/raid1/www/Hosts/bankrupt/TCRLA_Public/231004.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
Wednesday, October 4, 2023, Vol. 24, No. 199
Headlines
A R G E N T I N A
ARGENTINA: IMF Says Spending Adds Risks to US$44-Billion Deal
ARGENTINA: Massa Launches 'Dolar Vaca Muerta,' Seeking US$1.2BB
B A R B A D O S
SAGICOR FINANCIAL: Clears Last Hurdle to Acquire Ivari
B R A Z I L
BRAZIL: Foreign Investment to Drop to $65BB, Central Bank Says
BRAZIL: Unemployment at Lowest Since 2015
G U A T E M A L A
GUATEMALA: Fitch Gives 'BB' Rating on $565M Unsec. Notes Due 2032
J A M A I C A
NCB FINANCIAL: Bruce Bowen Replaces Septimus Blake as Executive
P A R A G U A Y
FRIGORIFICO CONCEPCION: S&P Affirms B ICR & Alters Outlook to Pos.
P E R U
AUNA SA: Fitch Affirms 'B' LongTerm IDRs, Outlook Remains Positive
TERMINALES PORTUARIOS: S&P Affirms 'BB+' ICR, Outlook Positive
P U E R T O R I C O
RISING TIDE: Moody's Withdraws 'Caa2' CFR & 'Caa2-PD/LD' PDR
T R I N I D A D A N D T O B A G O
[*] TRINIDAD & TOBAGO: TTMA Leads October Trade Mission to Guyana
- - - - -
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A R G E N T I N A
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ARGENTINA: IMF Says Spending Adds Risks to US$44-Billion Deal
-------------------------------------------------------------
Patrick Gillespie, Eric Martin & Manuela Tobias at Bloomberg News
report that a public spending boom and generous tax cuts carried
out by Argentina's Economy Minister Sergio Massa, who's also
running for president in the October election, pose new setbacks to
the country's US$44-billion program with the International Monetary
Fund, according to the Washington-based lender.
"The recently adopted policy measures and announcements add to
Argentina's challenges," IMF chief spokesperson Julie Kozack said
at a press conference in Washington, according to Bloomberg News.
"The economic situation remains very challenging and complex," he
added.
The IMF's rare public criticism of Argentina underscores growing
concerns about the future of the financial assistance programme
received by the South American nation, the largest ever granted by
the Fund, Bloomberg News notes. Under Massa's watch, Argentina
missed all of the targets agreed with the IMF through the end of
June and looks poised to miss them all again in September,
Bloomberg News relays.
After receiving US$7.5 billion from the IMF in August, Massa turned
his back on austerity commitments he had made in exchange for the
money and increased social welfare payments, public-sector salaries
while cutting income taxes for almost all Argentines, Bloomberg
News discloses. The spending spree is part a strategy to try to
overcome the ruling coalition's defeat in the primary election,
Bloomberg News says.
Yet the additional spending, largely financed by the Central Bank's
money-printing machines, risks further stoking inflation that's
already running at 124 percent a year, Bloomberg News notes.
Massa's rhetoric as a candidate poses additional challenges to the
relationship with the IMF, Bloomberg News relays. In public
speeches, he routinely accuses the lender of having forced the
government to devalue its official exchange rate by 18 percent as a
condition for the disbursement of the funds, even though he had
agreed with the terms of the deal, Bloomberg News notes. The
one-time devaluation, announced the day after the August 13 primary
election, caused prices to skyrocket overnight, accelerating
inflation to its fastest pace in three decades, Bloomberg News
discloses.
Asked about a proposal to adopt the dollar as Argentina's official
currency, an idea defended by presidential frontrunner Javier Milei
to end inflation, Kozack said such a move alone won't fix
Argentina's problems, Bloomberg News says.
"Dollarisation requires important preparatory steps, and it is not
a substitute for sound macroeconomic policies," she said, without
detailing what steps the IMF would like to see, Bloomberg News
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.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
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: Massa Launches 'Dolar Vaca Muerta,' Seeking US$1.2BB
---------------------------------------------------------------
Buenos Aires Times reports that Economy Minister Sergio Massa on
Sept. 26 launched a differential dollar for oil and gas exporters
from the Vaca Muerta basin in the quest for US$1.2 billion to boost
reserves and trim the possibilities of exchange rate tensions in
the lead-up to the general elections.
The export incentive programme, dubbed the 'Dolar Vaca Muerta' by
analysts, will operate on the same basis as the latest version of
the so-called 'Dolar Soya' or 'Soy Dollar – i.e. not granting a
higher exchange rate directly but permitting 25 percent of exports
to be cashed at the CCL (contado con liquidacion) exchange rate
while the remaining 75 percent will use the official exchange rate
(Mercado Unico Libre de Cambios, or MULC), according to Buenos
Aires Times. That equation will result in more convenient prices
for exporters, the report notes.
Massa's aims here are clear to analysts: to boost the reserves of a
Central Bank in the red, over and above the latest International
Monetary Fund (IMF) remittances, and stabilise financial dollars to
face, with the greatest calm possible, the closure of the electoral
process and the final stages of the Alberto Fernández Presidency,
the report discloses.
Economic analyst Natalia Motyl agreed that "the government seeks to
boost the reserves of the Central Bank and keep a lid on financial
dollars . . . . to halt, if needed, a run on the peso in the midst
of the general elections," the report relays.
"Today the greatest worry is that the electoral atmosphere and the
arrival of a new government do not increase the pressure on money
markets, transferring it to prices and more inflation," she told
Perfil in an interview, the report notes.
For Camilo Tiscornia, director of C&T Asesores Economicos, the new
programme announced by Massa" is a direct continuation of the 'Soy
Dollar'," applicable to the farming sector, and which "seeks, with
winter over and the [Nestor Kirchner] gas pipeline functioning, to
provide an incentive to cash dollars before the elections," the
report relays.
Seeking 'Stability'
Massa met oil executives from the fossil fuel basin such as YPF,
Tecpetrol, Pampa Energia, Pan American Energy, among others, before
making the announcement, the report relays.
The report discloses Massa visited Vaca Muerta works in Neuquen,
together with the local Governor Omar Gutierrez and the
governors-elect Rolando Figueroa (Neuquen) and Alberto Weretilneck
(Río Negro).
The minister explained that "reaching the October elections with
stability in financial dollars" was being sought, the report
relays.
"It cannot happen twice. You learn from the errors," Massa told
them in allusion to the sharp effect of the August 14 devaluation
of the peso on inflation, the report notes.
Massa highlighted "the production and investment records for gas
and oil" in Argentina, the report relays.
He further said: "With the [PASO primary] result there was some
thought that uncertainty would halt the sector but we do not want
to stop creating jobs and perforating to produce. Today we took
the decision to recognise 25 percent of exports and bring
investment into Argentina via contado con liqui [CCL] to guarantee
stability in jobs, public works and the financial system," the
report notes.
On Stream
The minister, together with YPF president Pablo González, toured
the start of the Vaca Muerta Norte oil pipeline, which will come on
stream next month, permitting a 50 percent increase in the capacity
to transport crude in the basin, the report relays. The pipeline
is 150 kilometres long with a daily transport capacity of 160,000
barrels, the report notes.
The work also includes the biggest tank yard constructed in Vaca
Muerta to do with two units of 170,000 barrels in capacity, which
can be increased in a second stage, the report discloses. Each
tank is 60 metres wide, approximately equivalent to half a
professional football pitch, and may load the equivalent of 1,000
Olympic pools, the report says.
The oil pipeline extends from YPF's central development zone in
Vaca Muerta (Loma Campana/La Amarga Chica/Bandurria Sur) to Puesto
Hernández, in Rincon de los Sauces, from where the export of crude
to Chile can be boosted via the Oleoducto Trasandino across the
Andes, as well as increasing the supply of light oil to the
refinery in Luján de Cuyo, Mendoza, optimising fuel deliveries to
all the central and northern zones of the country, the report
notes.
The oil pipeline will be set in motion next month, expanding by 50
percent the current capacity of oil transportation to the Neuquen
Basin and maximising the export potential to Chile, thus permitting
more dollars to enter the country, 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.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
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.
===============
B A R B A D O S
===============
SAGICOR FINANCIAL: Clears Last Hurdle to Acquire Ivari
------------------------------------------------------
David Rose at Jamaica Observer reports that Sagicor Financial
Company Limited (SFC) has received all regulatory approvals to
acquire Canadian life insurance company Ivari and expects to
complete the transaction by October 3, subsequent to the end of its
third quarter on September 30.
SFC had announced in August 2022 that it was seeking to acquire
Ivari for CA$325 million (US$251.27 million) or J$37.88 billion
which was to be funded 80 per cent by debt and 20 per cent with
cash, according to Jamaica Observer. The acquisition of Ivari not
only serves to push SFC's net income up from $133 million to US$173
million under IFRS (International Financial Reporting Standards) 4,
but also improves its balance sheet to consist of more investment
grade assets and result in positive implications for its own credit
rating, the report notes.
"For a purchase price of just under US$300 million, we're nearly
doubling our asset base, increasing our earnings and providing
access to another area for growth. This is an exceptional use of
our excess capital. Ivari is a leader in the Canadian middle
market, which is a demographic that fits nicely, with that we serve
here in the Caribbean. We believe this enhanced portfolio will
help us unlock an investment grade rating for Sagicor Financial
itself, as it improves our overall credit mix substantially," said
SFC President and Chief Executive Officer Andre Mousseau at the
June 16 annual general meeting, the report discloses.
SFC's prior presentation on Ivari noted that the Ivari acquisition
would push the investment grade component of its combined
US$16.4-billion investment portfolio from 69 to 83 per cent on a
pro forma basis, result in a 25 per cent plus accretion to its
earnings per share and double-digit accretion to its book value per
share, the report relays. Whereas 53 per cent of SFC's revenue
comes from the Caribbean, its pro forma numbers show this number
being cut to 42 per cent of US$3 billion in revenue, the report
notes. The 64 per cent contribution from the Caribbean to net
profit would be reduced to 47 per cent with Ivari and Sagicor Life
USA making up 27 and 26 per cent, respectively, the report
discloses.
Although Ivari's 2022 revenue grew two per cent to CA$989.37
million (US$730.06 million), its net profit dropped 86 per cent to
CA$10.51 million due to CA$1.28 billion in net investment expense
on its investment portfolio, the report relays. Ivari's total
assets declined 13 per cent to CA$12.14 billion with equity closing
12 per cent higher at CA$1.61 billion due to a CA$350.05 million
capital injection by Ivari Holdings ULC, the report discloses.
Ivari Holdings is owned by Wilton Re Limited, which is controlled
by the Canada Pension Plan Investment Board, the report notes.
As part of the deal, SFC will pay back the seller for any capital
that was injected into Ivari to meet minimum equity targets under
IFRS 17 and LICAT (Life Insurance Capital Adequacy Test) 23
standards, the report relays. This was noted by Mousseau in a
prior investor call where he also noted that SFC may choose to
further inject capital into Ivari to support higher capital levels
for growth, the report says. SFC's 2024 forward guidance on net
income with Ivari under its belt is US$91-US$116 million, the
report notes.
SFC's earnings under IFRS 17 showed an 11 per cent increase in
insurance revenue of US$332.14 million for the first half of 2023,
with net investment income coming in at US$335.58 million relative
to the restated net investment expense of US$355.42 million, the
report discloses. Net profit attributable to shareholders closed
the period at US$50.25 million compared to a restated net loss of
US$162.20 million, the report relays. SFC's net profit under IFRS
4 for the first six months of 2022 was US$77.09 million.
Sagicor Group Jamaica Limited (SJ) contributed US$18.12 million to
net profit attributable to shareholders for the first six months of
2023 with Sagicor Life Inc and Sagicor Life USA contributed
US$13.74 million and US$59 million, respectively, the report
notes.
SFC's total assets under IFRS 17 are up four per cent in the first
six months to US$11.04 billion with equity attributable to
shareholders at US$462.51 million, the report relays. SFC's book
value was US$3.24 (CA$4.29) at the end of June, the report notes.
SFC declared a dividend of US$0.05625 which was paid on September
13 to shareholders on record as of August 23.
Its Jamaican subsidiary Sagicor Group Jamaica declared a dividend
of J$0.505 to be paid on October 19 to shareholders on record as of
October 2, the report discloses. This payment totals J$1.97
billion with J$968.66 million (US$6.23 million) being paid to
direct parent company Sagicor Life Inc, the report relays.
Apart from the syndicated financing from three Canadian banks to
acquire Ivari, SFC also entered into a credit agreement on August 2
to establish a senior unsecured revolving credit facility for up to
US$125 million, the report discloses. SFC is also selling its
wholly owned subsidiary Sagicor Panama SA to Sagicor Costa Rica
S.A.'s subsidiary, a 50 per cent joint venture between Sagicor
Group Jamaica and Grupo Promerica. SFC is also disposing of its
operations in Curacao and St Maarten, the report says.
Despite all of the positive news, SFC's stock price is down 11 per
cent year to date to CA$4.90 with a new all-time low of CA$4.25
being achieved recently, the report notes. The decline has left
its market capitalisation at CA$694.58 million, the report
discloses. SFC renewed its normal course issuer bid on June 24
which allows it to purchase up 8,840,727 ordinary shares under a
stock buyback programme, the report relays. It's cancelled 37,244
shares in the last two months which has pushed its issued shares
down to 142,660,067 shares, the report says. This has also pushed
up JMMB Group Limited's interest to 23.28 per cent, the report
notes. JMMB Group is 20.01 per cent owned by Proven Group
Limited.
"Today, our shares are fundamentally undervalued on any reasonable
metric. We listed on the TSX right before COVID and the market
never had a chance to embrace us and continues not to recognise our
strength here in the Caribbean, the growth of our US business and
the value of our pending Canadian acquisition. With a strong and
growing business, we will push forward on our market engagement,
broaden our research coverage, and engage with new investors. As
we do this, we benefit from the powerful alignment that we've
created between our team, our board members and our shareholders,"
Mousseau closed, the report relays.
Headquartered in Barbados, Sagicor Financial Company Ltd, traded as
TSX: SFC, is a financial services conglomerate operating in United
States, Latin America and the Caribbean region.
Sagicor Financial Company Ltd. is a leading financial services
provider in the Caribbean, with over 180 years of history, and has
a growing presence as a provider of life insurance products in the
United States.
As reported in the Troubled Company Reporter Troubled Company
Reporter on Nov. 25, 2022, Fitch Ratings maintains Sagicor
Financial Company Ltd's (SFCL) at Rating Watch Positive (RWP).
SFCL's Long-Term Foreign-Currency Issuer Default Rating (IDR) and
senior unsecured debt remain unchanged at 'BB' and 'BB-',
respectively.
===========
B R A Z I L
===========
BRAZIL: Foreign Investment to Drop to $65BB, Central Bank Says
--------------------------------------------------------------
Richard Mann at Rio Times Online reports that the Central Bank of
Brazil anticipates foreign investment will drop to $65 billion this
year, compared to $90.6 billion last year.
They have revised the 2023 forecast from $75 billion to $65
billion, representing 3% of Brazil's GDP, according to Rio Times
Online.
Inter-company loan repayments will likely decrease, the report
notes. The bank credits this to robust international trade earlier
this year, the report relays.
Conversely, portfolio investments should experience a $10 billion
net inflow, 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 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 Inc., on August 15, 2023, upgraded Brazil's Long-Term
Foreign and Local Currency - Issuer Ratings to BB from BB (low).
At the same time, DBRS Morningstar confirmed Brazil's
Short-term Foreign and Local Currency - Issuer Ratings at R-4.
The trend on all ratings is Stable.(March 2018).
BRAZIL: Unemployment at Lowest Since 2015
-----------------------------------------
Richard Mann at Rio Times Online report that in Brazil, the jobless
rate dropped to 7.8% for the quarter that ended in August 2023.
This marks a decrease of 0.5 percentage points from the prior
quarter spanning March to May 2023, according to Rio Times Online.
Furthermore, it's the lowest unemployment rate observed since a
7.5% rate in February 2015, the report relays.
Compared to last year's time frame, there's a reduction of 1.1
percentage points, 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 was sworn in on January 1, 2023, as
the 39th president of Brazil, succeeding Jair Bolsonaro.
As recently reported in the Troubled Company Reporter-Latin
America, Fitch Ratings, in December 2022, affirmed Brazil's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook. The ratings are constrained by high
government indebtedness, a rigid fiscal structure, weak economic
growth potential, and a record of governability challenges that
have hampered efforts to address these fiscal and economic issues
and clouded policy predictability. The Stable Outlook reflects
Fitch's expectation that growth will slow in the coming year and
that recent fiscal improvement will erode under a new government,
but within a margin consistent with the current rating, and from a
better starting point than previously expected. Uncertainty is
elevated regarding the plans of the incoming government and the
extent to which these could ease or aggravate fiscal and economic
challenges. However, Fitch does not expect policies that
jeopardize broad economic stability.
Standard & Poor's affirmed its 'BB-/B' long- and short-term
foreign and local currency sovereign credit ratings on Brazil, and
the outlook remains stable (June 2022). The stable outlook
reflects S&P's base-case assumption that Brazil will maintain its
fiscal anchors over the next two years despite an increasing
interest burden, preventing significant fiscal slippage and
limiting the rise in its already high debt burden.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS's credit rating for Brazil is BB (low) with stable outlook
(March 2018).
=================
G U A T E M A L A
=================
GUATEMALA: Fitch Gives 'BB' Rating on $565M Unsec. Notes Due 2032
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to Guatemala's USD565
million notes maturing Oct. 4, 2032. The notes have a coupon of
7.05%.
Proceeds of the issuance will be used for general budgetary
purposes.
KEY RATING DRIVERS
The bond rating is in line with Guatemala's Long-Term Foreign
Currency Issuer Default Rating (IDR), which Fitch upgraded to 'BB'
from 'BB-' on Feb. 16, 2023. The Rating Outlook is Stable.
ESG - Governance: Guatemala has an ESG Relevance Score (RS) of '5'
for both Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption.
These scores reflect the high weight that the World Bank Governance
Indicators (WBGI) have in Fitch's proprietary Sovereign Rating
Model. Guatemala has a low WBGI ranking at 26th percentile,
reflecting relatively weak rights for participation in the
political process, weak institutional capacity, uneven application
of the rule of law and a high level of corruption.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The bond rating would be sensitive to any negative change to
Guatemala's Long-Term Foreign-Currency IDR.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
The bond rating would be sensitive to any positive change to
Guatemala's Long-Term Foreign-Currency IDR.
ESG CONSIDERATIONS
Guatemala has an ESG Relevance Score of '5' for Political Stability
and Rights as World Bank Governance Indicators have the highest
weight in Fitch's SRM and are therefore highly relevant to the
rating and a key rating driver with a high weight. As Guatemala has
a percentile rank below 50 for the respective Governance Indicator,
this has a negative impact on the credit profile.
Guatemala has an ESG Relevance Score of '5' for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption as
World Bank Governance Indicators have the highest weight in Fitch's
SRM and are therefore highly relevant to the rating and are a key
rating driver with a high weight. As Guatemala has a percentile
rank below 50 for the respective Governance Indicators, this has a
negative impact on the credit profile.
Guatemala has an ESG Relevance Score of '4' for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
World Bank Governance Indicators is relevant to the rating and a
rating driver. As Guatemala has a percentile rank below 50 for the
respective Governance Indicator, this has a negative impact on the
credit profile.
Guatemala has an ESG Relevance Score of '4[+]' for Creditor Rights
as willingness to service and repay debt is relevant to the rating
and is a rating driver for Guatemala, as for all sovereigns. As
Guatemala has track record of 20+ years without a restructuring of
public debt and is captured in Fitch's SRM variable, this has a
positive impact on the credit profile.
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.
Entity/Debt Rating
----------- ------
Guatemala
senior
unsecured LT BB New Rating
=============
J A M A I C A
=============
NCB FINANCIAL: Bruce Bowen Replaces Septimus Blake as Executive
---------------------------------------------------------------
RJR News reports that the NCB Financial Group has announced another
major leadership shake-up.
Former CEO of Scotia Group Jamaica, Bruce Bowen, has been appointed
CEO of National Commercial Bank Jamaica (NCBJ), according to RJR
News.
He replaces Septimus Blake, who served NCBJ for more than 20 years,
the report notes.
The bank says "effective September 30, Mr. Blake's term as CEO will
come to an end," the report relays.
The news comes months after the NCB Financial Group announced major
leadership changes to top management, the report discloses.
In July, NCB announced that Robert Almeida was appointed interim
Chief Executive Officer for the Group, and Malcolm Sadler the
interim Chief Financial Officer of NCB Financial Group, the report
says.
Chairman of the NCB Financial Group, Michael Lee Chin, has called a
press briefing, the report adds.
As recently reported in the Troubled Company Reporter-Latin
America, Jamaica Observer relayed that the NCB Financial Group is
yet to complete negotiations with its former president and CEO
Patrick Hylton and his deputy, Dennis Cohen, over the settlement in
relation to their separation from the company. At the centre of
the negotiations is the size of the separation package for the two
men who served the financial conglomerate for
the last two decades, including what value the company should
compensate the men for shares they were asked to surrender in July
2021, according to Jamaica Observer. Both men were asked to
surrender 95.1 million shares valued at $13.8 billion at the time
with the understanding that, over time, they would recoup that
value, the report noted. Some were recouped in compensation for
both men to the tune of $3.6 billion in the last financial year,
the report relayed.
===============
P A R A G U A Y
===============
FRIGORIFICO CONCEPCION: S&P Affirms B ICR & Alters Outlook to Pos.
------------------------------------------------------------------
S&P Global Ratings revised its rating outlook on Paraguayan
protein-processing company Frigorifico Concepcion S.A. to positive
from stable and affirmed its 'B' issuer credit and issue-level
ratings.
S&P said, "The positive outlook reflects our expectation that
Concepcion will post EBITDA above $150 million and an EBITDA margin
above 10% in 2023 and 2024. We also expect the company to keep debt
to EBITDA below 3.5x and sources of cash above uses of cash in the
next 12 months, while ramping up the recently acquired facilities
and expanding its operations.
"During 2021 and 2022, the company increased its slaughtering
capacity from around 850,000 heads to about 2.3 million. It also
has increased geographic diversification, and we now estimate
around 40% of total production will come from Brazilian assets.
"Given this growth, last-12-months EBITDA as of June 2023 reached
$138 million, and we expect EBITDA around $170 million in 2023,
from $115 million in 2022 and $65 million in 2021. At the same
time, the EBITDA margin reached 14.5% and 11.6% in the second and
first quarters of 2023, respectively. Therefore, we now expect
EBITDA margins above 10% in 2023 and 2024. The increase in the
company's size and diversification, raising production volumes and
EBITDA generation, could lead us to improve our business risk
assessment."
Although EBITDA is increasing along with higher production amid
favorable pricing, larger sales volumes are raising working capital
needs, with an outflow of $113 million in the second quarter of
2023. As a result, the company posted negative free operating cash
flows in the first half of 2023, weighing on its liquidity
position. Cash declined to $49 million in the second quarter of
2023 from $75 million in December 2022.
S&P said, "We believe the company has made significant progress in
ramping up acquired plants and is close to reaching optimal
capacity usage. Thus, we believe working capital needs should start
easing during 2024. To consider an upgrade, we would look for
Concepcion to keep sources of funds above uses of funds in the next
12 months, to ensure some liquidity cushion to withstand industry
downturns.
"In line with building additional liquidity cushion, management has
made public plans to raise additional financing in domestic markets
in Bolivia and Brazil, and potentially through a private placement.
We believe this will continue holding back a reduction in leverage
as gross debt will likely increase during 2023 and 2024.
Nevertheless, we expect Concepcion to maintain financial
discipline, keeping leverage between 3.0x-3.5x."
The Paraguayan and U.S. governments are negotiating to resume
protein exports to the U.S. If this happens, Concepcion could enter
a large market, increasing production and sales volume. The company
could also expand its slaughtering volumes if the Bolivian
government increases export quotas that would elevate the company's
plant utilization above the current 62%. Furthermore, recent
consolidation in the regional market could bring additional
opportunities for Concepcion.
Minerva's acquisition of Marfrig plants positions Concepcion as the
third-largest beef producer in the region with 8,465 heads
slaughtered per day.
=======
P E R U
=======
AUNA SA: Fitch Affirms 'B' LongTerm IDRs, Outlook Remains Positive
------------------------------------------------------------------
Fitch Ratings has affirmed Auna S.A.'s Long-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) at 'B', and its 2025 senior
notes at 'B'/'RR4'. The corporate Rating Outlook remains Positive.
Auna's rating reflects its solid brand and market position in the
regions it operates, good operating margins and geographical
diversification. The ratings are currently constrained by limited
financial flexibility and refinancing risks. Auna is on a
deleveraging trend as a result of improving operating cash flow
generation and integration of acquired assets. Fitch estimates the
company's net debt/adjusted EBITDA to decline to 4.1x at the end of
2023 and to 3.4x by 2024. Auna is proceeding with the refinancing
of its 2025 notes before 2Q24, which is key to support any positive
rating action.
KEY RATING DRIVERS
Stronger Business Profile: The recent acquisitions in Colombia and
Mexico enhanced Auna's business profile with improvement in
diversification, scale and profitability. In April 2022, Auna
acquired a controlling stake in IMAT Oncomedica, a leading health
care group in Monteria, Colombia, and, in October 2022, OCA, a
premium health care and oncological services provider in Monterrey,
Mexico, for a total amount of USD822 million. IMAT is specialized
in oncology, cardiology and high complexity services, and added
capacity of 427 beds in two hospitals. OCA operates three
high-complexity hospitals representing the largest infrastructure
footprint in Monterrey´s health care market, with 708 operating
beds and approximately 35% market share based on number of beds. As
of June 30 2023, Auna`s total hospitals operations counted with 375
operating beds in Peru, 1.109 in Colombia and 708 in Mexico.
On a pro forma basis, around 41% of Auna's revenue is now generated
in Peru, 29% in Colombia and 30% in Mexico. This represents an
improvement in revenue diversification compared with 2021, when 65%
of Auna's revenues were originated in Peru and 35% in Colombia. The
hospital operations in Monterrey offer a high-quality asset base
with a track record of robust operating margins (average of 34%).
Fitch foresees Auna's consolidated EBITDA margins moving around 24%
by 2024, an improvement from its historical 14% pre-pandemic levels
and 10.5% average during 2020-2021.
Operating Cash Flow Improving: Fitch expects Auna to generate
adjusted EBITDA of around PEN815 million in 2023 and PEN964 million
in 2024, which compares with proforma EBITDA of PEN673 million in
2022, considering a full year of acquisitions. Operating cash flow
should be around PEN131 million in 2023 and PEN320 million in 2024,
pressured by higher interest expenses. FCF will be approximately
negative PEN165 million in the first year and only PEN55 million
during 2024. The company is expected to focus on maintenance capex
and non-material opportunities to improve profitability. Fitch
incorporates around PEN296 million of capex in 2023, including
Detengra, and PEN265 million in 2024.
Leverage to Decline: Fitch expects Auna's net leverage to move to
4.1x in 2023 and down to 3.4x by 2024 as it completes the
integration of the acquired assets and implement new operating and
service standards. Those ratios represent an important improvement
compared with proforma figures in 2022 and 2021 of 5.0x and 6.3x,
respectively, per Fitch`s calculations.
Refinancing Risks Remains: Auna remains with the challenge to
complete the refinancing of its USD300 million senior notes due
2025. The current secured basis profile of its major debt
obligation (USD505 million of notes purchase agreement) due 2028
poses some pressure on Auna's financial flexibility, as it may
require a larger refinancing alternative and favorable credit
market conditions. The company's operating cash flow is sound and
is expected to improve with ongoing integration and increasing
utilization rates, which is supporting the deleveraging trend.
Fitch's base case scenario does not incorporate any dividend
pressure from Auna to its shareholders. Any deviation from that
could bring further pressure to the ratings.
Solid Market Position: Auna operates through four business
segments: (1) Oncosalud Peru; (2) Health care services in Peru,
which consists of its Auna Peru network; (3) Health care services
in Colombia, which consists of its Auna Colombia network; and (4)
Health care services in Mexico, which consists of its Auna Mexico
network and its insurance business from Dentegra. In Peru, Auna has
a solid business position as one of the largest and most recognized
players in the health care industry due to its highly regarded
oncology services.
Oncosalud is considered the leading brand in Peru, maintaining
approximately 30% market share in terms of private insurance plan
members with 1,204,000 members as of June. 30, 2023. This market
position makes Oncosalud the largest single private health care
plan in the country. Auna has achieved integration in its Peruvian
oncology platform through its ownership and management of hospitals
and clinics in all of the major cities in the country.
DERIVATION SUMMARY
Auna's ratings reflect the company's strong market position as one
of Peru's largest and well-known, reputable health care providers
and its growing presence in Colombia, and more recently in Mexico.
The company's current capital structure and financial flexibility
are pressured by recent acquisitions and the challenges to pursue
continuous improvements on its debt profile, representing an
important factor for its 'B' ratings.
Auna's strong brand, reputation in the industry, and R&D platform
are among its competitive advantages, translating to strong
relationships with payers and bargaining ability with third
parties. Fitch views Auna as weaker compared with regional peers in
terms of business scale and size of coverage. However, recent
acquisitions and diversification movements are positive for its
business profile.
Rede D'Or Sao Luiz S.A. (BB+/Stable) and Diagnosticos Da America
S.A. - DASA (DASA; AA[bra]/Negative Outlook), comparably with Auna,
both have strong relationships with payers, as well as providers
and insurance companies, in Brazil due to the two companies'
positive brands and reputations. Auna's higher leverage and
refinancing risks are currently a rating constrain. Although Auna
has comparable business risk with many players in the health care
industry, the company benefits from the growing Peruvian and
Colombian operating markets with predominantly middle-class
demographics, and its strong asset base and market-share in
Monterrey, Mexico.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer
Include:
- Revenue growth reflecting organic growth and integration
of acquired assets, reaching around PEN3.6 billion in
2023, PEN4.0 billion in 2024 and PEN4.7 billion in 2025.
- EBITDA margins of around 23%-25% for 2023-2025;
- Average capex of PEN275 million during 2023-2024 and
declining to PEN183 million in 2025;
- No dividend payment during 2023-2025.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Successful refinancing of the 2025 maturity.
- Fitch's adjusted EBITDA margin consistently above 22.5%;
- Fitch's net adjusted leverage ratio consistently
below 4.0x;
- EBITDA interest coverage above 2.0x;
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Fitch's net adjusted leverage ratio consistently above
5.0x;
- Maintenance of aggressive growth strategy and/or
shareholder friendly policies limiting improvements in
capital structure as expected;
- Major legal contingencies issues that represent a
disruption in the company's operations or a significant
impact to its credit profile.
LIQUIDITY AND DEBT STRUCTURE
Refinancing Risks Remains: As of June 30, 2023, Auna had PEN259
million of cash and cash equivalents, PEN379 million of short-term
debt, and total debt of around PEN3.5 billion per Fitch's criteria,
which excludes leases. Besides some working capital lines in the
short term, that Fitch expects to be refinanced with current
working capital credit lines, Auna has an important maturity of its
USD300 million senior notes due January 2025. After that, the next
large maturity is only 2028 for its purchase agreement notes
(USD505 million), but given the secured package collateral of this
credit lined this may impose a larger refinancing transaction.
ISSUER PROFILE
Auna S.A. is one of the largest and most recognized players in the
Peruvian health care industry, with a growing presence in
Colombia's health care industry, and more recently in Mexico. The
company offers oncology and general health care plans and operates
hospitals and clinics.
ESG CONSIDERATIONS
Auna S.A. has an ESG Relevance Score of '4' for Management Strategy
management's appetite for debt financed growth (albeit adding
diversification to the business) that underscores higher than
expected event risk and potentially higher comfort with
elevated/longer periods of leverage than anticipated, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Auna S.A. has an ESG Relevance Score of '4' for Financial
Transparency as financial transparency/reporting continues to be
relatively weaker than peers, 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.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Auna S.A.A. LT IDR B Affirmed B
LC LT IDR B Affirmed B
senior
unsecured LT B Affirmed RR4 B
TERMINALES PORTUARIOS: S&P Affirms 'BB+' ICR, Outlook Positive
--------------------------------------------------------------
S&P Global Ratings affirmed the 'BB+' issue rating on Terminales
Portuarios Euroandinos Paita S.A.
The positive outlook reflects S&P's view that it could raise its
rating on Paita's debt in the next 12 months once the effects of El
Niño on the port's traffic and its ability to recover become
clearer.
This is the worst El Niño since 1997-1998, based on the last
report from the Peruvian Multisectoral Commission in charge of the
National Study of the El Niño Phenomenon (ENFEN). El Niño leads
to a rise in sea temperatures and to heavy rains and floods in the
adjacent area of the port, which mainly affect fishing and the
crops that are the main products mobilized through the port.
S&P said, "We therefore revised our forecast and now expect Paita's
container traffic to decrease 7% in the next 12 months. More
precisely, in 2024, we anticipate container volumes handled to fall
to about 360,000 20-foot equivalent units (TEUs)--assuming El Niño
doesn't extend beyond the first half of next year--down from our
previous forecast of 330,000 TEUs. Still, we expect the DSCR will
remain 2.2x-2.5x in 2024, lower than what we forecast previously,
which was consistent with 2.6x for the same period.
"If the port can overcome all these challenges, if we continue to
view its market exposure as consistent with the medium ('3')
descriptor, and if the DSCR sustainably rises above 2.3x, we think
there is still room for an upgrade."
On May 2, 2023, Paita and the Peruvian National Port Authority
(APN) signed a second addendum to the concession agreement to add
investments of $5.2 million, which concludes the third phase of
Paita's investment plan. Consequently, the project acquired a
quayside gantry crane that will allow it to expand its container
capacity, supporting our long-term annual container traffic growth
assumption of 2.5%.
For Phase 4, which includes additional investments to improve the
port's efficiency and capacity, S&P expects the project to invest
about $70 million between 2023 and 2030. Paita will fund the works
through a reserve account that's funded with the remaining cash
available after the payment of debt service and funding of debt
service reserve accounts. As of July 2023, the Phase 4 reserve
account totaled $21.3 million.
=====================
P U E R T O R I C O
=====================
RISING TIDE: Moody's Withdraws 'Caa2' CFR & 'Caa2-PD/LD' PDR
------------------------------------------------------------
Moody's Investors Service has appended a limited default (LD)
designation to the Caa2-PD Probability of Default Rating of Rising
Tide Holdings, Inc. ("West Marine"), changing it to Caa2-PD/LD
following the company's distressed exchange of all of its existing
Moody's rated funded debt into equity as announced by the company
on September 18, 2023.
Subsequently, Moody's has withdrawn West Marine's ratings including
its Caa2 corporate family rating (CFR) and Caa2-PD/LD probability
of default rating as well as its Ca backed senior secured first
lien term loan, C backed senior secured first lien term loan and C
backed senior secured second lien term loan ratings. The outlook
was changed to rating withdrawn from negative.
RATINGS RATIONALE
Moody's appended the LD to West Marine's PDR because the company
consummated a distressed exchange transaction that resulted in all
of its existing Moody's rated funded debt being exchanged into
equity.
Moody's has withdrawn all of its ratings on West Marine because the
company's Moody's rated debt no longer exists following the
distressed exchange.
Rising Tide Holdings, Inc. is a specialty marine aftermarket
retailer that operates 233 hub stores in the US and Puerto Rico
under the West Marine brand name as well as two e-commerce websites
reaching consumers and professional customers. West Marine is
controlled by investment funds affiliated with L Catterton.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
[*] TRINIDAD & TOBAGO: TTMA Leads October Trade Mission to Guyana
-----------------------------------------------------------------
Shweta Sharma at Trinidad and Tobago News reports that the Trinidad
and Tobago Manufacturers Association (TTMA) will lead a trade
mission to Guyana at the beginning of October.
The TTMA, in a release, said a delegation of 31 companies and 45
participants, including Eximbank and exporTT will travel to Guyana
from October 3-7, according to Trinidad and Tobago News.
The delegation is being led by TTMA president Roger Roach.
"This mission aims to strengthen ties with our Caricom neighbour
and foster new relationships between TT and Guyanese companies.
Guyana remains a significant trading partner for TT, ranking in the
top five export destinations in the Caribbean. Main exports
consist of mineral fuels, beverages, food and beverage items,
chemical products and paper-related commodities just to name a
few," the release said, the report relays.
The sectors participating in the mission consist of food and
beverage, chemical, construction, household products,
agro-processing, cargo and services, the report notes.
The release said this is the second consecutive physical trade
mission to Guyana for the TTMA since covid19, with a virtual trade
mission taking place in 2021, the report recalls.
"Guyana will continue to be on the trade mission schedule for the
TTMA, due to the opportunities presented for mutual trade. TTMA
looks forward to a successful event as we continue to strengthen
ties between the business communities of both countries," the
release said, the report notes.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2023. All rights reserved. ISSN 1529-2746.
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of the same firm for the term of the initial subscription or
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contact Peter A. Chapman at 215-945-7000.
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* * * End of Transmission * * *