/raid1/www/Hosts/bankrupt/TCRLA_Public/230315.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
Wednesday, March 15, 2023, Vol. 24, No. 54
Headlines
A R G E N T I N A
ARGENTINA: Swaps US$21.7 Billion of Debt, Easing Default Fear
[*] ARGENTINA: Some 260,000 Birds Killed by Avian Influenza
B R A Z I L
AMERICANAS SA: Crash Halts Several Brazil Corporate Bond Sales
BRAZIL: Plans to Double Lending Capacity of Its Development Bank
CAMIL ALIMENTOS: S&P Alters Outlook to Negative, Affirms 'BB-' ICR
C A Y M A N I S L A N D S
ROCKLEY PHOTONICS: Taps A&M as Restructuring Officers
C H I L E
LATAM AIRLINES: Posts $2.5B Profit After Emerging From Bankruptcy
P E R U
AUNA SAA: S&P Lowers Long-Term ICR to 'CCC+', On Watch Developing
V I R G I N I S L A N D S
GEOPHYSICAL SUBSTRATA: S&P Withdraws 'B-' ICR on US$266MM Notes
X X X X X X X X
[*] IMF Warns Food Crisis Persist
- - - - -
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A R G E N T I N A
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ARGENTINA: Swaps US$21.7 Billion of Debt, Easing Default Fear
-------------------------------------------------------------
Scott Squires & Patrick Gillespie at Bloomberg News report that
Argentina exchanged a total 4.34 trillion pesos (US$21.7 billion)
in a local debt swap, alleviating immediate concerns of a potential
local debt default even as the government stockpiled financing
problems for the next administration.
The government exchanged around 64 percent of its debt maturing
through June for new notes due in 2024 and 2025, according to an
Economy Ministry statement, according to Bloomberg News. Argentina
said it expected to swap 55 percent to 70 percent of its
approximately US$37 billion in local obligations coming due in the
second quarter, Bloomberg News notes.
Facing presidential elections in October, the rollover gives this
Peronist government more breathing room in the coming months on its
finances, Bloomberg News relays. But it balloons the debt burden
for the next administration because many of the new notes are tied
to the rate of inflation, currently barreling toward 100 percent,
Bloomberg News discloses. Higher inflation will make future
payments more expensive, Bloomberg News says.
The swap results also indicate low participation by private sector
bondholders as half the upcoming maturities were held by public
sector institutions, which were forced to rollover local debt notes
anyway, Bloomberg News relays. Economy Ministry officials declined
to provide exact figures of private sector participation, Bloomberg
News says.
"Figures are weaker than what we expected," said Juan Manuel Pazos,
chief economist at TPCG Valores in Buenos Aires, Bloomberg News
notes. "Non-regulated players basically held out. The government
still has a lot of work to do to clear its second-quarter
maturities," he added.
S&P Global Ratings slashed Argentina's local currency debt rating
to selective default because it considers its peso-debt exchange
"distressed based on the likelihood of conventional default,"
absent the participation of creditors, S&P analysts led by Lisa
Schineller wrote in a statement obtained by Bloomberg News.
It's the second time the credit assessor has cut Argentina's local
currency rating this year, Bloomberg News discloses. A similar
swap in January, when the nation extended maturities on 2.89
trillion pesos of notes, was also deemed a "selective default" by
S&P. Soon after that, S&P raised the local currency debt rating to
CCC-.
Fitch Ratings Inc declined to comment. A representative for
Moody's Investors Service didn't respond to a request for comment,
notes the report.
Refinancing Risk
Even after the exchange, Argentina has a US$174 billion mountain of
local debt to manage, Bloomberg News relays. That pile is growing
almost exponentially because so many of its obligations are linked
to inflation near triple-digit territory, Bloomberg News notes.
Economists from Argentina's main opposition coalition have
complained that the government's debt exchange plan only delays the
pain that's coming for whoever is president after the next
election, Bloomberg News says.
Securities that aren't exchanged will have to be refinanced when
the country auctions new bonds, which could be expensive and
difficult soon before October's presidential election in October,
Bloomberg News notes.
Failure to roll over its obligations risks a potential mass exodus
from Argentina's local debt in coming months, forcing the
government to print money to cover its obligations and pushing
inflation even higher, Bloomberg News relays. But President
Alberto Fernandez's administration says a successful exchange will
show that Argentina can keep its debt obligations under control,
Bloomberg News notes.
"We want to leave behind the idea that Argentina is always weeks
away from a default," Economy Minister Sergio Massa said. "This
will allow us to clear up any uncertainty for 2023."
Argentina has a long history of restructuring debt, and reneging on
promises to bondholders. It has defaulted on foreign bonds three
times since the turn of the century, most recently in a 2020
restructuring deal that gave investors about 55 cents on the
dollar, Bloomberg News relays. It isn't selling foreign debt now,
but the international securities it has sold previously now trade
for around 30 cents on the dollar, Bloomberg News notes.
"With expected participation around 65 percent to 70 percent, it
should be good enough for a swap, but not enough to eliminate
risks," said Alejo Costa, chief Argentina strategist at BTG Pactual
in Buenos Aires, Bloomberg News discloses. "As for a potential
restructuring in the future, anyone would try to avoid it at first,
but you never know."
Some local investors like Adcap Asset Management's Paula Gandara
are sceptical the exchange will fully assuage the market's
concerns, Bloomberg News says.
"But anything that aims to improve sentiment and the smooth
functioning of the market is welcome," Gandara said, Bloomberg News
adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Last March 25, 2022, Argentina finalized agreement with the IMF for
a new USD44 billion Extended Funding Facility (EFF) intended to
fund USD40 billion in looming repayments of the defunct Stand-By
Arrangement (SBA), with an extra USD4 billion in up-front net
financing. This has averted the risk of a default to the IMF
and is facilitating a parallel rescheduling of Paris Club debt.
S&P Global Ratings, on Jan. 20, 2023, affirmed its 'CCC+/C' foreign
currency and 'CCC-/C' local currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings remains negative.
S&P's 'CCC+' transfer and convertibility assessment is unchanged.
The negative outlook on the long-term ratings reflects risks
surrounding pronounced economic imbalances and policy uncertainties
before and after the 2023 national elections. Global capital
markets are closed to Argentina. Moreover, disagreement within the
government coalition and infighting among the opposition constrains
the sovereign's ability to implement timely changes in economic
policy.
Fitch Ratings, on the other hand, downgraded in October 2022
Argentina's Long-Term Foreign-Currency (FC) and Local-Currency (LC)
Issuer Default Ratings (IDRs) to 'CCC-' from 'CCC'. The downgrade
reflects deep macroeconomic imbalances and a highly constrained
external liquidity position, which Fitch expects to increasingly
undermine repayment capacity as foreign-currency debt service ramps
up in the coming years.
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS confirmed Argentina's Long-Term Foreign Currency Issuer Rating
at CCC and Long-Term Local Currency Issuer Rating at CCC (high) on
July 21, 2022.
[*] ARGENTINA: Some 260,000 Birds Killed by Avian Influenza
-----------------------------------------------------------
Buenos Aires Times reports that some 260,000 poultry have been
euthanised or killed in recent days in Argentina as part of an
outbreak of avian influenza, a source at the National Agri-Food
Health and Quality Service (Senasa) said.
The animals, mostly chickens, died as a result of the disease
itself or were slaughtered by their owners, the source told AFP,
according to Buenos Aires Times.
Of the total, 220,000 deaths occurred on a farm in the southern
province of Rio Negro, 10,000 on a farm in Neuquen and 30,000
between two production sites in the city of Mar del Plata, located
in Buenos Aires Province, the report notes.
According to the latest official report from Senasa health body of
the 200 notifications received for suspected cases, 40 have been
confirmed positive, the report relays.
Argentina's government commits one billion pesos to fight bird flu
spread, the report notes.
It is the first time since the emergence of avian influenza in the
world 20 years ago that the disease has reached Argentina and it is
presumed that it was through migratory birds, the source said, the
report discloses.
At a meeting in Buenos Aires, Southern Hemisphere nations agreed to
create a technical commission to consult on highly pathogenic avian
influenza (HPAI), the report says. The group will draw up a joint
response to the presence of the virus and aspects of the commercial
exchange of poultry products, Senasa said in a statement, the
report relays.
The meeting was attended by veterinary professionals from
Argentina, Brazil, Bolivia, Chile, Paraguay and Uruguay.
After the first case was detected in a production establishment on
March 1, Argentina suspended the export of poultry products because
it temporarily lost its disease-free status, the report notes.
Production for domestic consumption, however, remained normal
because the disease is not transmitted to humans through the
consumption of poultry meat and eggs, it said, the report says.
Sales of Argentine poultry products abroad represent some US$330
million a year, with China as the main destination for the export,
the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Last March 25, 2022, Argentina finalized agreement with the IMF for
a new USD44 billion Extended Funding Facility (EFF) intended to
fund USD40 billion in looming repayments of the defunct Stand-By
Arrangement (SBA), with an extra USD4 billion in up-front net
financing. This has averted the risk of a default to the IMF
and is facilitating a parallel rescheduling of Paris Club debt.
S&P Global Ratings, on Jan. 20, 2023, affirmed its 'CCC+/C' foreign
currency and 'CCC-/C' local currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings remains negative.
S&P's 'CCC+' transfer and convertibility assessment is unchanged.
The negative outlook on the long-term ratings reflects risks
surrounding pronounced economic imbalances and policy uncertainties
before and after the 2023 national elections. Global capital
markets are closed to Argentina. Moreover, disagreement within the
government coalition and infighting among the opposition constrains
the sovereign's ability to implement timely changes in economic
policy.
Fitch Ratings, on the other hand, downgraded in October 2022
Argentina's Long-Term Foreign-Currency (FC) and Local-Currency (LC)
Issuer Default Ratings (IDRs) to 'CCC-' from 'CCC'. The downgrade
reflects deep macroeconomic imbalances and a highly constrained
external liquidity position, which Fitch expects to increasingly
undermine repayment capacity as foreign-currency debt service ramps
up in the coming years.
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS confirmed Argentina's Long-Term Foreign Currency Issuer Rating
at CCC and Long-Term Local Currency Issuer Rating at CCC (high) on
July 21, 2022.
===========
B R A Z I L
===========
AMERICANAS SA: Crash Halts Several Brazil Corporate Bond Sales
--------------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that the
turmoil in Brazil's credit market has put several local bond sales
on hold as banks and investors become more cautious with corporate
borrowers in the aftermath of the sudden collapse of Americanas SA.
Power company Coelba, a unit of Neoenergia SA, has pulled a planned
debt sale after underwriters tapped the so-called "market flex"
clause that allows for changes in conditions, according to people
familiar with the matter, according to globalinsolvency.com.
The firm had announced an issuance of 1.5 billion reais ($290
million) in local notes on Jan. 9, just days before Americanas
roiled markets by unveiling a $3.9 billion accounting hole, the
report notes.
Sporting goods retailer Grupo SBF SA and water utility Cia de
Saneamento Basico do Estado de Sao Paulo also scrapped early plans
of issuing local notes, the people added, asking not to be
identified because discussions aren't public, the report relays.
Pet shop chain Petz had already postponed a bond sale, the report
relays.
A spokesperson for Neoenergia confirmed it postponed the issuance
and said it is assessing financing alternatives, the report
discloses.
Century-old retailer Americanas shocked investors in mid-January,
when it announced "inconsistencies" that artificially boosted
profits and reduced reported liabilities by half, the report
discloses. Within about a week, the firm filed for bankruptcy
protection, the report adds.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in
Rio de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25,
2023. White & Case LLP, led by John K. Cunningham, is the U.S.
counsel.
BRAZIL: Plans to Double Lending Capacity of Its Development Bank
----------------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that Brazil's
development bank plans to issue tax-free bonds to double credit
operations to nearly $40 billion without the Treasury's help,
according to its planning and project structuring director.
Nelson Barbosa, who served as finance minister under Dilma Rousseff
and has now joined the ranks of the bank known as BNDES, said the
bonds will be linked to development projects in areas where the
institution wants to invest, such as energy transition, innovation
and infrastructure, according to globalinsolvency.com.
They will also be available to individual investors, sweetened by
the exemption of income tax, the report notes.
"One of our goals is to restore BNDES's historical size, which
means doubling the size of the bank," Barbosa said in an interview
from his office in Brasilia. "Instead of the Treasury borrowing
and transferring funds to BNDES, the bank itself will raise the
money," the report relays.
BNDES had historically disbursed about 2% of Brazil's gross
domestic product in loans, or 200 billion reais ($38.5 billion) at
current value, according to Barbosa, the report notes.
In order to achieve that, it will be necessary to double the volume
of credit operations, currently slightly under $20 billion, by the
end of President Luiz Inacio Lula da Silva's term, the report
discloses.
This time, however, the government wants to avoid past mistakes,
including huge injections of public money that hurt public finances
and Brazil's fiscal credibility, the report says.
BNDES's loan portfolio had gradually expanded with Treasury funding
during Lula's first two terms in office, reaching $200 billion
under Rousseff, more than that of the World Bank at the time, the
report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022
Brazilian general election. He was sworn in on January 1, 2023, as
the 39th president of Brazil, succeeding Jair Bolsonaro.
As recently reported in the Troubled Company Reporter-Latin
America, Fitch Ratings, in December 2022, affirmed Brazil's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook. The ratings are constrained by high
government indebtedness, a rigid fiscal structure, weak economic
growth potential, and a record of governability challenges that
have hampered efforts to address these fiscal and economic issues
and clouded policy predictability. The Stable Outlook reflects
Fitch's expectation that growth will slow in the coming year and
that recent fiscal improvement will erode under a new government,
but within a margin consistent with the current rating, and from a
better starting point than previously expected. Uncertainty is
elevated regarding the plans of the incoming government and the
extent to which these could ease or aggravate fiscal and economic
challenges. However, Fitch does not expect policies that
jeopardize broad economic stability.
Standard & Poor's affirmed its 'BB-/B' long- and short-term
foreign and local currency sovereign credit ratings on Brazil, and
the outlook remains stable (June 2022). The stable outlook
reflects S&P's base-case assumption that Brazil will maintain its
fiscal anchors over the next two years despite an increasing
interest burden, preventing significant fiscal slippage and
limiting the rise in its already high debt burden.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS's credit rating for Brazil is BB (low) with stable outlook
(March 2018).
CAMIL ALIMENTOS: S&P Alters Outlook to Negative, Affirms 'BB-' ICR
------------------------------------------------------------------
On March 13, 2023, S&P Global Ratings revised the national scale
rating outlook on Brazil-based food company Camil Alimentos S.A. to
negative from stable. S&P also affirmed its 'BB-' global scale and
'brAAA' national scale ratings. S&P kept the stable global scale
rating outlook and its stand-alone credit profile (SACP) of 'bb'
unchanged. S&P also affirmed the issue-level rating at 'brAAA' and
the recovery rating of '3' remained unchanged.
The negative outlook on the national scale reflects that S&P could
revise downward the SACP and downgrade Camil on the same scale if
it's unable to recover profitability and refinance its short-term
debt in the next 3-6 months, squeezing liquidity, while debt to
EBITDA remains close to 4x.
Camil's liquidity cushion eroded following the acquisitions of
Ecuador-based Dajahu, Santa Amália (pasta), Uruguay-based Silcom,
coffee assets and brands, and Mabel and Toddy (cookies) in the past
20 months totaling more than R$800 million, a considerable increase
in working capital consumption in 2022 because of higher
inventories amid lower retail sales, and the ramp-up of acquired
businesses. Additionally, worsening operating conditions and
increased interest costs have damaged the company's operating cash
flow generation. S&P said, "We view management as committed in
adhering to its financial target of maintaining debt to EBITDA
below 3x, the partial pause of its expansion capital expenditures
(capex), and decreased share buybacks. But we still lack visibility
on margin improvements." The delay in refinancing Camil's more than
R$1 billion of debt maturing in the next 12 months, amid a small
cushion for seasonal peaks of working capital consumption, could
trigger another negative rating action.
Camil's adjusted leverage reached 4.0x, while its EBITDA margins
dropped to 7.7% in the 12 months ended in November 2022 from 2.6x
and 8.6% in November 2021. For the first time in the past several
years, EBITDA margin in the third quarter bottomed out at 4.3%. S&P
said, "We expect production adjustments, along with softening
inflation in 2023, which should help bolster consumer confidence,
enabling margins to rebound to 8.0%-8.5% and leverage to 3.0x. The
latter will probably weaken when we take out stronger quarters of
2022 from our calculation, with positive FOCF upon smaller working
capital needs and holding investments, or shareholder
remuneration." The risk for this scenario stem from uncertainties
about Brazil's macroeconomic conditions, reflected in the 0.2%
contraction of the fourth-quarter GDP.
Camil will grapple with execution risks arising from integrating
acquired businesses and turning around some of them, while it
focuses on recovering profitability across its existing businesses.
Also, its operations in Chile and Peru are suffering from political
instability that damaged consumption in 2022. To align with our
base-case assumptions, the company should improve its profitability
across its main business lines--mainly rice, sugar and beans--but
also in its cookies (previously operating with negative EBITDA
margins), pasta, coffee, and international operations.
ESG credit indicators: E-3, S-2, G-2
Environmental factors are a moderately negative consideration in
S&P's credit rating analysis of Camil, while social and governance
factors have no material influence. Camil procures all its raw
materials (rice, beans, sugar, wheat, coffee and fish) from third
parties, so it's highly exposed to the agribusiness supply chain,
where environmental risk is higher than for most other segments.
This is because the impact of climate events can make crop yields
volatile and influence availability and costs of Camil's raw
materials. These factors can generate volatility in margins and
cash flows, which is offset by the company's ability to timely
adjust prices and its geographic diversification across Brazil,
Chile, Uruguay, and Ecuador and across various sub-segments.
===========================
C A Y M A N I S L A N D S
===========================
ROCKLEY PHOTONICS: Taps A&M as Restructuring Officers
-----------------------------------------------------
Rockley Photonics Holdings Limited appointed Alexander Lawson and
Christopher Kennedy of Alvarez & Marsal Cayman Islands Limited as
restrucuring officers.
The restructuring officer can be reached at:
Alexander Lawson
Christopher Kennedy
Alvarez & Marsal Cayman Islands Limited
Flagship Building, 2nd Floor
142 Seafarers Way, George Town, Grand Cayman
KY1-1104, Cayman Islands
=========
C H I L E
=========
LATAM AIRLINES: Posts $2.5B Profit After Emerging From Bankruptcy
-----------------------------------------------------------------
Carolina Pulice at Reuters reports that LATAM Airlines (LTM.SN)
reported a fourth-quarter net profit of $2.538 billion, the company
said and said the results reflected all financial renegotiations
stemming from its bankruptcy proceedings.
The quarterly profit of South America's leading airline compares to
a loss of $2.755 billion during the same three-month period a year
earlier, according to Reuters.
However, the company will propose not to pay out dividends and
instead use its 2022 profits to offset accumulated losses, it said
in a securities filing later, the report notes.
"Profits for the year ended December 31, 2022 must be used
primarily to absorb such losses," it said, the report relays.
The airline, created by the 2012 merger of Chile's LAN with
Brazilian rival TAM, operates units in Chile, Brazil, Colombia and
Peru, the report discloses.
Revenue for Santiago-based LATAM during the quarter rose about 38%
to $2.75 billion from the year-ago period, the report notes.
Last November, LATAM announced the completion of a years-long
restructuring process after it declared bankruptcy in 2020, the
report relays.
Chief Financial Officer Ramiro Alfonsin told reporters at a news
conference that "all renegotiations since we left Chapter 11"
bankruptcy protection are now reflected in the quarter's income
statement as profits, the report discloses.
The company's operating result - which excludes the restructuring
process - reached $139 million in the quarter, according to the
airline, the report relays.
Meanwhile, LATAM'S total costs for the quarter stood at $2.6
billion, almost in line with pre-pandemic levels, despite a nearly
two-thirds increase in fuel costs between 2019 and 2022, the report
adds.
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is
the committee's Brazilian counsel.
The ad hoc group of LATAM bondholders tapped White & Case, LLP as
counsel.
Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew
Glenn and partner Shai Schmidt, has been retained as counsel to the
ad hoc committee of shareholders.
=======
P E R U
=======
AUNA SAA: S&P Lowers Long-Term ICR to 'CCC+', On Watch Developing
-----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit and
issue-level ratings on Peruvian private health care service
provider Auna S.A.A. to 'CCC+' from 'B', and placed them on
CreditWatch with developing implications.
The CreditWatch developing listing reflects S&P's view that it
could raise the ratings if the company successfully refinances both
bridge loan maturities, alleviating pressure on its liquidity
position. The CreditWatch listing also reflects a potential further
downgrade if Auna fails to do so over the next few weeks.
In 2022, Auna acquired IMAT S.A.S. - Oncomedica S.A. (not rated)
and Organizacion Clinica America (OCA; not rated). These
acquisitions were partly funded with bridge loans that mature on
April 20, 2023 ($56 million), and early in October 2023 ($350
million equivalent), respectively. Although Auna has a sound
relationship with banks and is currently working on various
refinancing alternatives, it still hasn't refinanced these bridge
loans. The process of doing so is taking longer than S&P had
originally expected, and in its opinion, any setback in refinancing
would undermine the company's ability to meet its short-term
financial obligations. S&P believes that Auna's tighter liquidity
could pose additional downside risk over the next few weeks if it
doesn't refinance both bridge loans and extend their maturities.
S&P said, "Although Auna's year-end 2022 financials haven't yet
been released, our base-case scenario assumes that pro forma
adjusted gross debt to EBITDA will be near 5x, versus well above 5x
at the end of 2021. Nonetheless, we expect this metric to drop
below 4.5x (S&P Global Ratings' adjusted gross leverage) by the end
of 2023, considering the successful integration of acquired
companies and stronger operating results. Our base-case scenario
forecasts Auna's pro forma revenue and EBITDA of nearly PEN3.8
billion and PEN850 million, respectively, in 2023. While Auna's
performance remains in line with our expectations, we consider that
it doesn't offset higher refinancing risk that the company is
facing."
As the bridge loan maturities approach, S&P will continue to
monitor Auna's ability to refinance them, and take a rating action
accordingly over the next few weeks.
ESG credit indicators: E-2, S-2, G-3
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of Auna, like most
rated entities owned by private-equity sponsors where corporate
decision-making prioritizes the interests of the controlling
owners. Auna is 72% owned by Grupo Enfoca, which has maintained
control since 2008. We note that Auna's board of directors has
fewer independent members than those of its peers. Only one member
is fully independent, while five are part of Grupo Enfoca, and one
has a minority stake in the company."
===========================
V I R G I N I S L A N D S
===========================
GEOPHYSICAL SUBSTRATA: S&P Withdraws 'B-' ICR on US$266MM Notes
---------------------------------------------------------------
S&P Global Ratings withdrew its 'B-' issue rating on Geophysical
Substrata Ltd.'s US$266 million senior unsecured notes due in
December 2023. This follows Geophysical's completion of an exchange
offer for US$266 million 8.25% senior unsecured notes due in
December 2028.
===============
X X X X X X X X
===============
[*] IMF Warns Food Crisis Persist
---------------------------------
Jamaica Observer reports that the International Monetary Fund (IMF)
has warned that the global food crisis created by the Ukraine war
may persist with prices remaining elevated one year after the
conflict began.
"With two of the world's largest exporters of wheat and other
crucial crops entering a second year of war, many vulnerable
countries still face heightened food insecurity. Fragile and
conflict-affected states, home to one billion people, are at
particular risk," Jeff Kearns, senior communications officer in the
IMF policy communications division, said in a blog on the fund's
website, according to Jamaica Observer.
The warning comes one year after Russia's invasion of Ukraine
upended agricultural commodity markets, the report notes. Though
food prices have retreated from their record highs in early 2022,
they still remain elevated, Kearns pointed out, the report relays.
Eleven-straight monthly declines have pushed food prices down 19
per cent from a peak last March, the Food and Agriculture
Organization (FAO) of the United Nations said, the report relays.
Inflation-adjusted prices in February remained above the average
level for recent years, though they are now back in line with
levels seen before the war in Ukraine, the report discloses. The
composition of the FAO Food Price Index shows that vegetable oils
drove the decline in prices, along with dairy and cereals, while
sugar and meat are little changed from early last year, the report
says.
The IMF and other global institutions said in a recent joint
statement on food security that governments and donors must step up
support for the most vulnerable, facilitate trade and market
functioning, and abandon harmful subsidies, the report notes.
"More concerted action across these three key areas is needed to
prevent a prolonged crisis," the heads of the FAO, IMF, World Bank,
World Food Programme and World Trade Organization said in a
February 8 statement, their third since July on the global food and
nutrition security crisis, the report relays.
The IMF, which created a new Food Shock Window, has so far used its
resources to support Guinea, Haiti, Malawi, and Ukraine during the
crisis, the report notes. In addition, nine countries facing acute
food insecurity benefited from IMF financial support through new or
existing programmes, with a focus on strengthening social safety
nets and policies to help address the impact of the food crisis,
the report adds.
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