/raid1/www/Hosts/bankrupt/TCRLA_Public/230427.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
Thursday, April 27, 2023, Vol. 24, No. 85
Headlines
A R G E N T I N A
GAUCHO GROUP: Widens Net Loss to $21.8 Million in 2022
B R A Z I L
BRAZIL: Analysts Cut Interest Rate Forecasts for First Time
BRAZIL: To Announce Credit Card Measure, Minister Says
C O S T A R I C A
INSTITUTO COSTARRICENSE: Fitch Affirms IDRs, Sr. Unsec Bonds at BB-
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Expected to Pick up Due to Wage Increase
DOMINICAN REPUBLIC: Trade Balance Deficit w/ Guatemala Exceed $200M
P E R U
AUNA SAA: S&P Upgrades ICR to 'B', Off Watch Dev., Outlook Stable
HUDBAY MINERALS: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
P U E R T O R I C O
BED BATH & BEYOND: 14,000 Employees Threatened by Looming Closure
NEW BEGINNING: Taps Landrau Rivera & Assoc. as Legal Counsel
V I R G I N I S L A N D S
GEOPHYSICAL SUBSTRATA: S&P Withdraws 'B-' LT Issuer Credit Rating
X X X X X X X X
LATAM: ECLAC and the Caribbean Predicting 1.2% Growth in 2023
- - - - -
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A R G E N T I N A
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GAUCHO GROUP: Widens Net Loss to $21.8 Million in 2022
------------------------------------------------------
Gaucho Group Holdings, Inc. has filed with the Securities and
Exchange Commission its Annual Report on Form 10-K disclosing a net
loss of $21.83 million on $1.64 million of sales for the year ended
Dec. 31, 2022, compared to a net loss of $2.39 million on $4.92
million of sales for the year ended Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $18.69 million in total
assets, $7.90 million in total liabilities, and $10.79 million in
total stockholders' equity.
New York, NY-based Marcum LLP, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated April
17, 2023, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
Gaucho Group said, "The Company presently has enough cash on hand
to sustain its operations on a month-to-month basis, but if the
Company is not able to obtain additional sources of capital, it may
not have sufficient funds to continue to operate the business for
twelve months from the date these financial statements are issued.
Since inception, our operations have primarily been funded through
proceeds received in equity and debt financings. We believe we
have access to capital resources and continue to evaluate
additional financing opportunities. There is no assurance that we
will be able to obtain funds on commercially acceptable terms, if
at all. There is also no assurance that the amount of funds we
might raise will enable us to complete our development initiatives
or attain profitable operations."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1559998/000149315223012603/form10-k.htm
About Gaucho Group
Headquartered in New York, NY, Gaucho Group Holdings, Inc. --
http://www.algodongroup.com-- was incorporated on April 5, 1999.
Effective Oct. 1, 2018, the Company changed its name from Algodon
Wines & Luxury Development, Inc. to Algodon Group, Inc., and
effective March 11, 2019, the Company changed its name from
Algodon Group, Inc. to Gaucho Group Holdings, Inc. Through its
wholly owned subsidiaries, GGH invests in, develops and operates
real estate projects in Argentina. GGH operates a hotel, golf and
tennis resort, vineyard and producing winery in addition to
developing residential lots located near the resort. In 2016, GGH
formed a new subsidiary and in 2018, established an e-commerce
platform for the manufacture and sale of high-end fashion and
accessories. The activities in Argentina are conducted through its
operating entities: InvestProperty Group, LLC, Algodon Global
Properties, LLC, The Algodon - Recoleta S.R.L, Algodon Properties
II S.R.L., and Algodon Wine Estates S.R.L. Algodon distributes its
wines in Europe through its United Kingdom entity, Algodon Europe,
LTD.
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B R A Z I L
===========
BRAZIL: Analysts Cut Interest Rate Forecasts for First Time
-----------------------------------------------------------
Bloombeg News reports that Brazil analysts lowered their 2023
interest rate forecasts for the first time in a year and a half as
President Luiz Inacio Lula da Silva puts the finishing touches on a
proposal aimed to control the growth of public debt.
The benchmark Selic will fall to 12.5% this December, down from the
prior estimate of 12.75%, according to a central bank survey of
economists published Monday (April 17), the report notes. It was
the first reduction for 2023 since October 2021.
Estimates for borrowing costs at the end of next year remained
unchanged at 10%, according to Bloomberg News.
Analysts now see an easing cycle beginning in September with a
quarter-point reduction, followed by cuts of 50 basis points in
each of the two subsequent policy meetings, according to the
central bank, the report notes.
Policymakers led by Roberto Campos Neto have held rates steady at
13.75% since September, with no signs that they are discussing
easing, the report relays.
Annual inflation slowed for the ninth consecutive month to 4.65% in
March, but core measures stripping out volatile items like food and
energy are running fast, the report adds.
Bloomberg News further notes that Finance Minister Fernando Haddad
is commanding the design of a new public spending framework that
has initially been welcomed by investors. The plan sets targets for
budget surpluses before interest payments and was expected to be
delivered to Congress last April 17.
Campos Neto publicly praised the government’s plan, calling it
"super positive," as it ensures a controlled trajectory for the
country's debt. Still, he warned there's no "mechanical
relationship" with rate cuts, says the report.
At the same time, top analysts have questioned the plan's estimates
for revenue growth in a context of sluggish activity, falling
commodity prices and high borrowing costs, Bloomberg News relates.
In a separate release, domestic activity contracted 0.04% in
January from the month prior, according to a central bank’s proxy
for gross domestic product, notes the report. From a year ago, the
index rose 3.03%.
Analysts surveyed by the central bank forecast that inflation will
accelerate to 6.01% this year and then ease to 4.18% in 2024.
Economists see consumer price increases above the central bank's
targets through 2025, adds the report.
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).
BRAZIL: To Announce Credit Card Measure, Minister Says
------------------------------------------------------
Reuters reports that Brazilian Finance Minister Fernando Haddad
said the government is going to announce measures to improve credit
conditions in the country, including one regarding revolving credit
card rates.
Revolving credit card rates are the interest consumers must pay
when they cannot pay their credit card bills in full, pushing
unpaid amounts into future installments, according to Reuters.
Talking to reporters ahead of a meeting with the Brazilian banking
federation, Haddad said that the ministry will launch 14 measures
to improve the credit environment, the report notes.
He argued that the revolving credit card issue lies at the core of
the soaring indebtedness among Brazilians, the report says.
Haddad said the discussions will focus on high credit card interest
rates describing it as a widespread burden "being charged to the
population," the report discloses.
The design of current interest rates for credit cards is harming
low-income Brazilians, he said, the report notes.
"A good part of the population that is in the credit bureau is
because of credit cards," the report relays. The revolving credit
card interest rate in Brazil is 417.4% per year, according to the
latest data from the central bank, by far the most expensive type
of credit for individuals, Reuters relays.
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).
===================
C O S T A R I C A
===================
INSTITUTO COSTARRICENSE: Fitch Affirms IDRs, Sr. Unsec Bonds at BB-
-------------------------------------------------------------------
Fitch Ratings has affirmed Instituto Costarricense de Electricidad
y Subsidiarias' (ICE) Long-Term Foreign Currency and Local Currency
Issuer Default Ratings (IDRs) at 'BB-' and the senior unsecured
bonds at 'BB-'. In addition, Fitch assessed ICE's consolidated
Standalone Credit Profile (SCP) at 'b+'. The Rating Outlook is
Stable.
ICE's ratings incorporate its strategic importance to the country
and the potentially significant negative socio-political and
financial implications to the sovereign if there is any financial
distress at the company level. Additionally, the ratings reflect
the company's diversified asset portfolio, moderate capex program
and its strong market share position in both the electricity and
the telecommunications business.
KEY RATING DRIVERS
Rating Equalization: ICE's ratings reflect its strong linkage with
the sovereign of Costa Rica, as the company is an autonomous entity
owned by the Costa Rican State. As per Fitch's Government Related
Entity Criteria (GRE Criteria), ICE has an Overall Support Score of
45 IDRs that results in an equalization to Costa Rica's sovereign
rating at 'BB-'.
ICE is a strategic asset to the country due to its essential role
in the domestic electricity market, and it is the incumbent
participant in the telecommunications sector, which is an incentive
for the government to support the company if necessary. Fitch
believes that an event of default at ICE would have a very strong
negative impact for the sovereign on the availability and cost of
funding.
Operating Results Trend Positive: For 2023, Fitch estimates revenue
will increase 4%, mostly reflecting higher electricity demand and
recovery in the telecommunications business revenues. Estimated
ICE's FY 2022 consolidated revenue grew by 7.0% on higher
electricity exports to the region and increased consumption in
tourism-related areas. Electricity revenues grew 13.5% and
accounted for 60% of ICE's total revenue in 2022, while Telco
revenues increased by 3.6%. At the same time, operating expenses
were flat compared to 2021. In terms of profitability, ICE's
estimated EBITDA was CRC595 billion with a margin of 43% (FY 2021:
CRC432 billion and margin of 33.4%).
Leverage Profile: ICE's estimated EBITDA leverage as of December
2022 was 4.1x, down from 6.8x in 2021, on better operating results.
Fitch's base case projects ICE's leverage will be close to 4.3x in
2023, assuming EBITDA close to CRC576 billion and no major tariff
adjustments, and remaining close to 4.7x in 2024 while annual debt
amortizations around CRC200 billion. Fitch estimates that capex
levels for 2023 to 2026 will be around CRC340 billion annually on
average, which is equivalent to about 23% of revenues, and will be
funded with a combination of internally generated cash and debt.
High Exposure to Regulatory and Political Interference: ICE is
exposed to the risk of regulatory interference due to the lack of
transparency and clarity in the processes for determining tariffs
adjustment schemes in previous years. The company proposes
electricity tariffs for end-users to the regulator annually.
Electricity tariffs are set through the quarterly adjustment of
variable costs of electric generation (energy imports and fuel) and
through an ordinary tariff review that considers the company's
operating costs.
Diversified Asset Portfolio: ICE is a vertically integrated
monopoly in the electricity industry and an incumbent player in the
telecommunications industry in Costa Rica. As of December 2022, the
company accounted for 72% of the National Electric System's
installed capacity and produced 84% of the total electricity
consumed in Costa Rica. ICE's mobile market share in terms of
subscribers was approximately 41% according to most recent data
from Superintendencia de Telecomunicaciones (SUTEL).
The ratings reflect the company's low business risk resulting from
its business diversification and positive characteristics as a
utility service provider.
DERIVATION SUMMARY
ICE's linkage to the sovereign is similar to Comision Federal de
Electricidad (CFE; BBB-/Stable). Similar to ICE, CFE is highly
important to Mexico as its largest integrated electric utility, and
it is the only domestic entity allowed to both transmit and
distribute electricity.
ICE's ratings reflect its strong linkage to Costa Rica's sovereign
rating, which stems from the company's government ownership and the
implicit and explicit expectation of government support. The
ratings reflect the company's diversified asset portfolio, moderate
capex program, and its monopoly position in the electricity
industry and strong market share position in the telecommunications
business. ICE has a lower scale of operations compared with its
peers. ICE's EBITDA leverage as of FY 2022 of 4.1x was materially
lower than CFE's 10.7x.
KEY ASSUMPTIONS
- ICE remains important to the government as a strategic asset for
the country;
- In 2023, revenues grow by 4% on improved electricity demand;
- Leverage close to 4.3x in 2022; and 4.7x in 2024;
- ICE's Telco market share remains strong.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Upgrade of the sovereign's ratings.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A sovereign downgrade;
- Weakening of the linkage between ICE and the sovereign and a
material deterioration of ICE's operating and financial profile;
- Regulatory intervention that negatively affects the company.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: ICE's liquidity position is adequate, with a
cash and equivalents balance of approximately of CRC343 billion as
of YE 2022 and total debt of CRC2.465 billion, of which CRC225
billion was short-term debt.
Historically, ICE has financed capex with its own resources and new
debt, where the debt related to electrical projects represents
approximately 90% and the rest to the Telco segment.
ISSUER PROFILE
ICE is a government-owned, vertically integrated monopoly in the
electricity industry, in charge of developing, constructing and
operating an electric power generation, transmission and
distribution system and the incumbent player in the
telecommunications industry.
ESG CONSIDERATIONS
ICE has an ESG Relevance Score of '4' for Governance Structure and
Group Structure due to ownership concentration, as a majority
government-owned entity and due to the inherent governance risks
that arise with a dominant state shareholder. This has a negative
impact on the credit profile, and is relevant to the ratings in
conjunction with other factors.
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
----------- ------ -----
Instituto
Costarricense de
Electricidad y
Subsidiarias LT IDR BB- Affirmed BB-
LC LT IDR BB- Affirmed BB-
senior
unsecured LT BB- Affirmed BB-
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Expected to Pick up Due to Wage Increase
------------------------------------------------------------
Dominican Today reports that traders and economists expect to be
one of great economic activism due to the application of the salary
increase announced as of the first fortnight of April following the
agreement of the business sector and workers to apply a 19%
increase to the minimum wage.
Although some economists and workers understand that the increase
which brought the minimum salaries of large companies from
RD$21,000.00 to RD$24,150.00 is not significant, businessmen expect
that citizens will go to amusement and recreation centers due to
the possibility of the increase being able to increase their
expenses, according to Dominican Today.
It should be noted that the salary increase was initially proposed
by the business sector, which motivated the employees to
voluntarily increase their salaries by 10% as an alternative to
face the inflation affecting the country, the report notes. Then,
however, the workers' representatives asked for a 35% increase, the
report relays. Finally, after several months of waiting, a rise in
two items was agreed upon, the first one of 15%, which is the one
that will be applied now, and the second one of 4%, which will be
applied in February 2024, the report discloses.
Handling the Increase
However, economists call on the population not to fall into
excesses or get out of control in their expenses since factors such
as the Consumer Price Index and the inflation rate may vary in the
coming months, which may mean the cost of living will continue to
increase, the report discloses.
They also warned that the cost of the essential family basket is
not yet fully covered by the minimum wage, including that of large
companies, the report relays.
Minimum Wages in Latin America
As of January of this year, minimum wages in Latin America ranged
from:
-- US$07.00 for Venezuela;
-- US $203.00 for the Dominican Republic;
-- US$255.00 for Brazil;
-- US$266.00 for Peru;
-- US$316.00 for Honduras;
-- US$325.00 for Bolivia;
-- US$326. 00 for Panama;
-- US$332.00 for Mexico;
-- US$344.00 for Paraguay;
-- US$357.00 for Argentina (at the official exchange rate);
-- US$365.00 for El Salvador;
-- US$404.00 for Guatemala;
-- US$450.00 for Ecuador;
-- US$497.00 for Chile;
-- US$535.00 for Uruguay;
-- and US$622.00 for Costa Rica.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican To related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'.The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative.S&P also
affirmed its 'BB-' long-term foreign and local currency sovereign
credit ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said.A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
DOMINICAN REPUBLIC: Trade Balance Deficit w/ Guatemala Exceed $200M
-------------------------------------------------------------------
Dominican Today reports that Kathy Ann Grullon Aybar, the president
of the Centrocamara de Comercio de la Republica Dominicana
(Centrocamara-RD), has stated that in 2022, trade with Guatemala
reached a total of $282,769,393.3. Of this amount, $41,312,762.06
was attributed to exports to Guatemala, while $241,456,631.2 was
for imports from Guatemala, according to Dominican Today.
Grullon Aybar has urged businesses to capitalize on the
opportunities presented by Guatemala in order to reduce the trade
balance deficit by $200,143,869.14, the report notes.
The memorandum of understanding signed by Centrocamara-DR and the
Guatemalan Chamber of Industry (CIG) aims to create an alliance
that fosters cooperation, investment attraction, and business
exchange between the two countries, the report relates. The
signing ceremony took place at the Sheraton Hotel and was attended
by the Minister of Economy of the Dominican Republic, Janio
Rosales, the Guatemalan Ambassador, Javier Zepeda, and the
Dominican Ambassador in Guatemala, Sara Paulino, as well as a
delegation of 27 businessmen from Guatemala, directors of
Centrocámara, and representatives from the public and private
sectors of the Dominican Republic, the report discloses.
Grullon Aybar has identified pharmaceutical products, meat and
edible offal, various food preparations, plastics and their
manufacturers, milling supplies, inorganic chemicals, knitted
fabrics, paper, cardboard, cotton, and tobacco as goods exported to
Guatemala, the report says. Goods imported from Guatemala include
essential oils and resinoids, perfumery, toilet and cosmetic
preparations, preparations based on cereals, flour, starch, and
milk, pastry products, pharmaceuticals, fertilizers, cotton Glass,
sugars, articles confectionery, ethyl alcohol beverages,
undenatured with an alcoholic strength by volume, rum, cocoa, and
their preparations, notes the report.
The memorandum of understanding will enable the two institutions to
identify sectors and companies for the development of joint
projects, exchange knowledge and good practices, and promote
training and seminars for the business sector, the report relays.
The agreement also seeks to encourage research activities that aim
to generate more business between the Dominican Republic and
Guatemala, promote a bilateral internship program, and create
projects in the industrial sector and flow of investments, the
report notes. Trade fairs, missions, and business roundtables will
also be held to facilitate trade in accordance with the commitments
made in the Trade Facilitation Agreement of the World Trade
Organization (WTO), the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican To related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'.The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative.S&P also
affirmed its 'BB-' long-term foreign and local currency sovereign
credit ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said.A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
=======
P E R U
=======
AUNA SAA: S&P Upgrades ICR to 'B', Off Watch Dev., Outlook Stable
-----------------------------------------------------------------
On April 24, 2023, S&P Global Ratings raised its global scale
issuer credit and issue-level ratings on Peruvian private health
care service provider Auna S.A.A. to 'B' from 'CCC+' and removed
them from CreditWatch with developing implications, where it placed
them on March 13, 2023.
The stable outlook on Auna reflects its expectation of continued
improvement of its operating and financial results that should
accelerate the company's deleveraging, with adjusted gross debt to
EBITDA below 4.5x and EBITDA interest coverage still above 2x by
the end of 2023.
Auna issued $455 million in senior secured notes, through a private
placement, to refinance the bridge loans it used to partly fund the
acquisitions it made in 2022. Both bridge loans were set to mature
on April 20, 2023, and early October 2023, for $56 million and $350
million, respectively. S&P said, "As part of the $505 million
financing agreement, we expect Auna to disburse another $50 million
over the next few weeks to further refinance short-term debt and
for general corporate purposes. We believe Auna has alleviated
pressures on its liquidity by extending its debt maturity profile
through a five-year bullet financing. The company's next large debt
maturity is the $300 million senior unsecured notes due November
2025. We will monitor Auna's refinancing plan, and we expect the
company will proactively engage in funding alternatives to address
its short-term debt maturities."
After two years of operating setbacks mostly induced by the
pandemic, and significant investments in recent years that all
together pushed Auna's adjusted gross leverage well above 5x in
2020 and 2021, S&P expects Auna's 2022 pro forma results to show
deleveraging, although adjusted leverage to remain near 5x.
Starting in 2023, it expects Auna's deleveraging to accelerate
thanks to the following factors:
-- The integration of its recent acquisitions, and also from
higher capacity in terms of hospital beds (rising to 2,170 in 2024
from 1,803 in 2021), surgery rooms (to 95 from 83), and emergency
boxes units (to 272 from 238);
-- Higher occupancy rates in the healthcare services network;
-- Greater overall average annual stock of oncology affiliates;
and
-- The long-term increases in the average ticket price per
patient.
S&P said, "Our updated base-case scenario assumes revenue and
EBITDA margin near PEN3.7 billion and 22%, respectively, in 2023.
The higher margin reflects wider EBITDA margins at OCA and
IMAT-Oncomedica, as well as our expectation for dilution of fixed
costs. Moreover, we expect the company to slash its investments
with capital expenditures (capex) near PEN162 million in 2023 and
PEN150 million in 2024, and to be fully funded with its operating
cash flows. Given our assumptions that Auna will keep its
zero-dividend policy at least for the next two years, we don't
expect additional financing requirements. We also expect Auna's
board of directors and top management to remain fully committed and
focused on deleveraging the company's balance sheet. As a result,
we expect Auna's adjusted gross leverage to be below 4.5x at the
end of 2023 and well below 4x by the end of 2024.
"In our view, Auna's recent acquisitions significantly increase its
operating scale, geographic footprint, and profitability. We expect
OCA, IMAT-Oncomedica, and Dentegra to increase Auna's revenue and
EBITDA by roughly PEN1.4 billion and PEN446 million, respectively,
from 2021 levels, while consolidated EBITDA margin will converge to
22% in 2023. The OCA operation has a run-rate EBITDA margin near
35% and IMAT-Oncomedica close to 30%. Auna also expanded its
geographic footprint, with pro forma sales and EBITDA from Mexico
(29% and 44%, respectively), Peru (42% and 33%), and Colombia (29%
and 23%) expected in 2023. Moreover, the acquisitions will make
Auna the second-largest private health care service provider in
Latin American Spanish-speaking countries, and the fifth largest in
the region in terms of number of beds. In our view, Auna benefits
from a leading market position in the underserved and growing
private health care markets. It has a vertically integrated
oncology program and affordable costs, as well as horizontally
integrated regional healthcare service networks. We also consider
its diversified health care service offerings, and payor profile as
having limited exposure to government contracts."
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."
HUDBAY MINERALS: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) of Hudbay Minerals Inc. and Hudbay Peru S.A.C. at 'BB-'. The
Rating Outlook is Stable.
The ratings and Outlook reflect Hudbay Minerals Inc.'s mid-tier
size, concentration in two mines, extensive track record of
operating copper mines from exploration to production, and the
announced acquisition of Copper Mountain Mining Corporation. The
ratings also consider Hudbay's low-cost position at Snow Lake
(Manitoba, Canada) and Constancia (Peru), current mine lives
through 2038, and Fitch's expectation that EBITDA leverage will be
sustained below 2.5x.
KEY RATING DRIVERS
CM Acquisition Incrementally Positive: Fitch believes Hudbay's
announced all-share acquisition of Copper Mountain will provide
incremental earnings with minimal additional debt. The acquisition
would increase Hudbay's copper production by roughly 30% over the
next four years under Fitch's assumptions and increase Hudbay's
exposure to Canada. However, it would modestly reduce margins since
Copper Mountain's mine is in the second quartile of the global cost
curve compared with Hudbay's average first quartile position. The
acquisition has been unanimously approved by both companies' boards
of directors and is expected to close in late 2Q23 or early 3Q23.
Fitch expects Copper Mountain's operations to improve in line with
its 2022 technical report and also recognizes Hudbay's intent to
undertake further studies and focus on efficiencies consistent with
similar operations at Constancia. Fitch believe there is limited
execution risk in stabilizing operations at Copper Mountain given
Hudbay's capital resources and operational expertise.
Conservative Financial Policies: Fitch views Hudbay's conservative
capital allocation policy as favorable to its credit profile.
Hudbay's stated financing strategy for Copper World includes a
committed minority JV partner, a renegotiated optimal streaming
transaction, net debt/EBITDA of less than 1.2x, minimum cash of
$600 million, and limited (up to $500 million) non-recourse project
debt. Hudbay prioritizes operational improvements, low-risk and low
capital requirement brownfield expansions in advance of moving
forward on large scale greenfield projects.
Hudbay's EBITDA leverage was 2.4x at Dec. 31, 2022, and Fitch
projects EBITDA leverage will be sustained below 2.5x through 2026.
In addition, Fitch expects Hudbay to generate positive FCF over the
next few years, supporting its ability to fund capex with cash on
hand.
Favorable Low Cost Position: Hudbay's key mines have an average
first-quartile cost position and solid mine lives. The mine plan
for Constancia (Peru) supports a 16-year mine life; Snow Lake
(Canada) supports a 16-year mine life; Pampacancha (Peru) supports
a three-year mine life. According to CRU, Snow Lake has a first
quartile cost position and Constancia has a second quartile cost
position of the global cost curve.
Hudbay has an extensive track record of operating copper mines from
exploration to production and has a number of projects in the
exploration and development phases. Fitch expects annual copper
production to average around 150,000 tonnes and gold production to
average around 280,000/oz from 2023-2026.
Copper Exposure: Fitch believes Hudbay has meaningful commodity
diversification through its gold production, and to a lesser extent
its zinc production. However, the company has a longer-term focus
on copper, which accounted for 57% of consolidated revenues in
2022. Hudbay estimated, as of YE 2022, a $0.38/lb change in the
price of copper from the company's 2023 base case of $3.75/lb would
change operating cash flow before working capital changes by $77
million in 2023. Hudbay's average realized copper price was
$3.94/lb. in 2022 compared with $4.19/lb. in 2021, $2.86/lb. in
2020 and $2.73/lb in 2019. Current spot prices are around
$4.08/lb., which compares with Fitch's assumptions of $4.00/lb in
2023 and $3.63/lb in 2024 and 2025.
Copper World Potential: Fitch views the $1.9 billion Arizona phase
1 project favorably, given early indications of 86,000 tonnes of
annual copper production at sustaining cash costs of $1.44/lb. over
a 16-year mine life. Fitch does not include production or capital
spending, outside of relatively minimal capex to advance studies
and permits, in its forecasts since the project is not expected to
be approved before 2025. Hudbay has stated that the project would
only move forward if the definitive feasibility study results in an
IRR of greater than 15%, upon receipt of all state permits and
achievement of financial targets including: net debt/EBITDA of less
than 1.2x, a minimum cash balance of $600 million, and limited
non-recourse project debt of up to $500 million.
DERIVATION SUMMARY
Hudbay, with 2022 copper production at 104,473 tonnes, is
significantly smaller than copper producer First Quantum Minerals
Ltd. (B+/Rating Watch Negative) with 2022 copper production at
775,859 tonnes but is more than twice the size of Ero Copper Corp
(B/Stable) with 2022 copper production at 46,371 tonnes and Taseko
Mines Ltd.'s (B-/Stable) Gibraltar mine 2022 copper production at
about 44,000 tonnes.
Hudbay's average first quartile cost position of CRU Group's 2022
global copper cost curve is lower than First Quantum's average cost
position the fourth quartile, Ero Copper's average cost position in
the third quartile, and Taseko's average position in the fourth
quartile.
Hudbay has favorable projected leverage metrics compared with First
Quantum and Taseko and slightly favorable projected leverage
metrics compared with Ero Copper. Hudbay's EBITDA leverage of 2.4x
at YE 2022 compares favorably with First Quantum's EBITDA leverage
of 2.7x and Taseko's EBITDA leverage at 7.0x but is modestly higher
than Ero Copper's EBITDA leverage at about 2.1x.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer
Include:
- Acquisition of Copper Mountain closes effective Sept. 30, 2023;
- Production generally in line with the midpoint of guidance;
- Copper prices of $8,800/tonne in 2023, $8,000/tonne in 2024 and
2025, and $7,000 in 2026;
- Gold prices of $1,700/oz in 2023, $1,600/oz in 2024 and 2025, and
$1,300/oz in 2026;
- Zinc prices of $3,000/tonne in 2023, $2,500/tonne in 2024,
$2,200/tonne in 2025 and 2,100/tonne in 2026;
- Average annual capex through 2026 at about $300 million;
- Significant Copper World capital spending does not begin before
2026.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Reduced completion risks and funding strategy which mitigates
risk associated with the Copper World project;
- Improved size and scale;
- EBITDA leverage sustained below 2.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA leverage sustained above 3.5x;
- Sustained negative FCF before major development capital;
- Material reduction in average mine life.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity: Cash and cash equivalents were $226 million as of
Dec. 31, 2022, and $354 million was available under the $450
million, in aggregate, revolving credit facilities after
utilization for LOC. The Hudbay Minerals Inc. revolver and the
Hudbay Peru S.A.C. revolver both mature on Oct. 26, 2025. Debt
maturities are modest before the $600 million 4.50% notes due April
2026.
ISSUER PROFILE
Hudbay Minerals Inc. is an Americas based mid-sized mining company
producing copper with gold, silver and molybdenum by-products at
its Constancia operations (Peru) and gold with copper, zinc and
silver by-products at its Snow Lake operations (Canada). Its
development project pipeline includes Copper World (Arizona) and
Mason (Nevada).
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 Recovery Prior
----------- ------ -------- -----
Hudbay Peru S.A.C. LT IDR BB- Affirmed BB-
senior secured LT BB+ Affirmed RR2 BB+
Hudbay Minerals
Inc. LT IDR BB- Affirmed BB-
senior
unsecured LT BB- Affirmed RR4 BB-
senior secured LT BB+ Affirmed RR2 BB+
=====================
P U E R T O R I C O
=====================
BED BATH & BEYOND: 14,000 Employees Threatened by Looming Closure
-----------------------------------------------------------------
As of the bankruptcy filing, Bed Bath & Beyond Inc. employs 14,000
individuals in the United States, Puerto Rico, and Canada.
Approximately 6,000 people are employed on a full-time basis and
approximately 8,000 are employed on a part-time basis.
Approximately 1,600 employees earn a salary and 12,400 are paid on
an hourly basis.
In addition, the Debtors have historically sourced critical labor
support from various agencies and periodically retain specialized
individuals as independent contractors to complete discrete
projects. At this time, the Debtors retain approximately 50
independent contractors.
Bed Bath & Beyond hasn't disclosed in court filings how many
employees will be retained while it undergoes Chapter 11
proceedings and while it conducts a wind-down of its stores.
In the 60 days prior to the Petition Date, the Debtors issued
notices pursuant to the Worker Adjustment and Retraining
Notification Act to certain governmental entities and to 252
Employees that are expected to be impacted by a qualified "mass
layoff" or "plant closing" at seven facilities, including four
distribution and fulfillment centers in Texas and three stores in
New York.
During these Chapter 11 Cases, the Debtors anticipate closing
further offices, stores, and distribution and fulfillment centers
during the postpetition period, and such closures may implicate the
WARN Act.
The Debtors have filed a motion to pay prepetition wages and
benefits owed to employees so that they will continue to provide
services necessary to continue the Debtors' operations and maximize
the value of the Debtors' estates.
The Debtors seek authority, but not direction, to pay, remit, or
reimburse, as applicable, an aggregate of $76,133,000 to pay
prepetition amounts on account of the employee compensation and
benefits programs:
* Employee Compensation: $29.4 million
* Independent Contractor Compensation: $389,000
* Payroll Processing Fees: $6.2 million
* Withholding and Deduction Obligations: $10.9 million
* Reimbursable Expenses: $1.2 million
* Health Insurance Programs: $7.5 million
* Life and AD&D Insurance and Disability Benefits: $344,000
* Workers' Compensation Program: $14.7 million
* Paid Leave: $4.4 million
* Postpetition Non-Employee Director Compensation: N/A
* Supplemental Benefits Programs: $500,000
About Bed Bath & Beyond
Bed Bath & Beyond Inc., together with its subsidiaries, is an
omnichannel retailer selling a wide assortment of merchandise in
the Home, Baby, Beauty & Wellness markets and operates under the
names Bed Bath & Beyond, buybuy BABY, and Harmon, Harmon Face
Values. The Company also operates Decorist, an online interior
design platform that provides personalized home design services.
At its peak, Bed Bath & Beyond operated the largest home furnishing
retailer in the United States with over 970 stores across all 50
states, consistently at the forefront of major home and bath
trends. Operating stores spanning the United States, Canada,
Mexico, and Puerto Rico, Bed Bath & Beyond offers everything from
bed linens to cookware to electric appliances, home organization,
baby care, and more.
Bed Bath & Beyond closed over 430 locations across the United
States and Canada before filing chapter 11 cases, implementing full
scale winddowns of their Canadian business and the Harmon branded
stores.
Left with 360 Bed Bath & Beyond and 120 buybuy BABY stores, Bed
Bath & Beyond Inc. and 73 affiliated debtors on April 23, 2023,
each filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code to pursue a wind down of operations.
The cases are pending before the Honorable Vincent F. Papalia and
have requested joint administration of the cases under Bankr.
D.N.J. Lead Case No. 23-13359.
Kirkland & Ellis LLP and Cole Schotz P.C. are serving as legal
counsel, Lazard Frères & Co. LLC is serving as investment
banker,
and AlixPartners LLP is serving as financial advisor. Bed Bath &
Beyond Inc. has retained Hilco Merchant Resources LLC to assist
with inventory sales. Kroll LLC is the claims agent.
NEW BEGINNING: Taps Landrau Rivera & Assoc. as Legal Counsel
------------------------------------------------------------
New Beginning Realty Corp. seeks approval from the U.S. Bankruptcy
Court for the District of Puerto Rico to employ Landrau Rivera &
Assoc. as its legal counsel.
The Debtor requires legal counsel to:
(a) give advice regarding the duties and powers of the Debtor
in its Chapter 11 case under the laws of the United States and
Puerto Rico in which it conducts its business, or is involved in
litigation;
(b) advise the Debtor in determining whether a reorganization
is feasible and, if not, assits the Debtor in the orderly
liquidation of its assets;
(c) assist the Debtor in negotiation with its creditors in
the
preparation of a Chapter 11 plan;
(d) prepare legal documents;
(e) appear before the bankruptcy court, or any court in which
the Debtor asserts a claim interest or defense directly or
indirectly related to this bankruptcy case;
(f) employ other professional services as necessary to
complete Debtor's financial reorganization; and
(g) perform other legal services.
The firm will be paid at these rates:
Noemi Landrau Rivera, Esq. $200 per hour
Josue A. Landrau Rivera, Esq. $175 per hour
Legal and Financial Assistants $75 per hour
In addition, Landrau Rivera & Assoc. will seek reimbursement for
fees and expenses.
The retainer is $10,000.
Noemi Landrau Rivera, Esq., an attorney at Landrau Rivera & Assoc.,
disclosed in court filings that the firm and its members are
"disinterested persons" within the meaning of Section 101(14) of
the Bankruptcy Code.
The firm can be reached through:
Noemi Landrau Rivera, Esq.
Landrau Rivera & Assoc.
P.O. Box 270219
San Juan, PR 00927-0219
Telephone: (787) 774-0224
Facsimile: (787) 793-1004
Email: nlandrau@landraulaw.com
About New Beginning Realty Corp.
New Beginning Realty Corp., a company in San Juan, P.R., filed its
voluntary petition for Chapter 11 protection (Bankr. D.P.R. Case
No. 23-01049) on April 12, 2023, with as much as $1 million to $10
million in both assets and liabilities. Carlos A. Quinones Alfonso,
president of New Beginning Realty Corp., signed the petition.
Noemi Landrau Rivera, Esq., at Landrau Rivera & Assoc. serves as
the Debtor's legal counsel.
===========================
V I R G I N I S L A N D S
===========================
GEOPHYSICAL SUBSTRATA: S&P Withdraws 'B-' LT Issuer Credit Rating
-----------------------------------------------------------------
S&P Global Ratings withdrew its 'B-' long-term issuer credit rating
on Geophysical Substrata Ltd. at the issuer's request. At the same
time, S&P withdrew the 'B-' long-term issue rating on the
medium-term note program of the British Virgin Islands-based
holding company. The outlook on the long-term issuer credit rating
was negative at the time of withdrawal.
===============
X X X X X X X X
===============
LATAM: ECLAC and the Caribbean Predicting 1.2% Growth in 2023
-------------------------------------------------------------
RJR News reports the Economic Commission for Latin America and the
Caribbean (ECLAC) is predicting that regional economies will grow
by 1.2 per cent this year as they face a complex external scenario
marked by low growth in economic activity and global trade.
In addition, ECLAC said the interest rate hikes carried out
globally were compounded by the financial turbulence seen in early
March, which has increased uncertainty and volatility in financial
markets, according to RJR News.
It warned that regional countries are facing limited space for
fiscal and monetary policy once again in 2023, the report notes.
In a context of high demand for public spending, ECLAC said
measures will be needed to strengthen fiscal sustainability and
expand fiscal space by strengthening the taxation policy's
revenue-raising and redistributive capacity, the report adds.
*********
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
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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.
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