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/raid1/www/Hosts/bankrupt/TCRLA_Public/230410.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, April 10, 2023, Vol. 24, No. 72 Headlines A R G E N T I N A ARGENTINA: DBRS Confirms CCC LT FC Issuer Rating ARGENTINA: Historic Drought Adds to Economic Woes YPF SA: Reaches $300M Deal Related in U.S. Environmental Case B A R B A D O S BARBADOS: CIBC Makes Significant Purchase of Gov't Bonds B R A Z I L INTERCEMENT BRASIL: S&P Cuts Global Scale ICR to CCC+, Outlook Neg. NATURA & CO: Fitch Affirms LongTerm IDRs at 'BB', Outlook Positive NATURA & CO: S&P Affirms 'BB' Global Scale ICR, Outlook Stable S T . L U C I A ST. LUCIA: Over 500 St. Lucian MSMEs to Benefit From New Funding T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Electricity Increase Could Affect GDP, TTMA Says X X X X X X X X LATAM: Left-wing Governments Agree on Joint Inflation Plan [*] BOND PRICING: For the Week April 3 to April 7, 2023 - - - - - ================= A R G E N T I N A ================= ARGENTINA: DBRS Confirms CCC LT FC Issuer Rating ------------------------------------------------ DBRS, Inc. confirmed the Republic of Argentina's Long-Term Foreign Currency - Issuer Rating at CCC and downgraded Argentina's Long-Term Local Currency – Issuer Rating to CCC from CCC (high). At the same time, DBRS Morningstar confirmed the Republic of Argentina's Short-Term Foreign and Local Currency - Issuer Ratings at R-5. The trend on all ratings is Stable. KEY RATING CONSIDERATIONS The confirmation of the Long-Term Foreign Currency – Issuer Rating at CCC reflects DBRS Morningstar's view that Argentina's acute macroeconomic imbalances leave the economy highly vulnerable to shocks. Annual inflation is 99%, reserves are at a very low level, and the unofficial peso-dollar exchange rate is about 90% above the official rate, highlighting the market's concern with the outlook. Furthermore, Argentina has failed to regain access to international markets despite entering into an IMF program in March 2022. We expect Argentina will continue to implement the basic pillars of the IMF program in 2023, even as several key targets, including inflation and reserve accumulation, will likely be missed. The IMF projects 2.0% growth in 2023 but limited momentum at the start of the year, combined with the impact of a severe drought, tight import restrictions, and weaker external demand, suggest clear downside risks to the forecast. General elections are set to take place in October, which raise near-term policy risks. In our view, the challenging economic and political outlook presents material risks to macroeconomic stability and the government's capacity to repay its debt to private creditors. The downgrade of Argentina's Long-Term Local Currency – Issuer Rating to CCC reflects the deterioration in local government funding markets. The government has shortened maturities and increasingly relied on inflation-linked and dollar-linked issuance in order to roll over maturing local-currency debt and finance the deficit. The concentration of short-term debt coming due with the elections approaching in October raises rollover risk. The downgrade reflects a weakening in our assessment of the "Debt & Liquidity" building block. The Stable trends reflect our view that risks to the CCC ratings are broadly balanced. A credible macroeconomic policy adjustment by the next administration could potentially set the stage for stronger and more durable economic growth. Structural reforms to take advantage of the country's abundant natural resources could further strengthen the country's growth outlook. However, Argentina's large macroeconomic imbalances pose significant political and policy-related challenges. It is unclear whether the next administration will be willing and able to sustain public support for tight macroeconomic policies, especially as the country faces deep social divisions and a polarized political environment. RATING DRIVERS The ratings could be upgraded if the government implements a credible macroeconomic program that durably lowers inflation, puts fiscal accounts on a sustainable path, and strengthens the government's access to market financing. Reforms that increase investment and productivity growth would also be credit positive. The ratings could be downgraded if the IMF program is suspended, or if government debt dynamics deteriorate such that the odds of a restructuring of bonds held by the private sector materially increase. RATING RATIONALE Tighter Fiscal Policy Is Supporting The Macroeconomic Adjustment But Policy Implementation Risks Could Intensify As Elections Near One of the most pressing policy issues facing Argentina is the fiscal deficit. The government narrowed the primary deficit from 3.0% of GDP in 2021 to an estimated 2.4% in 2022, thereby slightly outperforming the program's primary deficit target of 2.5%. The 2023 budget aims to reduce the deficit to 1.9% of GDP, in line with the IMF program target. Although the scale of the adjustment appears modest, meeting the target could still be difficult. The fiscal balance in 2022 included 0.3% of GDP in non-tax revenue generated from the issuance of inflation-linked debt which will not be included in 2023. In addition, the adjustment in 2023 will largely depend on cutting politically sensitive spending items, such as energy subsidies and social transfers, during an election year. We expect the government to run tight fiscal policy in the first half of 2023 but it is not clear, in our view, if the government will maintain such a restrictive stance as the October elections approach. The next administration will face a challenging fiscal outlook. The scale of the fiscal adjustment needed to put public finances on a sustainable path is large and implementation risks are high, in our view. If the government meets its primary deficit target in 2023, the next administration will still need to tighten fiscal accounts by 3-4 percentage points of GDP. Such an adjustment is achievable, particularly if the next government wins with a strong mandate to address the country's macroeconomic imbalances. The test will be to sustain political support for such a sizable and potentially prolonged adjustment. The challenging fiscal outlook combined with historical weaknesses in fiscal policy formulation weigh negatively on the Building Block Assessment for "Fiscal Management & Policy". Stress In The Local Bond Market Could Lead To Greater Monetary Financing And Potentially A Restructuring Facing fragile market conditions, the government has shortened maturities and increasingly relied on inflation-linked and dollar-linked issuance in order to roll over maturing local-currency debt and finance the deficit. This has led to a concentration of local-currency bonds coming due in the second and third quarter. The high share of government debt held by public sector entities and the presence of capital controls mitigate rollover risk to some extent, but the government's ability to mobilize peso financing from private creditors is uncertain, especially as the election approaches and there continue to be concerns about policy credibility. Turbulence in the local market could lead to the government to rely on central bank financing, which would add to inflationary and exchange rate pressures. It could also potentially lead the administration to forcibly amend the terms on local government bonds. On the external front, Argentina has reduced its external debt servicing needs through 2024. In September 2020, Argentina reached an agreement with private creditors to restructure $82 billion in debt, which provided substantial FX liquidity relief through 2024. Argentina also reached an agreement on an Extended Fund Facility with the IMF in March 2022 to refinance repayments to the IMF that were largely coming due in 2022 and 2023. Despite these developments, Argentina has failed to regain market access. The next administration may seek another IMF program in early 2024, which could provide some additional net financial support in exchange for further policy conditionality. In our view, risks to debt sustainability are elevated. The IMF program's baseline scenario projects government debt-to-GDP to decline from 80% of GDP in 2022 to 71% in 2023 and then stabilize around that level through 2026. However, Argentina is vulnerable to shocks, including exposure to terms-of-trade and weather-related shocks, and faces material policy implementation risks. This, combined with the high share of debt denominated in foreign currency (66%), pose significant risks to public debt dynamics. Moreover, Argentina's capacity to repay will depend on strengthening domestic market conditions and eventually regaining access to international markets. The considerable risks to debt sustainability combined with Argentina's weak liquidity position lead DBRS Morningstar to make a negative adjustment in the Building Block Assessment for "Debt & Liquidity". Inflation Is Elevated And Unanchored, Complicating Any Adjustment By The Next Administration Inflationary pressures moderated slightly in the second half of 2022 but intensified in January 2023. Monthly headline inflation declined from its peak of 7.4% (m/m) in July 2022 to 5.1% in December 2022. The slowdown appeared broad-based but also driven partly by voluntary price agreements. However, headline inflation increased 6.0% (m/m) in January 2023, which raises some concerns about whether macroeconomic policies are sufficiently tight to moderate price pressures. On a year-over-year basis, headline inflation hit 99% in January. The IMF's updated projections from the Third Review assume that annual inflation will decline to 55-65% by the end of 2023. In DBRS Morningstar's view, the target looks very ambitious. While weak domestic demand should support disinflation, upward price pressures will remain strong due to further adjustments to utility rates, faster currency depreciation in order to maintain competitiveness, and growing wage pressures. According to the February Survey of Market Expectations by the central bank, the median forecast for CPI inflation was 98% for December 2023 and 80% for December 2024. The challenging outlook for inflation leads DBRS Morningstar to make a negative adjustment to the Building Block Assessment for "Monetary Policy and Financial Stability". The central bank has lifted real policy rates into positive territory in order to strengthen demand for peso assets and reduce inflation. The nominal effective policy rate was raised from 45% (on the 28-day LELIQs) in December 2021 to 107% in September 2022. That puts the nominal monthly policy rate at 6.3%, which is above recent reports of monthly inflation as well as expected inflation over the next 12 months. Durably reducing inflation will likely require a sustained commitment to tight macroeconomic policies and the phasing out of monetary financing. The government's use of short-term measures to combat inflation, such as price controls and import restrictions, could end up exacerbating underlying economic imbalances, leading to a further deterioration in the investment climate and an acceleration of inflation down the road. Argentina's financial system remains small in size. State-owned Banco Nacion is the dominant player in the banking sector. While profitability has suffered due to low net interest margins and limited demand for credit, the banking system has high levels of liquidity and is well-capitalized. Non-performing loans remain at low levels and net FX exposure is modest. However, exposure to the public sector has increased to over 50% of local currency assets. Low Reserves And A Sizable Exchange Rate Gap Signal Currency Vulnerability Despite foreign exchange controls and balanced current account dynamics, reserve accumulation efforts have been hobbled policy credibility concerns. The current account balance shifted from a surplus of 1.4% of GDP in 2021 to a deficit estimated at 0.3% in 2022. Although higher global grain prices boosted export receipts, the trade balance deteriorated due to higher natural gas and fertilizer import prices, as well as strong underlying demand, which drove capital and consumer import volumes higher. The current account is projected to shift to a small surplus in 2023 on the back of weaker domestic demand, although agricultural export losses due to the drought raise downside risks to the forecast. At the same time, Argentina has been unable to attract net capital inflows. While foreign direct investment into Argentina picked up in 2022, capital inflows have been largely offset by private sector debt repayments and Argentine savers' accumulation of hard currency assets. From Q3 2019, when capital controls where imposed, to Q3 2022, currency and deposits held abroad by Argentine residents increased by $29 billion, thereby lifting the stock to $247 billion (41% of GDP). As a result, Argentina maintains a sizable net international asset position, amounting to $113 billion in Q3 2022 (19% of GDP). Low reserves and a widening exchange rate gap could put pressure on the currency. Gross reserves amounted to $40 billion in mid-February, but net foreign exchange reserves (calculated as gross reserves minus dollar deposits from financial institutions, central bank currency swaps and credit lines, and gold) amounted to about $3 billion. Complicating reserve accumulation is the spread between the official ARS/USD rate and the unofficial rate, which is close to 90%. Concerned about reserve levels, the government has implemented on a series of foreign exchange controls. We expect the Fernandez administration to aim to avoid a sharp depreciation of the currency prior to the election. We anticipate that the next administration will be compelled to accelerate the crawl in order to weaken the real exchange rate and reduce the FX spread. Overall, we continue to see considerable external risks that, despite Argentina's balanced current account dynamics and positive NIIP, warrant a sizable negative adjustment to the Balance of Payments building block. Argentina Rapidly Recovered From The Pandemic But Growth Prospects Are Weak Without Policy Credibility and Structural Reforms The economy recovered rapidly from the shock of the pandemic. Output in the third quarter of 2022 was 7.4% above the fourth quarter of 2019. However, the Argentine economy was already suffering from a two-year recession prior to the pandemic, and real GDP is still slightly below the fourth quarter of 2017 when GDP peaked. Notwithstanding the recovery in 2021 and 2022, we expect the economy to slow markedly in 2023 due to deteriorating external conditions, tighter macroeconomic policies, and the ongoing drought. The IMF projects GDP growth of 2.0% in 2023 and 2024; however, we view risks to the forecast as clearly skewed to the downside. Poor macroeconomic management, an unpredictable and onerous regulatory environment, and limited global integration have contributed to Argentina's poor growth performance. In the eight years prior to the pandemic, GDP growth contracted on average by 0.3% per year. During this time, investment averaged 16.8% of GDP, one of the lowest rates among emerging markets, and the number of private sector jobs created was close to zero. The IMF program primarily aims to address macroeconomic imbalances, and leaves most of the necessary structural adjustments to the next government. Absent a plan that restores policy credibility and enacts structural reforms, we expect medium-term growth prospects to remain weak, with Argentine policymakers having limited room to stimulate growth without exacerbating macroeconomic imbalances. The Government Will Aim To Keep The Economy Treading Water Until The General Election in October The field of presidential candidates has not yet been defined. Primaries for the two main coalitions (Frente de Todos and Juntos por el Cambio) as well as for a libertarian coalition (La Libertad Avanza) are scheduled for August. The governing Peronist coalition (Frente de Todos) faces an uphill battle. Perceptions of economic mismanagement have driven the government's popularity close to its lowest level since 2010. In our view, the government's near-term objective will be to get to the October elections without generating hyperinflation, devaluation, or a default, but also while also avoiding taking any corrective policy actions that have might incur high political costs. As a result, we expect the next administration will take office under difficult economic and financial conditions. DBRS Morningstar views the broader issue of institutional quality in Argentina as a credit challenge. In many respects, Argentina's democracy is quite strong: competitive and fair elections are regularly held, basic civil and political freedoms are protected, and an active civil society is engaged in the democratic process. According to the Worldwide Governance Indicators, Argentina scores relatively well compared to regional peers in terms of Voice & Accountability. However, a key governance challenge is the Rule of Law. Public confidence in the integrity of the judiciary and other branches of government is generally low. In addition, we view policy predictability as weak, with frequent and significant changes to policy settings and frameworks over the electoral cycle. The heightened policy-related risks weigh on the Building Block Assessment "Political Environment". ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS Social (S) Factors The Human Capital and Human Rights factor affects the ratings. Similar to other emerging market economies and many of its regional peers, Argentina's per capita GDP is relatively low, at US$13.6k (US$26.1k on a PPP basis). This reflects the low level of labor productivity. This factor has been taken into account in the Economic Structure and Performance building block. In addition, labor and social conflicts have at times been a source of economic volatility in Argentina. Governance (G) Factors Two governance factors affect the ratings: (1) Bribery, Corruption and Political Risks, and (2) Institutional Strength, Governance, and Transparency. According to Worldwide Governance Indicators, Argentina ranks in the 35th percentile for Rule of Law and 38th percentile for Control of Corruption. Argentina ranks in the 38th percentile for Government Effectiveness and 29th percentile for Regulatory Quality. Notes: All figures are in U.S. dollars unless otherwise noted. Fiscal data refers to the federal government. Other public finance statistics are reported on a general government basis. ARGENTINA: Historic Drought Adds to Economic Woes ------------------------------------------------- Magali Cervantes & Sonia Avalos at AFP report that short of hard currency, Argentina's already fragile economy is now taking a beating from nature. The worst drought in almost 100 years has decimated critical soy, wheat and corn production, its main source of wealth from the fertile pampas, according to AFP. Soy and wheat crops were halved this year, while maize yield was cut by more than a third, according to official projections, slashing Argentina's exports in a sector crucial for the public purse, the report notes. In Lima, 100 kilometres northwest of the capital, much of the soy will not be harvested because the low yield and quality of the grain make the work economically unviable, explains agronomist and agricultural engineer Jaime Mestre, the report relays. The drought, now running for three straight years, has reduced the reserves of humidity in the soil to five percent, the report discloses. Most of the maize plants are dry in Lima. When separating the corn from the cob, the grain is frayed and shrivelled, the report says. With rainfall 50 percent lower than usual, whatever is there to be harvested will likely be of lower quality, the report notes. "They could not develop due to lack of water and the high temperatures. They do not justify the cost of a combine harvester," indicates Mestre, measuring yield at "15 percent of the historic average," the report relays. "We are 40 days away from sowing winter wheat and we have no humidity in the soil," a critical factor representing up to 60 percent of potential yield, he explains, the report notes. Bad Timing Adding to three-digit inflation and a burdensome debt of US$44 billion with the International Monetary Fund (IMF), the drought could not have come at a worse time for Latin America's third-biggest economy, the report says. A few days ago in Washington, during a visit to see US President Joe Biden, President Alberto Fernandez highlighted the worst drought suffered by Argentina since 1929 and the IMF conceded more flexible targets for the accumulation of international reserves, which have lost some US$5.5 billion so far this year, the report notes. The United States is the nation with the most voting rights at the IMF, which subsequently announced a US$5.4-billion disbursement to Argentina as part of its loan program, the report relays. The IMF insisted, however, that Argentina needed "a stronger policy package . . . to safeguard stability, address setbacks and secure program objectives" against the backdrop of "an increasingly severe drought, rising inflation [and] weak reserve coverage," the report discloses. To stimulate farming exports and boost monetary reserves, the government has announced a new temporary plan fixing a new exchange rate of 300 pesos per dollar for some agricultural products, an intermediate figure between the official exchange rate of some 215 pesos and 400 pesos or more on the parallel markets, the report says. Argentina is one of the main exporters of soy oil and flour, a sector netting the taxman some US$10 billion annually, the report notes. Exports of grain and derivatives reached US$43.363 billion in the 2021-2022 harvest but the impact of the drought has wrecked the projections for this harvest, of which half the soy and 35 percent of the maize has been lost, the report says. Rosario Stock Exchange economist Tomas Rodriguez Zurro estimates the overall loss to the economy of Argentina's poor grain-growing season will be about US$20 billion - almost three percentage points of GDP, the report discloses. "Less production rounds out in less transport, less oil consumption and an increase in forage costs to feed cattle, as well as less income for rural contractors," said Rodriguez Zurro. Soy, Maize and Wheat According to the Rosario Stock Exchange, Argentina's soy industry - the largest agricultural sector - will have its lowest production figures in 23 years, earning US$7.3 billion less than last year, the report relays. "The true situation will be seen when the combine harvesters enter the fields," says Mestre, who considers that the analysts underestimate the gravity of the panorama left by the drought, the report notes. In the core zone of the fertile pampas "rainfall has been half of the normal" level, reports Rodriguez Zurro. The 25 million tons of soy which this harvest is expected to produce would mark the lowest since 1999-2000, the report recalls. "It's practically half of what was expected when sowing started and 40 percent less than the last harvest," indicates the economist, the report notes. The situation will oblige increased imports for the production of soy flour and oil, the report says. "The temporary imports to supply the soy oil industry in this harvest will be a new record," added Rodriguez Zurro, the report notes. The net exports of the soy complex - exports minus imports - would thus total US$11.5 billion this year in comparison with the US$20.8 billion of the previous harvest, he explains. Meanwhile, wheat production has been halved. "The harvest will be 11.5 million tons when it had been 23 million last year," forecasts Rodriguez Zurro. Maize has dropped off 35 percent. "A production of 35 million tons has been estimated versus the 54 million projected when sowing began in September," the economist reports, the report discloses. To the loss of tonnage should be added the lower quality of the grain, which will distance Argentina from export standards," warned Mestre, the report says. "This is not a problem that will be solved if it starts to rain," the experts explains, mentioning the lack of credit and an inflation "which changes costs every day," the report relays. The country's more rural interior will feel the pain the most, he adds. Farming "will need at least three years to even out the losses. Inland towns are where the lack of economic movement is most felt," he warned, 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 March 29, 2023, lowered its long-term foreign currency sovereign credit rating on Argentina to 'CCC-' from 'CCC+'. S&P also affirmed its 'C' short-term foreign currency sovereign credit rating and its 'CCC-/C' local currency ratings on Argentina. The outlook on the long-term ratings is negative. S&P also lowered the transfer and convertibility assessment to 'CCC-' from 'CCC+'. The negative outlook on the long-term ratings reflects risks surrounding pronounced economic imbalances and policy uncertainties before and after the 2023 national elections. Divisions across the political spectrum constrain the sovereign's ability to implement timely changes in economic policy. Global capital markets are closed to Argentina. In the local market, swaps are being deployed to manage large maturities before placing debt through traditional auctions. The central bank continues to play a key role as a backstop for local debt management in the secondary market. The ongoing severe drought has exacerbated pressures in the already disrupted foreign exchange (FX) market. Fitch Ratings, on the other hand, downgraded Argentina's Long-Term Foreign Currency Issuer Default Rating (IDR) to 'C' from 'CCC-', and has affirmed the Long-Term Local Currency IDR at 'CCC-' on March 24, 2023. Fitch's downgrade of Argentina's rating to 'C' from 'CCC-' follows an executive decree that forces domestic public-sector entities into operations involving their holdings of sovereign debt securities, which would involve unilateral exchanges and forced currency conversion that constitute default events under Fitch's criteria. The 'C' rating reflects Fitch's view that default is thus imminent. Fitch said the rating would be downgraded to 'Restricted Default' (RD) upon execution of the exchanges. 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. YPF SA: Reaches $300M Deal Related in U.S. Environmental Case ------------------------------------------------------------- Maximilian Heath at Reuters reports that Argentina's state oil company YPF has agreed to pay nearly $300 million to the creditors of one of its now-bankrupt subsidiaries after they sued the company in relation to a historical U.S. environmental case, it said. The case against Maxus Energy Corporation, which YPF (YPFD.BA) acquired in the 1990s, dates back to 2005, when the state of New Jersey successfully sued the subsidiary for the contamination of the Passaic River decades earlier, according to Reuters. In 2016, Maxus Energy Corporation filed for chapter 11 protection in the U.S. Bankruptcy Court in Delaware, the report recalls. YPF said its former subsidiary had met its obligations until then, without specifying if these were financial or environmental, the report notes. In 2018, the liquidation trust that was created to help settle Maxus Energy Corporation's debts sued YPF for $14 billion over the New Jersey case, alongside Spanish oil company Repsol (REP.MC), which it included as YPF's majority owner between 1999 and 2012, the report relays. Under the conciliation agreement reached, the Maxus Liquidation Trust agreed to drop the claims it had filed against both YPF and co-defendant Spanish oil company Repsol, the statement issued by YPF said, the report notes. In turn, YPF and Repsol agreed to pay the trust $287.5 million each, without admitting any responsibility, the report says. Madrid-based Repsol did not immediately respond to a request for further comment on a public holiday in Spain, the report adds. About YPF SA As reported in the Troubled Company Reporter-Latin America on April 3, 2023, S&P Global Ratings lowered its local and foreign currency ratings on YPF SA to 'CCC-' from 'CCC+'. The outlook on these ratings is now negative. The downgrade follows a similar action on S&P's long-term foreign currency ratings and T&C on Argentina, following announced plans that, if implemented, would oblige some nonfinancial public-sector entities to exchange or sell their holdings of global- and local-law dollar-denominated bonds issued during the 2020 restructuring for other locally issued peso debt, likely dollar- and/or inflation-linked bonds. In S&P's view, the lack of clarity and the apparent motivation for the potential transaction underscore heightened credit vulnerabilities, in particular given the increasing pressures from the severe drought that Argentina is facing, which further constrains the already disrupted FX market. This expected greater pressure on the FX markets also explains S&P's downward revision of the T&C assessment to 'CCC-'. =============== B A R B A D O S =============== BARBADOS: CIBC Makes Significant Purchase of Gov't Bonds -------------------------------------------------------- RJR News reports that CIBC FirstCaribbean is acquiring BDS$100 million in the Barbados Optional Savings Scheme Plus (BOSS) investment instrument that officials say represents the return of confidence in government debt. Governor of the Central Bank of Barbados, Dr. Kevin Greenidge says with the CIBC First Caribbean purchase, there is an estimated $11 million of the bonds remaining, according to RJR News. He says the Central Bank is expected to issue a new round of BOSS Plus bonds shortly for the 2023/2024 financial year, the report notes. The move by the bank comes nearly five years after commercial banks suffered major losses as a result of government's debt restructuring program, the report relays. The BOSS investment instrument became available in August last year and the move by CIBC FirstCaribbean is its first investment in government bonds since the debt restructuring began in 2018, the report adds. =========== B R A Z I L =========== INTERCEMENT BRASIL: S&P Cuts Global Scale ICR to CCC+, Outlook Neg. ------------------------------------------------------------------- On April 5, 2023, S&P Global Ratings lowered its global scale ratings on Brazil-based cement company InterCement Brasil S.A. to 'CCC+' from 'B'. S&P also lowered its national scale issuer credit rating to 'brBB-' from 'brA'. S&P's recovery rating on the 2024 senior unsecured notes remains unchanged at '3'. The negative outlook indicates that S&P would downgrade the group in the next six months if it's unable to refinance the 2024 senior notes. InterCement and its parent, InterCement Participacoes S.A., have substantial debt maturities in the next 15 months, including $550 million senior notes due July 2024. Additionally, the group would have to refinance these notes until May 2024 to avoid a payment acceleration of debentures totaling R$4.5 billion. InterCement's debt maturities in the next 15 months will be significant, including a bullet maturity of the $550 million senior notes due July 2024. Also, the group's debentures totaling R$4.5 billion have a payment-acceleration clause stating that if the senior notes are not refinanced by May 2024, all debentures will be mandatorily redeemable. Although InterCement still has a little more than one year to refinance the notes, refinancing risks are significantly increasing, in S&P's view, given the upcoming maturity date and currently very tight financial conditions, both globally and in Brazil. The group has been in talks with banks to refinance the 2024 senior notes for some time now, but deteriorating credit market conditions since last year have extended conversations beyond our initial expectations. As of December 2022, InterCement had about $262.5 million of debt maturities in 2023 at the holding company and operating subsidiaries, mainly bank loan and debenture amortizations. Part of those maturities were already paid or refinanced through the proceeds from the sale of Egyptian operations and Loma Negra C.I.A.S.A.'s domestic bond issuance equivalent to $133 million. The group paid off a bilateral bank loan of $15 million and prepaid the first maturity of its debentures of about $40 million that was due July 2023. S&P assumes InterCement would be able to refinance a bank loan due May this year and pay down debenture amortizations in December 2023 with dividends received from Loma Negra, expected at about $65 million, similar to the 2022 level. S&P now views InterCement's capital structure as unsustainable given significant maturities at the holding level and given that the group's operations in Argentina remain the most important in terms of cash-flow generation, but access to that cash is restricted. The Argentine operations have been distributing dividends, but amounts are limited considering restrictions on transferring funds out of the country and Loma Negra's debt maturities. Additionally, excluding cash generation and debt from the Argentine operations, InterCement's credit metrics are much weaker, with debt to EBITDA above 5.5x compared with about 3x on a consolidated basis. In its efforts to improve its capital structure, the group sold its Egyptian operations, which would have contributed only about $20 million to consolidated EBITDA in 2022. Also, S&P understands that the group would be willing to sell its other African assets to use the proceeds to pay down debt, easing refinancing risks. But timing and amounts are still uncertain, so S&P doesn't incorporate them in its base-case forecasts. The Brazilian operations' volumes to grow over the coming years mostly from private-sector investments in infrastructure and the government's program to expand the low-income families' access to housing. In Argentina, strong demand in the homebuilder sector will continue to bolster volume growth in 2023, but the market should cool down in the following years. S&P expects a gradual margin improvement mostly due to lower inflation and softening input costs. ESG credit indicators: E-3, S-2, G-3 (climate transition risks, other government factors) S&P said, "Environmental factors are a moderately negative consideration in our credit rating analysis of InterCement. This is because the cement industry produces high greenhouse gas emissions, but the lack of substitute products limits the credit impact. Our analysis incorporates risks of stricter environmental regulations, although they might take longer to be put in place in Latin America and Africa, where the group operates. InterCement has invested in co-processing activities, which allow for the thermal destruction of biomass instead of fossil fuels, reducing emissions. Governance factors are also a moderately negative consideration. The group generates about 50% of EBITDA in Argentina, which we view as having high country risk, weighing on our view of the group's governance factors." NATURA & CO: Fitch Affirms LongTerm IDRs at 'BB', Outlook Positive ------------------------------------------------------------------ Fitch Ratings has affirmed Natura & Co Holding S.A.'s (Natura) Long-Term Foreign Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs) at 'BB' and its National Scale Rating at 'AA+(bra)'. Fitch has also affirmed Natura Cosmeticos S.A.'s FC and LC IDR at 'BB', its unsecured notes at 'BB' and its National Scale Rating at 'AA+(bra)'. Fitch has affirmed Avon Products, Inc.'s BB rating and its unsecured notes. Fitch has also affirmed and withdrawn Avon International Operations Inc.'s IDR of 'BB'. The Rating Outlooks remains Positive. Natura's 'BB' ratings reflect its strong brand and business position within the CF&T market, its diversified asset base and its ongoing challenges related to the turnaround of Avon and The Body Shop. The Positive Outlook reflects the expectation of a significant reduction in Natura's net leverage following the sale of Aesop. The more robust credit profile is mitigated by its above-average business risks and subdued profitability. Fitch has withdrawn the rating of Avon International Operations Inc. as it is no longer considered by Fitch to be relevant to the agency's coverage following the payment of outstanding bonds. KEY RATING DRIVERS Robust Capital Structure Following Aesop Sale: The sale of Aesop to L'Oreal for a total amount of USD2.53 billion will improve the group's financial flexibility and net leverage. Fitch estimates around BRL11.6 billion of net cash to be received by Natura at closing, which is expected to occur in the third quarter of 2023 and is subject to regulatory approvals. Aesop contributed 17% of Natura's consolidated EBITDA in 2022, while cash proceeds represented around 85% of Natura's consolidated debt, excluding leasing. Lower Net Leverage: Natura is expected to use cash proceeds for debt reduction and to lower its interest expense burden. Fitch estimates the pro-forma total adjusted leverage ratio, including leasing obligations, to reach 5.7x and a net cash position of BRL3 billion in 2022. The total leverage ratio is forecast at 4.4x and 3.3x, and on a net basis, 0.4x and 0.6x in 2023 and 2024, respectively. This represents a significant improvement from a median net leverage ratio of 2.6x during 2019-2021 and 4.2x during 2022. Ongoing Execution Risk Remains: Natura's key business risk relates to the turning around of Avon International and The Body Shop (TBS) operations, and the move toward omnichannel from a direct sales single model, that presents declining trends in certain markets. Natura is moving to its second wave of integration at Avon, seeking to reshape its cost structure and to optimize its geographic footprint aiming for profitable markets. For TBS, the focus is on business rightsizing and improvement on the core retail model. The integration of Avon's operations in Latin America have advanced relatively better as they fit with Natura´s own operations in the region, yet profitability remains subdued. Profitability Challenges: Natura should continue to face negative headwinds in the short term related to macroeconomic scenario, including foreign exchange volatility, higher interest rates, and consumer patterns changes in a post-pandemic world. Fitch forecasts Natura's consolidated EBITDAR margin to be around 9%-10% during 2023-24, which represents an improvement from 8.1% during 2022, but still below 10.3% of 2021 and 11.4% of 2020. Fitch forecasts include only six months of Aesop's operations for 2023. EBITDAR is projected to reach BRL3.5 billion in 2023 and BRL3.6 billion in 2024. Capex to Pressure FCF: Fitch projects negative FCF due to high capex related to investments in innovation, digitalization and minimum dividend payments (30% of net income) from 2024 on. Natura has invested heavily in digitalization focusing on increasing online sales. Fitch's base case incorporates an average annual capex of around BRL1.5 billion in 2023-2024, leading to negative FCF. Cashflow from the operation will benefit from lower interest expenses related to future debt repayment. No Rating Constraints: Natura's ratings are not constrained by Brazil's 'BB' country ceiling due to its operations outside Brazil (69% of its revenue in 2022) as well as an off-shore stand-by credit facility of USD625 million due 2024. The company has a diversified portfolio of operations, with some hard currency EBITDA from its assets abroad that should continue to cover its interest expenses in hard currency following the stronger capital structure profile and the exit of Aesop's operating cash flow. Other considerations that mitigate transfer and convertibility risks include cash held abroad as per Fitch's "Non-Financial Corporates Exceeding the Country Ceiling Rating Criteria." Consolidated Approach: Fitch assesses the group on a consolidated basis, given the strong operational and strategic incentives, centralized treasury, asset contribution via synergies and the tangible financial support in the form of payment of Avon's cross-border notes and inter-company loans. In addition, cross default clause and guarantees provided by Natura to the cross-border debt issuances by Natura Cosmeticos support the consolidated approach. Natura owns Natura Cosmeticos S.A. and Avon Products, which are two separate legal entities. DERIVATION SUMMARY Natura's ratings reflect the combined credit quality of Avon and Natura and its low adjusted net leverage post divestment of Aesop. It also incorporates execution risks related to the integration of Avon and The Body Shop and the challenge to develop its digital platform and move toward an omni-channel strategy. Natura has a solid business position in the CF&T industry, underpinned by strong brand recognition, and large scale. In terms of comparable companies, Fitch rates Oriflame Investment Holding Plc 'B' (Outlook Negative); it also operates in the direct-selling beauty market. Natura has a stronger business and financial profile than Oriflame. In Brazil, Natura also faces strong competition from a local participant, O Boticario (not rated), which has a record of maintaining a solid credit and business profile, and enjoys a strong brand and higher profitability. KEY ASSUMPTIONS Fitch Key's Assumptions Within the Rating Case for the Issuer - Fitch expects Natura's revenue to be relatively stable during 2023, considering Aesop's sale during 3Q22, and to decline in the low single digits during 2024, reflecting a full year of a lower revenue base; - Consolidated EBITDAR margins around 9%-10% in 2023-2024; - Average capex of around BRL1.5 billion to support the digitalization and innovation process; - Dividends at around 30% of net income on 2024 afterwards; - Gross leverage moving below 3.5x by 2024 RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Consolidated EBITDAR Margins above 11% on consistent basis; - Consolidated total adjusted debt/EBITDAR below 3.5x and net adjusted debt/EBITDAR ratio below 2.5x on a consistent basis; - Maintenance of strong liquidity and no major refinancing risks within 18-24 months. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Consolidated EBITDAR margins declining to below 9% on a recurrent basis; - Consolidated net adjusted leverage consistently above 3.5x from 2024 on; - Competitive pressures leading to severe loss in market-share for either Natura and Avon or a significant deterioration in its brands reputation. LIQUIDITY AND DEBT STRUCTURE Strong Liquidity: Natura has maintained strong liquidity and solid access to credit markets. The company had BRL5.9 billion in cash and marketable securities at YE 2022, with BRL331 million of short-term debt. Cash is sufficient to support debt amortization until 2027. On a proforma basis, taking into account the Aesop transaction, Fitch estimates Natura to reach a net cash position of BRL3 billion, and to repay debt seeking to reduce interest expenses. As of Dec. 31, 2022, Natura had total debt of around BRL18.2 billion, including Fitch's adjusted leasing obligations of BRL4.6 billion. Natura's debt mainly consists of BRL7.6 billion at Natura Cosmeticos, BRL4.4 billion at Natura&Co Holding and BRL1.5 billion at Avon. Cross-border bonds (61%) and local issuances (18%) are the company's main debt. ISSUER PROFILE Natura&Co is composed by four beauty companies: Natura, The Body Shop, Aesop and Avon. It is the fourth-largest pure play beauty group in the world with around 2.0% global market share as a result of its sizable operations in Latin America, Europe, North America, Asia Pacific and Oceania. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Natura Cosmeticos S.A. LT IDR BB Affirmed BB LC LT IDR BB Affirmed BB Natl LT AA+(bra)Affirmed AA+(bra) senior unsecured LT BB Affirmed BB Avon Products, Inc. LT IDR BB Affirmed BB senior unsecured LT BB Affirmed BB Avon International Operations, Inc. LT IDR BB Affirmed BB LT IDR WD Withdrawn BB Natura &Co Holding S.A. LT IDR BB Affirmed BB LC LT IDR BB Affirmed BB Natl LT AA+(bra)Affirmed AA+(bra) Natura &Co Luxembourg Holdings S.a r.l. senior unsecured LT BB Affirmed BB NATURA & CO: S&P Affirms 'BB' Global Scale ICR, Outlook Stable -------------------------------------------------------------- On April 5, 2023, S&P Global Ratings affirmed its ratings on Natura & Co. Holding S.A. (Natura&Co) and Natura Cosmeticos S.A. (Natura) at 'BB' on the global scale and at 'brAAA' on the national scale, including debt ratings. At the same time, S&P affirmed its 'BB-' global scale issuer credit and issue-level ratings on Avon incorporating a three-notch uplift of potential extraordinary parent support. S&P also revised downward its stand-alone credit profile (SACP) to 'b-' from 'b'. The recovery ratings remain unchanged at '3', with a rounded recovery expectation of 65%. S&P said, "The stable outlook reflects that although Natura&Co and Natura's leverage will be very low once the asset-sale proceeds are disbursed, we will monitor the group's growth strategy in terms of M&As and investments, along with shareholder returns to assess the more normalized capital structure, cash flows, and leverage. In addition, we expect the performance of Avon and The Body Shop (TBS) to gradually improve, despite still challenging conditions for consumption and difficulties in completing the turnaround." Natura & Co. Holding S.A. (Natura&Co) and Natura Cosmeticos S.A. (Natura) announced on April 3, 2023, the sale of the Australian retail cosmetics company Aeosop for $2.525 million, or almost R$13 billion, to L'Oreal S.A. (AA/Stable/A-1+). The pro forma 2023 figures, excluding Aeosop's revenue and EBITDA contribution for the entire year and assuming a $2.525 million (or about R$13 billion) cash inflow in the second half of 2023, will lower leverage from a peak of 4.7x and FFO to debt of 7.3% at the end of 2022. Even assuming the likely higher investments to boost integration of Avon and Natura in Latin America and to recover TBS's operations despite weak consumption amid high global inflation and interest rates, leverage of Natura&Co and Natura will be comfortably below 1x, with the potential plunge in interest payments through debt prepayment and/or debt refinancing. S&P said, "However, we're keeping our assessment of both companies' financial risk profiles as significant, given abnormally high volatility in cash-flow metrics recently and the requirement for a more sustainable improvement in cash generation across subsidiaries. Also, we will monitor the group's appetite for growth opportunities through M&As or more aggressive investments, and if shareholder returns were to rise, which could quickly ramp up the group's leverage again if the business units underperform." Avon continues to underperform in the third year of the turnaround since its acquisition. The benefits of commercial, administrative, and systems synergies have been weaker than expected, which raise some concerns about the long-term viability of Avon's brands and business model. Management already announced that it's shedding lackluster operations in some Eastern European countries, the performance of which was exacerbated by the Russia-Ukraine conflict. Operations in these countries represented 10%-15% of Avon's international business. S&P said, "It's shrinking its Fashion & Home unit, which has suffered from high inventories and weakening cash generation, and we expect Avon's representatives to gradually improve productivity. Despite the jump in Avon's margins by more than 400 basis points in 2023, debt to EBITDA remains at about 3.5x and FFO to debt below 12%, while the free-cash shortfall will be almost $100 million (or about R$510 million). Given the ongoing underperformance and weak cash flows, we revised downward Avon's SACP to 'b-' from 'b', but the final rating hasn't been impacted because of expected group support." S&P said, "The group has been deviating from our leverage expectations for about a year, but it announced several cost reductions, the effects of which should start showing up in 2023. This includes layoffs, restructuring, and the drop in board members and executives' compensation. Also, the 2023 results will exclude one-off charges such as impairments, transformational events, and restructuring expenses. We estimate Natura&Co's EBITDA margins to gradually recover to about 10%, which provide comfort for us to maintain our view of its business risk profile for a longer term." ESG credit indicators: (E-2; S-2; G-2 for Natura&Co and Natura; and E-2; S-2; G-3 for Avon) S&P said, "While all scores are neutral to Natura&Co and Natura, we believe that governance factors are a moderately negative consideration in our credit rating analysis of Avon, while environmental and social factors are an overall neutral consideration. Avon's historically weaker operating performance than that of peers, which led to consecutive turnaround plans and changes in strategy for its brands and products, as well as the lack of a long-term portfolio strategy, took a toll on the company's brand recognition." ================= S T . L U C I A ================= ST. LUCIA: Over 500 St. Lucian MSMEs to Benefit From New Funding ---------------------------------------------------------------- Jamaica Observer reports that approximately 500 St Lucian micro, small and medium-sized enterprises (MSMEs) are now eligible to access capital to grow and jump-start their business ventures post-COVID-19 from a new MSME Loan Grant Facility. The over EC$10 million in new funding was secured by the Government of St Lucia from the Caribbean Development Bank's (CDB) Special Development Fund 10th Cycle Loan Facility, according to Jamaica Observer. Conceptualized by Prime Minister Philip J Pierre back in 2021, the MSME facility was officially launched this month, the report notes. "I said to my colleagues we have to do something for small businesses and we articulated a clear policy position in our 2021-26 manifesto, to implement a series of measures to revitalize the business sector and to provide partial government guarantees to financial institutions for financing the working capital requirements of affected businesses during the recovery process," Pierre said, the report relays. "We must have wealth creators, we can't have people working for people only, we need to have innovators, we need entrepreneurs so we need small businesses to develop," he added. As per the conditions of the facility, up to 70 per cent of the funding for approved applicants will take the form of grant with the next 30 per cent offered as loan at an interest rate of 3 per cent with minimum collateral requirements, the report discloses. Qualified entrepreneurs and new business owners can access up to EC$10,000 while eligible businesses less than two years old can apply for up to EC$20,000 with those over two years eligible to receive up to EC$25,000, the report notes. Priority areas include manufacturing (eg agro-processing), agriculture, agro-tourism and services (beauty and wellness, creative industries, ICT and professional services), the report says. MSMEs that account for a large proportion of all private enterprises, employment, and contributions to gross domestic product (GDP) are said to be the backbone of the St Lucian economy, the report relays. Anecdotal data suggests that the sector contribute close to 40 per cent of GDP employing close to 40,000 persons or about 49 per cent of the labor force, the report discloses. There are over 6,000 registered MSMEs of which over 2,000 are owned by persons aged 18-35 years, the report says. The CDB, which has been pushing to support a rebound of the MSME space across countries of the region, said that its intervention is to be a catalyst for helping the sector to de-risk and unlock financing which traditionally has been unavailable, the report notes. Head of CDB's Private Sector Division Lisa Harding, in performance assessment and outlook for the MSMEs this year, said that she was pleased with the expanding contributions that MSMEs have been adding to employment generation, poverty reduction and overall economic activity and social stability in the region, the report notes. She was also more pleased with the growing evidence that financial institutions are rewarding that contribution, the report discloses. "We think this year is going to be a much better year for improved access to affordable credit for MSMEs. We've also seen more financial institutions recognizing this sector is playing a significant role in the economic recovery and are now looking at new and innovative financial instruments to offer financing being introduced," she said, the report adds. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Electricity Increase Could Affect GDP, TTMA Says ------------------------------------------------------------------- Andrea Perez-Sobers at Trinidad Express reports that new president of the Trinidad and Tobago Manufacturers' Association (TTMA) Roger Roach believes a proposed electricity rate increase could lead to economic fallout and a potential decline in Gross Domestic Product (GDP). Speaking at the TTMA's leadership discussion and network event at the Hyatt Regency (Trinidad) hotel in Port of Spain, Roach said the association met with the Regulated Industries Commission (RIC) in February about the proposed rate increase, according to Trinidad Express. He said the TTMA argued that the increase proposed to commercial and industrial customers would have far-reaching consequences, the report notes. In the end, Roach noted that the RIC advised the association to present its case in writing and the TTMA commissioned an international accounting firm to conduct an impact analysis of the proposed rate hike on manufacturers, the report relays. He told the audience that the TTMA received the final report from the consultant and the RIC has agreed to meet with them within the coming days, where the association would present findings, the report discloses. Roach said, according to the data, in a situation where 100 per cent of costs are passed down the value chain, consumers could potentially face a 15 per cent increase in their grocery bills, the report relays. The data also indicated that the rate hike can lead to potential decline in GDP of 0.66 per cent, a potential decrease in non-petroleum exports of 1.63 per cent, a potential decline in unemployment of 1.57 per cent and a potential increase in core inflation of 1.16 per cent, he said, the report notes. "As business leaders, we understand the predicament that T&TEC has found themselves in. We understand the role of the RIC and we certainly agree we must all share the burden. However, this proposed immediate increase in the electricity rate for industrial users . . . will lead to socio-economic problems," he said, the report discloses. On this issue of VAT refunds, Roach said this situation was untenable, the report says. "The silence on this important issue emanating from the Ministry of Finance and, by extension, the Government, is inscrutable. And the private sector wants answers, the report relays. Over the years the TTMA has presented specific and what we consider to be workable solutions to this VAT refund problem in our annual budget submissions," he recalled, the report notes. Roach said Government collected hundreds of millions of dollars during the tax amnesty from businesses that were unable to keep up with their obligations for one reason or the other, and it is projected that the Government will collect tens of millions more by May 17, the report discloses. "We call on the Government to use some of this money, to make immediate payments to compliant businesses. At this dire stage, we are open to the Ministry of Finance utilising the same mechanism used in 2020. Cash payments to Small and Medium-Sized Enterprises (SMEs) and issuing bonds to large businesses. This will plug the current hole, but what is required is a meeting of the minds," he said, the report says. Roach was appointed TTMA president following the organisation's 2023 annual general meeting at the Hyatt earlier, the report relays. He replaced Tricia Coosal who had held the position since 2021, the report adds. =============== X X X X X X X X =============== LATAM: Left-wing Governments Agree on Joint Inflation Plan ---------------------------------------------------------- Buenos Aires Times reports that presidents from 11 Latin American countries agreed to work together to reduce inflation through measures for the exchange of commodities and intermediate goods. The commitment was announced after a virtual meeting convened by Mexican President Andres Manuel Lopez Obrador. Representatives from a number of left or centre-left governments, including Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Cuba, Honduras, Venezuela and Saint Vincent and the Grenadines, were involved, according to Buenos Aires Times. "We can make economic and commercial exchanges if we reach an agreement and remove obstacles, tariffs, sanitary measures and each country has something to offer. All with the aim of allowing food and basic products to arrive at a better price," said Lopez Obrador in his speech to the forum, the report notes. He invited his counterparts to Cancun on May 6 and 7 for a summit meeting to finalize a strategy, the report notes. The presidents are seeking "better conditions" for the exchange of basic goods and intermediate goods by discussing trade, logistical and financial facilities, according to the declaration of the "Alianza de Paises de America Latina y el Caribe contra la Inflacion" ("Alliance of Latin American and Caribbean Countries against Inflation"), the report relays. The priority is to "lower the cost of products for the poorest and most vulnerable" sectors of the population, the document reads, the report discloses. Inflation in Latin America, as in other parts of the world, has remained stubbornly high due to Russia's invasion of Ukraine and global supply chain problems exacerbated by the pandemic, the report says. Prices in the region rose 14.8 percent last year, according to the International Monetary Fund (IMF), although some nations had it worse than others. Argentina recorded an annual rate of 94.8 percent, a three-decade high, the report relays. During his speech, Argentina's President Alberto Fernandez highlighted the impact of the war in Ukraine on the region's economies, the report notes. "Why don't we start thinking about getting involved as a continent and standing up to whoever it is and say 'Let's stop this war because this war is hurting us a lot,'" he declared, calling for a "joint solution," the report discloses. In several nations across the region the cost of living has begun to fall, in part due to central bank interventions and a decrease in global food and energy prices, yet Lopez Obrador warned that inflation remains "a threat" to all of Latin America, the report notes. The leaders agreed on the creation of a "technical working group" made up of government representatives from each country, which will determine cooperation measures focused "particularly" on "chemical fertilizers and organic fertilizers," one of the products most affected by the war, according to the joint statement obtained by the news agency. The group will be empowered to establish an action plan to implement "within a reasonable timeframe" trade facilitation measures that will address the rise in commodity prices and "inputs to contribute to food and nutrition security," including "technology transfers and cooperation in capacity building," the report relays. Delegates will also analyze the feasibility of smoothing access to products through improved logistical conditions, prioritizing "where possible" a framework to remove barriers and "harmonize" sanitary and phytosanitary regulations and certifications, the report discloses. Yet to achieve these goals, Latin American nations face the challenge of building productive supply chains, experts warn, the report notes. "If mechanisms can be found to supply these inputs from within the region, it will undoubtedly be beneficial," Cesar Salazar, a specialist at the Economic Research Institute of the National Autonomous University of Mexico (UNAM), told AFP, the report relays. "The great challenge is that Latin American economic integration is certainly very weak, there are no major production chains" within the region, he added, pointing out that Mexico has more trade ties with the United States, as does Brazil with China, the report notes. "As an idea, it seems to me to be very appropriate and could even have much more ambitious aims, not only to reduce inflation, but also to generate development based on local and regional production chains and stop depending on the north. But it is not easy, the challenge is great," Salazar said, the report adds. [*] BOND PRICING: For the Week April 3 to April 7, 2023 ------------------------------------------------------- Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- Fospar S/A 6.5 1.2 5/15/2026 BR BRL Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD Noble Holding Internat 5.3 60.5 3/15/2042 KY USD Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD Noble Holding Internat 6.2 62.2 8/1/2040 KY USD Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Sylph Ltd 2.4 65.1 9/25/2036 KY USD City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD Noble Holding Internat 6.1 62.0 3/1/2041 KY USD AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Esval SA 3.5 49.9 2/15/2026 CL CLP Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY 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 6.0 16.4 4/5/2023 KY USD ********* 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 2023. 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 * * *