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/raid1/www/Hosts/bankrupt/TCRLA_Public/230710.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, July 10, 2023, Vol. 24, No. 137 Headlines A R G E N T I N A ARCOR SAIC: Fitch Affirms 'B' LongTerm IDRs, Outlook Stable ARGENTINA: Massive Bus Strike Sparks Transport Chaos in Capital ARGENTINA: Short on Dollars, Makes IMF Loan Repayment MASTELLONE HERMANOS: Fitch Affirms 'B-' IDRs, Outlook Stable B R A Z I L BRAZIL: Experiences Foreign Trade Gains & Inflation Slowdown BRAZIL: Real to Take Support From Improving Economic Outlook MC BRAZIL: Fitch Downgrades LongTerm IDRs to 'B+'; Outlook Stable C H I L E INVERSIONES LATIN AMERICA: Fitch Lowers $403MM Secured Notes to C C O L O M B I A ECOPETROL: Fitch Rates Up to USD2-Bil. Unsec. Notes 'BB+' ZACAPA: S&P Upgrades ICR to 'B' on Expected Deleveraging D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Granted Loans RD$4.3B+ for Entrepreneurship E C U A D O R PRODUBANCO: Fitch Affirms 'B-' LongTerm IDR, Outlook Negative M E X I C O BRASKEM IDESA: Fitch Cuts IDRs to 'B+'; On Rating Watch Negative P A N A M A CFG INVESTMENTS 2023-1: S&P Assigns Prelim. B(sf) Rating on D Notes P A R A G U A Y BANCO CONTINENTAL: Fitch Affirms 'BB+' LongTerm IDRs P E R U ORAZUL ENERGY: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable P U E R T O R I C O GUR-MEAT INC: Court OKs Cash Collateral Access Thru July 6 PUERTO RICO: Fitch Affirms Ratings on PREPA T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Blinken Raises Concerns about Venezuela X X X X X X X X [*] BOND PRICING COLUMN: For the Week July 3 to July 7, 2023 - - - - - ================= A R G E N T I N A ================= ARCOR SAIC: Fitch Affirms 'B' LongTerm IDRs, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed Arcor S.A.I.C.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B'. The Rating Outlook is Stable. Fitch has also affirmed Arcor's Long-Term senior unsecured bond rating at 'B+'/'RR3'. Arcor's 'B' Foreign Currency IDR is one notch higher than Argentina's 'B-' Country Ceiling rating. This reflects Fitch's expectations that the company will be able to cover its hard currency interest expense with a combination of cash held abroad, export earnings and cash flow from subsidiaries outside of Argentina. The ratings also incorporate Fitch's assumption that the company will continue its delevering efforts. The 'RR3' Recovery Rating reflects above average recovery expectation for creditors in the event of default. It is supported by the historical precedent of numerous distressed debt exchanges by Argentine corporates that did not result in a reduction in principal. KEY RATING DRIVERS Strong Business Position: Arcor's ratings reflect the company's strong business position as a leading Latin American producer of confectionary and cookie products. The company's vertical integration ensures the quality of supplies, as well as the availability of main inputs. Arcor's brand names and distribution platform support its leading market shares in chocolates, candies, cookies and packaging in Argentina, its main market. Argentina, including exports to third parties, contributed over 70% of sales and 80% of EBITDA in 2022. The company's brands reach consumers in over 100 countries, but the majority of the other revenue and EBITDA came from the Andean region (11% and 12%, respectively). Foreign Currency IDR Rated Above Country Ceiling: Fitch projects that Arcor has sufficient cash holdings abroad and cash generation from exports and offshore operations to comfortably cover its hard currency interest payments over the next 12 months. Fitch's criteria for rating Foreign Currency IDRs higher than an issuer's applicable Country Ceiling evaluates the relationship between 12 months of foreign currency debt service and cash held abroad, cash generated by exports, undrawn committed credit lines and cash flow from foreign operations. If the ratio derived from the sum of these factors covers debt service by more than 1.0x-1.5x for 12 months, the issuer's Foreign Currency IDR may be notched one level above the applicable Country Ceiling. Low Leverage: Fitch expects Arcor's debt/ EBITDA to increase to 2.8x in 2023 (2.3x in 2022) and for it to remain at or under 2.5x over the ratings horizon. The company successfully repaid the balance of its 2023 bond maturity in May of this year with three local bond issuances amounting to approximately USD177 million (about USD100 million in pesos and USD77 million in USD-linked notes). With these transactions, the company lowered its USD debt exposure to just over half of its total debt. EBITDA is expected to decline in 2023 but remain around USD300 million. Fitch expects both revenues and margins to be pressured this year reaching nearly USD3 billion and 9%, respectively. The deterioration of the metrics reflects the current economic challenges facing Argentina resulting from FX imbalances and hyperinflation, as well as the expected weaker macro conditions in the region. Arcor and Bagley Call Option: Arcor S.A.I.C. and Bagley Argentina, S.A. together own about 49% of the shares of Mastellone Hermanos Sociedad Anonima (B-/Stable), a leading dairy producer in Argentina, for a total investment of USD134 million. Arcor has a call option for Mastellone's outstanding corporate stock that started in 2020 and lasts until 2025. Mastellone also has a put option during the same period. Fitch sees Mastellone as strategic for Arcor in the long term. DERIVATION SUMMARY Arcor's 'B' Foreign Currency IDR is well-positioned in its rating, given the company's vertically integrated model as a leading Latin American producer of confectionary and cookie products, paired with the group's export capacity and presence in several Latin American countries outside of Argentina. A business profile constraint is Arcor's moderate size relative to other large consumer goods companies, such as Nestle SA (A+/Stable) or Grupo Bimbo, S.A.B. De CV (BBB+/Stable), which have global presences. To increase its regional presence, Arcor has grown organically and non-organically and entered into partnerships. However, the company's operations remain significantly concentrated with Argentina representing more than 80% of EBITDA. Fitch estimates Arcor's Debt to EBITDA was around 2.3x in 2022 and expects it to remain around 2.5x within the ratings horizon. This compares favorably to its investment-grade peers like Alicorp S.A.A.(BBB/Stable), Bimbo, and Nestle, which all have gross leverage ratios within similar ranges. Arcor has lower gross leverage than Kraft Heinz Corporation's (BBB-/Stable), which is expected to be around 3.5x. In terms of profitability, Arcor's projected 2023 EBITDA margins of nearly 9% compare to Alicorp's at around 10%. The company's margins lag the rest of its peers. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case of the Issuer: - Revenue growth driven by inflation & real GDP growth; - EBITDA to remain near USD300 million 2023-2025; - Capex of about USD60 million for 2023-2025; - Dividends of USD40 million in 2023, USD20 million in 2024; - Debt/EBITDA approximately 2.8x in 2023 and then trend lower. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - An upgrade of Argentina's sovereign rating would lead to an upgrade of Arcor's Foreign Currency IDR, given the high level of cash generated from Argentine operations; - Gross debt/EBITDA below 2.5x on a sustained basis could lead to revision of the Outlook or an upgrade of the Local Currency IDR; - A significant improvement in Arcor's liquidity position. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Debt/EBITDA above 4.0x on a sustained basis; - Exports, cash abroad and committed bank lines not covering hard currency interest expense and debt amortization by 1.0x-1.5x over 12 months could lead to a downgrade of the Foreign Currency IDR; - A downgrade of Argentina's Country Ceiling would likely lead to a negative action on the Foreign Currency IDR or Outlook. LIQUIDITY AND DEBT STRUCTURE Manageable Liquidity: As of YE 2022, Arcor had approximately ARS20 billion (USD111 million) of cash and cash equivalents and short-term debt of ARS66 billion. Approximately 64% of total debt was in U.S. dollars. As of May 2023, the company repaid the balance of its 2023 notes with several local bond issuances. With this the company has extended these maturities to 2025 and beyond and reduced USD denominated debt to 54% of total debt. The only remaining international bond is a USD275 million 8.25% amortizing note due in 2027 that was issued as part of last year's debt exchange transaction. The company has strong access to bank lines to finance exports and local sources of financing to manage short-term debt. Capital controls pose a risk to all Argentine companies seeking to refinance USD denominated bonds. Nevertheless, Argentinean companies have been able to refinance their debt through local markets and Fitch expects Arcor to continue to do so. ISSUER PROFILE Arcor is a leading Latin American producer of confectionary products and cookie products. The company operates industrial plants and distribution centers in Argentina, Brazil, Chile, Peru, Mexico, and Angola. Arcor is a leader in the Argentine market and has an extensive international sales network with offices around the world. ARGENTINA: Massive Bus Strike Sparks Transport Chaos in Capital --------------------------------------------------------------- Buenos Aires Times reports that a massive bus strike over a pay dispute complicated public transport, dampening the mood of passengers and commuters in and around the Buenos Aires Metropolitan Area. Adding to the problems, a surprise walkout on a major railway line leading into the capital further added further complications, according to Buenos Aires Times. As early morning dawned in Buenos Aires, the streets were mostly empty of "colectivos", as buses are commonly known in the capital, the report notes. Almost total compliance with a stoppage of activities called by the Union Tranviarios Automotor (UTA) bus-drivers' union left tens of thousands of portenos stranded, the report discloses. The strike also affected Buenos Aires' overcrowded suburbs, as well as the city of La Plata (south) and six other provinces across the country, the report relays. The walkout comes with inflation running at more than 114 percent year-on-year and purchasing power falling, the report discloses. Collective bargaining talks for bus-drivers with President Alberto Fernandez's government have mostly failed, even though the Peronist leader ordered a wage hike for the sector. Bus companies, however, have refused to comply and are demanding higher subsidies to compensate for slumping profits, the report says. In a press release advertising the strike, the UTA accused employers of backtracking on "agreed salary raises," the report notes. Argentina's public transport service is run under concessions, though it is heavily subsidised by the state to keep ticket prices low, the report relays. Fares have been increasing month by month yet the cheapest bus journey still costs around 50 pesos (US$0.18), one of the lowest prices in Latin America, the report says. "We want to be paid [according to] the government's resolution. We want to be paid," declared trade union leader Roberto Fernández, head of UTA, the report notes. Economy Minister and presidential candidate Sergio Massa criticised company bosses, accusing them of being "parasites of the State" who were blocking "the right of people to travel," the report discloses. 'Lockout' The government has called a conciliatory meeting between transport employers and workers with the intention of resolving the conflict, the report notes. "We regret the situation that has arisen as a result of this lockout, which has a response from the workers when they do not receive the amounts that the government deposited in the accounts of the companies and should be paid as agreed," Transport Minister Diego Giuliano said in an interview on the C5N television news channel, the report relays. Strike heavily affected normal life in the capital, with the Subte underground metro service the only arm of public transport working as normal, the report discloses. Many schools and public universities in and around the capital suspended activities, with companies following suit and ordering employees to work from home, the report notes. Some 11 million people travel daily on the 388 bus lines in the Buenos Aires Metropolitan Area, with a total of 18,400 units in operation in the capital and its periphery, according to a 2019 study by the University of San Martin, the report notes. Single-line companies coexist with multi-line companies, with large firms accounting for almost 70 percent of the service, the report discloses. Further complications were added by a surprise stoppage on the Sarmiento train line, with thousands of passengers left stranded at the Once railway terminal, the report relays. Around 20 employees took to the train-tracks at Castelar station (40 kilometres to the west of the capital) to prevent trains from departing, the report says. Some 300,000 people travel daily to and from the capital and its western outskirts, with the line out of service for several hours until mid-morning, 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. ARGENTINA: Short on Dollars, Makes IMF Loan Repayment ----------------------------------------------------- Buenos Aires Times reports that short on dollars, Argentina's government has made a US$2.7-billion loan repayment to the International Monetary Fund partly using Chinese yuan. To avoid dipping further into its limited foreign currency reserves, Argentina's Economy Ministry said the country had also used so-called Special Drawing Rights or SDRs - an asset created by the IMF to supplement countries' official reserves - for part of the payment due, according to Buenos Aires Times. The report notes that IMF spokeswoman Julie Kozack in a statement confirmed: "The Argentine authorities continue to remain current on their financial obligations to the Fund." Presidential spokeswoman Gabriela Cerruti told reporters that the payment would be made "partly with Special Drawing Rights from the Treasury and partly with yuan, without using Central Bank reserves," the report discloses. Argentina reached a deal with the IMF last year to restructure a loan of US$44 billion - the legacy of a record loan contracted in 2018 under former president Mauricio Macri, the report relays. President Alberto Fernandez's government is attempting to grapple with the largest IMF assistance programme as it grapples with year-on-year inflation running at 114 percent, a severe shortage of foreign exchange and a poverty level of about 40 percent, the report relates. A record drought has seen agriculture exports plummet, slashing billions off gross domestic product, the report notes. Back in April, Economy Minister Sergio Massa said Argentina would use yuan to pay for Chinese imports instead of US dollars in order to preserve its reserves after securing an extension of a currency swap agreement with Beijing, the report discloses. "IMF staff and the Argentine authorities will continue to advance their work in the coming days, with the aim of reaching agreement on the fifth review of the Fund-supported programme," said Kozack, the report relates. The IMF official said technical discussions continue with Argentina "on a policy package to safeguard economic stability in the context of a challenging situation, partly affected by the historic drought, the report notes. "Discussions are focused on strengthening macroeconomic policies to support reserve accumulation and improve fiscal sustainability, while protecting the most vulnerable," the report discloses. The refinancing deal struck last year requires of Argentina to boost its international reserves and reduce the fiscal deficit, 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. MASTELLONE HERMANOS: Fitch Affirms 'B-' IDRs, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed Mastellone Hermanos Sociedad Anonima's Long-Term Foreign Currency Issuer Default Rating (IDR) and Local Currency IDR at 'B-'. The Rating Outlook is Stable. In addition, Fitch has affirmed Mastellone's senior secured debt-class rating at 'B-'/'RR4'. The ratings reflect Mastellone's manageable debt maturity profile, leverage, and interest expenses. The ratings also assume that Mastellone will be able to refinance short-term maturities in the local markets. The Long-Term Foreign Currency IDR is constrained by Argentina's 'B-' Country Ceiling. KEY RATING DRIVERS Moderate Leverage: Fitch expects gross leverage in ARS to be upwards of 3.5x in 2023 but remain under 4x over the next 18 months. Fitch forecasts EBITDA to remain around USD75 in 2023 and 2024. This represents a deterioration from 2022 where gross leverage in ARS was 2.3x and EBITDA reached USD115 million. Fitch expects operating performance to be under pressure in 2023 as a result of economic imbalances in Argentina affecting milk consumption and margins. The excellent results in 2022 were attributable to significant price increases of milk and related products and improved performance of the Leitesol brand in Brazil. Comfortable Debt Maturity Profile: Mastellone has a comfortable debt maturity profile. Over the next 12 months, the company has a local bond maturity of nearly USD12 million in December 2023, a USD33 million local note due in June 2024, and amortization payments on a USD44 million secured loan. The local bonds are USD and UVA denominated, but payable in pesos. The ratings incorporate the assumption that the company will be able to refinance the notes in the local markets as Argentinean investors seek protection from rampant inflation through USD linked or inflation protected instruments. Mastellone also has a secured USD111 million bond due in June 2026. Geographic Concentration: Mastellone is concentrated in Argentina (CC), where it generates 80% of its sales. This exposes the company to hyperinflation and other direct and indirect sovereign-related risks, including currency depreciation. In 2022, the company generated about 11% of sales in Brazil (BB-/Stable) and Paraguay (BB+/Stable) and 9% from exports. Exposure to Currency Risk: The majority of Mastellone's debt is denominated in USD and over 80% of sales are in Argentine pesos. Mastellone refinanced its debt in 2021 and reduced its exposure to USD by extending the larger portion of its debt repayments to 2026. Capital controls in Argentina limit access to U.S. dollars and Fitch expects these to be in place for the time being. The difficulty in accessing foreign currency increases refinancing risk for all Argentinean companies. Exports and operations overseas mitigate this risk for Mastellone. Volatility of Raw Milk Production: The company is exposed to raw milk production volatility, and a shortage could interrupt the company's export and foreign businesses, or increase production costs. Mastellone's business is divided among sales to Argentine, Brazilian and Paraguayan domestic markets and exports, with excess raw milk supply exported. Strong Business Position: Mastellone is the largest dairy company and the leading processor of dairy products in Argentina, operating as the number one player in the fluid milk market, based on physical volume, with a market share of approximately 65%. The company maintains the No. 1 or No. 2 market position in most of its product lines, and its strong market shares allow Mastellone to benefit from economies of scale in production, marketing and distribution. The company purchases about 13% of all raw milk in Argentina, which provides it with a degree of negotiating power. Arcor and Bagley Call Option: Fitch views Mastellone as strategic for Arcor in the long term. Arcor S.A.I.C. and Bagley Argentina, S.A., together, own about 49% of Mastellone's shares, and Arcor has a call option for outstanding corporate stock of Mastellone that started in 2020. DERIVATION SUMMARY Mastellone is Argentina's largest dairy company and leading processor of dairy products, with a market share of 65% in fluid milks and 30% across all dairy products in terms of total volume. The company's ratings are limited by Argentina's 'B-' Country Ceiling. Mastellone has a weaker position in scale, product diversification, profitability and geographic diversification compared with international peers such as Fonterra Co-operative Group Limited (A/Stable), Nestle SA (A+/Stable), Sigma Alimentos, S.A. de C.V. (BBB/Stable) and Arcor (B/Stable). KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case of The Issuer: -- Revenues remain relatively flat vs. 2022; -- EBITDA and EBITDA margin approaching USD75 million and 7% for 2023-2025; -- Debt/EBITDA remains below 4x in ARS or 3x in USD for 2023-2025; -- No material sales under public bids within the ratings horizon; -- Exports decline in 2023 due to FX imbalances but pick up in 2024 and 2025 assuming a peso devaluation. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade of the Argentine sovereign could result in a positive rating action for the Foreign Currency IDR; -- Increased ownership above 50% by Arcor and Bagley could result in positive actions for both the Foreign and Local Currency IDRs. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of Argentina's country ceiling rating would likely lead to a negative rating action on the Foreign and Local Currency IDRs; -- Debt to EBITDA above 5x on a sustained basis. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Mastellone's liquidity is adequate. Cash position as of 1Q2023 was ARS6.3 billion or approximately USD30 million. The debt is comprised of the USD111 million secured bond due in June 2026, a five-year USD44 million secured loan amortized over 15 quarterly periods beginning March, 2024. Mastellone has two local bonds due in 2023 and 2024 which Fitch expects the company to refinance with local USD linked issuances. ISSUER PROFILE Mastellone is the largest dairy company and the leading processor of dairy products in Argentina. It is first in the fluid milk market, based on physical volume. The company maintains the No. 1 or No. 2 market position in most of its product lines. 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. =========== B R A Z I L =========== BRAZIL: Experiences Foreign Trade Gains & Inflation Slowdown ------------------------------------------------------------ Rio Times Online, citing Poder360, reports that Brazil has witnessed gains in foreign trade over the past three months, benefiting from the reopening of the Asian market and increased income due to social benefit payments, according to Luciana Servo, the president of the Institute of Applied Economic Research (Ipea). These findings will be published in the forthcoming Conjuncture Letter Overview, which analyzes the macroeconomic situation, the report notes. Luciana Servo emphasized the positive outcomes of increased exports, which contribute to Brazil's economic growth by bringing in foreign resources, 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 will be sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. In July 2022, Fitch Ratings affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating at 'BB-' and revised the Rating Outlook to Stable from Negative. In June 2022, S&P Global Ratings also affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil. Moody's, in April 2022, affirmed Brazil's long-term Ba2 issuer ratings and senior unsecured bond ratings, (P)Ba2 senior unsecured shelf ratings, and maintained the stable outlook. On the other had, DBRS, in August 2022, confirmed Brazil's Long-Term Foreign and Local Currency Issuer Ratings at BB (low). BRAZIL: Real to Take Support From Improving Economic Outlook ------------------------------------------------------------ Rio Times Online, citing Reuters, reports that Brazil's currency will likely enjoy some support in the near term from faster economic growth and progress on reforms, despite the prospect of less favorable interest rate spreads ahead, a Reuters poll showed. The real appreciated last month to its firmest level in a year after several forecasts were improved and key fiscal changes proposed by the government of President Luiz Inacio Lula da Silva made headway in congress, according to Rio Times Online. The real is seen gaining a further 0.6% in three months to 4.81 per U.S. dollar from 4.84, according to the median estimate of 26 foreign exchange analysts surveyed June 30-July 3, the report notes. "The local story has turned more constructive, with Lula's administration largely moderating versus initial expectations set in November," said Erick Martinez, Latin America FX & rates strategist VP at Barclays, the report notes. In 12 months, the real is expected to lose 3.2% to 5.00 per U.S. dollar, but that would be a relatively small drop for the Brazilian currency, still leaving it trading close to its mid-point since 2020, the report discloses. Some economists warned of diminishing "carry trade" value for the real into next year, given that Brazil's central bank will probably inaugurate a phase of gradual policy easing soon, following marked disinflation trends in recent months, the report adds. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He will be sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. In July 2022, Fitch Ratings affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating at 'BB-' and revised the Rating Outlook to Stable from Negative. In June 2022, S&P Global Ratings also affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil. Moody's, in April 2022, affirmed Brazil's long-term Ba2 issuer ratings and senior unsecured bond ratings, (P)Ba2 senior unsecured shelf ratings, and maintained the stable outlook. On the other had, DBRS, in August 2022, confirmed Brazil's Long-Term Foreign and Local Currency Issuer Ratings at BB (low). MC BRAZIL: Fitch Downgrades LongTerm IDRs to 'B+'; Outlook Stable ----------------------------------------------------------------- Fitch Ratings has downgraded MC Brazil's Long-Term Issuer Default Ratings (IDRs) to 'B+' from 'BB-'. The Rating Outlook is Stable. Fitch has also downgraded MC Brazil's USD1,800 million senior secured notes due 2031 to 'B+'/'RR4' from 'BB-'. MC Brazil's downgrade reflects the materially lower expectation of cash flows, driven by compressed crack spreads through the rating horizon, which in turn deteriorate leverage and coverage ratios beyond downgrade triggers. Fitch expects MC Brazil will realize a weighted average crack spread of USD10/bbl between 2023 through 2026, below the USD13.6/bbl realized in the 2022. KEY RATING DRIVERS Tightening Spreads Constrain Cash Flow: Fitch estimates that MC Brazil's weighted average spread for 2023 will be USD10.7/bbl, down from USD13.6/bbl in 2022. The expectation of lower spreads across the product portfolio and through the rating horizon increases Fitch's leverage forecast to 5.7x in 2023 and to average 5.4x thereafter, which is reflective of a weaker credit profile. The elevated leverage is offset by the amortizing structure of its debt, adequate levels of cash on hand of USD440 million at 1Q23 and committed credit lines of close to USD600 million to help support its liquidity in volatile periods. Competitive Location: The location of MC Brazil's Mataripe Refinery (REFMAT) in northeastern Brazil bodes well for the company's competitiveness as the bulk of refining capacity in Brazil is located in the south and southeast. Its location and Brazil's current deficit in refined products support the company's continuation of import parity pricing seen in Brazil in recent years. The company may be able to import medium sweet crude oil feedstock at competitive prices given recent geopolitical developments. Operational Improvements: The company executed a $261 million capex program in 2022 investing in eight units that is expected to improve the refinery's availability, efficiency, and extended its residual life by at least 20 years and pushes major maintenance capex to 11 years from the previous assumed five years. Fitch is assuming an average utilization rate of 82% over the rated horizon, above the historical average of 72% and increase in diesel production from an average of 30% of total production to nearly 40%. Domestic Pricing Policies: MC Brazil's cash flow are vulnerable to domestic pricing policies for gasoline and diesel, as well as its ability to source oil domestically. In 2022, the company faced challenges sourcing domestic oil, as independent oil producers prioritized exports over domestic sales, as a tax arbitrage. The National Agency of Petroleum for Brazil (ANP) has since introduced regulation, new transfer price law, that will take effect in January 2024 that assigns a flat tax at a reference price that more closely reflects international prices; this regulation is expected to generate roughly BRL30 billion in annual revenues for the federal government. Resilient Debt Service Coverage Levels: Under the rating case, which assumes average crack spreads for REFMAT of $9.8/bbl over the next five years, the company is expected to report an average debt service coverage ratio (DSCR) of between 1.2x and 1.8x. The rating case assumes average utilization rates of approximately 82% through the rating horizon. DERIVATION SUMMARY MC Brazil's ratings reflect its status as a single-site, medium complexity refiner with a competitive geographic location. The company has a nameplate capacity of 302,000 barrels per day (bpd), which compares with CVR Energy, Inc.'s (BB-/Stable) nameplate capacity approximately 206,500 bpd. MC Brazil is smaller than peers Valero Energy Corporation (BBB/Stable) with 2.6 million bpd and Marathon Petroleum Corporation (BBB-/Positive) with 3.0 million bpd. MC Brazil is also smaller than peers PBF Holding Company LLC (BB-/Stable) with 1.04 million bpd and HollyFrontier Corporation (BBB/Stable) with 457,000 barrels of oil equivalent per day of high complexity capacity. The company's location is comparable with other mid-continental refineries in U.S. such as CVR Energy and HollyFrontier, which gives these companies a competitive advantage in sourcing crude oil close to production facilities while having more control on product pricing, particularly for domestic sales. MC Brazil should be well positioned to take advantage of higher than normal VLSFO crack spreads that may prevail for the next few years as a result of its ability to access low sulfur crude oils from Brazil and the implications from International Maritime Organization's 2020 rules for low-sulfur bunker fuels. MC Brazil's expected average gross leverage, defined as total debt/EBITDA, of 2.0x is generally in line with 'BB' to 'BBB' peers, with leverage 1.4x-2.0x. The main differentiator among issuers versus 'BBB' peers is primarily size, geographic diversification and business line diversification. KEY ASSUMPTIONS Fitch's Key Assumptions Within Fitch Rating Case for the Issuer Include: - Brent oil prices of $80/bbl in 2023, $75/bbl in 2024, $70 in 2025 and $60/bbl for the long term; - Crack spreads in Brazil's Northeast region range between $8.3-$9.3 per bbl over the forecasted period; - Utilization rate of 82% through the rating horizon - Average operating expenses of $7.1/bbl; - Average capex of $100 million per year over the rating cycle; - No payments to shareholders through the rating horizon; - Cash flows from hedging activities are not being incorporated in the base case. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Greater operations and earnings diversification or evidence of lower cash flow volatility; - Sustained debt/EBITDA leverage at or below 3.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Sustained DSCR below 1.0x; - Net Debt to EBITDA above 4.5x on a sustained basis; - EBITDA/Interest Expense below 2.0x; - Cash balance below BRL 2.0 billion. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: MC Brazil's liquidity position benefits from a six months debt service reserve account as well as an initial cash on hand policy of USD300 million funded at time of acquiring Landulpho Alves Refinery from Petrobras. This liquidity position covers approximately two years of debt service, which helps the company mitigate short-term effects in cash flow from price volatility in crude oil or refined products. The company also has access to a USD1 billion bank guarantee to support crude purchases, which include USD600 million of bank lines available. MC Brazil's debt primarily consists of USD1.8 billion amortizing debt, as well as any drawn amounts from its line of credit. The company may also incur limited additional indebtedness per the terms of the indenture. The notes have a sculpted amortization, as well as cash sweep provision driven by a combination of leverage and a target bullet amortization of USD500 million in 2031. The notes also have a minimum cash sweep mechanism of 25% of cash flow available sweeps while leverage is below 2.5x. The cash sweep increases by 25pp for leverage of 2.5x-3.0x, and reaches 75% should leverage surpass 3.0x. The debt issuance benefits from a cash waterfall structure that serves operating expenditures, crude purchases, capex, taxes and commodity hedging first; senior secured debt service and other financial obligations second; funding debt service reserve accounts third; making any debt service from cash sweep provisions; and lastly to make distributions to shareholders and other payments subject to restricted payment tests. The senior secured notes are collateralized by all material existing and future assets of the company, shares of the issuer and company, rights in all material contracts and by accounts receivable. The collateral excludes the liquidity facility for crude purchases. The covenants under the notes include restricted payment provisions. ISSUER PROFILE MC Brazil was formed for the purpose of acquiring and operating the Landulpho Alves Refinery, now REFMAT, from Petrobras. The refinery sells its products to Brazil's north and northeast regions and also exports fuel oils. REFMAT produces 30% Diesel, 17% Gasoline, 39% Fuel Oil, and the balance is other oil products. Although relatively large, REFMAT is a single site refinery, which impacted the company's cashflow generation due to disruptions from longer than expected downtime in 2022 and the first half of 2023. REFMAT's medium complexity (Nelson complexity index of 7.7) results in high fuel oil yields of approximately 35%, which the company expects to export as very low sulphur fuel oil (VLSFO). ESG CONSIDERATIONS MC Brazil Downstream Participacoes S.A. has an ESG Relevance Score of '4' for GHG Emissions & Air Quality due to the nature of the refining business and the emissions associated to it 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. ========= C H I L E ========= INVERSIONES LATIN AMERICA: Fitch Lowers $403MM Secured Notes to C ----------------------------------------------------------------- Fitch Ratings has downgraded Inversiones Latin America Power Limitada's (ILAP) USD403.9 million senior secured notes to 'C' from 'CC'. The notes are supported by cash flows from two windfarms in Chile, San Juan, S.A. (San Juan) and Norvind, S.A. (Totoral). The downgrade reflects Fitch's understanding that a default could be imminent given the lack of liquidity against the upcoming July 3rd debt service payment. Since last year, ILAP's financial profile has been continuously and profoundly deteriorated as a result of spot price volatility, the extension of the electricity tariff stabilization mechanism in Chile, and the delay in the implementation of a monetization facility that would allow the project to receive short-term liquidity and reduce working capital pressure. RATING RATIONALE The rating reflects the project's deteriorated liquidity position as well as its increased reliance on the monetization of the PEC I and PEC II receivables in order to comply with its obligations. Although around 73% of ILAP's revenues are contracted with distribution companies (DisCos) through regulated, fixed-priced, long-term power purchase agreements (PPAs) and short-term bilateral PPAs through 2033, the transaction is exposed to profitability erosion risk due to varying prices between the energy injection node and the DisCo withdrawal node, which is expected to be mitigated over the medium term due to transmission network expansions.is expected to be mitigated over the medium term due to transmission network expansions. Under Fitch's rating case, the debt service coverage ratio (DSCRs) is 0.5x for the first half of 2023. The next debt payment should occur in July 3rd and, as the debt service reserve account has been partially used, a default is imminent RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade -- Default on the next debt service due in July 3rd. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade -- Full payment of principal and interest as scheduled due in July 3rd. -- Project liquidity improvement thanks to the monetization of the PEC I and PEC II receivables, leading to operational cash generation above debt service; -- Decoupling costs remaining below or at USD15 per MWh, yielding an average forecast DSCR above 1x. 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. =============== C O L O M B I A =============== ECOPETROL: Fitch Rates Up to USD2-Bil. Unsec. Notes 'BB+' --------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to Ecopetrol's new issuance of up to USD2.0 billion senior unsecured notes with a long five-year maturity and a tap option due 2033. The proceeds of the notes will be used for general corporate purposes, which may include prepayment of current maturities and the company's investment plan for the remainder of 2023. Ecopetrol S.A.'s ratings reflect the close linkage with the Republic of Colombia (BB+/Stable), which owns 88.5% of the company. Ecopetrol's ratings also reflect the company's strategic importance for the country, as well as its ability to maintain a solid financial profile. KEY RATING DRIVERS Linkage to Sovereign: Ecopetrol's ratings reflect the strong linkage with the credit profile of the Republic of Colombia, owner of 88.5% of the company's total capital. The ratings also reflect the very strong incentive of the Colombian government to support Ecopetrol in the event of financial distress, given the company's strategic importance to the country as a supplier of virtually all liquid fuel demand in Colombia, and owner of 100% of the country's refining capacity. Ecopetrol relies on the receipt of funds from the Colombian government, through its stabilization fund Fondo de Estabilizacion de Precios de los Combustibles (FEPC), to offset the difference from selling fuel in the local market at lower prices versus the export market. At March 2023, the amount accrued in the FEPC was COP34.2 trillion (USD7.6 billion). Fitch expects that the balance in the FEPC account will decrease with several price adjustments beings rolled-out by the government. During 2022, the price was adjusted by COP600/gallon, and by additional COP600/gallon during the first half of 2023. Deconsolidated with ISA: Fitch expects that the majority of Ecopetrol's consolidated EBITDA will continue to be generated from its oil & gas business. Fitch estimates that on a deconsolidated basis, ISA's EBITDA in 2022, adjusted to Ecopetrol's ownership, is expected to represent 5.1% of Fitch's projected Ecopetrol EBITDA for 2022. Thus, currently, the ISA acquisition is not expected to materially affect Ecopetrol's leverage metrics over the rated horizon. Consolidated pro forma gross leverage, defined as total debt to EBITDA, was 1.0x in at FYE 2022, and Fitch forecasts 1.2x on average through 2026. Pro forma for ISA's debt and EBITDA, leverage in 2022 increases to 1.5x and averages 2.1x through the rating horizon. Strong Financial Profile: Ecopetrol's 'bbb' Standalone Credit Profile (SCP) reflects the company's strong financial profile. Fitch-calculated gross leverage as measured by total debt to EBITDA is expected to average 2.0x through the rating horizon. Fitch expects leverage to continue to be low though the rating profile as Brent process continue supporting EBITDA generation, and debt is expected to remain at current levels. Fitch expects Ecopetrol's interest coverage as measured by EBITDA to interest expense coverage to exceed 20x consistently through the rating horizon. Positive FCF Expected: Fitch expects Ecopetrol's FCF to be positive going forward, subject to revisions to investment and dividends plans. Fitch's base case assumption includes the company having an average annual capex budget of approximately USD5 billion over the next three years, and that it will pay 60% of previous year's net income in line with its 40% to 60% dividend policy. This, coupled with Fitch's price assumptions for Brent crude oil price of USD80/bbl in 2023, USD75/bbl in 2024 and USD60/bbl in the long term, would result in positive FCF over the next three years. Stable Operating Metrics: After production cuts of 4% implemented in 2020, and subsequent 6% reduction in reserves resulting from lower global hydrocarbon prices, Ecopetrol's operating metrics recovered and exceeded pre-pandemic levels. Fitch assumes total hydrocarbons production to be 722 thousand barrels of oil equivalent per day (boe/d) in 2023 exhibiting a trend or recovery expected to continue over the next three years. The company's proved reserve (1P) of 1,969 million boe gave the company a reserve life of 8.8 years as of 1Q23. Fitch assumes a 105% reserve replacement rate. Fitch's calculated implied pretax break-even crude oil price for Ecopetrol has remained relatively stable over the past three years at approximately USD35/boe. DERIVATION SUMMARY Ecopetrol's rating linkage to the Colombian sovereign rating is in line with the linkage for most national oil and gas companies (NOCs) in the region, including Petroleos Mexicanos (PEMEX; BB-/Stable), Petroleo Brasileiro S.A. (Petrobras; BB-/Stable), Petroleos del Peru - Petroperu S.A. (BB+/Negative) and Empresa Nacional del Petroleo (ENAP; A-/Stable). In most cases in the region, NOCs are of significant strategic importance for energy supply to their countries, including in Mexico, Colombia and Brazil. NOCs can also serve as a proxy for federal government funding as in Mexico, and have strong legal ties to governments through their majority ownership, strong control and governmental budgetary approvals. Ecopetrol's SCP is commensurate with a 'bbb' rating, which is in line with that of Petrobras at 'bbb', given Petrobras' recent significant debt reduction. Excluding IFRS16 leases, Ecopetrol's leverage at YE 2021 was 3.1x. Ecopetrol's credit profile is materially higher than that of Pemex's 'ccc-' SCP as a result of Ecopetrol's deleveraging capital structure versus PEMEX's increasing leverage trajectory. Ecopetrol will continue to report stable production, which Fitch expects to stabilize around 700,000 boed. This production trajectory further supports the notching differential between the two companies' SCP. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer -- Ecopetrol remains majority-owned by Colombia; -- Brent average USD80/barrel in 2023 and USD75/barrel in 2024 before trending toward USD60/barrel in the long term; -- USD9.5barrel discount to Brent crude; -- Stable production growth of 1.8% annually in 2023-2025; -- 105% reserve replacement ratio per year; -- Aggregate capex of approximately USD5.0 billion per year for the next three years; -- Dividends of 60% of previous year's net income. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Although not expected in the short to medium term, an upgrade of Colombia's sovereign ratings. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of Colombia's sovereign ratings; -- A significant weakening of the company's linkage with the government and a lower government incentive to support couple with a deterioration of its standalone credit profile. LIQUIDITY AND DEBT STRUCTURE Strong Liquidity: Ecopetrol's strong liquidity profile is supported by cash on hand, strong access to the capital markets and an adequate debt maturity profile. Ecopetrol reported COP15trillion (USD3.4 billion) of cash and equivalents on hand at March 31, 2023, compared with roughly USD3.5 billion of principal maturities in 2023 and the USD100 million of debt service over the same period. The company issued USD2.0 billion in January 2023 reflecting good access to capital markets. ISSUER PROFILE Ecopetrol is a leading integrated energy and infrastructure company in the Latin American and Central American region. The company is the largest in Colombia in relation to their Upstream, Midstream and Downstream business segments, and the company is the largest energy transmission company in region in connection with the Interconexion Electrica S.A. acquisition. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS Ecopetrol S.A.'s LT IDR is linked to the sovereign rating of Colombia. ESG CONSIDERATIONS Ecopetrol S.A. has an ESG Relevance Score of '4' for Governance Structure due to its nature as a majority 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 rating[s] in conjunction with other factors. Ecopetrol S.A. has an ESG Relevance Score of '4' for Exposure to Social Impacts due to multiple attacks to its pipelines, 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. ZACAPA: S&P Upgrades ICR to 'B' on Expected Deleveraging -------------------------------------------------------- S&P Global Ratings upgraded Zacapa, parent of fiber optic network provider Ufinet, its term loan, and revolving credit facilities (RCFs) to 'B' from 'B-'. The recovery rating remains at '3', reflecting its estimate of about 60 recovery (rounded estimate) in the event of a default. S&P said, "The stable outlook indicates that we expect Zacapa will continue to expand successfully, absorb more of its capital expenditure (capex), while keeping leverage below 6x and EBITDA cash interest coverage comfortably above 2.5x. "The upgrade reflects the group's solid operational and financial performance and our expectation that Zacapa will be able to deliver debt to EBITDA comfortably below 6.0x from 2023.More precisely, we forecast S&P Global Ratings-adjusted debt to EBITDA will decline to 5.5x in 2023 and to about 5x in 2024, supported by solid profitability, with EBITDA margins exceeding 50% and good visibility over revenue generation. This compares with our adjusted metrics of consolidated debt to EBITDA of 7.3x and pro forma debt to EBITDA of about 6.5x in 2022. We also acknowledge management's strong track record of budget execution, with only minor potential deviations from the plan due to foreign exchange fluctuations. "Deleveraging as per our base case hinges on a prudent shareholder financial policy, with no large debt-funded acquisitions or dividend recapitalization. Zacapa implemented a dividend recapitalization in 2022, and we do not anticipate any in the next two-to-three years. We cannot rule out potential acquisitions, therefore we think further rating upside is currently limited. "We expect the investment strategy over the coming years will further support revenue and EBITDA growth.Free operating cash flow (FOCF) will be slightly negative as a result of expansion capex, but remain compatible with the rating and turn positive again in one-to-two years. Annual investments are likely to increase to $160 million in 2023 and 2024 (a substantial part of the capex relates to indefeasible rights of use, or IRUs, sold), mainly for expansion, while maintenance capex remains low. "Our EBITDA cash interest coverage benchmark for the 'B' rating is 2.5x or higher, reflecting the currently high cost of market funding.This coverage benchmark is consistent with that for Zacapa's 'B' rated peers. Additionally, In March 2022, Zacapa entered into an interest rate hedge for its $1 billion of debt (nominal amount). The three-year hedging agreement expires in March 2025 and, with the interest rate cap strike rate at 2.5% (Secured Overnight Financing Rate), we expect Zacapa's annual cash interest will not materially exceed $100 million per year in 2023-2024. "We continue to see the group's liquidity as adequate, supported by moderate debt amortization and no maturities before 2027.We estimate the group's liquidity sources will cover uses by over 1.85x in 2023. Zacapa's $175 million RCF matures in 2027, and amortization payments on its $1,135 million facility (due in 2029) are very low, at 1.0% of the outstanding amount per year, paid quarterly." Outlook S&P said, "The stable outlook on Zacapa reflects our view that the company will maintain strong profitability, with EBITDA margins exceeding 50%, and demonstrate solid revenue growth over 2023-2025, thanks to expanding infrastructure needs in Latin America, combined with increasing bandwidth demand from companies and telecommunications carriers. We expect the S&P Global Ratings-adjusted debt-to-EBITDA ratio will drop to 5.5x in 2023 and about 5.0x in 2024 and EBITDA interest coverage to comfortably exceed 2.5x." Downside scenario S&P could downgrade Zacapa if: -- Adjusted leverage increases beyond 6x, for example, as a result of increased competition and pressure on pricing not being offset by volume growth; materially slower revenue and EBITDA growth compared with our base case; or more intensive development capex, acquisitions, or dividend distributions funded by new debt; -- FOCF stays significantly negative, absent healthy revenue growth, and liquidity weakens; or -- EBITDA cash interest coverage falls and remains below 2.5x. Upside scenario S&P sees limited rating upside at this stage because of the company's aggressive capital structure, financial-sponsor ownership, and potential for future debt-funded acquisitions. S&P could take a positive rating action if the group's owner relinquishes control over the medium term while credit metrics improve further. Environmental, Social, And Governance 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 Zacapa. Our assessment of the company's financial risk profile as highly leveraged reflects corporate decision-making that prioritizes the interests of the controlling owners, which is the case for most rated entities owned by private-equity sponsors. Our assessment also reflects such owners' generally finite holding periods and focus on maximizing shareholder returns." =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Granted Loans RD$4.3B+ for Entrepreneurship --------------------------------------------------------------- Dominican Today reports that under the leadership of President Luis Abinader, the Dominican government, in collaboration with the Entrepreneurship Laboratory and the Fairs of the Ministry of Youth (MJ), has provided loans totaling more than RD$4.3 billion pesos to young people. This achievement marks a record in the creation and expansion of business ideas, according to Dominican Today. Benefitting a total of 51,784 young individuals between the ages of 18 and 35 across various provinces in the country, these loans were made possible through the National Council for the Promotion and Support of Micro, Small, and Medium Enterprises (Promipyme), the report notes. The Entrepreneurship and Policies Laboratory of the First Youth Employment, in conjunction with the Ministry of Youth's Entrepreneurship and Youth Fair, facilitated the allocation of funds and acted as a platform for young entrepreneurs to access offerings from various banking institutions, the report relays. The financial support provided has led to the creation of 35,627 jobs and the strengthening of 222,671 existing positions, the report says. This has made a significant impact on the job market, with a total of 258,298 jobs being positively affected from August 16, 2020, to June 5, 2023, the report notes. Minister of Youth, Rafael Jesus Feliz Garcia, expressed his gratitude to President Abinader, describing him as the primary ally of Dominican youth due to his unwavering support, the report relays. "President Abinader has gone above and beyond in supporting the youth of our country like never before. He is a president who defends and empathizes with the Dominican youth," said Minister Feliz Garcia, the report discloses. The funds provided by Promipyme were disbursed to eligible applicants under the category of "entrepreneurship loans," further demonstrating the government's commitment to fostering youth entrepreneurship and economic growth in the Dominican Republic, 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 favourable 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. ============= E C U A D O R ============= PRODUBANCO: Fitch Affirms 'B-' LongTerm IDR, Outlook Negative ------------------------------------------------------------- Fitch Ratings has affirmed Banco de la Produccion S.A. Produbanco y Subsidiarias's (Produbanco) Long-Term Issuer Default Rating (LT IDR) at 'B-', Viability Rating (VR) at 'b-' and Short-Term IDR at 'B'. Produbanco's LT IDR Outlook remains Negative. Fitch also upgraded Produbanco's Shareholder Support Rating (SSR) by two notches to 'b-' from 'ccc'. The SSR upgrade to 'b-' follows the upgrade of Promerica Financial Corporation (PFC), Produbanco's ultimate parent to 'b+' from 'b' as well as Fitch reassessment of the parent's ability and propensity to provide support. Fitch believes PFC's improved financial profile and ability to withstand operating environment (OE) challenges, increases its ability and propensity to provide external support to Produbanco in case of need. The notching of the SSR from the parent rating has been reduced to two notches from three notches as Fitch has revised its assessment of support to consider the consistent key role of Produbanco to PFC's operations through the years. Nevertheless, Produbanco's IDR remains VR driven, however, its IDRs would only be downgraded if both the VR and SSR are also downgraded. KEY RATING DRIVERS Produbanco's VR drives its Long-Term IDR. Stable Asset Quality: Produbanco's asset quality has historically been sound, reflecting its portfolio composition which is focused heavily on large corporations. Despite the ending of the regulatory forbearance, asset quality deterioration was manageable, as the bank's non-performing loan (NPL) ratio only increased to 2.7% at 1Q23 from 1.7% at YE 2022, comparing favorably amongst its peers. Fitch, amid prolonged political uncertainty in Ecuador which has elevated downside credit risks, anticipates slightly greater NPL ratio deterioration than expected. Nonetheless, it expects this ratio to remain commensurate to its rating category over the medium term. Weak Capitalization: Produbanco's Fitch Core Capital ratio has remained slightly above Fitch's downside sensitivity of 9% since 2018, reaching 9.1% at 1Q23, which results in a modest capacity to absorb unexpected losses. Nonetheless, the agency highlights that this is part of the bank's efficient usage of capital strategy, reflected in stable core capitalization metrics over time. Produbanco's capital and leverage score also considers the entity's adequate loan loss reserve coverage. Stable Deposit Base and Adequate Liquidity: The bank also maintains a stable funding structure and adequate liquidity levels, which Fitch expects to continue over the rating horizon. The bank's funding relies mainly on customer deposits, accounting for 87% of the loan book, while financial and subordinated debt composed mostly by funds from multilateral agencies account for the remaining 13%. At 1Q23, Produbanco presented a loan to deposits ratio of 92.5% and a growth of 0.2% in customer deposits since YE 2022. Slight Profitability Deterioration: Produbanco's profitability performance deteriorated slightly as a result of a lower net interest margin and higher credit costs, but remains commensurate to the current rating category. This resulted in a decline of the operating profit to risk weighted assets ratio to 1.0% at 1Q23 from 1.35% at YE 2022. Fitch expects further deterioration in view of the ongoing OE conditions, but recognizes Produbanco's solid financial profile and its capacity to face added pressure. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade IDRs and VR - The VR would be downgraded if the Fitch Core Capital to RWA ratio is sustained below 9% without a credible plan to strengthen and restore capitalization metrics along with a deterioration in its profitability performance; - The ratings are also sensitive to changes in the sovereign rating, country ceiling, or further deterioration within the local OE, however the IDR would be downgraded only if both the VR and SSR are downgraded given Fitch's "higher of" approach. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade IDRs and VR - Produbanco's upside potential is limited. In the long-term, a rating upgrade would require improved prospects for the OE and a meaningful and sustained improvement in the banks' core profitability, along with an improvement in the bank's asset quality and capitalization. SHAREHOLDER SUPPORT RATING Although Produbanco's rating is VR driven, the SSR is assessed reflecting Fitch's view of possible external support from its majority shareholder Promerica Financial Corporation (PFC; B+/Stable; 62.2% ownership). The parent's ability to support is limited by the ample size of Produbanco compared with PFC (35% of consolidated assets) and the percent of the parent's ownership given the existence of other relevant minority shareholders, although it plays a key role for PFC. Following the upgrade of PFC's Long-Term IDR Fitch reduced the notching of Produbanco's SSR from PFC's IDR to two notches from three as Produbanco has shown consistent significant relevance to PFC's operation through the years. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: - A downgrade of the SSR would come from a deterioration of PFC's creditworthiness or a change in Fitch view of its ability and propensity to provide support; - The SSR could also be downgraded if the Country Ceiling Rating is downgraded below the level of the SSR. Currently, Ecuador's Country Ceiling is 'B' and the Rating Outlook on the sovereign's IDRs is Negative. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: - Produbanco's SSR has limited upgrade potential over the rating horizon, given its size and relevance relative to PFC. VR ADJUSTMENTS Fitch has assigned an OE score of 'ccc+' that is below the 'bb' category implied score due to the following adjustment reason: Macroeconomic Stability (Negative). PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS Produbanco's SSR is linked to Promerica Financial Corporation's Long-Term IDR. 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. =========== M E X I C O =========== BRASKEM IDESA: Fitch Cuts IDRs to 'B+'; On Rating Watch Negative ---------------------------------------------------------------- Fitch Ratings has downgraded Braskem Idesa, S. A. P. I.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'B+' from 'BB-' and the senior secured notes to 'B+'/'RR4' from 'BB-'. The ratings have all been placed on Rating Watch Negative (RWN). The downgrade reflects a material reduction in the outlook for polyethylene (PE) and a slower-than-expected market recovery path. Over the past several months, PE demand in North America has experienced a 10% decline, while new supply has been ramping up globally. The confluence of these factors, as well the uncertainty of the timing of high cost capacity shutting down, has led Fitch to revise its 2023 and 2024 PE reference prices resulting a considerably lower EBITDA, which has resulted in a projected deterioration of Braskem Idesa's liquidity position. The RWN reflects the uncertainty in obtaining the financing of the crucial construction of the ethane terminal. The weak backdrop for pricing and cash flow generation throughout 2023 could result in further delays in solidifying this financing. Braskem Idesa will be challenged to complete construction of its import terminal by late 2024 or early 2025 if this funding is not received by the end of 2023. Further, the company is expected to exceed its maintenance covenants on its term loan and may need a waiver extension as of 1Q24. KEY RATING DRIVERS High Near-term Leverage; Weak Coverage: Fitch expects PE prices to remain at lower levels than previously expected in 2023 and 2024. This will cause Braskem Idesa's net leverage to be very high in those years at 13x and 20x, respectively, which is above Fitch's downgrade trigger. Fitch forecasts the company's EBITDA for 2023 and 2024 to be approximately USD158 million and USD99 million, respectively. EBITDA interest coverage will be weak at 0.9x in 2023 and 0.6x in 2024. Fitch's expects a modest recovery in 2025 with net leverage expected to be 7.9x in 2025 and 5.7x in 2026, while EBITDA to interest expense is estimated to be 1.6x and 2.1x in 2025 and 2026, respectively. The elevated leverage is offset by the long-dated debt maturity profile of the company, absent the term loan. Spreads Remain Under Pressure: PE prices have been weaker than expected in 2023 and spreads have been lower, despite a decrease in the ethane price. Fitch's base case reflects Braskem Idesa PE prices of USD1,031/ton in 2023, USD1,016/ton in 2024 and USD1,172/ton in 2025 and spreads of USD863/ton in 2023, USD829/ton in 2024 and USD959/ton in 2025. Despite a decrease in ethane prices, spreads will be lower due to weakness in topline PE prices caused by buyer delaying purchases due to inventory buildups and a shift toward oversupplied conditions as well as more intense competition in the Mexican market from PE producers in the U.S. and Canada. Braskem Idesa is a second-quartile producer on the global cost curve. Importance of Ethane Terminal: The ethane terminal is critical to the long-term viability and competitiveness of Braskem Idesa. The company faces execution risk though 2024 as it continues construction of an ethane import terminal and secures financing for the project. Fitch conservatively assumes that the terminal will be completed by the 3Q25 and is currently approximately 40% complete. A key milestone for the project is obtaining the necessary financing, which is reflected in the RWN. In March 2023, the company formalized its partnership with Advario, a carve-out of German tank storage and logistics company Oiltanking GmbH, which has provided some confidence that the project will be completed. Business Risk: Braskem Idesa is vulnerable to PE price swings, spikes in raw material costs as well as dependence on a single product and single site operations. The company is exposed to operational risk from Pemex, which has an agreement to supply a minimum volume of 30,000 barrels per day (kbpd) of ethane until the earlier of February 2025 or the start-up of the ethane import terminal. The date can be extended if there are delays in obtaining terminal licenses and gives Braskem Idesa preemptive rights to acquire all Pemex's ethane not used for its own production. The recent expansion of the Fast Track increased capacity to 35kpbd, or 53% of capacity. The Fast Track expansion helps secure ethane supply until the terminal is built. Fitch assumes operating rates of 81% in 2023, 78% in 2024 and 82% in 2025. Standalone Rating Approach: Fitch considers Braskem Idesa's ratings and those of its majority shareholder Braskem S.A. (75% equity interest) to be independent due to Braskem S.A.'s lack of strong legal incentive to support Braskem Idesa as there are no parent guarantees or cross default provisions on Braskem Idesa's debt. In addition, Braskem Idesa's financial contribution in the form of dividends paid to the parent has been low and operational synergies between the companies are weak. As of March 31, 2023, Braskem Idesa reported MXN35 billion of subordinated shareholder loans, 75% of which was owed to Braskem and 25% to Grupo IDESA. DERIVATION SUMMARY Braskem Idesa's 1Q23 LTM net leverage ratio was well that of its peers at 17.5x, compared with Braskem at 7.6x, Orbia at 2.3x, Cydsa at 2.7x and Unigel at 2.7x. Dow's net leverage was 1.25x in 2021 and 1.56x in 2022. Historically, Braskem Idesa benefited from access to a competitive cost feedstock, with its EBITDA margin well positioned relative to other PE producers such as Braskem S.A. (BBB-/Stable) and more diversified players such as Dow Chemical Company (BBB+/Stable) in terms of operating margins. Braskem Idesa has a higher exposure to supply/contract risks compared with its peers. The company also has a weaker position in terms of exposure to a single asset and product, as well as limited geographic diversification. KEY ASSUMPTIONS - Pemex provides 32kbpd in 2023, 30kbpd in 2024, 26kbpd in 2025 and 15kbpd thereafter; - Imported ethane of 20kpbd in 2023 and 2024 and 15kbpd in 2025 via the Fast Track and 11kbpd in 2025 via the ethane import terminal; - Operating rates of 81% in 2023, 78% in 2024 and 82% in 2025; - Braskem Idesa PE prices of USD1,031/ton in 2023, USD1,016/ton in 2024 and USD1,172/ton in 2025; - Average ethane purchase prices of USD277/ton in 2023, USD298/ton in 2024 and USD331/ton in 2025; - Braskem Idesa polyethylene-ethane spreads of USD698/ton in 2023, USD657/ton in 2024 and USD774/ton in 2025; - Braskem Idesa earns an 11% premium over the industry reference PE price; - The ethane import terminal begins operations in 2025 and operates at a rate of 45kbpd; - USD/MXN exchange rates of 17.71 in 2023, 19.27 in 2024 and thereafter; - Waiver on term loans granted through 2024. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - An improvement in liquidity and interest coverage; - A recovery in PE prices and the PE-ethane spread. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Failure to obtain the funding for the terminal can lead to a more than one-notch downgrade; - Failure to obtain a waiver on the term loan's maintenance covenant, - A cash balance below USD200 million; - EBITDA to interest coverage below 1.5x in consecutive years; - Net debt to EBITDA sustainably above 6.0x. LIQUIDITY AND DEBT STRUCTURE Pressured Liquidity: Lower operating performance due to a challenging PE market is pressuring Braskem Idesa's liquidity. The company monetized roughly USD80 million-USD90 million of its receivables with committed credit lines and obtained a waiver on its net leverage maintenance covenant for 1H23 and is seeking a similar waiver for 2H23. Interest coverage will be tight at 0.9x in 2023 and 0.6x in 2024 due to the company's high debt load and subsequent high interest relative to its expected EBITDA. As of March 31, 2023, Braskem Idesa reported total debt of USD2.2 billion and net debt of USD1.8 billion. The company's maturities are well spread with only term loan amortizations of USD23 million due in each 2024 and 2025 and USD83 million in 2026. The majority of the company's debt is a USD900 bond due 2029 and a USD1.2 billion bond due 2032. ISSUER PROFILE Braskem Idesa, S.A.P.I. is a polyethylene producer with operations in the city of Coatzacoalcos, Mexico. Its annual production is 1.05 million tons of high- and low-density polyethylene. It began operations in early 2016. ESG CONSIDERATIONS Braskem Idesa SAPI has an ESG Relevance Score of '4' for Governance Structure due to shareholder concentration, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Braskem Idesa SAPI has an ESG Relevance Score of '4' for Financial Transparency due to lack of footnotes and adequate disclosures, 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. =========== P A N A M A =========== CFG INVESTMENTS 2023-1: S&P Assigns Prelim. B(sf) Rating on D Notes ------------------------------------------------------------------- S&P Global Ratings assigned its preliminary ratings to CFG Investments Ltd.'s series 2023-1 notes. The note issuance is an ABS transaction backed by unsecured personal loan receivables originated in four different jurisdictions: Aruba (BBB/Stable/A-2), Curaçao (BBB-/Stable/A-3), Bonaire, and Panama (BBB/Negative/A-2). The preliminary ratings are based on information as of July 5, 2023. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The availability of approximately 45.1%, 32.3%, 23.4%, and 17.0% hard credit enhancement to the class A, B, C, and D notes, respectively, in the form of subordination, overcollateralization, and a reserve account. Additionally, the deal will benefit by approximately 18.0% excess spread. This credit support levels are, in S&P's view, sufficient to withstand stresses commensurate with the preliminary ratings on the notes based on its stressed cash flow scenarios. -- The timely interest and principal payments made by the designated legal final maturity dates under stressed cash flow modeling scenarios appropriate to the assigned preliminary ratings. -- The collateral characteristics of the pool being securitized, which includes loans from four different jurisdictions: Aruba, Curacao, Bonaire, and Panama. The transaction has a 24-month revolving period during which the loan composition can change. As such, S&P considered the worst-case pool allowed by the transaction's concentration limits. -- The transaction's payment structure and mechanisms, which incorporate performance-based triggers linked to a monthly cumulative net loss percentage defined in the transaction documents that lead to revolving period termination events, and early amortization triggers that are linked to a servicer default, among others. -- The transaction's legal structure, which includes a Cayman Islands special-purpose vehicle issuing the notes and special-purpose entities in each jurisdiction (called borrowers) to which the portfolio of loans, or beneficial interests therein, has been transferred by the respective sellers. -- CFG Holdings Ltd.'s (CFG's) established management, its experience in origination and servicing consumer loan products across all jurisdictions, and its assessment of the operational risks associated with CFG's decentralized business model across certain jurisdictions. -- The transaction's exposure to the counterparty risk of the bank account providers in each relevant jurisdiction, which have credit quality consistent with the preliminary ratings. Additionally, the transaction's commingling risk, which S&P believes is mitigated by the two-day transfer of funds, the existence of a reserve account, and the small amount of exposure to this risk. Preliminary Ratings Assigned CFG Investments Ltd. (Series 2023-1) Class A, $107.1 million: BBB (sf) Class B, $24.5 million: BBB- (sf) Class C, $17.2 million: BB- (sf) Class D, $12.1 million: B (sf) Class RR, $7.3 million: Not rated =============== P A R A G U A Y =============== BANCO CONTINENTAL: Fitch Affirms 'BB+' LongTerm IDRs ---------------------------------------------------- Fitch Ratings has affirmed Banco Continental S.A.E.C.A. (Continental) of Paraguay's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB+'. The Rating Outlook is Stable. Fitch also affirmed Continental's Short-Term Foreign and Local Currency IDRs at 'B'. KEY RATING DRIVERS Continental's IDRs are driven by its intrinsic creditworthiness, as reflected in its Viability Rating (VR) of 'bb+'. The bank's VR is in line with its implied VR and considers Continental's strong local franchise as the largest Paraguayan bank with a 15.5% market share of the banking system's loans. Its strong capitalization metrics relative to its local and similarly rated international peers also influence the bank's ratings. Additionally, the VR considers Continental's good asset quality, adequate profitability and good liquidity and its stable, but concentrated funding. In Fitch's opinion, Continental's capitalization is its main financial strength, underpinning the agency's 'bbb-' score for capitalization and leverage. The bank's Fitch Core Capital (FCC) to risk-weighted assets (RWA) ratio reached 20.7% at Dec. 31, 2022. Continuous earnings retention has supported this ratio. In Fitch's view, the bank continues to be well prepared to face the Central Bank's higher capital requirements for domestic systemically important banks if required under law No.5587/16. There is no specific date for such a requirement to be effective. Despite Continental's modest size on a global basis, Fitch's business profile assessment takes into consideration the bank's leading market share in Paraguay, supporting a business profile score of 'bb+', which is above the implied score. Continental's business model focuses primarily on corporate lending and to a lesser extent small and medium companies. The bank's risk profile also supports its VR and considers conservative underwriting policies have enabled the bank to maintain stable and low non-performing loan (NPL) ratios over the past few years (NPLs 2019-2022 1.76% on average), but has also resulted in some concentration in the top 20 borrowers accounting for 20.2% of the total loans and about 1x of the FCC. Continental's impaired loan ratio over 60 days remained low at 1.56% as of March 31, 2023, which compares well with the banking system average of 3.38% and is at the lower end of the benchmark range for an implied assessment in the 'bb' category. Reserves coverage to impaired loans was 200%. Fitch expects any pressure on asset quality to be manageable, given the bank's business model, good reserve coverage and good collateral levels (near 32%). As of March 2023, Continental had a ratio of renewed, refinanced and restructured loans (RRR) of 11.86%, which was below the bank system's 15.83%, but still high compared with international peers. Renegotiated loans account for 84% of the RRR and 95% of the renegotiated loans are considered current. Fitch expects the bank's impaired loan ratio to remain commensurate to its implied score. Continental's earnings and profitability score of 'bb' as measured by its operating profit to RWA ratio, is in line with its implied score. This ratio increased to 2.9% as of December 2022 (up from 2.6% in 2021 and 2.4% in 2020). The upward trend is underpinned by its strong franchise with growing net interest margins and increased cost efficiencies. Fitch expects this ratio to remain above 3%. Continental´s funding and liquidity score of 'bb' is in line with its implied score. The bank's funding relies heavily on wholesale deposits which are concentrated (the top 20 depositors accounted for 27% of total deposits at March 2023); however, 10.5% of the top 20 deposits represent a public company that provides stable funding. Continental has further diversified its funding base during the recent past, with an issuance of a five-year USD300 million sustainable bond in international markets. The bank's funding is complemented by approved credit lines with a number of foreign financial institutions. Low board independence compared with regional peers, and key person risk due to the owner of the bank's high influence on Continental's strategic decisions are incorporated as a weakness for the bank's corporate governance evaluation. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Continental's VR and IDRs could be affected by material weakening of the bank's currently strong capital metrics (FCC sustained below 18%); - A deterioration of the operating environment that results in a sustained deterioration of the bank's asset quality (impaired loans ratio above 3.5%) or profitability metrics could be negative for creditworthiness; - Loss of the bank's strong competitive position in the local market could also pressure ratings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade is unlikely over the foreseeable future, but could result from potential improvements in Fitch's assessment of the Paraguayan operating environment faced by local banks together with an upgrade of the sovereign ratings. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS SENIOR UNSECURED DEBT Senior unsecured debt rating of 'BB+' is at the same level with the bank's Long-Term IDR, as Fitch views the likelihood of default of the senior debt is the same as that of the issuer. GOVERNMENT SUPPORT RATING Continental's GSR of 'BB' reflects a moderate probability of support being forthcoming because of uncertainties about the sovereign's ability or propensity to do so despite the bank's systemic importance. The ability of the sovereign to provide support is based on Paraguay's (Long-Term Foreign Currency IDR BB+/Stable). OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES SENIOR UNSECURED DEBT Senior debt ratings would generally move together with the bank's LT IDRs. GOVERNMENT SUPPORT RATING Factors that could, individually or collectively, lead to negative rating action/downgrade: - Continental' GSR is sensitive to changes in Fitch's assessment about the ability and/or propensity of the sovereign to provide timely support to the bank. Factors that could, individually or collectively, lead to positive rating action/downgrade: - A potential rating upgrade in the bank's GSR is unlikely. Continental is considered by Fitch as a domestic systemically important financial institution (D-SIFI) of the Paraguay financial system; VR ADJUSTMENTS The Operating Environment score of 'bb' has been assigned above the 'b' category implied score due to the following adjustment reasons: Sovereign Rating (positive). The Business Profile score of 'bb' has been assigned above the 'b' category implied score due to the following adjustment reasons: Market Position (positive). ESG CONSIDERATIONS Banco Continental S.A.E.C.A. has an ESG Relevance Score of '4' for Governance Structure due to low board independence compared to regional peers, and due to the main owner of the bank having a high influence on Continental's strategic decisions, which Fitch considers a key person risk. 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. ======= P E R U ======= ORAZUL ENERGY: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed Orazul Energy Peru S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) and USD363.2 million senior unsecured notes at 'BB'. The Rating Outlook is Stable. Orazul's ratings reflect the company's predictable cash flows supported by its contractual position, historically efficient and reliable hydroelectric generation assets, and cost structure flexibility. Fitch estimates gross leverage will decline to an average of 4.6x over the rated horizon compared to the elevated 6.5x level seen in 2020. KEY RATING DRIVERS Contracted Cash Flows: Orazul's ratings primarily reflect its stable and predictable cash flows, supported by revenues generated through capacity (availability) payments and generation requirements mostly contracted through U.S. dollar-linked power purchase agreements (PPAs). During 2022, the company generated approximately 2.021GWh, with around 90% of its capacity contracted (compared to 79% the year prior, or roughly the company's annual target). As of 2023, PPAs have 6.5 years of remaining life with strong credit quality off-takers, with around 58% of contracts lasting six years or more. The total contracted level should decline in 2024 to 1.5GWh, a decline to 75% of total power generation, as certain contracts expire. Fitch expects the company is likely to recontract its capacity, given limited competition and capacity in the country, but does not consider recontracts in its rating case until PPAs have been signed and completed. Increased Exposure to Spot Market Sales: Fitch estimates that Orazul will sell 25% of its total generation in the spot market in 2024, or a 130% increase compared to 2022 spot sales. The rating case assumes that a 17% decline in 2024 contracted revenue (USD14 million) will be partially offset with a concurrent USD14 million in net spot market revenue. Fitch approximates that contracted leverage, measured as total debt/approximated EBITDA from contracted sales, will spike to around 7x that year but reduce thereafter. Leverage Profile; Coverage Ratio: Fitch expects gross leverage, measured as total debt/EBITDA, to increase in 2024 to 5.2x (from 4.7x the prior year) for one year as certain PPAs and associated capacity payments terminate, resulting in one year of reduced EBITDA. Thereafter, increased PPA prices and spot sales from higher demand will cause EBITDA to rebound and drive leverage to 4.6x and below (or 5.5x and below for contracted EBITDA alone) on a sustained basis, consistent with the 'BB' rating category. Projections assume total debt of USD363 million and EBITDA averaging USD79 million (a 64% margin), and cash-funded capex averaging USD5.4 million over the next five years. EBITDA/interest expense will remain robust at 3.4x and above over the rating horizon. Market Position, Reliable Generation: Orazul, the fourth largest hydroelectric provider in Peru, is considered baseload in the Peruvian system, prioritized within the country's order of dispatch. The company has limited asset diversification and a relatively small business scale; however, its two run-of-river hydroelectric plants are efficient generators with an average capacity factor of around 66%. The plants: Cañón del Plato (266MW) and Carhuaquero (110MW), have a total installed capacity of 376MW. They operate a combined 11 turbines in two separate rivers, the flows from which have yielded minimal historical hydrological variation over time, enabling the company to contribute a consistent 4% of Peru's energy generation year-on-year. DERIVATION SUMMARY Orazul's closest peers are generation companies in the region, such as Kallpa Generacion S.A. (BBB-/Stable), Fenix Power Peru S.A. (BBB-/Stable) and AES Andes S.A. (BBB-/Stable). Their ratings reflect stable, diversified asset bases and predictable cash flows supported by solid contractual positions embodied in medium- to long-term PPAs with financially strong counterparties, and manageable volume exposure or strong shareholder support. Orazul is rated two notches below Kallpa, as Kallpa benefits from a diversified generation mix and has a stronger market position as the largest private generator in Peru. Orazul is also rated two notches below AES Andes to the latter's lower leverage and a longer-dated PPA average life (around 11 years). Like Orazul, AES Andes' consolidated gross leverage improved following the deconsolidation of a large asset, Alto Maipo. KEY ASSUMPTIONS - Spot injection prices average USD40/MWh, and average withdrawal prices of USD45/MWh through 2025; - Around 75% contracted level in 2024 as existing contracts expire, then around 77% of capacity contracted going forward, with spot sales accounting for the balance of capacity sold; - An increase in average regulated PPA prices to USD65/MWh and unregulated PPA prices to USD39/MWh in the next five years; - Average annual dividends of USD47 million, while maintaining a minimum YE cash balance of USD10 million; - Capex of USD9.3 million in 2023, mostly minor improvements to Canon del Pato, then minor capex averaging USD4.4 million in the next four years; - Ongoing capacity factor averaging 68% between the two plants, and future hydrological conditions consistent with low historical volatility. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Gross leverage, measured by total debt/EBITDA, falling below 4.0x on a sustained basis; - Maintenance of an adequate contracted position with similar terms contributing to cash flow predictability. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Total debt/EBITDA substantially exceeding 5.0x on a sustained basis; - Excessive cash distribution to shareholders; - A material rebalancing of the contractual base, resulting in significant cash flow volatility. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity: At March 31, 2023, Orazul's cash position was USD32 million, and it had no short-term debt. Annual liquidity is stable and supportive of interest and capital spending costs. It is driven by reliable cash flows and a USD25 million undrawn committed credit line. Fitch expects the company to maintain its liquidity policy of more than its YE minimum cash balance of USD10 million following distributions of excess cash to shareholders. The company's only outstanding debt is a USD363.2 million bullet bond that matures in 2027. Fitch expects the company to refinance this debt well ahead of its stated maturity. ISSUER PROFILE Orazul Energy Peru S.A. (OEP) owns and operates two hydroelectric power plants in northern Peru with a combined capacity of 376 MW, and represents the fourth largest hydroelectric complex within the Peruvian system. 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. ===================== P U E R T O R I C O ===================== GUR-MEAT INC: Court OKs Cash Collateral Access Thru July 6 ---------------------------------------------------------- Gur-Meat, Inc. sought and obtained entry of an order from the U.S. Bankruptcy Court for the District of Puerto Rico authorizing the use cash collateral on an interim basis through July 6, 2023. "Upon consideration of such motion, the court finds that interim authorization to use cash collateral is appropriate under Fed. R. Bankr. P. 4001(b)(2) in order to avoid immediate and irreparable harm to the estate," the Hon. Maria De Los Angeles Gonzalez ruled. A further hearing on the matter is set for July 6 at 10 a.m. In 2019, after relying on an accounting firm for nearly a decade, the Debtor became aware that the accountants were forwarding inexact and questionable data to lender Banco Popular de Puerto Rico. The information was corroborated by an audit performed by BPPR which made the findings of the misconstrued financials, which were facts that Debtor was unaware of because it fully relied on the trust placed in such accounting firm's reputation and work ethics. The situation led to a default called by the bank and negotiations to resume the relationship with the lender continued. At that point, the Debtor had no other alternative but to conclude the relationship with the accounting firm and work with BPPR for the continuation of the business. After the 2019 accounting situation, in January 2020, the island suffered a series of earthquakes, which significantly affected the southwest region of the island. The Debtor, with offices in Arecibo, had a large operation in the region under contracts for pre-packaged food. To make matters worse, in March 2020, the COVID-19 pandemic triggered a series of lock down orders with halted the food industry in its entirety. Furthermore, on January 20, 2020, PR Recovery and Development JV LLC, which purchased the loans from the Economic Development Bank of Puerto Rico (BDE), filed a lawsuit against the Debtor in the Court of First Instance de Arecibo, Case No. AR2020CV00189, which reached judgment and the Debtor came into several agreements to attempt to service the debt. The combination of these factors: the negligent accountants, the region's earthquakes, the COVID-19 pandemic, and aggressive collection actions by creditors, triggered a negative ripple effect on the Debtor's finances that led to this point in time. During the past three years, the Debtor has managed to keep 23 employees and the plant running, but at the same time, and considering that PRRD and BPPR were both applying duress to collect on their debts, the Debtor has been attempting to raise their clientele and improve operations to comply with debt service to no avail. The Debtor identifies BPPR, PRRD and the Small Business Administration as entities that might have an interest in the outcome of the Debtor's request and the cash collateral. On August 19, 2016, the BDE afforded the Debtor a credit facility for a commercial line of credit in the principal amount of $1.7 million. On January 3, 2020, PR Recovery sent written notices to the Debtor indicating that the Credit Facility had matured and expired, and alleged that BDE transferred all the rights, title and interest of BDE in and to the Credit Facilities on September 7, 2018. The Arecibo court granted the lender a judgment for $827,028 on February 3, 2022. The Debtor entered into a Loan Agreement with BPPR, pursuant to which the Bank granted the Debtor a revolving line of credit for the aggregate principal sum of $1.5 million. The credit line was originally from BDE under the SBA's financing program with a working capital cap line of $1.7 million. BPPR acquired a note payable which partially satisfied the BDE's line of credit and a new loan agreement dated December 29, 2017, was executed. The actual monthly payment is $10,000 maturing on October 31, 2023, and upon maturity a balloon payment for the full amount is due. Prior to the filing, the Debtor was in good faith negotiations with BPPR to enable the operation and continue the relationship. On January 27, 2022, the Debtor entered into a loan agreement with the SBA with a promissory note in the principal sum of $500,000 and with a blanket lien over all movable objects. According to its 14-day budget, the Debtor anticipates collections in the amount of $43,069, which will be needed to cover all expenses delineated in the budget and will require disbursement on an interim basis in the amount of $42,168. The Debtor proposes to use the cash collateral to maximize collections, increase the clientele base and preserve the going concern. Secured lenders asserting an interest to the cash collateral are adequately protected by the generation of new inventories and accounts receivables which replace inventory and account receivables with less value. The replacement lien on the future account receivables will be increased steadily month by month. The secured lenders will also be adequately protected by the preservation of Debtor's business going concern and the business plan to increase manufacturing and sales accordingly. The Debtor's ability to use cash collateral pursuant to the Interim Order will end on the earliest of: (i) entry of the Final Order, (ii) 45 days following entry of the Interim Order if no Final Hearing is held or if a Final Order is not entered by such date, (iii) the effective date of a confirmed plan of reorganization in the chapter 11 cases, (iv) the closing of a sale of all or substantially all assets of the Debtors. A copy of the motion and the Debtor's budget is available at https://urlcurt.com/u?l=0WSoVa from PacerMonitor.com. About Gur-Meat Inc. Gur-Meat Inc. is engaged in the business of processing meat products and the selling of pre-packaged food products to fast food restaurants and other constituents of the food industry since March 2009. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. P.R. Case No. 23-01914) on June 23, 2023. In the petition signed by Mariely Ramos Rojas, president, the Debtor disclosed $292,906 in assets and $3,598,904 in liabilities. Judge Maria De Los Angeles Gonzalez oversees the case. Javier Vilarino, Esq., at Villarino and Associates, represents the Debtor as legal counsel. PUERTO RICO: Fitch Affirms Ratings on PREPA ------------------------------------------- Fitch Ratings has affirmed the following Puerto Rico Electric Power Authority (PREPA) ratings at 'D': -- Approximately $8.3 billion in outstanding power revenue bonds; -- Issuer Default Rating (IDR). RATING ACTIONS ENTITY / DEBT RATING PRIOR ------------- ------ ----- Puerto Rico Electric Power Authority (PR) LT IDR D Affirmed D LT IDR WD Withdrawn D Puerto Rico Electric Power Authority (PR) /Power Revenues/1 LT LT D Affirmed D Puerto Rico Electric Power Authority (PR) /Power Revenues/1 LT LT WD Withdrawn D Fitch has also withdrawn PREPA's ratings because the issuer has defaulted. Accordingly, Fitch will no longer provide ratings or analytical coverage for PREPA. SECURITY The power revenue bonds are payable solely from the revenues of the system after the payment of current expenses and any designated reserves. KEY RATING DRIVERS On July 6, 2017, Fitch downgraded PREPA's Long-Term IDR and power revenue bond ratings to 'D' from 'C'. The action followed the authority's failure to pay principal and interest due on the revenue bonds on July 3, 2017 and the commencement of insolvency proceedings under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) on July 2, 2017. There have been no payments of scheduled debt service on the power revenue bonds since the initial nonpayment. ESG - Governance Structure: PREPA's future governance structure is uncertain at this time. ESG Relevance - Financial Transparency: PREPA has not released financial statements on a timely basis. ESG - Human Rights, Community Relations, Access & Affordability: PREPA has demonstrated unwillingness to increase retail rates based on affordability. RATING SENSITIVITIES There are no rating sensitivities as the ratings are being withdrawn. CREDIT PROFILE PREPA is a public corporation and component unit of the Commonwealth of Puerto Rico. It produces, buys, transmits, and distributes, substantially, all of the electric power consumed in Puerto Rico. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS PREPA has an ESG Relevance Score of '5' for Governance Structure due to the uncertainty of its future governance structure, which has a negative impact on the credit profile, and is highly relevant to the rating. PREPA has an ESG Relevance Score of '5' for Financial Transparency due to failure to release financial statements on a timely basis, which has a negative impact on the credit profile, and is highly relevant to the rating. PREPA has an ESG Relevance Score of '5' for Human Rights, Community Relations, Access & Affordability due to its unwillingness to increase retail rates based on affordability, which has a negative impact on the credit profile, and is highly relevant to the rating, contributing to its default. PREPA has an ESG Relevance Score of '4' for Exposure to Environmental Impacts due to the operational and financial effects of historical hurricanes and its ongoing susceptibility to natural disasters, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. PREPA has an ESG Relevance Score of '4' for Management Strategy due to the uncertainty of its future business strategy post restructuring, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. PREPA has an ESG Relevance Score of '4' for Group Structure due to its reliance on the Puerto Rican government as its largest customer, 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. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Blinken Raises Concerns about Venezuela ---------------------------------------------------------- Joel Julien at Trinidad Express reports that even as Trinidad and Tobago and Venezuela are currently locked in negotiations over the Dragon Gas field, the United States Secretary of State Antony Blinken has expressed concerns about the democratic process taking place in the South American country. Blinken raised concerns during a press conference in Guyana where he described as "deeply unfortunate" the disqualification of Maria Corina Machado from public office, according to Trinidad Express. Machado, one of the favorites to win the Venezuelan opposition's nomination for president in an October primary, was barred from holding public office for 15 years, the country's controller general said in a letter recently, the report notes. A previous ban placed on Machado was extended because she supported sanctions by the United States on the Nicolas Maduro government and backed former opposition leader Juan Guaido, the letter said, the report relays. In January, the US waived sanctions against Venezuela clearing the way for T&T to develop the Dragon Gas Field, the report discloses. Blinken said those sanctions were imposed as a means to put Venezuela back on a democratic path, the report notes. He said the Maduro regime can take several significant steps to show they are committed to being on that democratic path including ensuring a "free and fair election" next year, the report says. "The disqualification of a leading member of the opposition from competing in such elections certainly sends the opposite message and it is something that I think is deeply, deeply unfortunate," Blinken said, the report relays. "We are determined to continue international cooperation and coordination to press the regime to commit to free and fair elections in 2024 and to take the necessary steps to allow free and fair elections to go forward, the report discloses. "The purpose of the sanctions that we have imposed are not to create ends in themselves, that is not the objective, sanctions are a means to an end and the end is to help respond to the desire of the Venezuelan people to restore democracy and that starts with free and fair elections," Blinken said, the report notes. Blinken and Prime Minister Dr Keith Rowley both underscored their support for democracy in Venezuela, US State Department spokesperson Matthew Miller said following a meeting between the two leaders, the report discloses. Blinken met Rowley as part of his visit to Trinidad and Tobago. "Secretary Blinken and Prime Minister Rowley reaffirmed the strong ties between our nations and commitment to expand energy security and climate resilience as well as to facilitate a renewable energy transition through the US-Caribbean Partnership to Address the Climate Crisis (PACC 2030)," Miller said, the report notes. "The leaders underscored their support for democracy in Venezuela and the urgency of ending the security and humanitarian crisis in Haiti. The Secretary pledged the support of the United States to help combat crime and violence in the region, including by curbing the illicit flow of firearms," he said, the report discloses. Blinken met with Rowley at the Diplomatic Centre in St Ann's before flying to Guyana, the report notes. He arrived in Guyana just before noon where he met with that country's president Mohamed Irfaan Ali, the report relays. Wazim Mowla, the associate director of the Caribbean Initiative at the Adrienne Arsht Latin America Centre, said Blinken's visit to Guyana would be interesting as the country has emerged as an oil producer and has often conflicted with US global climate ambitions, the report discloses. "It'll be important for Blinken to rectify this relationship, as Guyana's political and economic clout is rapidly growing, and it won't be long before the country begins influencing global politics and markets," Mowla said, the report adds. =============== X X X X X X X X =============== [*] BOND PRICING COLUMN: For the Week July 3 to July 7, 2023 ------------------------------------------------------------ Issuer Cpn Price Maturity Country Curr ------ --- ----- -------- ------- ---- Earls Eight 0.1 63.8 12/20/2031 KY AUD Earls Eight 2.3 75.2 05/20/2032 KY AUD Earls Eight 1.7 71.4 06/20/2032 KY AUD Ecopetrol SA 4.6 75 11/02/2031 CO USD Ecopetrol SA 5.9 63.9 11/02/2051 CO USD Ecopetrol SA 5.9 65.5 05/28/2045 CO USD Lani Finance 3.1 68.6 10/19/2048 KY AUD Lani Finance 1.9 63.3 10/19/2048 KY EUR Lani Finance 1.7 60 03/14/2049 KY EUR Lani Finance 1.9 62.3 09/20/2048 KY EUR QNB Finance 3.4 75.4 10/21/2039 KY AUD QNB Finance 13.5 55.7 10/06/2025 KY TRY QNB Finance 2.9 75.3 12/04/2035 KY AUD SYN prop e tech SA 13.6 20.3 3/15/2024 BR BRL Yango Cayman 12 3.9 09/15/2023 KY USD MSU Energy SA 6.9 70.8 02/01/2025 AR USD MSU Energy SA 6.9 71.2 02/01/2025 AR USD Itau Unibanco SA 5.8 19.4 05/20/2027 BR BRL Jamaica Government 8.5 68.9 12/21/2061 JM JMD Jamaica Government 6.3 72.7 07/11/2048 JM JMD Kaisa Group Holdings 10.9 9.1 KY USD Fospar S/A 6.5 1.3 05/15/2026 BR BRL Frigorifico 7.7 71.1 07/21/2028 PY USD Frigorifico 7.7 71.4 07/21/2028 PY USD Galaxy Digital 3 62.5 12/15/2026 KY USD Colombia Bond 7.3 71.3 10/18/2034 CO COP Colombia Bond 7.3 71.3 10/18/2034 CO COP Colombia Bond 7.3 61.5 10/26/2050 CO COP Colombia Bond 7.3 61.5 10/26/2050 CO COP Colombia Bond 3.9 54.8 02/15/2061 CO USD Colombia Bond 4.1 61.9 02/22/2042 CO USD Colombia Bond 5.6 72.7 02/26/2044 CO USD Colombia Bond 3.1 74 04/15/2031 CO USD Colombia Bond 3.3 72.1 04/22/2032 CO USD Colombia Bond 5.2 67.3 05/15/2049 CO USD Colombia Bond 4.1 58.8 05/15/2051 CO USD Colombia Bond 5 66.9 06/15/2045 CO USD Colombia Bond 6.3 63 07/09/2036 CO COP Colombia Bond 6.3 63 07/09/2036 CO COP Banco Davivienda SA 6.7 66.5 CO USD Banco de Chile 2.7 75.4 03/09/2035 CL AUD Banco de Chile 1.7 69.5 04/26/2032 CL EUR Chile Bond 1.3 52 01/22/2051 CL EUR Chile Bond 3.1 66.9 01/22/2061 CL USD Chile Bond 1.3 65.4 01/29/2040 CL EUR Chile Bond 1.3 71.2 07/26/2036 CL EUR Chile Bond 3.3 66.6 09/21/2071 CL USD China Maple Leaf 2.3 75 01/27/2026 KY USD China SCE Group 6 29 02/04/2026 KY USD China SCE Group 7.4 56.2 04/09/2024 KY USD China SCE Group 7 35.2 05/02/2025 KY USD China SCE Group 6 42.9 09/29/2024 KY USD Ruta del Maipo 2.3 53.5 12/15/2024 CL CLP Santander Consumer 2.9 73.1 11/27/2034 CL AUD Seagate HDD Cayman 3.4 73.4 07/15/2031 KY USD Seazen Group 4.5 63.6 07/13/2025 KY USD Silk Road Investments 2.9 68.8 01/23/2042 KY AUD Simpar Finance 10.8 73.8 02/12/2028 BR BRL Simpar Finance 10.8 73.8 02/12/2028 BR BRL Skylark 1.8 58.2 04/04/2039 KY GBP YPF SA 1 69.8 01/10/2026 AR USD YPF SA 7 61.6 12/15/2047 AR USD YPF SA 7 61 12/15/2047 AR USD UEP Penonome II SA 6.5 73.6 10/01/2038 PA USD UEP Penonome II SA 6.5 74.1 10/01/2038 PA USD Guaranteed 5.4 73.7 01/29/2038 KY USD Guaranteed 5.3 71.9 03/23/2038 KY USD Helenbergh China 8 32.9 11/07/2024 KY USD Agile Group Holdings 6.1 41 10/13/2025 KY USD Agile Group Holdings 5.5 45 04/21/2025 KY USD Agile Group Holdings 5.5 39.2 05/17/2026 KY USD Alfa Desarrollo SpA 4.6 72.1 09/27/2051 CL USD Alfa Desarrollo SpA 4.6 72.1 09/27/2051 CL USD Alibaba Group 2.7 67.4 02/09/2041 KY USD Alibaba Group 3.2 65.2 02/09/2051 KY USD Agile Group Holdings 5.8 50.2 01/02/2025 KY USD QNB Finance 11.5 62.1 1/30/2025 KY TRY Generacion 9.9 73.1 12/01/2027 AR USD Generacion 12.5 0 02/16/2024 AR USD Gol Finance Inc 8.8 40.5 KY USD Gol Finance Inc 8.8 42 KY USD Goldman Sachs 2.3 75.9 06/30/2040 KY EUR Greenland Hong Kong 10.2 45.9 KY USD Guacolda Energia SA 4.6 40.8 04/30/2025 CL USD Guacolda Energia SA 4.6 40.8 04/30/2025 CL USD Tencent Holdings 3.2 66.2 06/03/2050 KY USD Tencent Holdings 3.2 66.5 06/03/2050 KY USD Tencent Holdings 3.3 63 06/03/2060 KY USD Tencent Holdings 3.3 63.5 06/03/2060 KY USD Three Gorges Finance 3.2 74.2 10/16/2049 KY USD VTR Comunicaciones 5.1 55.3 01/15/2028 CL USD VTR Comunicaciones 5.1 53.6 01/15/2028 CL USD VTR Comunicaciones 4.4 54.4 04/15/2029 CL USD VTR Comunicaciones 4.4 54.5 04/15/2029 CL USD Banco del Estado 3.1 72.5 02/21/2040 CL AUD Banco del Estado de 1.7 70 03/01/2032 CL EUR Banco del Estado 2.8 68.9 03/13/2040 CL AUD Banco del Estado 1.7 69.2 07/05/2032 CL EUR Banco GNB Sudameris 7.5 73.3 04/16/2031 CO USD Banco GNB Sudameris 7.5 73.4 04/16/2031 CO USD Banco Santander Chile 1.3 57.6 11/29/2034 CL EUR Banco Santander Chile 3.1 72.3 02/28/2039 CL AUD Panama Bond 4.5 73.5 01/19/2063 PA USD Panama Bond 4.3 74.8 04/29/2053 PA USD Panama Bond 3.9 66.8 07/23/2060 PA USD Pearl Holding III 9 30.5 10/22/2025 KY USD Pearl Holding III 9 30.5 10/22/2025 KY USD Peruvian Bond 3.6 68.6 01/15/2072 PE USD Peruvian Bond 2 69.5 11/17/2036 PE EUR Peruvian Bond 2.8 61.1 12/01/2060 PE USD Peruvian Bond 1.3 72.1 03/11/2033 PE EUR Peruvian Bond 3.2 60.9 07/28/2121 PE USD Vista Energy 1 73 03/03/2028 AR USD Voyager II 3.3 74.3 03/23/2034 KY AUD Transocean Inc 6.8 67.6 03/15/2038 KY USD Inversiones Latin 5.1 44.6 06/15/2033 CL USD Inversiones Latin 5.1 44.8 06/15/2033 CL USD KWG Group Holdings 7.4 15.8 01/13/2027 KY USD KWG Group Holdings 6 40.8 01/14/2024 KY USD KWG Group Holdings 5.9 22.2 11/10/2024 KY USD KWG Group Holdings 6.3 17.6 02/13/2026 KY USD KWG Group Holdings 7.4 26.5 03/05/2024 KY USD KWG Group Holdings 6 19.4 08/10/2025 KY USD KWG Group Holdings 6 16.8 08/14/2026 KY USD KWG Group Holdings 7.9 27.5 08/30/2024 KY USD KWG Group Holdings 7.9 60.2 09/01/2023 KY USD Telecom Argentina SA 1 56.5 02/10/2028 AR USD Telecom Argentina SA 1 64.2 03/09/2027 AR USD Tencent Holdings 3.8 74.1 04/22/2051 KY USD Tencent Holdings 3.8 74.1 04/22/2051 KY USD Tencent Holdings 3.9 72.3 04/22/2061 KY USD Tencent Holdings 3.9 72.3 04/22/2061 KY USD eHi Car Services 7 64.9 09/21/2026 KY USD El Salvador Bond 6.4 62.3 01/18/2027 SV USD El Salvador Bond 6.4 62 01/18/2027 SV USD El Salvador Bond 7.1 48.5 01/20/2050 SV USD El Salvador Bond 7.1 48.6 01/20/2050 SV USD El Salvador Bond 5.9 46 01/30/2025 SV USD El Salvador Bond 7.6 49.4 02/01/2041 SV USD El Salvador Bond 7.6 49.4 02/01/2041 SV USD El Salvador Bond 8.6 58.1 02/28/2029 SV USD El Salvador Bond 8.6 57.9 02/28/2029 SV USD El Salvador Bond 8.3 56.4 04/10/2032 SV USD El Salvador Bond 8.3 56.3 04/10/2032 SV USD El Salvador Bond 7.7 50 06/15/2035 SV USD El Salvador Bond 7.7 50 06/15/2035 SV USD El Salvador Bond 9.5 54.6 07/15/2052 SV USD El Salvador Bond 9.5 54.5 07/15/2052 SV USD El Salvador Bond 7.6 49.9 09/21/2034 SV USD El Salvador Bond 7.6 50 09/21/2034 SV USD Banda de Couro 8 69.1 01/15/2027 BR BRL Alibaba Group 3.3 63 02/09/2061 KY USD AMTD IDEA Group 4.5 52.5 KY SGD AAC Technologies 3.8 68.6 06/02/2031 KY USD ACEN Finance 4 70.9 KY USD AES Tiete 6.8 0.7 04/15/2024 BR BRL Agile Group Holdings 13.5 40.7 KY USD Agile Group Holdings 8.4 38.1 KY USD Agile Group Holdings 7.9 31 KY USD Argentina Bonar Bonds 1 19.8 7/09/2029 AR USD Argentina Bonar Bonds 1 27.5 08/05/2023 AR USD Argentina Treasury 2.5 25.3 11/30/2031 AR ARS Argentine Bond 0.5 19.5 07/09/2029 AR EUR Argentine Bond 1 23.7 07/09/2029 AR USD Argentine Bond 0.1 21.5 07/09/2030 AR EUR Argentine Bonos 16 72.6 10/17/2023 AR ARS Argentine Bonos 15.5 22.2 10/17/2026 AR ARS Ascent Finance 3.4 58.4 02/06/2043 KY AUD Ascent Finance 3.8 59.8 06/28/2047 KY AUD Ascent Finance 1.2 61.4 07/12/2047 KY EUR Astra Cumulative 1.5 60.6 11/01/2029 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 * * *