------------------------------------
Moody's de Mexico S.A. de C.V. withdrew the Caa1/B3.mx (Global
Scale, local currency/Mexico National Scale) issuer ratings of the
Municipality of Cuautla and also withdrew the negative outlook.
Moody's has decided to withdraw the ratings for its own business
reasons.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2018.
=====================
P U E R T O R I C O
=====================
AES PUERTO RICO: Fitch Affirms C Rating on $161MM Series A Bonds
----------------------------------------------------------------
Fitch affirmed the rating for the following AES Puerto Rico L.P.
securities issued through the Puerto Rico Industrial, Tourist,
Educational, Medical & Environmental Control Facilities Financing
Authority:
-- $161.87 million ($160.57 million) cogeneration facility
revenue bonds Series A (tax-exempt bonds) due June 2026 at 'C';
-- $33.1 million ($32.83 million) cogeneration facility revenue
bonds, Series B (taxable bonds) due June 2022 at 'C'.
RATING RATIONALE
Fitch has no Rating Outlook on the project given the low likelihood
for any short-term resolution to the off-taker's 'D' rating or
conclusion of its insolvency proceedings, which could lead to
subsequent action on the project's rating. There is an issue with
the off-taker that is evolving, and remaining downside risks that
may materialize in the insolvency process are reflected in the
rating.
Summary: AES PR's 'C' rating is linked to but not constrained by
the credit quality of the Puerto Rico Electric Power Authority
(PREPA), currently rated 'D'. PREPA is the revenue counterparty
under AES PR's power purchase agreement (PPA). A payment default
and negative rating action would result if PREPA failed to make
payments under the PPA, which could become a possibility should
PREPA try to renegotiate the PPA under bankruptcy proceedings.
However, PREPA is currently honoring its PPA payment obligations,
demonstrating the importance of AES PR as a supplier of power for
PREPA.
KEY RATING DRIVERS
Contracted Revenue Profile -- Revenue Risk: Midrange (Revised from
Weaker)
The 25-year tolling-style PPA with a non-investment-grade
counterparty effectively mitigates some risk of exposure to
capacity price, energy margin, and dispatch risks throughout the
debt term, subject to project availability and heat rates. Further,
project cash flows are materially different from dispatch levels,
and revenues are subject to achievable minimum performance
thresholds of 90% effective availability factor (EAF) under the
project's PPA. However, the off-taker's ability to make future
contractual payments is unclear given its financial and operational
difficulties, which were exasperated by the Hurricane Maria.
Uneven Operations -- Operation Risk: Weaker
AES PR has historically been susceptible to forced outages, which
have reduced availability and capacity payments. Further, the
operating cost profile has exceeded original estimates. Management
has taken a proactive approach to limit forced outages with some
results; however, extended scheduled outages have continued to
negatively impact project availability in some periods.
Manageable Supply Risk -- Supply Risk: Midrange
Fuel supply risk is mitigated by a two-year, fixed-price fuel
supply agreement sufficient to meet the project's expected fuel
requirements through 2019. The the agreement's short term is
mitigated by the historical precedence for renewal and liquid
market for coal. Fuel price risk is mitigated by the tolling-style
PPA, subject to heat rates. Ash inventory is actively managed by
the project via the sale of its various ash products. AES PR's
efforts have helped to offset near-term ash disposal concerns, but
cash flow uncertainty is heightened without a permanent solution.
Typical Structural Features -- Debt Structure: Midrange (Revised
from Weaker)
The project's bonds are fixed-rate and mature within the PPA term,
but have back-loaded amortization profiles. The equity
distribution, leverage, and debt service reserve provisions are
consistent with standard project finance structures. AES PR does
not have O&M or major maintenance reserves, which increases the
importance of operational stability and heightens the project's
reliance on other sources of liquidity. Approximately 55% of the
total debt outstanding, including unrated bank loans, is variable
rate with over 80% synthetically fixed with investment-grade
counterparties.
Financial Profile
The project's 'C' rating is guided by Fitch's ratings definitions,
and also the assessments assigned for all the qualitative key
rating drivers. For projects in this rating category, rating case
coverages provide little additional information to evaluate the
risk of default. By definition, the rating suggests that this
issuer has little capacity to navigate adverse economic
conditions.
PEER GROUP
AES PR is comparable to projects rated in the 'C' category in
California that are constrained by the off-taker, PG&E. Similar to
California projects with ratings that are constrained by the
off-taker, AES PR's financial metrics are consistent with a higher
rating under Fitch's rating criteria.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action:
-- An improvement in PREPA's long-term credit quality;
-- Sustained improvements to plant availability or heat rate
could enhance the long-term profile.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action:
-- PREPA's failure to meet its payment obligations would likely
impact AES PR's rating;
-- PREPA's attempts to renegotiate the PPA under its insolvency
proceedings that negatively impact the project's cash flows and
ability to service debt.
CREDIT UPDATE
AES PR's rating reflects the rating of PREPA, which was downgraded
to 'D' on July 6, 2017 following commencement of the insolvency
proceedings under Title III of the Puerto Rico Oversight,
Management, and Economic Stability Act (PROMESA) and failure to pay
principal and interest due on its revenue bonds on July 3, 2017.
PREPA's failure to meet its payment obligations to the project
would likely lead to negative rating action for AES PR.
The project maintained strong availability in the first quarter of
fiscal 2019; however, its availability dropped to 54% in April 2019
due to a scheduled outage for major maintenance, causing the
project to earn less than 100% (between 90%-99% through year to
date 2019) of its capacity payment. Upon completion of the major
maintenance, management confirmed that the plant's units are
operating in a state of good repair; the project has operated
without issue, and is not in need of follow-up repairs. With the
exception of April 2019, the project's monthly availability has
remained between 88%-99%, and as of August 2019, the project earned
about 98.5% of its capacity payment. Under the PPA, AES PR must
maintain a 12-month rolling EAF above 90% to earn the full capacity
payment from PREPA. Over the past five years, the project's EAF
under the PPA has drifted between 85%-95% with intermittent dips
below the PPA threshold.
Excluding April 2019, the project's capacity factor remained high,
ranging between 86%-100%. Management believes the project remains
well-positioned given that it is the lowest cost producer of power
in Puerto Rico, and believes it will continue to experience high
levels of dispatch going forward. In addition, management believes
that the project is likely to experience a high dispatch level of
roughly 98% going forward.
Previously, the project had 555K tons of Agremax (aggregate
material manufactured from coal ash) inventory that is close to its
on-site capacity limit. While ash disposal remains a concern for
the project, management attempted to address the site storage
limitations by continuously shipping Agremax to the mainland United
States for disposal. With continuous shipment of Agremax to the
mainland United States, management has advised that the ash levels
onsite are around 150k tons, reflecting roughly six months of
production. Agremax disposal will continue to be a major
operational concern that can erode margins for the project.
Management has indicated that PREPA has been paying its bills more
frequently, evidenced by reducing its receivable cycle to about 50
days (June 2019) relative to the 47 days allowed under the PPA.
This represents an improvement from historical days past due and
has made a positive impact on the project's cash flow. Fiscal 2018
revenues were 17% lower than budgeted at $249 million due to
outages that caused low availability and monthly numbers trailing
below the 90% threshold mandated in the PPA for full capacity
payments. DSCR at 4Q18 was high at 1.96x (TTM) due to PREPA paying
past due invoices to the project. DSCR at 2Q19 remained high at
2.14x, but is projected to decrease to 1.30x in the following 12
months due to increased costs associated with Agremax disposal.
The project remains dependent on PREPA's continued payments to
service debt and finance operations. PREPA's long-term financial
position and restructuring plans will continue to have an outsized
effect on the project. PREPA's recent payment track record and high
levels of dispatch corroborate the project's view that it is an
important part of Puerto Rico's generation system as a reliable and
a low-cost producer.
Asset Description
AES PR owns and operates a net 454 megawatt coal-fired circulating
fluidized bed combustion power plant in Guayama, Puerto Rico. The
project delivers electric energy and capacity to PREPA under the
terms of a 25-year PPA. The PPA is structured as a modified tolling
agreement that reimburses the project's fuel and O&M costs.
PUERTO RICO: Unveils $20BB Plan to Revamp Island's Power Grid
-------------------------------------------------------------
Karen Pierog at Reuters reports that Puerto Rico's undependable
power network would be modernized and decentralized under a $20.3
billion, 10-year plan disclosed by government officials of the
bankrupt U.S. commonwealth.
The so-called GridMod plan, developed with federal, local and
private sector input, targets repair and reconstruction measures
designed to strengthen the network and ensure its resilience
against natural disasters like the devastating hurricanes that
struck Puerto Rico in 2017, according to a statement from Governor
Wanda Vázquez Garced's office, according to Reuters.
"The GridMod Plan will provide the safe, modern and resilient
electricity network that our communities need and deserve," the
governor said, adding that an improved power network will help
boost the island's economy, the report notes.
Puerto Rico and its electric power authority known as PREPA filed
for bankruptcy in 2017 just months before hurricanes Irma and Maria
devastated the power grid, the report relays.
Federal funding would cover about $13 billion of the plan, which
also calls for private investment, according to the governor's
statement, the report notes.
The plan recommends a transformation to a decentralized electricity
network, incorporating renewable energy and micro-networks to
improve reliability and avoid blackouts during catastrophic events,
the report adds.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
Bondholders' Attorneys
Kramer Levin Naftalis & Frankel LLP and Toro, Colon, Mullet, Rivera
& Sifre, P.S.C. and serve as counsel to the Mutual Fund Group,
comprised of mutual funds managed by Oppenheimer Funds, Inc., and
the First Puerto Rico Family of Funds, which collectively hold over
$4.4 billion of GO Bonds, COFINA Bonds, and other bonds issued by
Puerto Rico and other instrumentalities.
White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS
Family of Funds and the Puerto Rico Family of Funds, which hold
$613.3 million in COFINA bonds.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam &
Lausell are co-counsel to the ad hoc group of General Obligation
Bondholders, comprised of Aurelius Capital Management, LP, Autonomy
Capital (Jersey) LP, FCO Advisors LP, and Monarch Alternative
Capital LP.
Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are
co-counsel to the ad hoc coalition of holders of senior bonds
issued by COFINA, comprised of at least 30 institutional holders,
including Canyon Capital Advisors LLC and Varde Investment
Partners, L.P.
Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon
Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson
Kempner Capital Management LP, OZ Management, LP, and OZ Management
II LP (the QTCB Noteholder Group).
Committees
The U.S. Trustee formed an official committee of retirees and an
official committee of unsecured creditors of the Commonwealth. The
Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia &
Milian, C.S.P., as its attorneys. The Creditors Committee tapped
Paul Hastings LLP and O'Neill & Gilmore LLC as counsel.
Puerto Rico PBA
The Puerto Rico Public Buildings Authority --
http://www.aep.gobierno.pr/-- is a public corporation created by
Act No. 56 of June 19, 1958, as amended. The Authority is charged
with satisfying the needs of design, construction, remodeling,
improvements, operation and maintenance of the structures that the
agencies, corporations and instrumentalities of the Commonwealth of
Puerto Rico need to offer their services. Among the facilities
that the Authority designs, builds and preserves are: schools,
hospitals, police facilities, prisons, fire stations and government
centers, among others. In addition, the Authority provides
property leasing services and new spaces for server storage (Data
Center).
The Puerto Rico Public Buildings Authority, a/k/a Autoridad de
Edificios Publicos de Puerto Rico (AEP), commenced a Title III case
under PROMESA on Sept. 27, 2019 (Bankr. D.P.R Case No. 19-05523).
=====================================
T R I N I D A D A N D T O B A G O
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TRINIDAD & TOBAGO: AMCHAM Calls For Reality Amid Economic Woes
--------------------------------------------------------------
Trinidad Express reports that AMCHAM Trinidad and Tobago Chief
Executive Officer Nirad Tewarie said that the economic downturn T&T
is experiencing now is worse than in the 1980s and to reverse the
country's plight requires politicians facing realities.
"According to the data, this is the worst recession that we have
been in since the 1980s and therefore how we get out of it and what
we do requires the truth," said Tewarie, while delivering the
welcome remarks on the second day of AMCHAM T&T's 23rd Annual
Health, Safety, Security and the Environment (HSSE) Conference and
Exhibition, according to Trinidad Express.
In a statement, AMCHAM T&T said while it does not think that T&T is
facing an 1980s-style gloom and doom situation, the country will
have to face the truth and answer to indisputable facts regarding
its economic reality, the report notes.
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V E N E Z U E L A
=================
CITGO PETROLEUM: Gets a U.S. Lifeline in Holding Off Creditors
--------------------------------------------------------------
Clifford Krauss at The New York Times Online reports that the Trump
administration moved to protect the Venezuelan-owned refining
company Citgo from creditors by closing a narrow loophole on
sanctions intended to topple the Venezuelan government.
Citgo faced dismemberment if the Venezuelan national oil company
did not make a $913 million payment on its 2020 bonds due on Oct.
27. But now all transactions on the bonds will be blocked for 90
days, according to The New York Times Online.
The administration move will shore up Juan Guaido, the Venezuelan
opposition leader, the report notes. Mr. Guaido declared himself
the acting president after elections last year that were widely
considered fraudulent but kept President Nicolas Maduro in power,
the report relays.
In recent months, Mr. Guaido managed to take control of the board
of Citgo, which is an affiliate of Petroleos de Venezuela, or
PDVSA, the report notes. But his position in Venezuela has
weakened after several failed attempts to prompt a military
uprising against Mr. Maduro, who has the support of Cuba and
Russia, the report relates.
There was little reaction in the bond market from the decision,
which bondholders considered a stopgap measure, the report notes.
"It looks like a minor win for the Guaido team," said Ajata
Mediratta, managing partner, president and portfolio manager at
Greylock Capital Management, a leader of a committee of Venezuelan
bondholders, the report relays.
A default could have led to an auction of Citgo's assets, and
ultimately end the Venezuelan ownership of the refiner, the report
discloses. As Venezuela's most valuable asset abroad, Citgo is
considered critical to a future recovery of the country's economy,
which is in a deep depression, the report says.
The Treasury Department sanctions on the Maduro government prohibit
American businesses from conducting financial transactions
involving Venezuelan assets, the report relays. But an exemption
was put in place for holders of PDVSA 2020 bonds to prevent
Venezuela from citing American sanctions as a reason not to pay
bondholders, the report notes.
Senators Marco Rubio of Florida and Ted Cruz of Texas, both
Republicans, as well as several other members of Congress, argued
that the exemption that was originally designed to hurt Mr. Maduro
would instead hurt Mr. Guaido and jeopardize the jobs of thousands
of Americans, the report says.
Crystallex International, a Canadian gold company whose share of a
mining project was nationalized by Venezuela's socialist
government, was poised to lay claim to pieces of Citgo, which
includes three refineries, pipeline networks and a chain of gas
stations valued at up to $10 billion, the report notes.
The Citgo decision came three days after the administration renewed
licenses to Chevron and several oil service companies, allowing
them to work in Venezuela for three more months as a measure to
protect American investments and help a future Venezuelan recovery,
the report relays.
Citgo has long been the American gateway for Venezuelan heavy crude
oil, as well as a producer of refined fuels sent back to Venezuela,
the report discloses. But since United States sanctions were put
in place to stop the Venezuelan oil trade, Citgo has been forced to
turn away from Venezuela and buy its crude from other Latin
American and African countries, the report says.
Citgo is a profitable company that has no problem meeting its own
debt payments, the report notes.
But Venezuela has $150 billion in debt and is in virtual default,
except for payments of oil to service its debts to China and
Russia, the report relays. Though Venezuela has the world's
largest reserves, its oil production is down to less than half a
million barrels a day, making it a marginal player in global energy
markets, the report adds.
About CITGO Petroleum
Citgo Petroleum Corporation is a United States-based refiner,
transporter and marketer of transportation fuels, lubricants,
petrochemicals and other industrial products. Based in Houston,
Texas, Citgo is majority-owned by PDVSA, a state-owned company of
the Venezuelan government (although due to U.S. sanctions, in 2019,
they no longer economically benefit from Citgo.)
As reported in the Troubled Company Reporter-Latin America on Sept.
5, 2019, S&P Global Ratings affirmed its 'B-' long-term issuer
credit ratings on CITGO Holding Inc. and core subsidiary CITGO
Petroleum Corp.
TCRLA reported on April 2, 2019, S&P Global Ratings said it
assigned its 'B+' issue-level rating and '1' recovery rating to
U.S.-based refinery and petroleum product marketer and distributor
CITGO Petroleum Corp.'s $1.2 billion senior secured term loan due
in 2024. At the same time, S&P Global Ratings placed the rating on
CreditWatch with developing implications. The company planned to
use the proceeds from the financing to provide liquidity for
ongoing business needs. In addition, the company planned to
terminate its revolving credit facility and AR securitization
facility.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week October 21 to October 25, 2019
-------------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD
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
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
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
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
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
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
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
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
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
Argentine Republic Gov 8.3 72.9 12/31/2033 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
Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD
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
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US 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
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 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
[*] LATAM: IDB Study Diagnoses Investment Promotion Agencies
------------------------------------------------------------
Resources, presence overseas and the level of targeting of
Investment Promotion Agencies (IPAs) contribute considerably to
attracting greater volumes of foreign direct investment and to
bringing multinational companies to their respective countries,
according to a study by the Inter-American Development Bank.
Foreign direct investment (FDI) is a key driver of economic
development. Despite drops in recent years, global inward FDI stock
rose from 6 percent in 1980 to nearly 40 percent in 2017. In this
context, the number of countries with IPAs quadrupled over the last
30 years in countries of Latin America and the Caribbean and the
Organization for Economic Co-operation and Development (OECD).
The report, How to Solve the Investment Promotion Puzzle , presents
the most complete and novel mapping of the institutional
organization and activities of IPAs from 51 countries of Latin
American and Caribbean and OECD members.
In general, agencies in Latin America and the Caribbean are smaller
and more independent than those in OECD countries, and focus and
evaluate their work less than those in developed countries. But
they perform similar activities to attract, facilitate, and retain
investments.
However, there are differences between countries. Costa Rica stands
out for its high levels of independence, specialization, and
evaluation of its impact. Chile is notable for its efforts in
evaluation, specialization, and inter-institutional cooperation.
And Uruguay is set apart by its level of cooperation with other
agencies.
"This study satisfies the demand from Latin American and Caribbean
governments to learn how other agencies operate. The needs,
capacities, and institutional characteristics of each countries are
unique, so rather than seeking a silver bullet, the report aims to
give officials the tools to solve their policy puzzle to attract
investment," said Christian Volpe Martincus, principal economist at
the Integration and Trade Sector of the IDB, and the report's
co-author.
Monika Sztajerowska, an economist at the Investment Division of the
OECD and co-author of the study, said that "this report provides
valuable inputs for international organizations as they support
countries to attract and retain investments, as well as for those
doing the necessary work of evaluating the impact of these
efforts."
More specifically, the report found that:
* Latin American and Caribbean agencies have a median annual
budget of US$5 million, compared to US$14 million for OECD
countries. The largest OECD agency has a budget equivalent to 4.6
percent of Nicaragua's GDP, but it accounts for less than 1 percent
of FDI inflows in that group of countries.
* The median IPA employs 100 people, 32 of whom work on
investment promotion. The median Latin American and Caribbean
agency assigns 20 people to this function, compared to the OECD
median of 40. Most employees (over 97 percent) hold undergraduate
or postgraduate degrees.
* Latin American and Caribbean agencies receive a lower share of
funding from the public sector than OECD agencies.
* OECD agencies have a much more extensive network of overseas
offices than Latin American and Caribbean IPAs.
* Apart from investment promotion, the most common mandates
include the promotion of exports, innovation, green investments,
regional development, and domestic investment.
* IPAs differ from each other in their approaches to promotion:
some prioritize and exclude sectors, countries, investors, and/or
projects. Ohers only focus their targeting efforts on one or two of
these aspects.
* Most of the agencies interact with many public, private, and
international organizations.
The data used in the report was collected through a joint IDB/OECD
survey. The main findings of this report can be visualized in these
interactive figures.
*********
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 * * *