/raid1/www/Hosts/bankrupt/TCRLA_Public/230622.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, June 22, 2023, Vol. 24, No. 125
Headlines
A R G E N T I N A
ARGENTINA: Analysts Forecast 148.9% Inflation in 2023
GAUCHO CROUP: To Hold Annual Meeting on Aug. 24
B R A Z I L
AMERICANAS SA: Billionaire Trio Agree to Lock-Up Period
AZUL SA: Launches Exchange Offer as Part of Restructuring Plan
BRAZIL: Halts Hydroelectric Power Exports to Argentina and Uruguay
C O L O M B I A
GRAN TIERRA: Fitch Affirms LongTerm IDRs at 'B', Outlook Stable
J A M A I C A
JAMAICA: Battle Against Poverty
JAMAICA: Local Banks Ready for Release of New Banknotes
T R I N I D A D A N D T O B A G O
TRINIDAD GENERATION: Fitch Affirms 'BB' Rating on 2027 Unsec. Notes
- - - - -
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A R G E N T I N A
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ARGENTINA: Analysts Forecast 148.9% Inflation in 2023
-----------------------------------------------------
Buenos Aires Times reports that Argentina's runaway inflation rate
will soar to 148.9 percent in 2023, according to a new estimate
from the nation's leading market analysts and economists.
The stark forecast, outlined in the Central Bank's latest 'REM'
survey of market expectations released, is a rise of 22.5 points on
the previous estimate issued by the same group of experts,
according to Buenos Aires Times.
Consumer prices in Argentina rose 8.4 percent in April - the
highest monthly increase in more than three decades, the report
notes. Inflation over the last 12 months totals 108.8 percent and
is forecast to rise sharply as the country builds up to general
elections in October, the report relays.
In its monthly report, the Central Bank said economic indicators
for May "suggest that monthly inflation moderated" last month,
despite continuing increases, the report relays.
The INDEC national statistics bureau will report the official
monthly inflationary figure for May, the report notes.
The Central Bank last month raised a benchmark interest rate from
91 percent to 97 percent, one of a series of measures to suck pesos
out of the market and alleviate pressure on Argentina's multiple
exchange rates, 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, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
GAUCHO CROUP: To Hold Annual Meeting on Aug. 24
-----------------------------------------------
The Board of Directors of Gaucho Group Holdings, Inc. determined
that the Company's 2023 Annual Meeting of Stockholders will be held
on Aug. 24, 2023. Stockholders of record of the Company's common
stock at the close of business on June 30, 2023 will be entitled to
notice of, and to vote at, the Annual Meeting.
Pursuant to the advance notice provisions set forth in the
Company's Bylaws, a stockholder intending to present a proposal to
be included in the proxy statement for the 2023 Annual Meeting must
give timely notice thereof in proper written form to the secretary
of the Company. To be timely, a stockholder's notice must be
delivered to or mailed and received at our principal executive
offices not later than the close of business on the tenth day
following the date on which public disclosure of the date of the
2023 Annual Meeting is made. Accordingly, the deadline for the
submission of proposals to be included in the proxy statement for
the 2023 Annual Meeting is June 22, 2023.
Stockholder proposals, and the notices thereof, must comply with
the Company's Bylaws and the U.S. Securities and Exchange
Commission's rules regarding the inclusion of stockholder proposals
in proxy materials.
In addition, to comply with the SEC's universal proxy rules,
stockholders who intend to solicit proxies in support of director
nominees other than the Company's nominees must provide notice in
writing to the secretary of the Company at our principal executive
offices that sets forth the information required by Rule 14a-19
under the Exchange Act, no later than July 1, 2023.
Notices of intention to present proposals or nominate directors at
the 2023 Annual Meeting, and all supporting information required by
SEC rules and its Bylaws, as applicable, must be submitted to:
Secretary of Gaucho Group Holdings, Inc.
112 NE 41st Street, Suite 106,
Miami, FL 33137
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.
Gaucho Group reported a net loss of $21.83 million for the year
ended Dec. 31, 2022, compared to a net loss of $2.39 million for
the year ended Dec. 31, 2021. As of March 31, 2023, the Company
had $21.01 million in total assets, $8.60 million in total
liabilities, and $12.40 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.
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B R A Z I L
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AMERICANAS SA: Billionaire Trio Agree to Lock-Up Period
-------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that the main
shareholders at embattled Brazilian retailer Americanas SA
tentatively have agreed to retain their stake for about three years
as part of a restructuring plan.
The precise lock-up period for the billionaires Jorge Paulo Lemann,
Marcel Telles and Carlos Sicupira is still under discussion and
creditors are requiring it to last into 2027 as a guarantee
shareholders will keep helping to rescue the company, the people
said, asking not to be named because the negotiations are not
public, according to globalinsolvency.com.
Lemann, Telles and Sicupira declined to comment.
Americanas is negotiating a restructuring plan with banks after it
disclosed a 20 billion real ($4.1 billion) accounting hole that
doubled it's debt, prompting a rush by creditors to demand early
repayment and leading to a bankruptcy protection filling, the
report notes. Under the plan, the billionaire trio would pour 10
billion reais immediately into the company, and consider an
additional 2 billion reais in two separate installments - one in
2026 and another in 2027 - depending on the firm's financial
situation, the report adds.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust
e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in Rio
de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25,
2023. White & Case LLP, led by John K. Cunningham, is the U.S.
counsel.
AZUL SA: Launches Exchange Offer as Part of Restructuring Plan
--------------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Brazilian
airline Azul launched exchange offers aimed at pushing forward
bonds originally set to mature in 2024 and 2026, the latest move in
a broader restructuring plan it expects to remove an overhang on
its stock.
The exchange offers total $1 billion and follow a deal with
aircraft lessors to give them equity and tradeable debt in exchange
for lower payments, a deal seen reducing lease payments by a total
5.4 billion reais ($1.11 billion) in the long term, according to
globalinsolvency.com.
Azul said in a securities filing it would look to exchange 5.875%
notes due 2024 and totaling $400 million for newly issued 11.5%
notes due 2029, while $600 million in 7.25% notes maturing in 2026
would be exchanged by 10.875% notes due 2030, the report discloses.
"Markets were looking a lot at Azul's short term debt, and we are
going to get it all out of our way," Azul CEO John Rodgerson told
Reuters in light of the announcement. "That's going to give a lot
of track for Azul to really take off now." Rodgerson acknowledged
the interest paid on the new notes would be higher because of the
"complex" global scenario of high rates, but assured the move would
be beneficial for both the company and bondholders, with 100% of
the notes set to be paid, the report adds.
As reported in the Troubled Company Reporter-Latin America on Feb
22, 2023, Moody's Investors Service has downgraded to Caa2 from B3
Azul S.A. (Azul)'s corporate family rating. At the same time,
Moody's has downgraded to Caa3 from Caa1 the rating of the senior
unsecured notes issued by Azul Investments LLP and unconditionally
guaranteed by Azul. The outlook for all ratings is negative.
BRAZIL: Halts Hydroelectric Power Exports to Argentina and Uruguay
------------------------------------------------------------------
Lachlan Williams at Rio Times Online reports that Brazil has paused
the export of surplus hydroelectric power to Argentina and Uruguay,
with energy from thermoelectric plants still being dispatched to
these countries, reports the Chamber of Commercialization of
Electrical Energy (CCEE).
The CCEE noted that the latest dispatch occurred on June 11,
according to Rio Times Online.
However, the operation has not been officially terminated, meaning
energy exports may resume if there's demand, surplus energy in
Brazil, and accessible transmission lines, the report notes.
This change aligns with the end of Brazil's wet season, which had
filled reservoirs and spurred energy exports, reducing tariffs, the
report 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).
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C O L O M B I A
===============
GRAN TIERRA: Fitch Affirms LongTerm IDRs at 'B', Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Gran Tierra Energy Inc.'s (GTE) and Gran
Tierra Energy International Holdings Ltd's (GTE International)
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
at 'B'. The Rating Outlook is Stable. In addition, Fitch has
affirmed the 2027 USD300 million and 2025 USD300 million senior
unsecured notes at 'B'/'RR4'.
GTE's ratings and Outlook reflect an adequate capital structure and
low-cost operating profile, constrained by small scale of
operations and limited geographic diversification. Fitch forecasts
the company's gross production will grow at a CAGR of 15% over the
next three years, reaching an average of 47,000boed by YE2025,
while maintaining PDP and 1P reserve life at 4.0 years and 7.0
years, respectively. Fitch estimates GTE's debt/1P should be at or
below USD7/boe, and gross EBITDA leverage at or below 2.0x, over
the rating horizon.
KEY RATING DRIVERS
Small Concentrated Production Profile: GTE's ratings are
constrained by its production size, projected to increase to
47,000boed by YE2025, in line with Fitch's positive sensitivity
trigger of 45,000boed. The company has a concentrated production
profile where the Midas block accounted for 55% of total production
as of 1Q23. GTE's PDP and 1P reserve life is stable and is expected
to be close to 4.0 years and 7.0 years, respectively, in 2023.
Ambitious Growth Strategy: Fitch expects total production to reach
47,000boed by YE2025, at a CAGR of 15% from YE2022 production.
Growth will come mainly from the Acordionero field as the company
continues its development drilling plan while expanding its oil
recovery program through waterflooding and the polymer injection.
In April 2023, GTE renegotiated the agreement with Ecopetrol
(BB+/Stable), extending the duration of Suroriente Block by 20
years.
Low-Cost Production Profile: GTE's is well positioned compared with
peers with half-cycle cost of production of USD22/boe in 2022 and
expected to remain at or below USD20/boe over the next three years,
down from USD25.0/boe in 2021. The company's half-cycle cost
decreased in 2022 as interest expenses declined by USD7.3 million.
GTE's production profile allows the company greater financial
flexibility to absorb shocks in pricing, as lower cost of
production has allowed GTE to sell at a deeper discount than peers.
The rating case is assuming GTE will sell at an average discount to
Brent of USD12.0/bbl over the rated horizon.
Adequate Capital Structure: GTE's gross leverage is projected to be
1.3x in 2023, assuming an EBITDA of USD441 million and total debt
of USD572 million, and is expected to remain at or below 2.0x over
the rating horizon. Debt/1P is expected to be at or below
USD7.0/boe assuming 1P replacement of 105%. In terms of capex, the
company completed most of its development program in 1Q23,
incurring in USD71 million and adding 12 new production wells.
Fitch's base case assumes that the 2023-2026 USD774 million capex
plan will be funded with internal cash flows without additional
debt.
DERIVATION SUMMARY
Gran Tierra Energy's (GTE) credit and business profile is
comparable with other small independent oil producers in Colombia.
The ratings of SierraCol Energy (B+/Stable) and Geopark (B+/Stable)
are constrained to the 'B' category or below, given the inherent
operational risk associated with the small scale and low
diversification of their oil and gas production.
GTE's improved production profile would be the highest among the
'B'-rated Colombian oil exploration and production companies. Fitch
expects GTE's production will average 47,000boed BY YE2025. GTE's
PDP reserve life is expected to be 4.0 years with a 1P reserve life
7.0 years, which compares well with SierraCol's PDP reserve life of
4.8 years and 1P reserve life of 6.3 years in 2021, and Geopark's
4.0 years and 7.4 years, respectively.
GTE's half-cycle production was USD22.1/boe in 2022 and the
full-cycle cost is expectedto be USD38.3/boe. This is in line with
SierraCol's half-cycle production cost of USD22.4/boe in 2022 and
but higher than its full-cycle cost of USD34.2/boe and Geopark, who
is the lowest cost producer in the region at USD12.7/bbl and
USD24.4/bbl.
GTE's 2023 leverage is expected to be 1.3x, virtually unchanged
from 1.2x in 2022. GTE's total debt to PDP is expected to be
USD12/boe and total debt to 1P be USD7/boe in 2023.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer:
- Fitch's price deck of USD85/bbl in 2023, USD75/bbl in 2024,
USD65/bbl in 2025 and USD53/bbl long term;
- Working interest production of 33,000boed in 2023, and an
average of 45,000boed between 2024-2026;
- Average USD12/bbl discount to Brent over 2023-2026;
- Royalties of USD13/bbl in 2023 and an average of USD10/bbl
from 2024-2026;
- Operating expenses at USD15/boe in 2023, an average of
USD12/boe between 2024-2026;
- Transportation cost of USD1/boe over the rating horizon;
- SG&A cost of USD2.5/boe in 2023 over the rating horizon;
- Capex total of USD744 million between 2023-2026, an average
of USD194 million per year;
- No dividends or share repurchases during 2024-2026;
- 1P Reserve Replacement of 105%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Net production maintained at 45,000boed or more, while
maintaining a 1P reserve life of seven years or greater;
- Maintenance of a conservative financial profile with gross
leverage of 2.5x or below and total debt/1P reserves of
USD8/bbl or below.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Sustainable production size declines to below 30,000boed;
- 1P reserve life declines to below seven years on a sustained
basis;
- A significant deterioration of credit metrics to total
debt/EBITDA of 3.5x or more;
- A persistently weak oil and gas pricing environment that
impairs the longer-term value of its reserve base;
- Sustained deterioration in liquidity below USD200 million
and operating profile, particularly in conjunction with
more aggressive dividend distributions than previously
anticipated.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: GTE reported USD106 million in cash and
equivalents as of 1Q23, plus a credit facility agreement with a
borrowing base of up to USD150 million that remains undrawn.
Furthermore, in 1Q23 the company managed to buy back USD8 million
in face value of Gran Tierra's 2025 notes as part of the company's
ongoing commitment to reduce debt. The rating case assumes GTE's
FCF will be positive between 2023 and 2026.
ISSUER PROFILE
Gran Tierra is an independent energy company with an average oil
production of approximately 33,000boed onshore in Colombia. GTE's
blocks are located in the Middle Magdalena, Llanos and Putumayo
basins. The company had 84MMboe of 1P reserve and 7.5-year reserve
life as of FY22.
ESG CONSIDERATIONS
Gran Tierra Energy International Holdings Ltd. has an ESG Relevance
Score of '4' for GHG Emissions & Air Quality due to the growing
importance of policies designed to limit the greenhouse gas (GHG)
emissions from the production of oil and gas and potentially
lessening demand, which has a negative impact on the credit
profile, and is relevant to the rating[s] 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 Recovery Prior
----------- ------ -------- -----
Gran Tierra
Energy Inc. LT IDR B Affirmed B
LC LT IDR B Affirmed B
senior
unsecured LT B Affirmed RR4 B
Gran Tierra
Energy
International
Holdings Ltd. LT IDR B Affirmed B
LC LT IDR B Affirmed B
senior
unsecured LT B Affirmed RR4 B
=============
J A M A I C A
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JAMAICA: Battle Against Poverty
-------------------------------
Dashan Hendricks at Jamaica Observer reports that Prime Minister
Andrew Holness has told the World Bank Group and the Inter-American
Development Bank (IDB) that he intends to tap their support in
helping to reduce poverty in Jamaica, as the next step in
leveraging stability in the country to benefit more Jamaicans.
Holness was speaking after meeting with the presidents of the World
Bank and the IDB, according to Jamaica Observer. The heads of both
multilateral financiers were in Jamaica earlier on a joint visit,
the report notes.
"Having achieved stability and having now using that to move
towards leveraging private sector investment in the country, we
don't take it for granted that this will automatically result in a
reduction in poverty," Holness said at a press briefing, the report
relays. "Government has to be very deliberate and instrumental in
structuring programs that will lift people out of poverty and, and
the World Bank and the IDB, you have incredible experience,
knowledge, know-how, and, of course, the resources financially to
assist us in programs that will deal with poverty," he continued.
Jamaica's poverty rate is estimated to have declined to 12.6
percent in 2022, from an estimated 23 percent in 2020, the report
discloses.
Holness said in the push to reduce poverty in Jamaica, the
Government will be moving to reform the PATH program under which
welfare benefits are distributed with the help of the multilateral
financiers, the report relays.
Ajay Banga, president of the World Bank Group, who took office
earlier this month, choosing Jamaica as the second country to visit
during his term endorsed the prime minister's push, but said
reducing poverty will take more than enlisting the help of the
World Bank and the IDB, especially in light of an increase in
poverty levels coming out of the COVID-19 pandemic, the report
discloses.
"In many ways, poverty, having taken a sort of setback for the last
four or five years, leads to a conclusion that no matter what we do
over the next few years, there is not enough money in the
multilateral banking system, in the generosity of governments or in
the generosity of philanthropists, to take on the level of
challenge that we all face in our individual spaces. And I think,
therefore, getting the private sector involved, getting its
ingenuity, its capital, its innovation and its energy to come to
work with all of us, meaning government and multilateral
institutions, to make a difference to not just poverty, but living
and eliminating poverty on a livable planet," he said.
His IDB counterpart, Ilan Goldfajn, adding his voice to the
discussion, said the issue must also look at inequality which has
plagued the region, the report relays. He said other issues such
as assessing countries based on vulnerabilities will be analysed,
in response to Holness raising the issue of countries like Jamaica,
through its qualification as a middle-income country, does not
qualify for certain loans or grants, despite being vulnerable to
events such as natural disasters, the report notes. The country
issued catastrophe bonds to help insure against the event of losses
from natural disasters, the report says.
"I think it was a great deal, but it will also be dealt with
through a fund that we can help provide, that you can draw, based
on whatever happened to your country, and I think there's a role
for the multilaterals, but there's also a role for the private
sector to be involved in that," Goldfajn said, the report notes.
Earlier, Finance Minister Nigel Clarke said he is seeing "definite
interest" from other Caribbean countries to join in issuing a
regional catastrophe bond that would protect their budgets from
hurricanes and spread investor risk across more countries, the
report discloses.
"Jamaica will certainly reissue our bond, even if we don't have
anyone else to come with us," Clarke told Reuters in an interview.
"But interest has been indicated and we'll take it from there," he
added, without naming specific countries or dollar amounts, the
report says. Jamaica launched its current catastrophe bond in
2021, the report relays. It was designed and facilitated by the
World Bank, which holds the principal in trust to be paid out in
the event of a disaster to pay for immediate repairs and assistance
that would otherwise strain its budget, the report notes.
The talks came after Banga visited a World Bank-sponsored
greenhouse farm in Manchester where he met with farmers growing
sweet peppers and tomatoes, the report discloses.
"All I am trying to do is two or three things. One is to actually
learn the difference our projects make on the ground. The second
is to meet the local Government and make sure that we can
understand what is in their priority for the development of Jamaica
over the next three to four years. And then we can put our
resources focused to work on development of the right things,"
Banga told the Jamaica Observer.
Banga added that he chose to go to the farm because "I will stifle
in my office. I am not an office kind of guy. I get energy from
people. If you see me interacting with people, [it's because] I
learn from them. I learn from what they tell me, because frankly,
reading a 50-page report is not the same as listening to that
farmer who was explaining to be about those peppers. In five
minutes, I learn more from him than I would have learnt from a
50-page report. I am smart and I learn quick, I don't like reading
50-page reports," the report relays.
He said the priority areas outlined by Clarke include improving
education, digitisation, the cost of electricity and climate
resilience, the report adds.
As reported in the Troubled Company Reporter-Latin America in March
2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
JAMAICA: Local Banks Ready for Release of New Banknotes
-------------------------------------------------------
RJR News reports that local banks in Jamaica say they are ready for
the deployment of the new banknotes which will be in circulation.
National Commercial Bank says 43 of its more than 300 Automated
Banking Machines across the island will be ready to facilitate cash
withdrawals of the new notes between June 15 to 16, according to
RJR News.
The bank says intelligent ABMs at 12 locations will also be able to
accept deposits of the new banknotes, the report notes.
NCB says it plans to complete the upgrade of its entire fleet of
ABMs by September 2023, the report relays.
At the same time, Jamaica National says a few of its ABMs will be
able to dispense the new notes, the report says.
It has listed 10 machines in its network with that function, the
report relays.
However, none of the machines are able to take deposits with the
new notes at this time, the report notes.
The bank says upgrades are being made to facilitate deposits in
short order, the report says.
The Jamaica Bankers Association over the last few weeks has
indicated that all members are working to have ABMs retrofitted for
the deployment of the new polymer banknotes, the report relays.
The Bank of Jamaica will extend its opening hours to 2:00 p.m. to
facilitate the exchange of the new notes, the report notes.
The current banknotes will, however, remain legal tender, the
report adds.
As reported in the Troubled Company Reporter-Latin America in March
2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
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T R I N I D A D A N D T O B A G O
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TRINIDAD GENERATION: Fitch Affirms 'BB' Rating on 2027 Unsec. Notes
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Fitch Ratings has affirmed Trinidad Generation Unlimited's (TGU)
senior unsecured notes due 2027 at 'BB'. The Rating Outlook is
Stable.
The rating reflects TGU's importance to Trinidad and Tobago's
energy matrix and operational integration with its ultimate parent,
the country's government. TGU's generation capacity is fully
contracted under a long-term power purchase agreement (PPA) with
state-owned Trinidad and Tobago Electricity Commission (T&TEC),
with payments under the PPA in turn guaranteed by the government.
KEY RATING DRIVERS
Strong Linkage with Government: Fitch considers TGU's credit
quality as being materially linked to that of Trinidad and Tobago,
given that the PPA between TGU and T&TEC, as off-taker, is fully
backed by a government guarantee. The asset is aligned with the
sovereign's overall strategy to maintain low energy prices as a
competitive edge for private investment. TGU is indirectly
controlled by the government through the National Investment Fund
Holding Company Limited, a company created by the government to
hold its investment in TGU together with holdings of other,
publicly traded assets.
Operational, Financial Performance to Normalize: Fitch expects
TGU's equivalent availability (EA) factor to normalize toward 91%
in 2023 and 93% beyond following corrective measures undertaken in
2022, which would allow TGU to fully receive committed capacity
payments from its only off-taker, T&TEC. T&TEC is obligated to make
capacity payments for 93% of TGU's 720MW capacity, regardless of
its ability to offtake, as long as the plant is available to
supply.
Prospective Stable Cash Flows: The company's strong contracted
position through a 30-year U.S.-dollar-denominated PPA signed with
T&TEC supports the perspective of stable and predictable cash flow,
surpassing the company's maturity of outstanding notes due 2027.
Under the PPA, the government guarantees fuel and water supplies,
and supply interruption of either has no effect on TGU's receipt of
capacity revenues. Approximately 99% of TGU revenues stems from the
capacity payments, with energy sales making up the balance. Fitch
forecasts FCF to remain structurally positive over the rating
horizon, supported by moderate capital investments and a
conservative dividend distribution policy.
Capital Structure: Fitch expects structural leverage to sustain at
around 6.7x in the intermediate term. Leverage increased to 11.6x
in 2022 as a result of the lower EA factor of the plant due to the
unplanned outages. The company's prospective leverage, given its
very low business risk and stable cash flows, is consistent with
investment-grade peers that operate under toll-based revenue
structures with little or no market-based risks, akin to electric
transmission and pipeline companies. The average debt service
coverage ratio (DSCR) is expected to remain above 2.0x, which is
considered strong for a generation company with an amortizing debt
structure.
Strategically Important Asset: TGU owns and operates a 720MW net
capacity combined-cycle gas-fired plant, representing 34% of the
country's installed capacity and covering approximately 55% of the
country's average demand. The thermal power plant's operations are
supported by the country's large natural gas reserves. Under the
sovereign's natural gas policies, the power sector receives
priority for delivery of natural gas in the event of curtailments
in gas supply.
DERIVATION SUMMARY
TGU's counterparty risk with the Trinidad and Tobago government
effectively anchors its rating at a level below that of toll-based
peers. These include Chile's GNL Quintero S.A. (GNLQ; A-/Stable)
and Transelec S.A. (BBB/Stable), both of which benefit from Chile's
strong operating environment and regulatory framework.
GNLQ's gross leverage fell to 3.8x at fiscal 2022 year-end, in line
with Fitch's expectations. TGU's leverage, by contrast, is expected
to approximate 7.0x until its notes begin amortizing in 2025. TGU's
notes are rated three notches below those of Transelec, whose
leverage should remain at around 6.0x-6.5x as the company expands
operations in Chile.
KEY ASSUMPTIONS
- The plant sustains 93% effective availability during forecast
period, but remains at 91% in 2023 due to scheduled maintenance; in
line with the stipulation of the Power Purchase Agreement (PPA).
- PPA prices linked to inflation;
- 2023 capex around USD24.6 million for a periodic maintenance
year, then averaging at USD12 million through forecast;
- Annual dividends of USD11 million through forecast.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- A material improvement in the country's overall economic
condition.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A deterioration of macroeconomic conditions resulting in weaker
sovereign indicators;
- A material de-linkage from the government;
- A debt service coverage ratio below 1.5x on a sustained basis.
LIQUIDITY AND DEBT STRUCTURE
Healthy Liquidity: TGU's liquidity is strong, with the company
holding USD167.2 million in cash and short-term investments as of
Dec. 31, 2022. The high liquidity levels will sustain in the near
term, but likely be reduced to a USD40 million working cash balance
beyond 2025 as the company uses around USD200 million to reduce the
principal of its USD600 million bond coincident with a refinancing
of the balance.
ISSUER PROFILE
TGU owns and operates a 720MW net capacity combined-cycle gas-fired
plant located in the Republic of Trinidad & Tobago. TGU is
controlled by the government of the Republic of Trinidad & Tobago
(GRTT) through a holding company, the National Investment Fund
Holding Company Limited.
ESG CONSIDERATIONS
Trinidad Generation Unlimited has an ESG Relevance Score of '4' for
Governance Structure due to ownership concentration as a wholly
government-owned entity and the inherent governance risk that
arises with a dominant state shareholder, which 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
----------- ------ -----
Trinidad Generation
Unlimited
senior unsecured LT BB Affirmed BB
*********
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.
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of the same firm for the term of the initial subscription or
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