/raid1/www/Hosts/bankrupt/TCRLA_Public/231213.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, December 13, 2023, Vol. 24, No. 249
Headlines
A R G E N T I N A
ARGENTINA: Investors Bet on 44% Peso Devaluation After Pres. Debut
ARGENTINA: Stops Banks From Hoarding Dollars Ahead of Devaluation
B R A Z I L
BRAZIL: Agricultural Growth Forecasted at 14.5% for 2023
MERCON COFFEE: Files for Chapter 11 Bankruptcy
C O S T A R I C A
AUTOPISTAS DEL SOL: Fitch Affirms 'B' Note Rating, Outlook Now Pos.
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Eyes Regional Market for Export Growth
DOMINICAN REPUBLIC: Faces Criticism Over Aerodom Contract Terms
EGE HAINA: Fitch Affirms 'BB-' LongTerm IDR, Alters Outlook Pos.
J A M A I C A
JAMAICA: BOJ Working With Banks to Reduce Fraud
JAMAICA: EPOC Credits Approach to Disaster Risk Financing
T R I N I D A D A N D T O B A G O
ATLANTIC LNG: Government Defends New Structure for Firm
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A R G E N T I N A
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ARGENTINA: Investors Bet on 44% Peso Devaluation After Pres. Debut
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Ignacio Olivera Doll & Kevin Simauchi at Bloomberg News report that
Argentina investors were preparing for a 44 percent devaluation of
the country's official exchange rate after Javier Milei's
inauguration on December 10.
While the president's team has signalled it won't lift currency
controls right away and seemingly delayed plans to scrap the peso
altogether, the current level of the Argentine currency is largely
seen as unsustainable, according to Bloomberg News. Markets are
signalling a drop of about 27 percent, while investment banks like
JPMorgan Chase & Co and local private advisory firms suggest it
will eventually weaken some 44 percent as Milei prepares to unwind
capital controls that have spawned a hodgepodge of exchange rates,
Bloomberg News relays.
"We expect an FX realignment to adjust relative prices, permitting
a gradual capital controls phase-off," JPMorgan economists Diego
Pereira and Lucila Barbeito wrote in a research note, Bloomberg
News discloses.
While the magnitude of the devaluation is unclear, the policy
"should be coupled with a draconian fiscal adjustment" to offset
revenue losses and create incentives to start rebuilding the
Central Bank's reserves, they wrote, adding that dollarization
doesn't seem to be a priority as of now, Bloomberg News says.
One-time congressman Milei, who pledged a radical overhaul to quell
inflation that's running at more than 140 percent, has toned down
his fiery rhetoric since winning the November 19 run-off, Bloomberg
News discloses. He promised his government would meet its debt
obligations and sought to dispel fears about governability,
seemingly abandoning more controversial proposals and surrounding
himself with Wall Street veterans who also served in the
administration of former president Mauricio Macri, Bloomberg News
relays.
Milei picked Santiago Bausili, a close friend of incoming Economy
Minister Luis Caputo, to lead the nation's Central Bank, Bloomberg
News notes. The nomination, which needs to be approved by the
Senate, broadens the powers of the economic team Caputo is building
to implement austerity measures and fight inflation, Bloomberg News
notes. It also signals the new government isn't planning to have
an independent monetary authority for now, Bloomberg News adds.
Market Signs
Markets are signaling traders will sell pesos at 500 per dollar,
from the current official rate of 363 pesos, according to people
familiar, who cited Siopel pricing and asked not to be named
because the information isn't public, Bloomberg News relays.
Assets like dollar-linked bonds are currently being sold at around
600 pesos per dollar, while peso futures negotiated at the Rofex
exchange indicate that it will depreciate to 741 pesos per dollar
by the end of December, Bloomberg News discloses.
"A reasonable value of the exchange rate could be at 600 to 650
pesos per dollar," Guillermo Francos, one of Milei's closest
advisers, said during a TV interview over the weekend. Francos,
who is focused on building political alliances and is not part of
the economic team, also added that the number takes into account
the peso's historical value in real terms, Bloomberg News says.
A spokesperson for Milei's office declined to comment.
If confirmed, the devaluation would narrow the gap between the
official peso and the country's parallel rate used to skirt
currency controls, which is currently trading near 963 per dollar,
Bloomberg News notes.
The weaker rate would be similar to the one that exporters have
access to under existing capital controls, which allows some of
them to sell half of the currency reserves they receive in parallel
markets, Bloomberg News relays.
"There will be an official devaluation and the exchange
restrictions would be maintained for the companies," said Marcos
Buscaglia, co-founder of consulting firm Alberdi Partners,
Bloomberg News adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez 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
0its 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: Stops Banks From Hoarding Dollars Ahead of Devaluation
-----------------------------------------------------------------
Ignacio Olivera Doll at Bloomberg News reports that Argentina's
Central Bank limited the amount of foreign currency the nation's
commercial lenders can hold, in a push to discourage US dollar
hoarding ahead of an expected devaluation by president-elect Javier
Milei after inauguration.
The country's Central Bank said that holdings may not be greater
than the lowest amount recorded between October 12 and December 6,
according to a rule published on its website, notes Bloomberg News.
The measure - announced on the last business day of the previous
administration - went into effect immediately and is valid until
the end of the year, Bloomberg News notes.
The new rule would force banks to unwind dollars they currently
hold in their portfolio, according to people familiar with the
matter, who asked not to be named discussing private information,
Bloomberg News relays. That would increase the supply in the
official exchange market and help the Central Bank to support the
peso just as traders brace for a devaluation, Bloomberg News
discloses. Market pricing points to a 27 percent drop in the peso,
and investors see a 44 percent devaluation going forward under
Milei, Bloomberg News relays.
Spokespeople for the Central Bank said the measure is aimed at
keeping banks from increasing dollar holdings, Bloomberg News
relays. Milei's team declined to comment.
While Milei's team has signalled it won't lift currency controls
right away and seemingly delayed plans to scrap the peso
altogether, the current level of the Argentine currency is largely
seen as unsustainable, Bloomberg News adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez 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
0its 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.
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B R A Z I L
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BRAZIL: Agricultural Growth Forecasted at 14.5% for 2023
--------------------------------------------------------
Iolanda Fonseca at Rio Times Online reports that the National
Agriculture and Livestock Confederation (CNA) announced that
Brazil's farming sector is projected to grow by 14.5% in 2023.
From January to October, the sector's total production value hit
BRL1.24 trillion ($250.51 billion), according to Rio Times Online.
This growth means agriculture could account for 47.5% of Brazil's
GDP this year, the report relays.
Farming exports from Brazil are also on the rise, the report notes.
They are expected to reach $164 billion by year-end, marking a 3%
increase from 2022, 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).
MERCON COFFEE: Files for Chapter 11 Bankruptcy
----------------------------------------------
Green coffee supplier Mercon Coffee Corp. and its affiliates filed
for Chapter 11 bankruptcy in New York.
Reuters reports that Netherlands-based Mercon Coffee Group, one of
the world's largest coffee traders, filed for bankruptcy protection
in the U.S. due to what it defined as "exceptionally challenging
operating environment."
According to Reuters, Mercon said in a letter sent to clients that
problems in recent years such as the logistical disruption during
the pandemic, frost and drought in Brazil, price volatility, and
rising interest rates all combined to hurt the company's financial
situation.
In the letter, signed by Mercon's Chief Executive Oscar Sevilla,
the company said lenders have elected "not to extend credit
agreements, resulting in extremely tight working capital
conditions."
Mercon has operations in all the major producing regions including
Brazil, Vietnam and Central America,
Court documents from the U.S. Bankruptcy Court for the Southern
District of New York show Mercon and its affiliates in several
countries have a total debt of $363 million.
The bankruptcy filing lets Mercon keep operating while it pursues
an "orderly sale of its assets," Bloomberg reports.
Rumors of financial problems at the coffee trader, which has sales
operations in Europe, Asia and the United States, circulated among
some market participants in the last hours.
The comments followed news from Nicaragua that the country's
largest coffee exporter, CISA Exportadora, had closed doors. CISA
was a subsidiary of Mercon.
In a statement, Nicaragua's government, according to Reuters, said
it was aware of CISA's suspension of operations and bankruptcy,
which it added was "not just occurring in Nicaragua" and was
"foreign" to the country's current economic situation.
Bloomberg News notes that the company's biggest unsecured creditors
include a Nicaraguan unit of Banco Lafise, Crowdout Capital, London
Forfaiting, and sustainability-focused investment fund &Green, the
company said in its bankruptcy petition.
About Mercon Coffee
Mercon Coffee Corp. -- https://www.merconcoffeegroup.com/ -- is a
supplier of green coffee to the international coffee roasting
industry. Mercon is headquartered in the Netherlands and has
offices around the globe.
Mercon Coffee Corp. sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-11945) on Dec. 7,
2023. In the petition filed by CRO Harve Light, the Debtor
reported assets and liabilities between $100 million and $500
million each.
The Debtors are represented by:
Blaire Cahn, Esq.
Baker & McKenzie LLP
999 Ponce de Leon Blvd., Suite 910
Coral Gables, FL 33134
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C O S T A R I C A
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AUTOPISTAS DEL SOL: Fitch Affirms 'B' Note Rating, Outlook Now Pos.
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Fitch Ratings has affirmed Autopistas del Sol, S.A.'s (AdS)
international notes at 'B', and National Scale Rating on its local
notes at 'A(cri)'. The Rating Outlook has been revised from Stable
to Positive. The international and local notes are supported by the
cash flow generation from Costa Rica's Ruta 27 toll road.
The Outlook revision to Positive reflects the positive evolution of
traffic and revenue in 2023, which is expected to continue in the
future. In addition, the Outlook reflects the successful completion
of the viaduct project, which is no longer a constraint on AdS's
ratings and is expected to support more traffic use by improving
security concerns. The latter could result in an improvement of
financial metrics to levels consistent with a higher rating.
RATING RATIONALE
AdS's ratings reflect the asset's traffic and revenue profile as a
toll road that serves a strong reference market within Costa Rica,
which is supported by an adequate toll adjustment mechanism. Mostly
used by commuters, the project may face significant competition in
the medium term once the main competing road (Ruta Uno) is
improved, especially if its tariffs were set significantly lower
than those of Ruta 27.
Toll rates are adjusted quarterly to the exchange rate (CRC/USD)
and annually to reflect changes in the U.S. Consumer Price Index
(CPI), plus additional adjustments are applied whenever CPI or the
exchange rates varies more than 5% in absolute terms.
The ratings also reflect a fully amortizing senior debt structure
with a fixed interest rate and a net present value (NPV) cash trap
mechanism that prevents an early termination of the concession
before debt is fully repaid.
Fitch's rating case average debt service coverage ratios (DSCR) is
1.2x, which is in line with Fitch's criteria guidance for a higher
rating. Nonetheless, the rating is currently constrained by the
1.0x minimum average projected in 2027. Under this scenario, Fitch
expects the project will receive Minimum Revenue Guarantee (MRG)
payments from 2027 onward, which totals in average 14% of annual
revenues from 2027 to 2030.
KEY RATING DRIVERS
Mostly Commuter with Growing Heavy Traffic [Revenue Risk - Volume:
Midrange]:
The asset is a toll-road that serves a strong reference market,
playing an important role in the broader transportation system as
it serves as a link between San Jose (Costa Rica's capital city)
and its surrounding metropolitan area with the Pacific Coast, and
is used by commuters on workdays and by San Jose residents
traveling to the beaches on the weekends. The road could face
significant competition once major improvements to the existing and
congested San Jose-San Ramon Route are made. The concession
agreement provides an MRG that compensates the issuer if revenue is
below certain thresholds, somewhat alleviating this risk.
Adequate Rate Adjustment Mechanism [Revenue Risk - Price:
Midrange]
Toll rates are adjusted quarterly to reflect changes in the Costa
Rican Colon (CRC) to USD exchange rate, and annually to reflect
changes in the U.S. CPI. Tolls may be adjusted prior to the next
adjustment date if the U.S. CPI or the CRC/USD exchange rate varies
(+/-) by more than 5%. No tariff adjustments are applied according
to Costa Rican inflation; however, this exposure is limited to the
costs denominated in CRC which account for 20% of total expenses.
Historically, tariffs have been updated appropriately.
Suitable Capital Improvement Program [Infrastructure Development &
Renewal: Midrange]:
The asset is operated by an experienced global company with a
higher-than-average expense profile, due to its geographical
attributes. The majority of the investments required by the
concession have been made, including the new viaduct which is fully
operational since October 2023. The concession requires lane
expansions when congestion exceeds 70% of the ideal saturation
flow, which triggers the need for further investments. However, the
project would only require the concessionaire to perform these
investments to the extent they do not represent a breach in the
DSCRs assumed by the issuer in the financing documents.
Structural Protections Against Shortened Concession [Debt
Structure: Midrange]
Debt is senior secured, pari passu, fixed-rate, and fully
amortizing. The debt is denominated in USD, but no significant
exchange rate risk exists due to the tariff adjustment provisions
set forth in the concession and because CRC-denominated toll
revenues will be converted to USD daily. Notwithstanding, some
exposure to Costa Rican inflation is present as tariff adjustments
follow U.S. inflation only.
The structure includes an NPV cash trap mechanism to prepay debt if
revenue outperforms the base case revenue indicated in the issuer's
financial model, which largely mitigates the risk of the concession
maturing before the debt is fully repaid. Typical project finance
features include a six-month debt service reserve account (DSRA), a
six-month backward and forward-looking 1.20x distribution trigger
and limitations on investments and additional debt.
Financial Profile
Under Fitch's base case the project yields a minimum and average
DSCR of 1.2x (2024) and 1.4x, respectively. While under Fitch's
rating case, minimum and average DSCR are 1.0x (2027) and 1.2x,
respectively. The concession is expected to expire in July 2033,
which matches its maturity and preserves a 2.5-year tail after debt
maturity. It assumes payments under the MRG starting in 2027, which
amounts in average to 14% of annual revenues between 2027 and 2030.
The metrics are in line with Fitch's applicable criteria for a
higher rating. Nonetheless, the rating is currently constrained by
the 1.0x minimum average projected in 2027.
PEER GROUP
Comparable projects in the region include TransJamaican Highway
(TJH; BB-/Stable) in Jamaica. AdS and TJH are similar projects
since they are both strong commuting assets within their respective
country's capital cities. Although they share similar attributes,
AdS has lower metrics (average DSCR of 1.2x versus 2.2x of TJH
under Fitch's rating case) and TJH has no dependency on traffic
growth in order to repay the rated debt. TJH is rated above the
Jamaican sovereign (B+/Positive) and is constrained by Jamaica's
'BB-' Country Ceiling.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Traffic (expressed as Weighted Annual Average Daily Traffic or
WAADT) performance consistently below Fitch's rating case
expectation of 44,392 vehicles in 2024;
- Substantially greater than expected traffic loss occurs due to
the advancement of works in the competing route. Fitch's rating
case expectation is a loss of 15.0% in 2025 and 23.5% in 2027;
- A deterioration of the liquidity available for debt service,
beyond the expected use of reserves.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Traffic performance (WAADT) consistently above Fitch's base case
expectation of 44,818 vehicles in 2024 or if the project achieves a
DSCR equal to or above 1.17x in 2024.
- Expectation that construction works on the competing road could
start beyond 2024
TRANSACTION SUMMARY
The asset serves as a connection between the city of San Jose and
its metropolitan area with Puerto Caldera, along the Pacific Coast.
The asset is operated by Globalvia, one of the world leaders in
infrastructure concession management, which manages 28 concessions
in seven countries. The company was established in 2007 by FCC
Group and Bankia Group. In March 2016, Globalvia was acquired by
pension funds OPSEU Pension Plant Trust Fund (40%), PGGM N.V. (40%)
and Universities Superannuation Scheme Ltd (20%).
CREDIT UPDATE
Up to October 2023, traffic reached 98.7% of 2019 volume, above
Fitch's rating case expectations of 97% and slightly below the 99%
expected in Fitch's base case. According to the concessionaire, the
increase in traffic was possibly favored by the relatively stable
oil prices during the first half of the year, the appreciation of
the CRC, which could have improved purchasing power, and improved
macroeconomic conditions in Costa Rica.
Whereas traffic growth slowed in the second half of 2022, likely
due to fare increases and higher than expected inflation and fuel
costs in Costa Rica, the WAADT of the July to October 2023 period
already shows a 9% increase against the same period of last year.
Tariffs in 2023 increased in line with U.S. inflation. Revenues
through October 2023 at USD76.4 million surpassed 2019 revenues for
the same period by 20% and generally in line with Fitch's cases.
Operational expenses have been mostly in line with Fitch's
expectations. However, total expenditures were materially lower,
with accumulated opex and capex at 75.2% and 68.6% of Fitch's base
case expectation, respectively. According to the concessionaire,
this is due toinvestments for slope stabilization that were lower
than projected and a USD6.3 million contribution by the shareholder
earlier this year.
Part of the road is built on a sloping embankment, which has
presented constant settlements. As the situation worsened, it was
decided that to avoid landslide risk a new viaduct would need to be
constructed that would not be supported by the potentially sliding
surface. The 145 meters viaduct was completed in October 2023, and
is currently fully operational, totalling an investment of USD15
million.
DSCR for the last semi-annual payment of June 2023 was 1.1x, higher
than the expected 1.0x in Fitch's base case and 0.9x in its rating
case, given the lower capex investments needed and the observed
traffic growth from January to October 2023 (7% higher than the
same period of 2022). According to the issuer, as of November 2023,
5/6 of the debt service due in December 2023 was already funded.
Debt service reserve account is currently funded with only 86% of
its target balance, given requirements for this account increased
following the amortization schedule. Fitch expects the target to be
achieved throughout 2024.
According to the concessionaire, the first of five phases of
undelayable work to the competing route, Ruta Uno, has been
completed. However, the next four phases have had severe delays. In
August 2023, the Central Bank of Costa Rica agreed to an early
termination of the Ruta Uno trust and return control of Ruta Uno to
the Ministry of Public Works and Transportation (MOPT) and the
National Road Council (CONAVI). The final deadline for the trust's
dissolution is December 2024. As such, it is likely that pending
works on Ruta Uno will be further delayed until plans to abolish
Fideicomiso Ruta Uno are completed, and a new investment scheme is
designed.
Fitch expects that construction work could take three to four years
and could be reactivated by late 2025 or early 2026, meaning
completion would take place around 2030. The uncertainty regarding
the definitive dates for the construction of Ruta Uno, coupled with
lack of visibility on what kinds of tariffs such a road would
charge, if any, have resulted in Fitch taking a more conservative
approach by assuming that the effects of competition could be felt
in Ruta 27 when Ruta Uno is partially completed.
FINANCIAL ANALYSIS
Fitch's base case assumes traffic reaches 100% of 2019 levels in
2024. From 2025 until 2030, Fitch expects an average traffic growth
of 3.6%. From this baseline, Fitch deducts the expected effect of
the expansion and improvement of the competing road with traffic
drops of 7.5% in 2025 and 11.75% in 2027. O&M and major maintenance
expenses were projected following the issuer's budget adding a 5%
stress plus annual U.S. inflation, which is forecasted at 3.7% for
2023, 2.7% for 2024, 2.0% for 2025 and 2.0% afterward. This
scenario resulted in a minimum and average DSCR of 1.2x (2024) and
1.4x, respectively.
Fitch's rating case assumes traffic reaches 100% of 2019 levels in
2024. From 2025 until 2030, Fitch expects an average traffic growth
of 3.1%. From this baseline, Fitch deducts the expected effect of
the expansion and improvement of the competing road with traffic
drops of 15% in 2025 and 23.5% in 2027. O&M and major maintenance
assumptions were projected following the issuer's budget adding a
7.5% stress plus annual U.S. inflation.
Inflation assumptions are the same as in the base case. This
scenario resulted in a minimum and average DSCR of 1.0x (2027) and
1.2x, respectively. Under this scenario, MRG will be received from
2027 onward. Downward deviations from Fitch's rating case may
provoke some shortfalls when the improvements on the competing road
are completed. However, available liquidity is sufficient to
withstand transitory shortfalls when CFADs cannot fully cover debt
service. In general, the project's resiliency is strengthened with
time, with every year after reaching 2019 levels adding up to its
ability to withstand future traffic drops.
ESG CONSIDERATIONS
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 Prior
----------- ------ -----
Autopistas del
Sol, S.A.
Autopistas del
Sol, S.A./Project
Revenues - First
Lien/1 LT LT B Affirmed B
Autopistas del
Sol, S.A./Project
Revenues - Second
Lien/2 Natl LT Natl LT A(cri)Affirmed A(cri)
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Eyes Regional Market for Export Growth
----------------------------------------------------------
Dominican Today reports that the Caribbean, home to over 44 million
people and known for its white-sand beaches and rich heritage from
Spanish, French, and Dutch ancestors, is emerging as a key export
destination for the Dominican Republic.
This potential is underscored by data from the Dominican Republic's
Export and Investment Center (ProDominicana), which shows a trade
exchange of US$ 9.12 billion with the Caribbean from 2019 to 2022.
Notably, 2022 saw trade amounting to US$ 2,143 million, according
to Dominican Today.
Victor Bisono, the Minister of Industry, Commerce, and MSMEs
(MICM), emphasized the geographical proximity and agricultural
development of the Dominican Republic as significant factors in
exploring the Caribbean market, the report notes. He pointed out
the growth in exports, like fruit products, which increased from
US$ 4.8 million in 2018 to US$ 17 million in 2022, with notable
exports of avocado to Guyana and bananas to Turks and Caicos, the
report relays.
Biviana Riveiro, the director of ProDominicana, highlighted the
strategic need to diversify markets. She noted that while the
majority of remittances, migration, and trade typically involve the
United States and Europe, the Caribbean offers new opportunities
for Dominican businesses, the report discloses. In 2022, exports
to Jamaica reached US$100 million, and other nations like Guyana,
Trinidad and Tobago, Curacao, Grenada, and Saint Kitts and Nevis
are seen as potential markets, particularly for micro, small, and
medium-sized enterprises (MSMEs), the report says.
The challenges in tapping into this potential include enhancing
connectivity, developing infrastructure, and having a skilled
workforce, the report relays. Factors like the Russia-Ukraine war,
border closures, pandemic effects on maritime trade, and rising raw
material and fuel costs have impacted the Dominican Republic's
global trade balance, the report discloses.
Peter Palewonsky, director of the National Competitiveness Council,
acknowledged that global factors influence the national economy but
stressed the importance of looking towards the Caribbean to
diversify export destinations, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCR-LA reported in April 2019 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.
On December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, Moody's Investors Service changed the outlook on
the Government of Dominican Republic's ratings to positive from
stable and affirmed the local and foreign-currency long-term issuer
and senior unsecured ratings at Ba3. Moody's said the key drivers
for the outlook change to positive are: (i) sustained high growth
rates have enhanced the scale and wealth levels of the economy; and
(ii) a material decline in the government debt burden coupled with
improved fiscal policy effectiveness will support medium-term debt
sustainability.
The affirmation of the Ba3 ratings balances the Dominican
Republic's strong economic growth dynamics and relatively contained
susceptibility to event risks, with a comparatively weaker fiscal
position, reflecting long-standing credit challenges which include:
(i) a shallow revenue base compared to peers, (ii) weak debt
affordability metrics, and (iii) high exposure to foreign currency
borrowing.
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.
DOMINICAN REPUBLIC: Faces Criticism Over Aerodom Contract Terms
---------------------------------------------------------------
Dominican Today reports that the agreement between the Dominican
Government and Aeropuertos Dominicanos Siglo XXI (Aerodom) includes
a clause where Aerodom can seek financial compensation or other
remedies from the State if they fail to achieve "economic balance".
Critics, particularly in the opposition, have expressed concerns
about the leniency of this clause, allowing Aerodom to seek
government compensation if their yearly economic forecasts are not
met, according to Dominican Today.
Article 12 of the contract, focusing on "Economic Balance,"
mandates that both parties strive to ensure a profitable return
from the Capital Investment Program, the report notes. However,
this article also outlines over 12 potential situations where
projected outcomes may not materialize, including excessive airport
usage by fee-exempt individuals, continuous economic disruption,
hyperinflation, and a decline in passenger traffic, the report
relays.
Opposition parties have highlighted these clauses, arguing that
they unfairly benefit Aerodom if their annual financial projections
fail, the report relays. In such cases, Aerodom is authorized to
propose various solutions, including compensation, modifying
clauses or tariffs, extending deadlines, renegotiating the
contract, or other measures to restore economic balance, the report
notes.
Comparisons have been made to the "shadow toll" system on the
Samana highway, where the government compensated the concessionaire
for lower-than-expected vehicle flow, the report discloses. Deputy
Jose Horacio Rodriguez cautioned against this aspect of the
contract, citing past instances where the government had to amend
the original 1999 contract due to disrupted economic balance, the
report says.
Rodriguez pointed out that within five years, passenger numbers
fell short of projections, breaking the economic balance and
leading to the concessionaire collecting all airport taxes, a
situation that persisted from 2004 to 2017, the report relays. He
also criticized the contract's complexity and lack of
accessibility, noting that important financial details were in
English and contained complex technical jargon, which the
commission refused to translate or delve deeper into, the report
discloses.
The contract, having passed the Chamber of Deputies, is now headed
to the Senate of the Republic for further consideration, the report
adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCR-LA reported in April 2019 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.
On December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, Moody's Investors Service changed the outlook on
the Government of Dominican Republic's ratings to positive from
stable and affirmed the local and foreign-currency long-term issuer
and senior unsecured ratings at Ba3. Moody's said the key drivers
for the outlook change to positive are: (i) sustained high growth
rates have enhanced the scale and wealth levels of the economy; and
(ii) a material decline in the government debt burden coupled with
improved fiscal policy effectiveness will support medium-term debt
sustainability.
The affirmation of the Ba3 ratings balances the Dominican
Republic's strong economic growth dynamics and relatively contained
susceptibility to event risks, with a comparatively weaker fiscal
position, reflecting long-standing credit challenges which include:
(i) a shallow revenue base compared to peers, (ii) weak debt
affordability metrics, and (iii) high exposure to foreign currency
borrowing.
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.
EGE HAINA: Fitch Affirms 'BB-' LongTerm IDR, Alters Outlook Pos.
----------------------------------------------------------------
Fitch Ratings has affirmed the Foreign and Local Currency Long-Term
Issuer Default Ratings of Empresa Generadora de Electricidad Haina,
S.A. (EGE Haina) at 'BB-' and revised the Rating Outlook to
Positive from Stable. Fitch has also affirmed EGE Haina's USD300
million senior unsecured notes at 'BB-'.
The Positive Outlook reflects Fitch's revision of the Outlook on
the Dominican Republic's sovereign rating. Haina's credit quality
is linked to the sovereign rating given the dependency of
state-owned distribution companies from government transfers as a
result of the high risk of the Dominican Republic electricity
sector, which has high energy losses, low level of collections and
important subsidies. The ratings also reflect the size and
diversification of its generation asset base. Fitch Ratings
projects leverage to increase to around 5x between 2023 and 2025 as
EGE Haina will increase its debt to finance it expansion plan.
Fitch expects EGE Haina's leverage will start deleveraging in 2026
to 4.2x.
KEY RATING DRIVERS
Outlook Revised to Positive Based on Sovereign: Fitch revised the
Dominican Republic's sovereign Rating Outlook to Positive from
Stable on Nov. 29, 2023, reflecting a track record of robust
economic growth, a diversified export structure, high per-capita
GDP and social indicators, and governance scores that compare
favorably with peers. Post-election, there could be scope for the
next administration to pass pending legislation related to a new
Fiscal Responsibility Law that could contribute toward improving
the macro institutional framework.
Growth has decelerated in 2023, but Fitch expects it to recover to
high levels during 2024-2025. External liquidity metrics have
improved in recent years, and foreign currency share of government
debt is on a downward path.
Heightened Counterparty Exposure: EGE Haina depends on payments
from the state-owned distribution companies with a history of high
energy distribution losses (33% in 2022), low collection rates and
electricity tariffs that do not account for true energy costs. The
regular delays in government transfers pressure working capital
needs and add volatility to cash flows. The company mitigates
payment delays by keeping a strong liquidity position above USD50
million per year and maintaining available credit lines that cover
six months of electricity sales.
Diversified Asset Base: EGE Haina's credit profile benefits from a
diversified asset portfolio of power generation assets using
different sources of energy (natural gas, fuel oil, wind, coal and
solar). By YE 2023, thermal sources will account for 65% of EGE
Haina's generation capacity, 16% from wind and 19% from solar,
after adding 90MW of new solar capacity.
Expansion Plan Affects Cash Flow: Fitch expects that between 2023
and 2025, EGE Haina will maintain negative annual average FCF of
USD180 million due to an ambitious expansion plan. Between 2023 and
2024, through its subsidiary, Siba Energy (51% owned by EGE Haina),
USD207 million will be directed to the construction of a 250MW
closed cycle power plant scheduled for completion by 2025; 190MW of
which is already online in an open cycle since June 2023. In
addition, throughout 2023-2026, EGE Haina expects to invest USD650
million in adding more than 500MW of renewal generation capacity to
its asset base.
Elevated Credit Metrics: Fitch expects gross leverage levels will
increase to around 5x between 2023 and 2025 from 4x in 2022. This
incorporates USD280 million additional debt EGE Haina will take
directly to finance its increased investment plan in solar farms
and USD230 million from the Siba Energy to finance its expansion.
Fitch expects the company will deleverage to 4.2x in 2026, once the
solar plants are operational and the SIBA Energy power plant is
completed.
Contracts Support Cash Flow: Fitch expects that, between 2023 and
2025, more than 80% of EGE Haina's revenues will come from
long-term purchased power agreements (PPAs), which have adequate
cost pass-through provisions that support cash flow generation
stability. In 2022, EGE Haina signed eight PPAs with nonregulated
clients that are going to be supplied with the recently opened
Esperanza Solar Park.
In addition, the company signed three PPAs with the state
distribution companies related to the Siba Energy natural gas power
plant. These agreements rely on capacity payments that, from 2023
onward, will add revenue predictability. Fitch projects EGE Haina's
EBITDA at nearly USD155 million for YE 2023, and close to USD170
million in 2024.
DERIVATION SUMMARY
EGE Haina's rating is similar to AES Espana B.V., the Dominican
Republic's other primary electricity generator. Both AES Espana and
EGE Haina's ratings are restricted by the counterparty exposure
from the state-owned distribution companies, which are their main
offtakers and link both companies' credit profiles to the sovereign
rating. The Dominican electricity sector is dependent on government
transfers due to high energy losses, low level of collections and
important subsidies.
EGE Haina's credit profile benefits from its asset base in
operation with 1,149 MWh capacity, larger than the combined
capacity of AES Espana and its related company Dominican Power
Partners at 677MWh. EGE Haina has a diversified energy matrix that
uses different sources of energy (natural gas, fuel oil, wind, coal
and solar), while AES Espana's generation units are mainly
dependent on natural gas and fuel oil. In addition, AES Espana has
an integrated operation with a natural gas port, regasification,
storage and gas pipeline facilities.
KEY ASSUMPTIONS
- Installed capacity in operation of 1,149MW in 2023; 1,314MW in
2024; 1,584MW in 2025; and 1,734MW in 2026;
- Siba Energy closed cycle is completed by 2025;
- Energy generation, excluding Siba Energy, has an average of yoy
3% growth between 2022 and 2025;
- Account receivables days of 84 with no material delays in
government payments;
- Annual average capex of EGE Haina, excluding Siba Energy, will be
close to USD170 million between 2022 and 2025;
- Total capex of Siba Energy of USD208 million in 2023 and 2024;
heightened capex in 2023 and 2025 will be mostly financed with
incremental debt;
- In 2Q23, the Siba Energy natural gas plant starts operation and
generates an additional EBITDA of close to USD10 million in 2023
and USD25 million in 2024;
- Average dividend payment in 2023-2025 of USD30 million.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An upgrade of the Dominican Republic's sovereign ratings.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A downgrade of the Dominican Republic's sovereign rating;
- Operational cash flow deterioration that leads to a sustained
leverage of more than 4.5x;
- Sustained EBITDA/Interest Coverage below 2.5x;
- Negative FCF outside of expansion period;
- Cash position below USD50 million.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: EGE Haina maintains adequate liquidity,
supported by its available cash balance, predictable revenue and
its debt maturity terms. As of June of 2023, EGE Haina had USD56
million in cash and an expected USD70 million in cash from
operations for 2023, with short-term obligations of USD140 million.
EGE Haina has USD211 million in available credit lines, with
liquidity support in order to face volatility in the collection
profile of its accounts receivable, if needed. EGE Haina does not
have a materially significant debt payment until 2028.
ISSUER PROFILE
EGE Haina is one of the Dominican Republic's main electricity
generation companies and is 50% controlled by Haina Investment Co.
Ltd, a private holding firm incorporated in the Cayman Islands, and
49.993% held by Fondo Patrimonial de las Empresas Reformadas
(FONPER), a holding company fully owned by the Dominican
Government.
ESG CONSIDERATIONS
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 Prior
----------- ------ -----
Empresa Generadora
de Electricidad
Haina, S.A. LT IDR BB- Affirmed BB-
LC LT IDR BB- Affirmed BB-
senior unsecured LT BB- Affirmed BB-
=============
J A M A I C A
=============
JAMAICA: BOJ Working With Banks to Reduce Fraud
-----------------------------------------------
RJR News reports that The Bank of Jamaica (BOJ) says it continues
to take seriously the fraud threats in the financial system.
Deputy BOJ Governor Dr. Jide Lewis says the central bank is working
with local banking players to implement strategies to reduce fraud,
according to RJR News.
"There are a couple of initiatives that we're looking to launch in
the very near future, including giving guidelines to financial
institutions in terms of how they should go about strengthening
their cyber frameworks," he said, the report relays.
"This is, of course, going to be done through a consultative
process as we do with all our guidelines. And then once we get
through that consultation process, we will be enshrining it into a
standard of best practice, which of course has binding obligations
on the licensees in terms of their commitment to follow these sets
of procedures," the deputy BOJ governor added, the report notes.
He said the central bank is constantly in touch with the players in
the financial market, particularly the banking sector, to help them
understand their reponsibility in ensuring that their internal
control environment is robust, the report adds.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. The upgrade of Jamaica's
rating to B1 reflects the government's sustained commitment to
fiscal consolidation and debt reduction. The positive outlook
reflects Moody's assessment that a continuation of the favorable
fiscal trajectory will further increase Jamaica's credit
resilience.
S&P Global Ratings raised on September 13, 2023, its long-term
foreign and local currency sovereign credit ratings on Jamaica to
'BB-' from 'B+', and affirmed its short-term foreign and local
currency sovereign credit ratings at 'B'. The stable outlook
reflects S&P's expectation that the government will remain
committed to prudent fiscal policies and reducing debt, as well as
supportive economic policies including a flexible exchange rate
regime and effective monetary policy.
In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
JAMAICA: EPOC Credits Approach to Disaster Risk Financing
---------------------------------------------------------
RJR News reports that the Economic Programme Oversight Committee
(EPOC) has credited the government for its approach to disaster
risk financing.
EPOC Chairman Keith Duncan says the country has taken a
multi-layered approach to guarding against risks, according to RJR
News.
"This involves establishing adequate funds and reserves to retain
the costs associated with both low and high-frequency events such
as floods, heavy rainfall, hurricanes and earthquake," he said, the
report notes.
The government has also maintained a National Disaster Fund
capitalized at J$465 million as at the end of June, and contingency
funds which amounted to $5 billion at the end of June, the report
says.
"The government has also placed an international development bank
contingent line of credit which provides access to $285 million,"
Mr. Duncan added.
Along with these facilities, in 2021, Jamaica secured a Catastrophe
Bond, which provides protection of up to US$185 million against
losses from named storms, the report relays.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. The upgrade of Jamaica's
rating to B1 reflects the government's sustained commitment to
fiscal consolidation and debt reduction. The positive outlook
reflects Moody's assessment that a continuation of the favorable
fiscal trajectory will further increase Jamaica's credit
resilience.
S&P Global Ratings raised on September 13, 2023, its long-term
foreign and local currency sovereign credit ratings on Jamaica to
'BB-' from 'B+', and affirmed its short-term foreign and local
currency sovereign credit ratings at 'B'. The stable outlook
reflects S&P's expectation that the government will remain
committed to prudent fiscal policies and reducing debt, as well as
supportive economic policies including a flexible exchange rate
regime and effective monetary policy.
In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
ATLANTIC LNG: Government Defends New Structure for Firm
-------------------------------------------------------
RJR News reports that the Trinidad & Tobago government defended the
new unitized commercial structure for Atlantic LNG that allows the
state-owned National Gas Company of Trinidad and Tobago to obtain a
greater share in the revenue derived from the sale of LNG on the
global market.
Prime Minister Dr Keith Rowley, who led a delegation for talks in
London earlier this month involving NGC, Shell and bp, said the
country is expected to receive an estimated TT$11 billion in
additional revenue as a result of the new accord, according to RJR
News.
He said if Trinidad & Tobago had failed to reach an agreement over
the renegotiation it could have meant the country going to the
International Monetary Fund for assistance in the future, the
report notes.
As reported in the Troubled Company Reporter-Latin America on
March 9, 2023, Andrea Perez-Sobers at Trinidad Express said that
Atlantic LNG (Atlantic) has confirmed that it is laying off staff
and has already offered all employees voluntary separation of
employment packages (VSEP) to go home over the next two months.
The VSEP comes as the company has moved from operating four LNG
Trains to three, and even with three, its president, Ronald Adams,
recently admitted that it is only getting enough natural gas to
meet 70 per cent of the capacity of the reduced number of Trains,
according to Trinidad Express. It also continues a trend in the
local energy sector of retrenchment of staff, the report notes. In
response to questions from Sunday Business, the company did not
say how many workers would be asked to leave but noted a further
review would be conducted with the possibility that if it did not
get enough numbers accepting its offer, some may have to be cut,
the report relays.
*********
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 * * *