/raid1/www/Hosts/bankrupt/TCRLA_Public/231229.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
Friday, December 29, 2023, Vol. 24, No. 261
Headlines
A R G E N T I N A
YPF SA: Milei Sets up Firm For Privatization
B R A Z I L
AMERICANAS SA: Gets Green Light From Creditors to Overhaul Debt
PETROBRAS SA: Resumes Equatorial Margin Oil Exploration
STATE OF ALAGOAS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
C H I L E
CHILE: Speeds Up Interest Rate Cuts Pace After Currency Rebounds
C O L O M B I A
COLOMBIA: Delivers First Rate Cut, Cautious About Next Moves
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Acoprovi Reports Zero Growth in Construction
[*] DOMINICAN REPUBLIC: Strengthens Economic Ties With EuroChamber
E C U A D O R
INTERNATIONAL AIRPORT: Fitch Hikes Rating to 'B', Outlook Positive
M E X I C O
BRASKEM IDESA: Fitch Affirms 'B+' LongTerm IDR, Outlook Negative
FINANCIERA INDEPENDENCIA: Fitch Affirms 'B+' IDRs, Outlook Stable
PETROLEOS MEXICANOS: Fitch Affirms B+ LongTerm IDR, Outlook Stable
T R I N I D A D A N D T O B A G O
MASSY: Initiates 'Disciplinary Process' After Claims By Sr. Exec.
- - - - -
=================
A R G E N T I N A
=================
YPF SA: Milei Sets up Firm For Privatization
--------------------------------------------
Jonathan Gilbert at Bloomberg News reports that President Javier
Milei took the first step to privatise state-run Argentine
companies with a sweeping decree that opens the door for private
business to take control of key sectors.
Milei - a libertarian who wants to shrink government and deregulate
to flip the switch on Argentina's crisis-prone economy - announced
a slew of reforms that would allow tens of state-controlled firms,
many of them money-losing, to be sold off, according to Bloomberg
News.
"Repeal rules that impede the privatisation of state companies,"
Milei said in a televised message, listing the reforms in bullet
points, Bloomberg News relays.
He added that all state businesses would have their legal structure
changed to fully clear the path to privatization, Bloomberg News
notes.
Milei campaigned on this message, mentioning national airline
Aerolíneas Argentinas SA, rail networks, state media companies,
and water and sewage company AySA as assets to be sold to private
operators, Bloomberg News relays. He also said he'd target
state-run oil driller and refiner YPF SA and energy company Enarsa
after a "transition" period, Bloomberg News notes.
The only company Milei singled out in his announcement was
Aerolineas Argentinas, which the government has spent hundreds of
millions of dollars a year to prop up, Bloomberg News discloses.
He said he'd authorised a handover of shares - likely to employees
- and would at the same time free up Argentina's air-travel
industry, Bloomberg News says.
While Milei can seek to privatise companies by presidential decree,
he's nevertheless likely to face pushback in Congress, where his
party is a minority, and may struggle to get enough votes to pass
divestments through, Bloomberg News notes.
"I don't see a scenario how this decree would be backed by
Congress," Paulo Farina, partner at the Buenos Aires-based Visviva
consultancy firm, said in an interview. "It touches too many
interests not to see a congressional coalition trying to reject
it," he added.
With his privatization push, Milei mimics a similar policy pursued
by ex-president Carlos Menem, the market-friendly leader of the
1990s who sold several strategic assets in an attempt to downsize
government after a period of hyperinflation, Bloomberg News relays.
After a crippling crisis that peaked in late 2001, Argentina then
opted to re-nationalise some companies in an era of leftist
leaders, Bloomberg News discloses. They took back AySa in 2006,
Aerolineas in 2008 and YPF in 2012. Milei, intent on slashing
public spending and subsidies, wants to undo all that, Bloomberg
News notes.
"We'd take nearly a couple of years to privatise YPF," Milei told
Bloomberg News during the campaign. "Because the company has been
destroyed and selling it at market prices would be to give it away.
We need it to manage the transition to putting the energy sector in
order," Bloomberg News relays.
YPF and other Argentine energy companies have struggled with heavy
regulation to protect consumers from currency devaluations that
drive inflation, curtailing their revenues and investments,
Bloomberg News notes.
The state oil company's New York-listed shares still trade about 20
percent lower than when the government seized it in April 2012,
taking control from Spain's Repsol SA - even after Milei's
electoral triumph last month produced big stock-market gains,
Bloomberg News discloses.
Complicating matters is a US court ruling earlier this year
ordering Argentina to pay some US$16 billion after it botched
technical steps during the nationalization, Bloomberg News relays.
The government has said it will appeal, Bloomberg News says.
Nevertheless, YPF over the past decade has channelled its
nationalistic role to successfully spearhead development of
Argentina's Patagonian shale riches, and it is leading plans for
pipeline build-outs and liquefied natural gas exports, Bloomberg
News notes.
Milei has tapped executives from the oil and steel empire of
Argentine-Italian billionaire Paolo Rocca to lead YPF, Bloomberg
News relays.
It may be harder to privatize YPF than some other companies since
the 2012 nationalization law contains a clause requiring two-thirds
of Congress to approve selling the government's shares, rather than
just a simple majority, Bloomberg News adds.
About YPF SA
YPF S.A. is a vertically integrated, majority state-owned Argentine
energy company, engaged in oil and gas exploration and production,
and the transportation, refining, and marketing of gas and
petroleum products.
Founded in 1922, YPF was an oil company established as a state
enterprise. YPF was later privatized under president Carlos Menem
and was bought by the Spanish firm Repsol in 1999, and the
resulting merged company was call Repsol YPF.
In 2012, about 51% of the firm was renationalized and this was
initiated by President Cristina Fernandez se Kirchner. The
government of Argentina agreed to pay $5 billion compensation to
Repsol.
In April 2023, S&P Global Ratings lowered its local and foreign
currency ratings on YPF SA to 'CCC-' from 'CCC+'. The outlook on
these ratings is now negative. The downgrade follows a similar
action on S&P's long-term foreign currency ratings and T&C on
Argentina, following announced plans that, if implemented, would
oblige some nonfinancial public-sector entities to exchange or
sell their holdings of global-and local-law dollar-denominated
bonds issued during the 2020 restructuring for other locally issued
peso debt, likely dollar-and/or inflation-linked bonds. In S&P's
view, the lack of clarity and the apparent motivation for the
potential transaction underscore heightened credit vulnerabilities,
in particular given the increasing pressures from the severe
drought that Argentina is facing, which further constrains the
already disrupted FX market. This expected greater pressure on the
FX markets also explains S&P's downward revision of the T&C
assessment to 'CCC-'.
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B R A Z I L
===========
AMERICANAS SA: Gets Green Light From Creditors to Overhaul Debt
---------------------------------------------------------------
Bloomberg News reports that creditors of distressed Brazilian
retailer Americanas SA approved a restructuring plan to overhaul 50
billion reais ($10.3 billion) of debt in a key step to applying a
recovery plan nearly a year after its sudden implosion due to a
multi-year fraud.
With more than 97% of banks, bondholders and suppliers represented
at the virtual meeting, the creditors gave the company the green
light to proceed with the plan that envisions a capital injection
of 24 billion reais in 2024 and recovery rates close to 30%,
according to the report.
The stock gained as much as 7.8% in Sao Paulo trading to 0.97 reais
a share.
Brazil's wealthiest and most iconic businessmen billionaires Jorge
Paulo Lemann, Carlos Sicupira and Marcel Telles are the largest
shareholders of Americanas and have agreed to inject 12 billion
reais into the company as part of the recovery plan, the report
relays.
They've already put up 1.5 billion reais as part of
debtor-in-possession financing and will disburse another 3.5
billion reais shortly after the plan's approval, chief financial
officer Camille Loyo Faria said in the assembly, the report adds.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in
Rio de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25, 2023. White &
Case LLP, led by John K. Cunningham, is the U.S. counsel.
PETROBRAS SA: Resumes Equatorial Margin Oil Exploration
-------------------------------------------------------
Richard Mann at Rio Times Online reports that Petrobras, the
Brazilian state-owned oil company, has restarted drilling in Rio
Grande do Norte, marking the resumption of oil and gas exploration
in the Equatorial Margin.
This comes after facing challenges from the Ministry of
Environment, resulting in a public dispute, according to Rio Times
Online.
The Equatorial Margin, including the controversial Foz do Amazonas
area, covers five basins from Amapa to Rio Grande do Norte, the
report notes.
About Petrobras
Petroleo Brasileiro S.A. or Petrobras (in English, Brazilian
Petroleum Corporation - Petrobras) is a semi-public Brazilian
multinational corporation in the petroleum industry headquartered
in Rio de Janeiro, Brazil. Petrobras control significant oil and
energy assets in 16 countries in Africa, the Americas, Europe and
Asia. But, Brazil represents majority of its production.
The Brazilian government directly owns 54% of Petrobras' common
shares with voting rights, while the Brazilian Development Bank
and Brazil's Sovereign Wealth Fund (Fundo Soberano) each control
5%, bringing the State's direct and indirect ownership to 64%.
A corruption scandal was uncovered in 2014 that involved
Petrobras.
The scandal related to money laundering that involved Petrobras
executives. The executives were alleged to get received kickbacks
from overpriced contracts, to the tune of about $3 billion in
total. Over a thousand warrants were issued against politicians
and businessmen in relation to the scandal. In 2016, Marcelo
Odebrecht, CEO of Odebrecht, was sentenced to 19 years in prison
after being convicted of paying more than $30 million in bribes to
Petrobras executives.
In January 2018, Petrobras agreed to pay $2.95 billion to settle a
U.S. class action corruption lawsuit. In September 2018,
Petrobras agreed to pay $853.2 million to settle with Brazilian and
U.S. authorities.
In July 2022, Fitch Ratings affirmed Petrobras' BB- Long-Term
Issuer Default Rating. In addition, Fitch has revised the Rating
Outlook to Stable from Negative following a similar revision to
Brazil's Sovereign Rating Outlook. Also in July 2022, Egan-Jones
Ratings Company upgraded the foreign currency and local currency
senior unsecured ratings on debt issued by Petrobras to BB+ from
BB.
STATE OF ALAGOAS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed the State of Alagoas' Long-Term Foreign
and Local Currency Issuer Default Ratings (IDRs) at 'BB'. The
Rating Outlook is Stable. In addition, Fitch has affirmed Alagoas'
Short-Term Foreign and Local Currency IDRs at 'B', National
Long-Term Rating at 'AAA(bra)'/Stable Outlook, and National
Short-Term Rating at 'F1+(bra)'. Alagoas Standalone Credit Profile
(SCP) was raised to 'bb-' from 'b+'.
The State of Alagoas' IDRs and Stable Outlook are supported by the
Brazilian sovereign rating, considering the federal government is
its most significant creditor. Debt owed to the federal government
corresponds to approximately 62% of the state's direct debt. Fitch
views intergovernmental debt as more favorable because it can be
used as an instrument of support by the sovereign in periods of
distress, leading to a one-notch uplift from the state's 'bb-'
SCP.
Alagoas' SCP was raised due to improving tax collection, reflecting
the change to the ICMS (Imposto sobre a Circulação de Mercadorias
e Serviços) average basic tariff to 19% from 17%, effective from
March 2023. This counterbalanced the National Congress limitation
to ICMS over fuels and electricity. The state also reported more
moderate opex growth in 2023 after a large increase in 2021-2022.
Fitch does not currently identify credit concerns to the state's
ratings from the Braskem mine incident, but will continue
monitoring the situation.
KEY RATING DRIVERS
Risk Profile: 'Weaker'
The assessment reflects Fitch's view that there is a high risk of
the issuer's ability to cover debt service with the operating
balance weakening unexpectedly over the scenario horizon
(2023-2027), due to lower revenue, higher expenditure or an
unexpected rise in liabilities or debt-service requirement.
Revenue Robustness: 'Weaker'
The Brazilian tax collection framework transfers a large share of
the responsibility to collect taxes to states and municipalities.
Constitutional transfers exist as a mechanism to compensate poorer
entities. For that reason, a high dependency on transfers is
considered a weak feature for Brazilian LRGs.
The primary metric for revenues robustness is the transfers ratio
(transfers to operating revenues). LRGs that report a transfer
ratio above or equal to 40% are classified as 'Weaker', while
others with a ratio below 40% are classified as 'Midrange'. Alagoas
reports a relatively high dependency on the federal government,
which drives the 'Weaker' assessment. As of 2022, transfers
represented 52.7% of operating revenues, compared to the 48.4%
average for 2018-2022.
Historically, revenue growth performed above GDP. Taking the period
of 2018-2022, Fitch sees CAGR of 11.6% in nominal terms for
operating revenues, compared to an average annual nominal GDP
growth of 9%.
Revenue Adjustability: 'Weaker'
Fitch believes Brazilian states and municipalities have little
capacity to enact revenue increases in response to downturns.
Additional taxation is not very affordable, given tax tariffs are
near the constitutional national ceiling, and a small number of
taxpayers represent a large share of tax collection, driving the
'Weaker' factor.
The most relevant tax, the ICMS, has a concentrated taxpayer base
like other Brazilian states. Fitch estimates that the top-10
largest taxpayers share of total ICMS tax collection in Alagoas
range between 30% and 40%. This creates a challenging environment
for the state to expand its own revenue collection during a
downturn.
The National Congress recently set a limit for the ICMS tax tariffs
on electricity, telecommunications and fuels. Such goods should be
treated as essential goods and tariffs are limited to around 17%,
creating further challenges for revenue adjustability.
Alagoas reacted to this measure by raising the average basic ICMS
tariff in the state to 19% from 17%. The increase in the basic
tariff, aligned with other measures to boost tax collection
efficiency, resulted in positive real growth for tax collection,
which expanded 13.4% year-to-date by October 2023. Alagoas was the
first state to perform such an adjustment, which will be followed
by others in 2024.
Alagoas is one of the poorest states in Brazil. GDP per capita was
at 0.54x of the national average in 2021, and the poverty rate was
approximately 51.7% in 2021. Low per-capita income and high poverty
create challenges for further tax increases given that a
significant share of the population spends all its income on basic
items that are essential for survival.
Expenditure Sustainability: 'Midrange'
Responsibilities for states are moderately countercyclical since
they are engaged in healthcare, education and law enforcement.
Expenditure tends to grow with revenues as a result of earmarked
revenues. States and municipalities are required to allocate a
share of revenues in health and education. This results in a
procyclical behavior in good times, as periods of high revenue
growth result in a similar behavior for expenditures. However, due
to the large weight of personal expenditures and salary rigidity,
downturns that result in lower revenues are not followed by similar
drops in expenditures. LRGs that better manage human resources and
pension systems tend to be more efficient.
Alagoas has shown moderate control over expenditure growth with
sound margins. Operating margins were down to 10.7% in 2022 from an
average of 17.8% between 2018 and 2022, reflecting significant
increases to public service wages and contracts towards suppliers.
The state is current on its payroll bill and has no significant
delays for the payment of suppliers. Operating expenditure CAGR
reached 14.2% between 2018 and 2022, slightly above the 13.3% CAGR
of operating revenues.
As of October 2023, opex increased 6.3% compared to the same period
of 2022, indicating a more prudent fiscal policy after a period of
fiscal expansion. Fitch views operating margins stabilizing around
10% in its rating case.
The ongoing incident in the city of Maceio (not rated) regarding
the possible collapse of a Braskem salt mine, has led to the
displacement of close to 40 thousand people since 2019. The process
seems to have accelerated in recent weeks. To date, Braskem has
disbursed approximately BRL 10 billion in compensations to the
affected population, with other claims under judicial process to
cover for incremental environmental and social impacts. Fitch does
not identify short-term pressures to the state's expenditures
trend, or to the level of economic activity, but will monito the
situation.
Expenditure Adjustability: 'Weaker'
Brazilian local governments suffer from a fairly rigid cost
structure, driving this factor to 'Weaker'. As per the Brazilian
constitution, there is low affordability of expenditure reduction,
especially for the payroll bill and pensions. As a result, whenever
there is an unpredictable reduction in revenues, operating
expenditure does not follow automatically.
For the State of Alagoas, personal expenditures corresponded to 51%
of total expenditure in 2022. This item has very limited
flexibility for adjustments given salary rigidity and limited
ability to manage human resources or pensions. Other operating
expenditures amounted to close to 29.9% of total expenditures in
2022 and has some flexibility for adjustments, but still limited by
constitutional mandates on health and education. Capex represented
16.5% of total expenditures in 2022 and 11.8%, on average, between
2018 and 2022.
Liabilities & Liquidity Robustness: 'Weaker'
Access to new loans is restricted as Brazilian LRGs are not allowed
to access the market through bond issuances and private banks
rarely engage with subnationals. Lenders consist mainly of public
commercial and development banks and multilateral organizations.
Often, loans are guaranteed by the federal government, especially
for foreign currency loans. For that reason, the federal government
has strict control over new lending to LRGs.
There is a moderate national framework for debt and liquidity
management since there are prudential borrowing limits and
restrictions on loan types. Under the Fiscal Responsibility Law of
2000, Brazilian LRGs must comply with indebtedness limits.
Consolidated net debt for states cannot exceed 2x, or 200%, of net
current revenue. Alagoas reported a debt ratio of 54.5% as of YE
2022. The law also sets limits for guarantees at 22% of net current
revenues. Alagoas reported a 1.54% ratio as of YE 2022.
As of December 2022, external debt totaled BRL1.8billion,
corresponding to 17.4% of direct debt. External debt is largely
owed to multilateral organizations and counts with federal
government guarantee. Fitch expects the share of external debt to
increase as the state is planning to restructured part of its debt
in exchange for a loan with a multilateral organization. While the
exposure to foreign currency risk should increase, debt maturity
profile is expected to lengthen. External debt with multilateral
entities counts with favorable debt cost and federal government
guarantee.
Debt directly owed to the federal government represented 62% of
direct debt in December 2022. Intergovernmental debt counts with
more favorable terms, such as debt service relief during periods of
economic distress. Such was the case during 2020 and early 2021.
There is moderate off-balance sheet risk stemming from the pension
system, which is a burden for most Brazilian LRGs, especially for
states given their mandate over education and public security.
Pension payments represent a significant share of operating
expenditures. According to the National Treasury report "Boletim de
Finanças dos Entes Subnacionais," Alagoas' pension deficit cost
the state's treasury 8.8 % of net current revenues in 2021.
Liabilities & Liquidity Flexibility: 'Midrange'
A framework exists for providing emergency liquidity support from
the federal government via the granting of extended maturity over
the prevalent federal debt portion. Fitch assesses the entity's
available liquidity to differentiate between 'Weaker' and
'Midrange' for liabilities and liquidity flexibility.
The Brazilian National Treasury analyzes the liquidity rate for
LRGs that borrow with federal government guarantees (Capacidade de
Pagamento or CAPAG), which is measured by the LRGs' short-term
financial obligation to net cash.
The federal government's threshold to rate this ratio 'A' is 100%.
Fitch has set a threshold of 100% for the average of the last three
years (2020-2022 year-end) and for the last year-end results
available (December 2022) below 100%, which would result in a
'Midrange' assessment for this factor.
Alagoas reported a three-year average liquidity ratio of 32.8%. As
of December 2022, the metric reached 49%, corroborating with the
'Midrange' assessment.
Debt Sustainability: 'aa category'
Fitch's rating case forward-looking scenario indicates that the
payback ratio, measured as net adjusted debt/operating balance, the
primary metric of the debt sustainability assessment, will reach an
average of 6.0x for 2025-2027, which is aligned with a 'aa'
assessment. The synthetic debt service coverage ratio, the
secondary metric, is projected at 1.8x for the 2025-2027 average,
aligned with an 'a' assessment. Fiscal debt burden is projected at
62% for the same period.
Debt sustainability improved to 'aa' from 'a' category from the
previous annual review on due to improved coverage ratios. This was
mostly due to measures to recover tax collection, while keeping
opex growth under control, which led to stronger operating balances
in the projected horizon. As the secondary metric is only one level
below the primary metric, Fitch does not apply an override to the
overall debt sustainability assessment.
DERIVATION SUMMARY
Fitch assesses Alagoas' SCP at 'bb-', reflecting a combination of a
'Weaker' risk profile and debt sustainability metrics assessed in
the 'aa' category under Fitch's rating case scenario. The SCP,
positioned at 'bb-', also reflects the peer comparison. Alagoas'
'BB' IDR benefits from a one-notch uplift from its SCP because the
federal government is Alagoas' most significant creditor.
Approximately 62% of Alagoas debt is owed directly to the federal
government, resulting in an enhanced payback ratio around 2.3x and
an enhanced DSCR above 4x. This would suggest an enhanced DS score
in the 'aaa' category.
Per criteria, the uplift from the SCP to the IDR through
intergovernmental finance support cannot lead beyond the lending
government rating (the sovereign). Therefore, with a higher SCP,
the uplift was adjusted to one notch in the current annual review
from two notches in the previous annual review.
KEY ASSUMPTIONS
Risk Profile: 'Weaker'
Revenue Robustness: 'Weaker'
Revenue Adjustability: 'Weaker'
Expenditure Sustainability: 'Midrange'
Expenditure Adjustability: 'Weaker'
Liabilities and Liquidity Robustness: 'Weaker'
Liabilities and Liquidity Flexibility: 'Midrange'
Debt sustainability: 'aa'
Support (Budget Loans): '1'
Support (Ad Hoc): 'N/A'
Asymmetric Risk: 'N/A'
Rating Cap (LT IDR): 'N/A'
Rating Cap (LT LC IDR) 'N/A'
Rating Floor: 'N/A'
Quantitative assumptions - Issuer Specific
Fitch's rating case is a "through-the-cycle" scenario, which
incorporates a combination of revenue, cost and financial risk
stresses. It is based on 2018-2022 figures and 2023-2027 projected
ratios. The key assumptions for the scenario include:
- yoy 5.8% increase in operating revenue on average in 2023-2027,
which results of a combination of growth assumptions for taxes
(linked to inflation plus spread), transfers (linked to nominal
GDP), and other operating revenues (linked to inflation). The
rating case includes a 100 bps annual negative shock to taxes and
transfers;
- yoy 7% increase in tax revenue on average in 2023-2027,
reflecting the adjustment to Alagoas average ICMS basic tariff in
2023 and projected inflation plus spread going forward;
- yoy 6% increase in operating spending on average in 2023-2027,
which reflects actual data up to October 2023 and the expectation
that opex will grow 200 bps above inflation in 2024-2027 in Fitch's
rating case;
- Net capital balance of BRL 1,986 million on average in 2023-2027,
capex is projected to sustain historical values in real terms and
to absorb excess cash generation through the projection horizon;
- Long-term debt considers new loan disbursements as shared by the
government minus projected amortization of non-intergovernmental
debt.
- Cost of debt: 4.3% on average in 2023-2027, which reflects
government projections for debt service payments. For the rating
case, Fitch applies a 50 bps shock to apparent cost of debt.
Quantitative assumptions - Sovereign Related
Figures as per Fitch's sovereign actual for [2022] and forecast for
[2023-2025], respectively (no weights and changes since the last
review are included as none of these assumptions was material to
the rating action):
Liquidity and Debt Structure
Net adjusted debt considers BRL10.4 billion of direct debt and
unrestricted cash of BRL1.9 billion as of YE 2022. Fitch estimates
that close to 17.4% of debt is external debt with federal
guarantee. Meanwhile, debt owed to the federal government
corresponds to 62% of total debt.
Issuer Profile
Alagoas is home to 3.1 million people, equal to approximately 1.5%
of the Brazilian population, with below average socioeconomic
indicators. Its revenue sources mainly consist of transfers from
the federal government in addition to taxes. The main spending
responsibilities cover education, healthcare and law enforcement.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- A negative rating action on Brazil's IDR would lead to a
corresponding rating action on the States of Alagoas given that the
uplift between Alagoas' SCP and its IDR is limited by the sovereign
rating.
- Alagoas's IDRs would be downgraded if its payback ratio, after
accounting for federal support, is projected above 5x and its
coverage ratio is projected below 2x.
- The ratings could also be downgraded if the intergovernmental
support mechanism is removed or undermined by regulatory changes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- A positive rating action on Brazil's IDR could lead to a
corresponding rating action on the States of Alagoas given that the
uplift between Alagoas' SCP and its IDR is limited by the sovereign
rating.
ESG CONSIDERATIONS
Estado de Alagoas has an ESG Relevance Score of '4' for Population
Demographics due to the negative weight the municipality's poverty
rate has on its revenue raising ability, which has a negative
impact on the credit profile, and is relevant to the rating[s] in
conjunction with other factors.
Estado de Alagoas has an ESG Relevance Score of '4' for Human
Development, Health and Education due to its Human Development
Index (calculated as a geometric average of health, education and
income) at the bottom of the ranking among Brazilian states, which
has a negative impact on the credit profile, and is relevant to the
rating[s] in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The ratings of Estado de Alagoas are supported by the Brazilian
sovereign through intergovernmental finance.
Entity/Debt Rating Prior
----------- ------ -----
Estado de Alagoas LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Natl LT AAA(bra)Affirmed AAA(bra)
Natl ST F1+(bra)Affirmed F1+(bra)
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C H I L E
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CHILE: Speeds Up Interest Rate Cuts Pace After Currency Rebounds
----------------------------------------------------------------
Bloomberg News reports that Chile's central bank sped up the pace
of its interest rate cuts with a reduction of three quarters of a
percentage point and signaled borrowing costs could fall even
faster as both inflation and the global economy improve.
Policymakers led by Rosanna Costa voted unanimously to cut
borrowing costs to 8.25%, as expected by 12 of 20 analysts in a
Bloomberg survey.
Eight others expected a second straight reduction of 50 basis
points, according to the report.
In a statement, board members wrote that closely-watched core
inflation - which excludes volatile items - is slowing faster than
previously expected and reaffirmed the headline figure will hit the
3% target in the second half of next year, the report relays.
Meanwhile, global financial conditions have evolved favorably, the
report notes.
"The convergence of inflation to the target will require further
cuts in the monetary policy rate," policymakers wrote in the
statement accompanying the decision, the report relays. "Its
magnitude and timing will take into account the evolution of the
macroeconomic scenario and its implications for the trajectory of
inflation," policymakers added.
The bank delivered a more aggressive rate cut after the peso gained
8% since its prior meeting on Oct. 26, dragging down the cost of
imports including fuels, the report notes.
Economic activity fell in October, according to a central bank
proxy for GDP, while the end of a push for a new constitution is
providing relief in the near-term, the report relays. Globally,
falling US Treasury yields are supporting asset prices, the report
adds.
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C O L O M B I A
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COLOMBIA: Delivers First Rate Cut, Cautious About Next Moves
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Bloomberg News reports that Colombia delivered its first interest
rate cut in three years, lowering borrowing costs by 25 basis
points as signs of a faltering economy overtake inflation concerns.
The central bank reduced its benchmark rate to 13%, Governor
Leonardo Villar told reporters in Bogota after the policy meeting,
according to Bloomberg.
The decision was backed by five of the bank's seven board members,
with two voting to keep the rate at 13.25%, the report relays.
Twelve of 22 economists surveyed by Bloomberg correctly forecast
the move, while the rest expected interest rates to remain
unchanged, the report relays.
Villar said policymakers are cautious about next moves, paying a
lot of attention to the behavior of consumer prices and inflation
expectations, the report discloses.
"We need to watch what's happening to the sources of this inflation
to see if it's possible to keep cutting interest rates," he added,
the report relays.
Colombia now joins Brazil, Chile, Peru, and other smaller Latin
American economies that have started easing monetary policy as
inflation slows toward target and economic activity cools, the
report adds.
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Acoprovi Reports Zero Growth in Construction
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Dominican Today reports that the Dominican Association of Home
Builders and Developers (Acoprovi) has announced a standstill in
growth for the construction sector in 2023. Engineer Annerys
Melendez, president of Acoprovi, highlighted the sector's
significant contribution to the Gross Domestic Product, with
housing construction forming a major part of this, according to
Dominican Today.
In an interview with Hector Herrera Cabral on the D'AGENDA program,
Melendez described 2023 as a challenging year, impacted by high
interest rates and inflation, the report relays. However, recent
months have seen a reduction in both, leading to some
revitalization in the sector, the report discloses. Despite a
positive growth of over 5% in October compared to the previous
year, the overall annual growth is expected to be negligible, the
report says.
Melendez noted a downturn in sales earlier in the year, despite
efforts by monetary authorities to stimulate the sector through the
release of reserve requirements and Rapid Liquidity Funds, the
report notes. The latter part of the year has seen an improvement,
reflecting broader economic trends affecting various sectors, the
report relays.
Looking forward, Melendez remains hopeful, anticipating that
interest rates might stabilize at pre-pandemic levels, beneficial
for healthy construction activity, the report discloses. She urged
all stakeholders, including banks, suppliers, and importers, to
support the construction sector by responding positively to
international decreases and assisting buyers with favorable
interest rates for home purchases, 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: Strengthens Economic Ties With EuroChamber
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Dominican Today reports that the Ministry of Industry, Commerce and
MSMEs (MICM) of the Dominican Republic and the EuroChamber of
Commerce have signed a Memorandum of Understanding, a significant
move to enhance investment, knowledge exchange, and commercial ties
between the Dominican Republic and the European Union's private
sector.
The agreement, signed by MICM head Víctor Bisonó and EuroChamber
President Jean Marco Pou, aims to bolster bilateral economic
relations, according to Dominican Today. Bisono emphasized the
strategic importance of the European market for Dominican products,
citing the $4.8 billion trade exchange in 2022, with Dominican
exports at $1.1 billion and imports at $3.7 billion, the report
notes. Key exports include cocoa, bananas, rum, cigarettes, and
medical instruments, the report relays.
The Dominican Republic, noted by Bisono as the Caribbean's leading
destination for European foreign direct investment, stands out for
its political and economic stability, dynamism, and international
presence, the report discloses. This agreement represents an
opportunity to identify and overcome trade barriers, thereby
streamlining exchange processes, the report notes.
Pou highlighted the fundamental nature of this alliance,
underscoring the robust and growing export-import relationship
between the regions, the report relays. The agreement is viewed as
a milestone in further developing these commercial ties, the report
relays.
The partnership between the MICM and the EuroChamber aims to
promote bilateral economic relations, supported by various
initiatives, actions, and projects, the report notes. It is
expected to facilitate the marketing of goods and services and
identify business opportunities, particularly within the framework
of the Economic Partnership Agreement between CARIFORO and the
European Union, the report discloses.
The signing was witnessed by key figures from both sides, including
EU Ambassador Katja Afheld and Luis Aranque, head of the Commercial
Section of the EU Delegation in the Dominican Republic, the report
says. This collaboration marks a significant step towards
strengthening the Dominican Republic's position in the global
economic landscape, 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.
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E C U A D O R
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INTERNATIONAL AIRPORT: Fitch Hikes Rating to 'B', Outlook Positive
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Fitch Ratings has upgraded the long-term rating assigned to
International Airport Finance S.A.'s USD400 million senior secured
notes to 'B' from 'B-'. The Rating Outlook is Positive. The
issuance was made in connection with Corporacion Quiport S.A.
(Quiport), the concessionaire of Quito's Mariscal Sucre
International Airport.
RATING RATIONALE
Quiport's upgrade reflects the airport's operational and financial
performance significantly above Fitch's projections, which is now
commensurate with a higher rating, along with the expectation that
it will be sustained in the long term. The Positive Outlook
indicates that if traffic and revenue perform in line with Fitch's
updated projections, the rating could be further upgraded.
Fitch believes that a 12-month debt service reserve account (DSRA)
would provide sufficient liquidity to preserve debt service if
short-lived capital controls are imposed, supporting a rating one
notch above Ecuador's 'B' Country Ceiling. Convertibility risk is
largely mitigated by Ecuador's dollarized economy. However, the
transaction is still exposed to transfer risk, as Fitch expects the
risk of imposing capital controls would be higher for lower-rated
sovereigns, especially those at low sub-investment grade like
Ecuador.
The rating reflects Quiport's strategic but somewhat modest traffic
base, comprised mostly of origin and destination (O&D) and
leisure-oriented passenger traffic, a history of moderate
volatility, and some competition from Guayaquil's Jose Joaquin de
Olmedo International Airport, the country's second largest airport.
The rating also reflects a tariff setting mechanism that allows for
indexation according to increases in U.S. and Ecuadorian consumer
prices. The rated debt is fixed-rate, fully amortizing and includes
additional liquidity in the form of an offshore DSRA and a stand-by
letter of credit (SBLC), enough to cover 12 months of debt
service.
Under Fitch's Rating Case, minimum and average (2024-2032) debt
service coverage ratios (DSCRs) are 1.5x (in 2024) and 1.7x,
respectively. Quiport's ability to service its debt under severe
traffic shocks supports a rating above Ecuador's 'CCC+' Long-Term
Foreign Currency IDR. Metrics are strong for the assigned rating
according to Fitch's applicable criteria. However, the rating is
constrained one notch above Ecuador's country ceiling.
KEY RATING DRIVERS
O&D, Leisure-Oriented Airport [Revenue Risk: Volume - Midrange]:
The airport is located in Quito's metropolitan region, which
accounts for 16% of the country's population (2.8 million people),
and had a smaller enplanement base of 2.5 million departing
passengers (pax) in 2019. The airport's traffic base is mostly O&D
(approximately 99% of total), with leisure-oriented traffic
exceeding business traffic. Traffic volatility is moderate with the
largest historic peak-to-trough of 12.9% occurring between 2014 and
2016, excluding 2020. Carrier concentration in terms of revenue is
low. There is some competition from Ecuador's second largest
airport, Guayaquil's Jose Joaquin de Olmedo International Airport.
Dual Till Regulation [Revenue Risk: Price - Midrange]: Regulated
revenue tariffs are indexed according to inflation in Ecuador and
the U.S., and commercial revenues have no tariff-setting
restrictions.
Modern Infrastructure [Infrastructure Development & Renewal:
Stronger]: The airport is modern and well-maintained and has
relatively detailed short- and long-term expansion plans. Future
expansions are to be funded with internal cash flow generation,
while the associated expenditures are smoothed through a rolling
capex reserve. Any requested changes to the airport's Master Capex
Plan as a result of material deviations to traffic projections must
be approved by the grantor.
The Master Capex Plan defines the works and milestones to be
reached, but not specific investment amounts, which must be
estimated by the airport. The debt structure also includes an
offshore capex reserve account or SLBC covering staggered
percentages of the next 18 months of capex needs.
Fully Amortizing Debt Structure with Strong Liquidity [Debt
Structure: Stronger]: The senior secured debt is composed of a
single fixed-rate U.S. dollar-denominated tranche with a fully
amortizing repayment profile. Structural features include an
offshore 12-month DSRA, which limits transfer and convertibility
risk and a capex reserve account. The structure has robust debt
incurrence and dividend distribution tests.
Financial Profile
Under Fitch's rating case, minimum and average DSCR is 1.5x and
1.7x, respectively. DSCRs are commensurate with a higher rating
according to Fitch's applicable criteria. However, the rating is
constrained one notch above Ecuador's Country Ceiling.
PEER GROUP
Quiport's closest peer is ACI Airports SudAmerica, S.A. (ACI;
BB+/Stable), the indirect sponsor of Puerta del Sur S.A., who holds
the concession for Montevideo's Carrasco International Airport in
Uruguay. Both airports are small but represent the main
international gateways to their respective countries. ACI's metrics
are strong for the assigned rating; however, its rating is
constrained because projected DSCR in 2024 is below 1.0x. Quiport's
metrics are also consistent with a higher rating, but constrained
one notch above Ecuador's Country Ceiling.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Annual traffic growth consistently below 3%;
- Deterioration of the credit profile of Ecuador's Sovereign and
Country Ceiling, particularly the risk of imposing capital controls
affecting the ability to transfer currency.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Annual traffic growth consistently above 4%;
- Actual DSCRs above 1.3x on a sustained basis.
CREDIT UPDATE
Total enplanements as of September 2023 reached 2.0 million pax,
which represented a recovery of 106% of 2019 levels. This recovery
was well above Fitch's base and rating cases' traffic estimates of
97% and 90% recovery, respectively. Domestic traffic continued
showing a faster recovery than international traffic, with an
average recovery of 109% versus 103%. According to Quiport's
management, the better than expected performance is due to a
significant increase in the capacity offered by some airlines, as
well as the opening of new direct routes.
The last tariff adjustment was made in February 2023 and considered
the U.S. and Ecuador inflation observed in 2022. The next update on
usage tariff fees for domestic and international passengers is
expected to be made in February 2024, in line with inflation. As of
September 2023, operating revenues reached USD143 million and were
above Fitch's base case expectations of USD127 million, as a result
of a greater recovery in traffic. In the same period, operating and
capital expenditures (capex) reached USD49 million and in line with
Fitch's estimate of USD50 million for the same period.
The company incurred in higher capex than expected which, according
to the concessionaire, was mainly due to works that were executed
ahead during the year, but with the expectation is that the total
annual expense will be in line with the issuer's budget for 2023.
As a result of higher capex, DSCR for 2023 in a proforma basis is
anticipated to close at around 2.1x, above Fitch's base case
expectation of 1.7x. The DSRA is currently fully funded with a
balance of USD60 million in the form of an SBLC. Quiport continues
undergoing legal disputes related to the audit of the concession by
the Comptroller General of Ecuador, and the recognition of certain
tax exemptions by the Servicio de Rentas Internas.
Quiport is currently pursuing the corresponding legal actions and
the amount of potential liabilities is not known at the moment by
Fitch. Nonetheless, certain assumptions have been made in Fitch's
Rating Case to account for potential negative outcomes for the
concession.
FINANCIAL ANALYSIS
Fitch base case assumes actual performance as of September 2023 for
the entire year. From 2024 onwards, Fitch assumed a compounded
annual growth rate (CAGR) of 3.6%. The budget of operating and
capex were stressed by 3.0%. U.S. inflation was assumed at 2.7% in
2024, 2.5% in 2025 and 2.0% from 2026 onwards, while Ecuador
inflation was forecasted at 1.6% in 2024, 1.3% in 2025 and 2.0%
from 2026 onwards. Under this scenario, minimum and average DSCR
(2024-2032) are 1.6x and 1.8x, respectively.
Fitch's rating case also assumes that 2023 performance as of
September will be maintained for the remainder of the year and,
from 2025 onwards, a CAGR of 3.4% was assumed. U.S. and Ecuador
inflation are assumed the same as in the base case, while the
budget of operating and capex were stressed by 5.0%. Additional
management costs of USD100 million in litigation settlements were
considered, amortized over 10 yearly payments of USD10 million from
2024 onwards, and also stressed at 5%. Under this scenario, minimum
and average DSCR (2024-2032) are 1.5x and 1.7x, respectively.
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
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International Airport
Finance S.A.
International Airport
Finance S.A./Airport
Revenues - First
Lien/1 LT LT B Upgrade B-
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M E X I C O
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BRASKEM IDESA: Fitch Affirms 'B+' LongTerm IDR, Outlook Negative
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Fitch Ratings has affirmed Braskem Idesa, S. A. P. I.'s Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B+'.
The ratings have been removed from Rating Watch Negative and have
been assigned a Negative Outlook. In addition, Fitch has affirmed
Braskem Idesa's senior secured bonds at 'B+'/'RR4'.
The ratings were removed from RWN given Braskem Idesa's has secured
funding for the new ethane import terminal.
The 'B+' rating reflects a weak outlook for polyethylene (PE) and a
slower-than-expected market recovery path. Over the past several
months, PE demand in North America has experienced a 10% decline,
while new supply has been ramping up globally, which impacted and
will continue to impact EBITDA and liquidity in the next 12-24
months, resulting in Negative Outlook.
KEY RATING DRIVERS
Importance of Ethane Terminal: Braskem Idesa's Negative Watch has
been removed following the company's securing of funding for the
new ethane terminal, and its amended completion time line for the
project to 1Q25 from 3Q25. The terminal is currently approximately
50% complete. The ethane terminal is critical to Braskem Idesa's
long-term viability and competitiveness. The company faces
execution risk through 2024 as it continues to construct the ethane
import terminal after securing financing for the project.
Spreads Remain Under Pressure: PE prices remained weaker than
expected in 2023, and spreads have been lower, despite a decrease
in ethane prices. Fitch expects that the cycle will turn in 2H24,
resulting in less pressure for Braskem Idesa. Fitch's base case
reflects Braskem Idesa's PE prices of USD1,018/ton in 2023,
USD1,057/ton in 2024 and USD1,258/ton in 2025 and spreads of
USD709/ton in 2023, USD754/ton in 2024 and USD907/ton in 2025. As a
second-quartile producer on the global cost curve, Braskem Idesa
will be able to quickly benefit from improved pricing conditions.
High Near-term Leverage; Weak Coverage: Fitch expects PE prices to
remain at lower levels than previously expected in 2023 and 2024.
In turn, this will cause Braskem Idesa's net leverage spike in
those years at 20x and 9.8x, respectively. However, net leverage is
expected to revert back above the downgrade sensitives as the cycle
recovers.
Fitch forecasts the company's EBITDA for 2023 and 2024 to be
approximately USD92 million and USD221 million, respectively.
EBITDA interest coverage will be weak at 0.6x in 2023 and 1.4x in
2024. Fitch expects a modest recovery in 2025 with net leverage
expected to be 6.6x in 2025 and 6.3x in 2026, while EBITDA to
interest expense is estimated to be 1.9x on both years. The
elevated leverage is offset by the company's long-dated debt
maturity profile.
Business Risk: Braskem Idesa is vulnerable to PE price swings,
spikes in raw material costs, as well as dependence on a single
product and single site operations. The company is exposed to
operational risk from Pemex, which has an agreement to supply a
minimum volume of 30,000 barrels per day (kbpd) of ethane until the
earlier of February 2025, or the start-up of the ethane import
terminal. The date can be extended if there are delays in obtaining
terminal licenses and permits and gives Braskem Idesa preemptive
rights to acquire all Pemex's ethane not used for its own
production through 2045.
The recent expansion of the Fast Track increased capacity to
35kpbd, or 53% of capacity. The Fast Track expansion helps secure
ethane supply until the terminal is built. Fitch assumes operating
rates of 76% in 2023, 88% in 2024 and 87% in 2025.
Standalone Rating Approach: Fitch considers Braskem Idesa's ratings
and those of its majority shareholder Braskem S.A. (75% equity
interest) to be independent due to Braskem S.A.'s lack of strong
legal incentive to support Braskem Idesa, as there are no parent
guarantees or cross default provisions on Braskem Idesa's debt. In
addition, Braskem Idesa's financial contribution in the form of
dividends paid to the parent has been low and operational synergies
between the companies are weak.
DERIVATION SUMMARY
Fitch's calculation of Braskem Idesa's 3Q23 LTM net leverage ratio
was well above that of its peers at 28.6x, compared with Braskem at
8.0x, Orbia at 3.1x, Cydsa at 2.7x and Dow's at 1.6x. Historically,
Braskem Idesa benefited from access to a competitive cost
feedstock, with its EBITDA margin well positioned relative to other
PE producers such as Braskem S.A. (BBB-/Stable) and more
diversified players such as Dow Chemical Company (BBB+/Stable) in
terms of operating margins.
Braskem Idesa has a higher exposure to supply/contract risks
compared with its peers. The company also has a weaker position in
terms of exposure to a single asset and product, as well as limited
geographic diversification.
KEY ASSUMPTIONS
- Pemex provides 30kbpd in 2023, 30kbpd in 2024, 16kbpd in 2025 and
15kbpd thereafter;
- Imported ethane of 20kpbd in 2023, 27kpbd in 2024, via the Fast
Track; 37kbpd in 2025 and 47kbpd in 2026 via the ethane import
terminal;
- Operating rates of 76% in 2023, 88% in 2024 and 87% in 2025;
- Braskem Idesa PE prices of USD1,018/ton in 2023, USD1,057/ton in
2024 and USD1,258/ton in 2025;
- Average ethane purchase costs of USD309/ton in 2023, USD304/ton
in 2024 and USD351/ton in 2025;
- Braskem Idesa polyethylene-ethane spreads of USD709/ton in 2023,
USD754/ton in 2024 and USD907/ton in 2025;
- Braskem Idesa earns an 10% service margin over the industry
reference PE price;
- The ethane import terminal begins operations in 2025 and operates
at a rate of 45kbpd;
- MXN/USD exchange rates of 18.00 in 2023, 18.20 in 2024 and 17.00
thereafter;
- Waiver on term loans granted through 2024.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- An improvement in liquidity and interest coverage;
- A recovery in PE prices and the PE-ethane spread.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Failure to obtain a waiver on the term loan's maintenance
covenant;
- A cash balance below USD200 million;
- EBITDA to interest coverage below 1.5x in consecutive years;
- Net debt to EBITDA sustainably above 6.0x.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Profile: As of Sept. 30, 2023, Braskem Idesa reported
total debt of USD 2.1 billion and net debt of USD1.9 billion. The
company's maturities are well spread with only term loan
amortizations of US23 million each due in 2024 and 2025 and USD83
million in 2026. The majority of the company's debt is a USD900
million bond due 2029 and a USD1.2 billion bond due 2032.
ISSUER PROFILE
Braskem Idesa, S.A.P.I. is a polyethylene producer with operations
in the city of Coatzacoalcos, Mexico. Its annual production is 1.05
million tons of high- and low-density polyethylene. It began
operations in early 2016.
ESG CONSIDERATIONS
Braskem Idesa SAPI has an ESG Relevance Score of '4' for Governance
Structure due to shareholder concentration, which has a negative
impact on the credit profile, and is relevant to the rating[s] in
conjunction with other factors.
Braskem Idesa SAPI has an ESG Relevance Score of '4' for Financial
Transparency due to lack of footnotes and adequate disclosures,
which has a negative impact on the credit profile, and is relevant
to the rating[s] in conjunction with other factors.
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
----------- ------ -------- -----
Braskem Idesa SAPI LT IDR B+ Affirmed B+
LC LT IDR B+ Affirmed B+
senior secured LT B+ Affirmed RR4 B+
FINANCIERA INDEPENDENCIA: Fitch Affirms 'B+' IDRs, Outlook Stable
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Fitch Ratings has affirmed Financiera Independencia, S.A.B. de
C.V., SOFOM, E.N.R.'s (Findep) Long-Term Local and Foreign Currency
Issuer Default Ratings (IDRs) at 'B+'; Short-Term Local and Foreign
Currency IDRs at 'B'; senior unsecured Long-Term debt rating at
'B+'/'RR4'; Long-Term National Ratings at 'BBB(mex)'; and
Short-Term National Rating at 'F3(mex)'.
Fitch has also affirmed Apoyo Economico Familiar S. A. de C. V.,
Sociedad Financiera de Objeto Multiple, E. N. R.'s (AEF) national
Long-Term and Short-Term ratings at 'BBB(mex)' and 'F3(mex)',
respectively. Fitch has removed all ratings of Findep and AEF from
Rating Watch Negative (RWN) and assigned Stable Rating Outlooks for
the Long-Term IDRs and National Long-Term Ratings.
Fitch has withdrawn the rating of Findep's 8% Senior Notes due to
their cash redemption.
KEY RATING DRIVERS
The rating affirmation and removal from RWN reflect that the
short-term maturity concentration during the first seven months of
2024 has been addressed with the formalization of a MXN1,400
million long-term, secured credit line with HSBC Mexico on Nov. 24,
2023, and the full cash payment of the 8% July 2024 Senior Notes on
Dec. 15, 2023.
Funding, Liquidity and Coverage Remain a Constraint: Findep's IDRs
are based on its standalone credit profile (SCP) and below the
implied SCP due to the company's improving, but not yet
fully-stabilized funding, liquidity and coverage profile (weakest
link). Fitch has maintained the Funding, Liquidity and Coverage
score at 'b' with high importance and modified the trend to stable
from negative. The demonstration of a proactive and effective
management of future debt maturities and short-term liquidity
coverage could moderate the impact of Funding, Liquidity and
Coverage on Fitch's overall view of the company's credit profile
and be positive for the ratings.
As of September 2023, the metric of liquid assets plus undrawn
committed facilities to short-term funding was 0.4x. Fitch
estimates short-term liquidity coverage after the senior notes
payment of around 0.9x for 2024 (considering the debt payments from
December 2023 to November 2024, a cash level of MXN761 million and
deducting the restricted cash similar to the one of September
2023). Fitch also considers that Findep's unsecured funding sources
will decrease as a proportion of total debt with the bond payment,
from 58.2% as of September 2023 to a level closer to 53%
(considering the remaining unsecured senior notes and the amount of
the unsecured credit line of Nafin as of November 2023).
Sustained Sound Profitability: Fitch has revised the score of
Earnings and Profitability factor to 'bb+' from 'bb' with stable
trend to reflect Findep's sustained sound profitability despite its
high impairment charges and increased cash accumulation. As of
September 2023, pre-tax income to average assets was 8.4% (December
2022: 7.9%). Fitch expects the entity to maintain high
profitability considering its strategy to prioritize loan
collections, increase efficiency and control asset deterioration.
Fitch has also revised Findep's risk profile trend to Stable from
Negative considering the eased liquidity risk faced by the entity.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Failure to proactively and effectively manage future debt
maturities as evidenced by a ratio of cash and undrawn committed
credit facilities below 0.5x in a sustained manner, in conjunction
with a significant reduction of unsecured debt portion consistently
below 40% of total debt;
- A relevant deterioration of Findep's business prospects and
diversification, which could result in a change of Fitch's
assessment of its business profile and Sector Risk Operating
Environment (SROE).
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Demonstrated proactive and effective management of future debt
maturities, including a consistent cash and undrawn committed
credit facilities metric of 0.5x of the short-term debt, sustained
cash generation and unsecured debt above 40% of total debt;
- Maintenance or improvement in market position, risk appetite and
other financial profile metrics;
Financial figures are in accordance with the CNBV criteria. 3Q23
and 4Q22 figures include recent accounting changes in the process
to converge to International Financial Reporting Standards (IFRS).
Prior years did not include this change and the agency believes
they are not directly comparable.
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
Debt Ratings: Findep's global debt issuance rating is in line with
its respective corporate rating level, as the debt is senior
unsecured. The 'RR4' recovery rating assigned to Findep's senior
unsecured issuance reflects average recovery prospects.
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
The senior unsecured debt rating will mirror any changes to
Findep's IDRs, or it could be downgraded below Findep's IDRs if the
level of unencumbered assets substantially deteriorates,
subordinating bondholders to other debt.
SUBSIDIARY AND AFFILIATE RATINGS: KEY RATING DRIVERS
Subsidiary Ratings: AEF's national ratings are equalized to
Findep's, driven by Fitch's opinion that the high integration and
large relative size of the subsidiary support a group ratings
approach. As of September 2023, AEF accounted for close to 28% of
Findep´s consolidated assets after eliminations, plays a relevant
role to the consolidated operation, and received the majority of
its funding from related parties.
SUBSIDIARY AND AFFILIATE RATINGS: RATING SENSITIVITIES
AEF's national ratings will move in tandem with Findep's national
ratings, consistent with the group ratings approach.
ADJUSTMENTS
The Standalone Credit Profile has been assigned below the implied
Standalone Credit Profile due to the following adjustment reason:
Weakest Link - Funding, Liquidity & Coverage (negative).
The Business Profile score has been assigned below the implied
score due to the following adjustment reason: Business model
(negative).
The Asset Quality score has been assigned below the implied score
due to the following adjustment reason: Loan charge-offs,
depreciation or impairment policy (negative).
The Earnings and Profitability score has been assigned below the
implied score due to the following adjustment reason: Revenue
diversification (negative).
The Capitalization and Leverage score has been assigned below the
implied score due to the following adjustment reason: Risk profile
and business model (negative).
The Funding, Liquidity and Coverage score has been assigned below
the implied score due to the following adjustment reason: Liquidity
coverage (negative).
SUMMARY OF FINANCIAL ADJUSTMENTS
Pre-paid expenses and other deferred assets were reclassified as
intangibles and deducted from equity to reflect their low loss
absorption capacity.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
AEF's ratings are linked to Financiera Independencia's ratings.
ESG CONSIDERATIONS
Findep has an ESG Relevance Score of '4' for Management Strategy
due to risks associated with the company's continued execution of
its strategy to reduce liquidity risk in the medium term. These
execution risks have a negative impact on the credit profile and
are relevant to the rating in conjunction with other factors.
Findep has an ESG Relevance Score of '4' for Customer Welfare —
Fair Messaging, Privacy & Data Security as its business model has
high lending rates to unbanked, lower income segments of the
population, which exposes Findep to relatively high regulatory,
legal and reputational risks. This has a negative impact on the
credit profile and is relevant to the rating in conjunction with
other factors.
Findep has an ESG Relevance Score of '4' for Exposure to Social
Impacts given that its business model (individual loans to
low-income segments) is exposed to shifts of consumer or social
preferences or to measures that the government could take to
increase financial inclusion. This has a negative impact on the
credit profile and is relevant to the rating 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
----------- ------ -------- -----
Financiera
Independencia,
S.A.B. de C.V.,
SOFOM, E.N.R. LT IDR B+ Affirmed B+
ST IDR B Affirmed B
LC LT IDR B+ Affirmed B+
LC ST IDR B Affirmed B
Natl LT BBB(mex)Affirmed BBB(mex)
Natl ST F3(mex) Affirmed F3(mex)
senior
unsecured LT WD Withdrawn B+
senior
unsecured LT B+ Affirmed RR4 B+
Apoyo Economico
Familiar S. A.
de C. V.,
Sociedad
Financiera de
Objeto Multiple,
E. N. R. Natl LT BBB(mex)Affirmed BBB(mex)
Natl ST F3(mex) Affirmed F3(mex)
PETROLEOS MEXICANOS: Fitch Affirms B+ LongTerm IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Petroleos Mexicanos' (Pemex) Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B+'.
Fitch has also removed the ratings from Rating Watch Negative
(RWN), and assigned a Stable Rating Outlook. Additionally, Fitch
has affirmed the rating of approximately USD80 billion of Pemex's
international notes outstanding at 'B+'/'RR4'.
The removal from RWN reflects the commitment to inject USD8.5
billion of capital into the company, after the inclusion and
approval of Pemex in the federal budget, to address a portion of
its 2024 maturities.
Pemex's ratings are four notches below the sovereign, which is a
variation of Fitch's GRE criteria, explained by Fitch's view that
Pemex remains financially vulnerable and its ESG track record
further impairs its ability to raise capital.
KEY RATING DRIVERS
Government Support: The inclusion of Pemex in the annual budget,
for the first time, is credit positive, and resolved Fitch's
short-term concerns regarding the government's ability and
willingness to materially support Pemex. The approved budget
included USD8.5 billion of support for Pemex in 2024, covering most
of its USD10.9 billion of debt maturities in 2024, with the balance
being covered with reduction in the DUC and expected to be
refinanced. Additional support is needed to address the company's
USD31 billion of short-term debt reported in 3Q23.
Fitch believes the inclusion of Pemex in the annual budget will
make further support easier. The presidential election in 2024
provides some uncertainty regarding what support will be provided
for Pemex in 2025 and thereafter. Over the rating horizon, Fitch
estimates Pemex will need to address a USD30 billion cash shortfall
between 2024 and 2027, averaging USD 7.0 billion per annum, in
addition to USD20 billion in maturities between 2025 and 2027.
Linkage to Sovereign Rating: Pemex's ratings are four notches below
the sovereign. Fitch applies a variation to its GRE criteria in
order to assign a rating with a four-notch differential. The
variation is explained by Fitch's view that Pemex is in financial
distress, and its ESG track record impairs its ability to raise
capital. The company reported USD105 billion of debt as of 3Q23,
USD78 billion in PPE, and negative equity book value of USD90
billion. Supporting Pemex to the extent that is needed given the
high level of debt and the amount of investment needed to improve
its capital structure and operating assets will be increasingly
material to the government's finances.
Cash flow Generation: Fitch estimates that Pemex's FFO margins will
average 4.0% compared with an average EBITDA margin of 25%
throughout the rating horizon, which include the reduction in the
DUC, explained by the high cost of production, with an estimated
full-cycle cost of USD64.04 per boe in 2022, where interest expense
per barrel was USD8.65, and government take was USD17.35 per boe.
Pemex will need additional support from the government to cover its
capex budget, which is estimated to be USD13 billion. In 2023,
Pemex had multiple fires at critical assets, and it remains
vulnerable to any disruptions in its operations that can further
stress the company's liquidity.
Operational Track Record: Fitch believes the multiple fires at
critical assets and infrastructure that resulted in numerous
injuries and fatalities to its employees reflect concerns
pertaining to the management of its operations and/or the lack of
maintenance capital expenditures in its core assets and
infrastructure. High debt service and the need for the government
to finance negative cash flows have been key reasons for under
investment.
ESG- GHG Emissions & Air Quality; ESG - Waste & Hazardous Materials
Management and Ecological Impacts: Pemex has experienced multiple
fires at its operating facilities and infrastructure that are
expected to have residual impacts on the local communities and
environment. Fitch is concerned that the management of its
operations and/or the lack of maintenance capital expenditures in
its core assets and infrastructure will further challenge its
financial profile. This was a key consideration in the 'B+' rating,
as Pemex's ESG track record can further impair its ability to raise
capital.
ESG - Employee Wellbeing: The multiple fires that have occurred in
2023 have resulted in numerous injuries and fatalities of its
employees. Fitch is concerned regarding the management of its
operations, and regulatory oversight to ensure Pemex and other
operators in the country are meeting industry standards pertaining
to safety and employee wellbeing.
ESG - Management Strategy: The confluence of the company's ESG
track record and its financial distress further complicates
management's ability to execute on its strategy, which is
exacerbated by the company's challenging debt maturity profile and
limited accessibility of capital.
DERIVATION SUMMARY
Pemex's link to the sovereign compares unfavorably with peers
Petroleos Brasileiro S.A. (Petrobras; BB/Stable), Ecopetrol S.A.
(BB+/Stable), Empresa Nacional del Petroleo (ENAP; A-/Stable) and
Petroleos del Peru - Petroperu S.A. (BB+/Negative). All of Pemex's
regional peers have strong linkages to their sovereigns due to
strong government support. Fitch believes governments in the
region, except for Mexico, implemented different measures to ensure
the SCPs of their respective national oil and gas companies remain
viable in the long term.
Fitch views Pemex's SCP as commensurate with the 'ccc-' level,
which is 10 notches below Petrobras' and Ecopetrol's SCPs of 'bbb'.
The differences are primarily due to Pemex's weaker capital
structure and increasing debt. Pemex's SCP reflects the company's
large transfers to Mexico's federal government, large and
increasing financial debt balance when compared with 1P reserves
and elevated EBITDA-adjusted leverage. Comparatively, Ecopetrol and
Petrobras significantly strengthened their capital structures and
maintained stable operating profiles.
KEY ASSUMPTIONS
- Average West Texas Intermediate crude prices of USD78/bbl in
2023, USD75/bbl in 2024, USD65bbl in 2025, USD60bbl in 2026, and
USD57bbl for the mid-cycle;
- Henry Hub prices of USD2.87/mcf in 2023, USD3.25/mcf in 2024,
USD3.0/mcf in 2025, USD2.75/mcf in 2026 and thereafter;
- Oil Production stays flat at 1.8mmboed;
- Annual capex average of USD10 billion;
- Government take to average 60% of EBITDA per annum;
- All short-term debt and debt maturities are refinanced at 11%;
- PEMEX will receive necessary support from the government to
ensure adequate liquidity and debt service payments;
- Refined product volumes growth moves aligned with Fitch's Real
GDP growth forecasts of 2.4% in 2023, 1.8% in 2024, and 2.0%
thereafter.
RECOVERY ANALYSIS
Pemex receives preferential treatment under Mexican bankruptcy law.
The company cannot technically default under the current code.
Nonetheless, the company has USD105 billion in debt, of which USD80
billion is in international bonds, which translates into an implied
recovery using the liquidation approach of 43%. The company assets
are predominately in Mexico, with the exception its Deer Park
refinery in Texas, and its debt is senior unsecured. Given the
government ownership and strategic importance of these assets, it
is highly unlikely that creditors will have claims to their assets.
Further, on a going concern basis, the company's equity value is
negative and its going concern EBITDA does not properly reflect
cash flow available for debt service, given the high government
take, which makes FFO negative.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An upgrade of Mexico's sovereign ratings;
- An irrevocable guarantee from Mexico's government to sustainably
cover more than 75% of Pemex's debt;
- A material capitalization, coupled with further reduction of
taxes, with a business plan that results in neutral to positive FCF
through the cycle, while implementing sustainable upstream capex
that is sufficient to replace 100% of reserves and stabilize
production profitably.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A downgrade of Mexico's sovereign rating;
- Weakened ability and/or willingness of the government to
meaningfully support Pemex;
- Weakened social and political implications or desire to support
Pemex;
- Inaccessibility of financing and/or material increase in interest
expense, stressing FFO to negative;
- Cash balance falling below USD3.0 billion on sustained basis;
- A material accumulation of supplier liabilities.
LIQUIDITY AND DEBT STRUCTURE
Stressed Liquidity: Pemex's liquidity position remains weak as a
result of negative FCF, which resulted in a relatively low cash
position and reduced availability of its lines of credit. Pemex
reported total cash and equivalents of around MXN496 billion as of
3Q23. The company reported MXN1,865 billion of total debt with
MXN553 million in short-term debt.
ISSUER PROFILE
Pemex, Mexico's state oil and gas company, is the nation's largest
company and ranks among the world's largest vertically integrated
petroleum enterprises.
ESG CONSIDERATIONS
Fitch has maintained Pemex's ESG Relevance Score for GHG Emissions
& Air Quality and Waste & Hazardous Materials Management and
Ecological Impacts at '5' due to the numerous fires at its
operating facilities that are expected to increase its carbon
footprint and risks to polluting the environment and its impact on
local communities. This has a negative impact on the credit profile
and is highly relevant to Pemex's rating.
Fitch maintained Pemex's Employee Wellbeing ESG Relevance Score at
'5' due to the multiple fires that have occurred in 2023 that have
resulted in numerous reported injuries and fatalities of its
employees. Fitch is concerned regarding the management of its
operations, and the regulatory oversight to ensure Pemex and other
operators in the country are meeting industry standards pertaining
to safety and employee wellbeing. This has a negative impact on the
credit profile and is highly relevant to Pemex's rating.
Fitch maintains Pemex's Management Strategy ESG Relevance Score at
'5' due to the confluence of the company's ESG track record and its
financial distress, which is expected to further complicate
management's ability to execute on its strategy. This has a
negative impact on the credit profile and is relevant to the
ratings in conjunction with other factors.
Pemex has an ESG Relevance Score of '4' for Governance Structure,
resulting from its nature as a majority government-owned entity and
the inherent governance risk that arises with a dominant state
shareholder, which has a negative impact on the credit profile and
is relevant to the 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
----------- ------ -------- -----
Petroleos Mexicanos
(PEMEX) LT IDR B+ Affirmed B+
LC LT IDR B+ Affirmed B+
senior unsecured LT B+ Affirmed RR4 B+
=====================================
T R I N I D A D A N D T O B A G O
=====================================
MASSY: Initiates 'Disciplinary Process' After Claims By Sr. Exec.
-----------------------------------------------------------------
RJR News reports that Trinidad based conglomerate Massy says it has
started a "disciplinary process" to review the conduct of a senior
executive during the company's annual general meeting.
During the meeting with shareholders, Executive Vice President
responsible for Business Integrity Angelique Parisot Potter claimed
"bizarre rituals" were taking place in the executive leadership
training, according to RJR News.
She spoke to a 13-page document, including audio evidence, the
report notes.
In a statement to the Jamaica Stock Exchange published, Massy said
an internal investigation has started, the report relays.
Mrs. Parisot Potter has been sent on paid administrative leave,
effective December 20 to January 12, or until the investigation is
complete, the report notes.
While the board categorically denied the accusations, the Guardian
newspaper in Trinidad and Tobago is reporting that Massy said it
has launched an independent probe to look into each of her
allegations, the report relays.
Her claims resulted in a one per cent dip in the price of Massy
shares, the report adds.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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