/raid1/www/Hosts/bankrupt/TCRLA_Public/230801.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
Tuesday, August 1, 2023, Vol. 24, No. 153
Headlines
A R G E N T I N A
ARGENTINA: Discloses Measures to Boost Foreign Reserves
ARGENTINA: IMF Seeks to Stop 116% Inflation From Getting Worse
COMPANIA GENERAL DE COMBUSTIBLES: Fitch Withdraws 'B-' IDRs
B R A Z I L
BRAZIL: Unemployment Rate Falls to 8%
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Hollywood Unemployment Impacts Dominican Cinema
P E R U
PERU: Regional Food Security a Common Goal
P U E R T O R I C O
ACADEMIA DE DESARROLLO: Court Confirms Ch. 11 Subchapter V Plan
CAPARRA HILLS: Fitch Affirms 'B+' Long Term IDR, Outlook Stable
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Discloses Measures to Boost Foreign Reserves
-------------------------------------------------------
Buenos Aires Times reports that the Argentine peso lost value on
the informal market as the government announced measures to bolster
dwindling reserves.
The rate on the informal market rose to 550 pesos to the dollar
from 528 pesos as the government said it would take steps to
stimulate exports and discourage imports, according to Buenos Aires
Times.
Many Argentines see converting their pesos to US currency as their
only defense against the ravages of inflation, which hit its
highest level in three decades in 2022, finishing the year at 94.8
percent, the report notes.
The country's international reserves, over US$44 billion in
January, are now at just over US$25 billion, the report discloses.
In the first half of this year, Argentina's trade deficit was
US$4.4 billion, the report notes.
The new measures included an official rate of 340 pesos to the
dollar for agricultural exports until August 31 -- higher than the
official rate of 284 pesos, the report relays.
There are also new taxes on imports, the report notes.
Sergio Massa, economy minister and a presidential hopeful in
October elections, told representatives of the agricultural
industry -- Argentina's main source of foreign exchange -- the
measures were necessitated by "the reality of the moment," the
report says.
This included negotiations with the International Monetary Fund on
repayment of a US$44 billion loan, as well as the devastating
economic impacts of a record-breaking drought, the report relays.
The government and IMF said they had agreed on "the central
objectives and parameters" of a repayment plan, the report
discloses.
Buenos Aires has not been able, thus, far to meet the IMF
requirements of accumulating international reserves and reducing
its 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.
In 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 June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None
of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions
within the government coalition, and infighting among the
opposition,
constrain the sovereign's ability to implement timely changes in
economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's
Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to
'CC' from 'C' and affirmed the Long-Term Local Currency (LC) IDR
at 'CCC-'. Fitch typically does not assign Outlooks to sovereigns
with a rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
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: IMF Seeks to Stop 116% Inflation From Getting Worse
--------------------------------------------------------------
Manuela Tobias and Hannah Pedone at Bloomberg News report that the
International Monetary Fund is working with Argentina to help stop
its 116% inflation rate getting significantly worse, the Fund's top
economist said.
"Inflation numbers at that level is always a very, very worrisome
sign," Chief Economist Pierre-Olivier Gourinchas said in an
interview with Bloomberg TV. "What we are doing is, working with
the authorities and trying to make sure that we have in place
policies that would prevent inflation from escalating from this
already very high level."
The IMF revised its 2023 inflation forecast for Argentina to 120%
from 98.6%, the report relays. It also forecast a 2.5% economic
contraction this year, from a previous forecast of 0.2% growth,
Bloomberg News says.
Argentina's problems have been aggravated by the severe drought
that has hit farms in one of the world's biggest agricultural
exporters, Gourinchas said, Bloomberg News notes. The devastation
brought on by the drought is one of the reasons Argentina and the
IMF have had to overhaul their agreement, Bloomberg News
discloses.
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.
In 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 June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None
of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions
within the government coalition, and infighting among the
opposition,
constrain the sovereign's ability to implement timely changes in
economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's
Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to
'CC' from 'C' and affirmed the Long-Term Local Currency (LC) IDR
at 'CCC-'. Fitch typically does not assign Outlooks to sovereigns
with a rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
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.
COMPANIA GENERAL DE COMBUSTIBLES: Fitch Withdraws 'B-' IDRs
-----------------------------------------------------------
Fitch Ratings has affirmed Compania General de Combustibles S.A.'s
(CGC) Long-Term Foreign Currency (FC) and Local Currency (LC)
Issuer Default Ratings (IDR) at 'B-'. The Rating Outlook is Stable.
Concurrently, Fitch has withdrawn the ratings.
The affirmation reflects CGC's businesses profiles that have proved
to be resilient, over the years, to a deteriorating macroeconomic
environment plagued with inflation and devaluation of the local
currency. The company has maintained its adequate leverage profile,
liquidity, of which a large portion is held in USD abroad, combined
with exports that help mitigate the impact of capital controls.
The ratings were withdrawn for commercial reasons.
KEY RATING DRIVERS
Weak Operating Environment: CGC's ratings are capped by the country
ceiling of Argentina, given its exposure to the federal government
through gas purchasing agreements (Plan Gas Ar.) over the rating
horizon. Argentina's energy sector is influenced by the government,
as it is a strategic sector for economic growth and revenues
(through taxes, royalties, and exports). It also relies on
government subsidies to incentivize gas development.
Production Profile: CGC's production is projected to reached
60,000boed in 2023. As of end of June 2023, CGC was the sixth
largest gas producer and seventh largest oil producer in Argentina.
CGC's 1P reserve base increased by 16% to 141mmboe, and its 1P
reserve life was 7.8 years. The company has a diversified operation
and production profiles, that include sites in San Jorge, Neuquina,
and Cuyaya basins. These are prolific basins, and Cuyyana falls
within the prolific Vaca Muerta area, complementing CGC's existing
operation in the Austral basin.
Stable Cash Flow Profile: Fitch's rating case estimates FCF will be
negative in 2023 as the company deploys USD450 million in capex to
its assets located in the San Jorge and Austral basins. CGC's cash
flows are supported by contracted revenues under Plan Gas Ar 4
(PG5) achieving the extension of gas contracts until December 2028,
with a maximum price of USD3.46 MMBTU for the contracts plus
incremental volume above the base curve, at an additional price
starting at USD9.5 MMBTU. The company's exposure to potential
payment delays by the government, is mitigated through its oil
production, which will partially be exported, and non-contracted
gas sales.
Transitory High Leverage: CGC's gross leverage is expected to be
close to 4.0x in 2023, and then descend below 3.0x by 2026. Total
debt to 1P is expected to be USD7boe in 2023, as the company
finances most of its Austral and Golfo San Jorge projects with
debt. CGC has roughly USD42 million of debt maturing in 2023. The
largest portion comprises of USD200 million of optional convertible
bonds due in 2028. The rating case assumes that debt will be at or
below USD1 billion over the rating horizon.
DERIVATION SUMMARY
CGC's (B-/Stable) credit profile compares favorably to Argentine
corporates Pampa Energia (B-/Stable) and Capex S.A. (CCC+) and to
other small independent oil and gas companies in the region. The
ratings of GeoPark Limited (B+/Negative), SierraCol Energy
(B+/Stable), Gran Tierra Energy International Holdings Ltd.
(GTE)(B/Stable), and Frontera Energy (B/Stable) are constrained to
the 'B' category, given the inherent operational risks associated
with small scale and low diversification of their oil and gas
production profiles.
CGC is an energy company, and its business profile compares mostly
to Capex and Pampa's upstream business, but both Capex and Pampa
are diversified energy companies that generate majority of cash
flows from power generation, thus they are more exposed to CAMMESA.
Both Pampa and CGC are leaders in Argentina in their respective
business operations.
CGC produces both oil (38%) and gas (62%) exclusively in Argentina,
which limits its ratings, its off-taker and impact of capital
controls. Nonetheless, its pro forma production size compares
favorably to other 'B' rated oil and gas E&P producers, which will
constrain its rating to the 'B' category. These peers include
Canacol, Geopark, SierraCol, Gran Tierra Energy, and Frontera
Energy.
KEY ASSUMPTIONS
Operations
-- Oil and gas production to average 63,000 boe/d over the next
four years;
-- Average realized natural gas price of USD5.00mmBTU flat over
the rating horizon under PG5;
-- Average realized Brent price of USD76bbl in 2023, USD71bbl in
2024, and USD55bbl long term;
-- Capex of USD450 million in 2023; annual average of USD200
million between 2024 and 2026;
-- Lifting cost (COGS - D&A) of USD26/boe average between
2023-2026;
-- Selling expenses are USD2/ boe flat from 2023-2026;
-- SG&A expenses are USD2/boe flat from 2023-2026;
-- Exploration expense are USD 0.2/boe flat from 2023-2026;
-- Reserve replacement ratio of 105% per annum.
Financial:
-- Fitch Average and EOP ARS/USD exchange rates;
-- Dividends received of USD5 million per annum 2023-2026;
-- Dividends paid of USD10 million per annum 2023-2026;
-- Debt outstanding remains at or below USD1 billion over the
rating horizon.
RATING SENSITIVITIES
Rating sensitivities are not applicable as the ratings have been
withdrawn.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: CGC reported USD240 million in cash and cash
equivalent in 1Q23, sufficient enough to cover debt maturities in
the next 18 months. The company's debt was USD1.1 billion by the
end of June, composed by USD187 million in short-term debt. The
rating case assumes that CGC will tap local markets to replenish
its cash position in need arises, and debt at or below USD1 billion
over the rating horizon.
ISSUER PROFILE
CGC is an energy company with operations in Argentina, engaged in
the development, production and exploration of natural gas, crude
oil, LPG (upstream business) and with a significant interest in a
network of pipelines in northern and central Argentina.
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
CGC has an ESG Relevance Score of '4' for GHG Emissions & Air
Quality due to the growing importance of policies designed to limit
the greenhouse gas (GHG) emissions from the production of oil and
gas and potentially lessening demand, which has a negative impact
on the credit profile, and is relevant to the rating[s] in
conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
===========
B R A Z I L
===========
BRAZIL: Unemployment Rate Falls to 8%
-------------------------------------
Richard Mann at Rio Times Online reports that despite Brazil seeing
the lowest level of formal job creation in the first half of the
year since the onset of the pandemic in 2020, the country's
unemployment rate exhibited a significant improvement.
According to the Brazilian Institute of Geography and Statistics
(IBGE), the unemployment rate dipped to 8% in the second quarter,
marking a 0.8 percentage point decrease from the first quarter, the
report notes.
This rate is the lowest for the second quarter since 2014,
according to Rio Times Online.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022
Brazilian general election. He was sworn in on January 1, 2023, as
the 39th president of Brazil, succeeding Jair Bolsonaro.
Fitch Ratings upgraded on July 26, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'BB', from 'BB-',
with a Stable Outlook. The upgrade reflects better-than-expected
macroeconomic and fiscal performance amid successive shocks in
recent years, proactive policies and reforms that have supported
this, and Fitch's expectation that the new government will work
toward further improvements.
In mid-June 2023, S&P Global Ratings, revised the outlook on its
long-term global scale ratings on Brazil to positive from stable.
S&P affirmed its 'BB-/B' long- and short-term foreign and local
currency sovereign credit ratings on Brazil. S&P also affirmed its
'brAAA' national scale rating, and the outlook remains stable. The
transfer and convertibility assessment remains 'BB+'. The positive
outlook reflects signs of greater certainty about stable fiscal and
monetary policy that could benefit Brazil's still-low GDP growth
prospects. Continued GDP growth plus the emerging framework for
fiscal policy could result in a smaller government debt burden than
expected, which could support monetary flexibility and sustain the
country's net external position.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS's credit rating for Brazil is BB (low) with stable outlook
(March 2018).
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Hollywood Unemployment Impacts Dominican Cinema
-------------------------------------------------------------------
Dominican Today reports that the Dominican Republic has become a
significant hub for international film productions, attracting
filmmakers with its natural landscapes, local infrastructure, and
incentives such as the Transferable Tax Credit of 25%. However,
the ongoing Hollywood strike is beginning to affect the country's
film industry, according to Dominican Today.
In 2022, 125 films were shot in the Dominican Republic,
contributing more than RD$15 billion to the local economy, the
report notes. However, the labor dispute in Hollywood has led to
the cancellation of several projects, and it is now affecting
Pinewood Studios in the Dominican Republic, the report relays. The
Screen Actors Guild of the United States (SAG-AFTRA) strike has
halted two productions at the studio, causing uncertainty about
when an agreement will be reached, the report discloses.
The strike is not only impacting Hollywood but also spreading to
other cities, and the Dominican Republic is feeling its effects,
the report notes. Lantica Media, which operates Pinewood Studios
in the country, revealed that 85% of its revenue comes from
Hollywood projects, the report relays. They are currently working
on local and non-union projects from other parts of the world, but
the uncertainty remains, the report discloses.
The dispute between Hollywood actors and scriptwriters is seen as a
"lost fight" and could cause significant damage to the US economy,
with experts estimating it could result in $4 billion in losses,
the report relays. The duration of the strike remains uncertain,
with predictions that it could last for several months based on
previous Hollywood strikes, the report notes.
The impact on the Dominican film industry is a matter of concern,
as the strike has already affected projects in the country and
could potentially lead to further disruptions in the coming months,
the report discloses. The hope is that an agreement will be
reached soon to bring stability back to the industry, the report
notes.
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.
S&P Global Ratings, in December 2022, raised its long-term foreign
and local currency sovereign credit ratings on the Dominican
Republic to 'BB' from 'BB-'. The outlook on the long-term ratings
is stable. S&P affirmed its 'B' short-term sovereign credit
ratings. S&P also revised its transfer and convertibility (T&C)
assessment to 'BBB-' from 'BB+'. The stable outlook reflects S&P's
expectation of continued favorable GDP growth and policy continuity
over the next 12-18
months that will likely stabilize the government's debt burden.
In February 2023, S&P said its BB ratings reflect the country's
fast-growing and resilient economy. It also incorporates the
country's historical political and social challenges in passing
structural reforms to contain fiscal deficits, despite recent
improvements in the electricity sector. The ratings are constrained
by relatively high debt, a hefty interest burden, and limited
monetary policy flexibility.
Fitch Ratings, in December 2022, affirmed the Dominican Republic's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Rating Outlook.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
=======
P E R U
=======
PERU: Regional Food Security a Common Goal
------------------------------------------
David Francisco and Malaga Ego Aguirre at Trinidad Express report
that food security of the population and the fight against poverty
and malnutrition, as well as the well-being of health, have become
one of the priorities of all countries, and world peace and
sustainable development are the essential conditions to achieve
food security.
Potato is a Peruvian historic contribution to world food security
and peace, according to Trinidad Express.
According to sequenced genomic studies, around 8,000 to 10,000 and
years ago, wild potatoes were domesticated by the Peruvian mountain
people, who devised selection processes to eliminate toxic
compounds and were able to eat potatoes boiled, baked, and mashed,
as we do now, the report notes.
The first Spaniards in the region, who landed in 1532 noticed
Peruvian natives eating these strange, round objects and emulated
them, the report relays. News of the new food spread within three
decades to France and the Netherlands, th report discloses. The
first scientific description of the potato appeared in 1596 when
the Swiss naturalist Gaspard Bauhin awarded it the name Solanum
tuberosum, the report says.
Brought to Europe from Peru, the humble potato gave rise to modern
industrial agriculture, allowing farmers to grow more crops on less
land, the report discloses. In turn, this allowed communities to
feed themselves on smaller amounts of land, the report notes.
Europe that simply could not reliably feed itself experienced
constant famines and the potato changed all that and raised living
standards, the report says. Well-fed wealthy countries are less
likely to go to war than starving, poor countries, the report
notes.
Once potatoes were imported to the old world starting in the late
17th century, they seem to have eradicated hunger and nationwide
famines and dampened conflicts for the next two hundred years, the
report relays.
Nowadays, it is urgent to adopt urgent strategies and measures to
close the gap of the food crisis caused by the devastating effects
of climate change and armed conflicts that have generated a
shortage of fertilizers in the world and inflation that is mainly
reflected in the price of food, the report says.
Trade restrictions and global geopolitical tensions are a serious
risks to food and development prospects, the report discloses.
In the search for global solutions to international problems,
regional unity and cooperation offer practical solutions to face
the food crisis, the report notes.
The Embassy of Peru co-hosted with the Trinidad and Tobago Chamber
of Industry and Commerce a webinar on the opportunities offered by
the Peruvian supply of high-quality fresh fruits and vegetables to
contribute to food security in the region, the report relays.
"We seek to make visible the great biodiversity of food that is
produced in our country and how our reasonable prices and reliable
and sustainable supply can help food security in the region,
especially in Trinidad and Tobago," the report notes.
All new scientific studies agree that a balanced diet, rich in
vegetables and fruits, has a crucial effect to keep us healthy and
protect against chronic diseases such as heart disease, diabetes,
and stroke, provides us with antioxidants, and can reduce ageing,
the report relays.
One of the great comparative advantages of Peru is that thanks to
its agroclimatic conditions it is possible to have a production of
these valuable foods throughout the year and we have daily flights
of Copa Airlines from Lima to Trinidad and Tobago via Panama, the
report says.
In the last five years, Peru maintains the highest annual growth
rate in non-traditional exports in the region, with an average
annual expansion of 8.8 per cent, the report discloses.
This result is explained by the higher shipments of agricultural
products (mainly fruits), textiles, chemicals, fishing, and iron
and steel, the report notes.
"Our non-traditional exports accumulated US$ 7,412 million in the
period January-May 2023, an increase of 5.6 per cent compared to
what was registered in the same period of 2022."
Last May, non-traditional exports amounted to 1,398 million
dollars, an interannual increase of 0.2 per cent, explained by the
higher volumes shipped (2.5 per cent), mainly agricultural,
fishing, and iron and steel products, the report relays.
According to main destinations, higher sales of non-traditional
products were registered to Asia (South Korea) and China, basically
for fishery products, and to Europe (Netherlands and Spain), for
agricultural products (avocados), the report notes.
In the niche of organic products, Peruvian exports of organic
products exceeded 628 million dollars in 2022, the main
destinations being the United States (USA), the Netherlands, and
Germany, the report discloses.
The main organic export products were coffee, cocoa, bananas,
quinoa, and ginger, among others, the report relaus.
Given the increase in demand for the production and export of
organic products in Peru, strict certification is fundamental,
since it generates trust between importing and exporting countries
by ensuring that products and services have the established
quality, safety, and performance specifications required for
household consumption, the report notes.
=====================
P U E R T O R I C O
=====================
ACADEMIA DE DESARROLLO: Court Confirms Ch. 11 Subchapter V Plan
---------------------------------------------------------------
Judge Enrique S. Lamoutte has entered an order confirming Academia
De Desarrollo Integral Cristiano Inc.'s Chapter 11 Subchapter V
Plan dated December 8, 2022.
Academia de Desarrollo Integral Cristiano Inc., filed with the U.S.
Bankruptcy Court for the District of Puerto Rico a Plan of
Reorganization for Small Business dated December 8, 2022.
The Debtor is a corporation that was chartered on November 4,
2005.
Debtor's principal asset is a parcel of land with improvements in
which Debtor operates a school and provides education services to
students.
The property is encumbered with a mortgage lien in favor of First
Bank of Puerto Rico. The sole stockholder of the Debtor is Mrs.
Maria I. Romero Nieves who has over 29 years of experience in the
education service in Puerto Rico and is in charge of supervising
and implementing all business strategies for the operation of the
business.
This Plan of Reorganization proposes to pay creditors of the Debtor
from the cash flow generated through the normal operation of
Debtor's business and with the private funds collected by various
of members of the Debtor's President's family.
Non-priority unsecured creditors holding allowed claims will
receive distributions in the aggregate amount of $5,000 during the
total five years of the life of the plan which are to be paid pro
rata among all allowed claimants under this Class through monthly
instalments. This Plan also provides for the payment of
administrative and priority claims.
Class 1 shall consist of that secured portion of Claim No. 1 filed
by First Bank Puerto Rico in the total amount of $292,907. On the
effective date, Debtor proffers for First Bank to retain its lien
unaltered and for its claim to be repaid in the secured amount of
$255,000.00, through monthly installments in the amount of
$2,221.32, calculated at a fixed annual interest rate of 6.5%
through an amortization of 15 years. The monthly payments shall be
made in the first 5 days of every given month, after the effective
date. In addition, the Debtor will maintain the property properly
insured and pay all real property taxes related with the property.
Any amount of Firstbank's claim over the secured portion detailed
herein, will be considered a general unsecured claim sharing
distribution within Class 2.
Class 2 shall consist of all General Unsecured creditors. On the
effective date of the plan allowed and for five additional years
claimants shall receive from the Debtor a sum payment from the
ongoing operation in the aggregate amount of $5,000 during the
total five years of the life of the plan which are to be paid pro
rata among all allowed claimants under this Class through monthly
instalments.
Class 3 shall consist of the interest held by Mrs. MarÃÂa I.
Romero Nieves as the sole equity security interest holder. The
equity holders will continue to manage and administer the
reorganization endeavors of the Debtor. The Security Holder will
retain their interest on the reorganized entity. The Security
Holder will receive no other distribution through the Plan.
The Debtor will have sufficient funds to pay the plan and continue
with the operations of its business.
As a starting point in terms of funding, Debtor's officer Maria
Romero has ensured through personal resources, to have available
around $120,000 for the funding of this proceeding since the
voluntary petition and for the plan while reorganizations
strategies are implemented. This source of funding will be in a
form of unsecured loan which repayment would be subject to the
completion of the plan payments.
This funding will provide for the payment of professionals related
to the bankruptcy proceeding, the payment of a specialized
consultant in the education industry and, the repayment of
Firstbank's secured loan for a period of at least 3 years or until
Debtor's operations themselves provide for such payment, while
Debtor moves to reorganize, implements all strategies, and focuses
all efforts on increasing the income of Debtor's business.
A full-text copy of the Plan of Reorganization dated Dec. 8, 2022,
is available at https://bit.ly/3uXH6i0 from PacerMonitor.com at no
charge.
Attorney for the Plan Proponent:
Alexis A. Betancourt Vincenty, Esq.
Lugo Mender Group, LLC
100 Carr. 165, Suite 501
Guaynabo, PR 00968-8052
Telephone: (787) 707-0404
Facsimile: (787) 707-0412
Email: a_betancourt@lugomender.com
About Academia de Desarrollo Integral Cristiano
Academia de Desarrollo Integral Cristiano Inc. filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D.P.R. Case No. 22-02689) on Sept. 9, 2022, with up to $1 million
in both assets and liabilities. Alexis A. Betancourt Vincenty,
Esq., at Lugo Mender Group, LLC serves as the Debtor's counsel.
CAPARRA HILLS: Fitch Affirms 'B+' Long Term IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Caparra Hills, LLC's Long-Term (LT)
Issuer Default Rating (IDR) at 'B+' and senior secured debt at
'BB'/'RR2'. The Rating Outlook is Stable.
The ratings reflect Caparra's improving net leverage as the company
continues to replace gross leasable area (GLA) vacated and
downsized by key tenants and pay off debt. Caparra's notes are
notched up two notches from its LT IDR to 'BB' to reflect strong
recovery prospects in the event of a default. The Stable Outlook
reflects Fitch's expectation that Caparra will continue to renew
upcoming contracts and keep vacancy stable to improving.
Caparra's ratings are mitigated by limited property
diversification, small scale relative to other peers, and contract
maturity risk.
KEY RATING DRIVERS
Net Leverage Improvement: The company improved total net
debt/EBITDA and gross debt/EBITDA, to 5.7x and 6.4x, respectively,
in the LTM 3Q as of March 31, 2023, down from fiscal 2022 (June YE)
when total net debt/EBITDA and gross debt/EBITDA remained at 7.7x
and 7.9x, respectively. Fitch expects leverage will gradually
continue to improve over the medium term and beyond as the company
repays debt, receives revenues from new tenants and recovered foot
traffic, and improves occupancy. Fitch projects net leverage of
around 6.0x over the next couple years.
Caparra had USD46.8 million of total debt as of LTM June 30, 2022,
which was composed entirely of secured bonds that require
approximately USD4.7 million of annual debt service (interest and
principal). Fitch's net leverage calculation excludes cash held in
Caparra's debt service reserve, which holds approximately USD7.5
million and covers roughly 19 months of debt service.
Strong Track Record of Renewals: Fitch's base case expects
occupancy to remain stable around 85% over the medium term,
improving toward 90% in 2025. Contract maturity risk is dwindling,
as 15.9% of rents are set to expire within 12 months of March 31,
2023, compared to 35.5% in 2020. Mitigating this risk is Caparra's
solid track record of renewals in Puerto Rico's subdued business
and economic environment. Fitch's expects that the company will be
able to renew a significant portion of these upcoming maturities
over the next year, as well as replace any vacated space. T-Mobile
Center's classification as a Class-A building in Puerto Rico,
highlighted by its solid location in Guaynabo, is viewed as a
positive by prospective tenants.
High Tenant Concentration Improvement: Fitch expects that current
overall levels of counterparty concentration risk will continue to
improve as the company continues to renew or replace key tenants.
As of March 31, 2023, Caparra's total occupancy rate was 82.1%, of
which about 53% was occupied by 10 major tenants (down from a peak
of over 60%). T-Mobile Center, where Caparra offers net rentable
space of 207,554 sqf has an occupancy rate of 80%, of which 42% is
occupied by key tenants that lease over 10,000 sf. Fitch views
positively the company's concentration of Class-A tenants, which
include large international corporations such as T-Mobile, L'Oreal,
and Walgreens, among others, as these tenants have relatively lower
collection risk than other tenants.
Secured Bond Enhances Recovery Prospects: The 'BB' rating on the
secured bonds positively incorporates the collateral support
included in the transaction structure. Bond payments are secured by
a first mortgage on the company's real estate properties and the
assignment of leases. The secured bonds are payable solely from
payments made to the Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority
(AFICA) by Caparra. AFICA serves solely as an issuing conduit for
local qualified borrowers for the purpose of issuing bonds pursuant
to a trust agreement between AFICA and the trustee. The secured
bonds are not guaranteed by AFICA, do not constitute a charge
against the general credit of AFICA, and do not constitute an
indebtedness of the Commonwealth of Puerto Rico or any of its
political subdivisions.
Weak Operating Environment: Economic conditions in Puerto Rico
continue to remain challenging. Caparra's small size and lack of
geographic diversification makes it highly exposed to Puerto Rico's
struggling economy, which has resulted in high unemployment rates
and increased migration from the island. Despite the company's
relatively stable performance in Puerto Rico, these factors have
the potential to erode appraisal values and negatively affect lease
rates and renewals. Solid property location within Guaynabo
partially mitigates this risk, as Guaynabo and the surrounding
radius has an income base representing more than 25% of Puerto
Rico's income.
DERIVATION SUMMARY
Caparra's ratings reflect its limited property diversification and
occupancy, which at 85% for FY 2023 is in line with the 'B' rating
category, and its riskier operating environment compared to U.S.
peers, as Caparra is dependent on the fragile economy of Puerto
Rico and operates on a relatively small scale with single asset
concentration. Caparra's consistently positive FCF over the last
few years and adequate liquidity justify its higher rating compared
to General Shopping e Outlets do Brasil S.A. (CC).
The company has shown resiliency in its operating performance with
consistent EBITDA margins over 60% (62% expected in 2023), which is
in line with 'BB' rated peers. The company's recent operating
performance and repayment of debt have contributed to the company's
reporting of net debt/ EBITDA of 5.7x as of March 31, 2023, which
is more commensurate with the 'BB' rating category. The company
also benefits from strong renewal rates and solid financial
flexibility.
Caparra's notes have been notched up to 'BB' to reflect strong
recovery prospects in the event of a default.
KEY ASSUMPTIONS
-- FY 2023 revenues to increase by mid double digits due to
collections, acquiring new tenants to fill GLA, and recovery from
the pandemic;
-- Occupancy to remain stable around 85% over the short term,
improving towards 90%;
-- EBITDA margins of around 62% over the medium term;
-- No upcoming acquisitions, divestitures or additional debt
issuances.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Lower business risks in terms of contract maturity schedule,
concentration risk while continuing to improve cash flow generation
resulting in lower net leverage of about 6.0x could trigger a
positive rating action.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A downgrade could be triggered due to a lack of a rapid
improvement of the company's vacancy rates, contract maturity
schedule coupled with declining cash flow generation, measured as
EBITDA, resulting in sustained net leverage above 7.5x.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Caparra's liquidity is supported by its cash
position of USD5.0 million as of LTM March 31, 2023 (3Q). The
company also maintains a debt service reserve fund of approximately
USD7.5 million, held by the trustee, covering 19 months of debt
service as of YE June 30, 2022 (interest and principal, which is
USD4.7 million). During the same period, Caparra's short-term debt
obligation was USD1.4 million. FCF as of FY 2022 was USD1.9
million, and USD2.5 million as of March 2023. FCF is expected to
continue to be positive in FY 2023, backed by strong cash flow from
operations (CFO) expectations for the company.
ISSUER PROFILE
Caparra Hills, LLC is a limited liability company consisting of the
ownership and operation of the commercial properties: T-Mobile
Center, Galeria San Patricio, and Caparra Office Center. Caparra is
located in the San Patricio sector of Guaynabo, 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
Caparra Hills, LLC has an ESG Relevance Score of '4' for Exposure
to Environmental Impacts due to its presence in a hurricane-prone
region, which has a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
*********
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 * * *