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/raid1/www/Hosts/bankrupt/TCRLA_Public/240201.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 Thursday, February 1, 2024, Vol. 25, No. 24 Headlines B A H A M A S FTX GROUP: Alameda Research Drops Lawsuit Against Grayscale FTX GROUP: Clashes With IRS Over Tax Fight Burden FTX GROUP: Ex-Customers Want Fair Cryptocurrency Boom Repayment FTX GROUP: Parents of Bankman-Fried Want Bankruptcy Suit Tossed B E R M U D A TEEKAY TANKERS: Egan-Jones Hikes Sr. Unsecured Ratings to BB+ B R A Z I L BRAZIL: Rice Prices Show Signs of Decrease After 40% Yearly Rise EMBRAER SA: Moody's Upgrades CFR to Ba1, Outlook Remains Stable HIDROVIAS DO BRASIL: Moody's Affirms 'B1' CFR, Outlook Stable LIGHT SA: BTG, Farallon Weigh Lending to Troubled Utility D O M I N I C A N R E P U B L I C [*] DOMINICAN REPUBLIC: Cap Cana Reveals $500MM Investment Project J A M A I C A JAMAICA: Household Equipment & Maintenance Cost Rose 10.5% in Dec. - - - - - ============= B A H A M A S ============= FTX GROUP: Alameda Research Drops Lawsuit Against Grayscale ----------------------------------------------------------- Pritam Biswas at Reuters reports that bankrupt cryptocurrency exchange FTX's affiliate Alameda Research has dropped a lawsuit against Grayscale Investments that had accused the digital asset manager of "enriching itself at shareholders' expense", a court filing. Alameda, which filed the lawsuit in a Delaware court in March last year, had also accused Grayscale of charging high fees and refusing to allow investors to redeem their shares from its two crypto-focused trusts, the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust, according to Reuters. Grayscale CEO Michael Sonnenshein was named in the lawsuit along with parent company Digital Currency Group (DCG) and its CEO, Barry Silbert, the report notes. The report relays that the court filing showed that accusations against all parties in the lawsuit were dismissed. "Alameda's voluntary dismissal underscores Grayscale's position that this legal action was entirely without merit," a Grayscale spokesperson said. DCG said it had "no comment" on the matter. GBTC began trading as an exchange-traded fund earlier in the month on NYSE Arca after the U.S. Securities and Exchange Commission approved to convert its existing Grayscale Bitcoin Trust into an ETF, the report notes. Since it went bankrupt in November 2022, FTX has been trying to recover assets to repay its creditors, the report adds. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, 2022, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 million in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. FTX GROUP: Clashes With IRS Over Tax Fight Burden ------------------------------------------------- Rick Archer of Law360 reports that FTX and the Internal Revenue Service clashed, January 17, 2024, before a Delaware bankruptcy judge, each arguing the other should bear the burden of proof in an upcoming battle over the government's claim that the failed cryptocurrency giant owes billions of dollars in taxes. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 billion in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. FTX GROUP: Ex-Customers Want Fair Cryptocurrency Boom Repayment --------------------------------------------------------------- Steve Muchoki of Crypto News Flash reports that the distressed FTX customers and creditors have decided to formally fight the motion that seeks to deny them crypto profits registered last year. Recently, FTX submitted an estimation motion that dollarizes customer claims as of November 11, 2022, when the crypto exchange filed for Chapter 11 bankruptcy protection in the United States. The crypto exchange wants to reset the crypto prices to Bitcoin at $16,871, ETH at $1,258, and Solana (SOL) at $16.2. The estimation motion argued that the rest of the assets should be allocated to non-customer creditors including shareholders. However, FTX customers have vehemently disagreed with the motion as it would be unfair considering the notable gains made by the respective crypto assets in the past year, especially SOL. The FTX customers wrote an objection to the motion directed to the presiding Judge Dorsey, indicating that the debtor's arguments could lead to unfair compensation and, thus should be denied. The FTX estate held about 10 percent of SOL's total circulating supply, with the majority ready to be unlocked through 2028. What's Ahead for FTX Crypto Exchange The future of FTX is gradually shaping out with the court restricting process ensuring a fair process to the creditors and debtors. The FTX relaunch has sparked significant speculations from the crypto industry, thus helping the native token rally despite lacking intrinsic value. Current holders of FTT do not have any use case apart from mere speculation of the near future relaunch of FTX. Additionally, the US justice system has found SBF guilty of all the charges and now awaits the final sentencing. Nonetheless, the reopening of the FTX exchange faces several hurdles including a tarnished reputation amid heightened competition in the web3 sector. Moreover, there are dozens of crypto exchanges led by Binance, Coinbase, and Gemini that have thrived through the 2022/2023 cryptocurrency bear market. The distressed crypto exchange could benefit from the fast-growing web3 industry, its deep crypto liquidity, and the change of leadership. Notably, the appointment of John Ray III to facilitate the restructuring process has instilled confidence in the FTX crypto exchange. FTT Market Outlook and Price Action The FTX's native token FTT has registered notable trading volume in the past few months in anticipation of the full relaunch of the distressed cryptocurrency exchange. As of this report, FTT token traded around $3.25, up about 20 percent in the past seven days. Notably, the FTT token has a fully diluted valuation of about $1 billion and an average 24-hour trading volume of around $133 million. The small-cap altcoin faces a steep hill climb ahead as its reputation has significantly been tarnished since its sudden collapse. Nonetheless, the company still holds a significant amount of valuable digital assets like Bitcoin, Ethereum, Solana, and stablecoins. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 billion in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. FTX GROUP: Parents of Bankman-Fried Want Bankruptcy Suit Tossed --------------------------------------------------------------- Evan Ochsner of Bloomberg Law reports that Sam Bankman-Fried's parents moved to dismiss a lawsuit brought by FTX's bankrupt estate, saying it fails to show they had a formal role at the fallen crypto exchange or breached any fiduciary duty. Allan Joseph Bankman can't be held liable for alleged breaches of fiduciary duty because he didn't hold an official role at FTX, he argued in a filing in the US Bankruptcy Court for the District of Delaware. The complaint also fails to allege that Bankman and Barbara Fried intended to conduct a fraudulent transfer, the filing says. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 billion in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. ============= B E R M U D A ============= TEEKAY TANKERS: Egan-Jones Hikes Sr. Unsecured Ratings to BB+ ------------------------------------------------------------- Egan-Jones Ratings Company, on January 16, 2024, upgraded the foreign currency and local currency senior unsecured ratings on debt issued by Teekay Tankers Ltd. to BB+ from BB. Previously, EJR, on January 2, 2024, maintained its 'BB' foreign currency and local currency senior unsecured ratings on debt issued by Teekay Tankers. EJR also withdrew the rating on commercial paper issued by the Company. Headquartered in Hamilton, Bermuda, Teekay Tankers Ltd. provides oil transportation services through a fleet of mid-size tankers, including Suezmax and Aframax crude oil tankers and Long Range 2 product tankers. =========== B R A Z I L =========== BRAZIL: Rice Prices Show Signs of Decrease After 40% Yearly Rise ---------------------------------------------------------------- Richard Mann at RJR News reports that in a new development in Brazil, rice prices have started to decline following a 40% increase over the past year. As of January 2024, the cost for producers reached R$ 128.83 ($25.8) per sack, up from R$ 91.45 in January 2023, according to RJR News. The spike resulted from global market shifts, including India's export ban on its primary rice variety due to poor monsoon rains impacting output, the report notes. Early this year, prices hit a record high of R$ 131.44 per sack, says Cepea/USP, 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). EMBRAER SA: Moody's Upgrades CFR to Ba1, Outlook Remains Stable --------------------------------------------------------------- Moody's Investors Service has upgraded Embraer S.A.'s Corporate Family Rating to Ba1 from Ba2. The outlook is maintained stable. RATINGS RATIONALE The upgrade of Embraer's rating to Ba1 reflects the improvement in credit metrics related to a gradual recovery in deliveries, operating performance and backlog, as well the company's proactive debt reduction, including a material $600 million debt repayment in the third quarter of 2023. Embraer's adjusted gross leverage declined to 3.1x in the twelve months that ended September 2023, while operating margins recovered to 10.9% from 5.4% at the end of 2022. Despite the delays in production related to supply chain and labor issues, the company was able to increase deliveries of aircrafts in the commercial segment, grow revenue for the services and support segment, executive jets, and post higher profitability in the defense and security business with the commercialization of the KC-390 aircraft. Embraer also improved its liquidity profile with non-core asset sales, initiatives to reduce cash burn and costs and the business combination of the eVTOL business EVE Holding, Inc. (EVE). Embraer generated about $150 million in free cash flow since 2021, and paid down $1.2 billion in debt in the same period, increasing its cushion to withstand future volatility in operations. Moody's expects that Embraer's adjusted gross leverage will decline further to 2.5x-3.0x in the next 12-18 months, while net leverage ratios will remain within 0.5x-1.0x, as the company increases deliveries further and ramps up its defense and security business profitability, and uses proceeds from cash generation to strengthen its balance sheet further. Despite potential volatility in existing contracts with the Brazilian government, Embraer's backlog will continue to grow with additional orders in the commercial aviation segment, as illustrated by the recently announced agreements that led to a total backlog of $17.8 billion at the end of September 2023 up from $17.5 billion at the end of 2022. The company's liquidity profile also improved with proceeds from non-core asset sales, as the business combination and IPO of EVE in 2022, and with Embraer's strategy to reduce cash burn through efficiency gains, such as better inventory management, reduction in the production cycle of aircraft, and the optimization of investments to respond to market the conditions, as illustrated by the postponement of the 175-E2 jet entrance to 2027-28 from 2022 because of the pilot contract scope clause limitations in the United States. The company also announced in October 2022 a new $650 million committed credit line due in 2025, and proactively managed liabilities to extend its debt schedule further. In June 2023, the company announced a cash tender of $536 million of its outstanding notes due in 2025. In July 2023, the company issued $750 million notes due in July 2030 and repurchased $39 million, $204 million, and $189 million of its 2025, 2027, and 2028 notes, respectively. In addition, Embraer repurchased the remaining $370 million outstanding amount of its 2025 notes in September 2023, significantly reducing its debt maturities until 2027. Such milestones help abate liquidity risks coming from the capital intensity of its business and the development costs of the new eVTOLs business and investments needed to comply with new service agreements -- which require less employed capital than the jet business --, freeing up cash for additional debt reduction. Historically, Embraer has maintained a conservative financial management, prioritizing debt reduction over dividend distributions, and Moody's expects the company to maintain this strategy to preserve liquidity and credit metrics. Embraer's Ba1 rating reflect its solid position as a leading regional jet maker and its reputation as a reliable airplane producer, bolstered by its good liquidity derived from large cash balances and a manageable debt maturity profile and adequate credit metrics. The Ba1 ratings also take into consideration the fact that funding from Brazilian public banks would be available, if needed. In Moody's view, Embraer is still a strategic asset to the Government of Brazil (Ba2 stable), which owns a golden share in Embraer with veto rights. The rating is constrained by the cyclical nature of the aviation business and increasing competition, particularly given the significant investments required on an ongoing basis to keep up with evolving customer needs. The capital intensity of the aircraft manufacturing business related to working capital pressure and high investments requirement is an additional rating constraint, particularly when considering Embraer's smaller size than those of its main competitors in the commercial aviation segment. LIQUIDITY Embraer has good liquidity and a track record of consistently maintaining a high cash balance that matches the level of its outstanding debt. At the end of September 2023, the company's cash on hand and short-term investments of $1.7 billion ($1.5 billion excluding EVE) were enough to cover all its debt maturities through 2027. Embraer also has $650 million in committed credit lines due in October 2025. Historically, the company's cash availability fluctuates during the year because of seasonal working capital requirements, with the overall cash flow being the strongest during the latter part of the year when most aircraft tend to be delivered. The company generated positive FCF of BRL540 million ($108 million) for the 12 months that ended September 2023, and Moody's expects Embraer to continue to record positive cash generation of about $100 million-$150 million over the next 12-18 months, despite the investments required at EVE. Moody's also expects Embraer to continue to proactively pursue liability management initiatives to lengthen its debt tenor and reduce debt cost, thus preserving its liquidity profile. RATING OUTLOOK The stable outlook reflects Moody's expectations that Embraer's credit metrics will continue to gradually improve through 2024 and that the company will maintain its good liquidity to mitigate risks related to volatile market conditions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Additional upward rating pressure would require further improvement in Embraer's credit metrics and liquidity, such that the company builds cushion under stress scenarios. Quantitively, an upgrade would require positive free cash flow generation on a sustained basis, gross leverage ratios strengthening further to below 2.5x and interest coverage (measured by EBIT/interest) above 4x on a sustained basis. The maintenance of a strong liquidity profile and of conservative financial policies would also be required for an upgrade. Declines in demand or deliveries of new aircraft, particularly if not matched by additional sources of liquidity, could result in a rating downgrade. A downgrade could also result from wider liquidity concerns, for instance because of cost inflexibility, or from clear expectations that the company will not be able to maintain financial metrics compatible with a Ba1 rating with gross adjusted leverage above 4x, interest coverage below 2x and retained cash flow/net debt below 15% on a sustained basis. COMPANY PROFILE Embraer is a leading manufacturer of commercial jets with up to 150 seats, with a growing defense and security segment, and a line of business jets, including new types for the medium-sized and super-medium-sized segments. Embraer also owns 89.5% of EVE, an eVTOL business in development stage. Founded in 1969 by the Brazilian federal government and privatized in 1994, Embraer is headquartered in Sao Jose dos Campos, Brazil. In the 12 months that ended September 2023, the company reported net revenue of BRL26.8 billion ($5.4 billion) with an adjusted EBITDA margin of 17.7%. The principal methodology used in this rating was Aerospace and Defense published in October 2021. HIDROVIAS DO BRASIL: Moody's Affirms 'B1' CFR, Outlook Stable ------------------------------------------------------------- Moody's Investors Service has affirmed Hidrovias do Brasil S.A.(HBSA)'s B1 corporate family rating and the B1 backed senior unsecured ratings of the notes issued by Hidrovias International Finance S.a.r.l. due 2025 and 2031 and fully and unconditionally guaranteed by HBSA and its fully-owned subsidiaries, except for the bauxite operations subsidiaries (guarantor group). The outlook for the ratings is stable. RATINGS RATIONALE Since 2022 HBSA has been focused in deleveraging its balance sheet with gross leverage reducing to 4.8x in September 2023 from 8.7x in 2021. Moody's expects the trend to continue with gross leverage reaching 4.2x year-end 2024 and below 4.0x in 2025. But, in the short-term trailing leverage will peak at 5.6x in Q1 2024 mainly because of a weak EBITDA in the Q4 2023. The lower than usual river draft in the North Corridor has limited the transport of volumes by HBSA. With the lower utilization of the assets HBSA also decided to anticipate maintenance costs initially planned for the Q1 24. Moody's estimates these events will lead to single digit EBITDA margin in Q4 2023 and a full year EBITDA of BRL808 million, margin of 40.7%, driving leverage up to 5.4x year-end 2023. HBSA's B1 ratings are supported by a solid business model with about 80% of its revenues ensured by long-term take-or-pay agreements with strong off-takers. The agreements contain minimum volume guarantees and cost pass-through clauses, which translate into predictable cash flow, high capacity utilization rates and high operating margins for the company. The positive outlook for agricultural production, with Brazilian grain production continuing to grow gradually in the coming 10 years, and waterborne transportation in Brazil and Paraguay, and the strategic location of HBSA's operations also support its ratings. The ratings are constrained by the company's still high gross leverage, short operating track record and small size compared with that of its peers rated by Moody's. The high degree of product and geographic concentration also constrains HBSA's ratings because it exposes the company to adverse weather conditions that could limit agricultural production and river navigability. As an inland operator the company is exposed to climate-related risks such as low rainfall and river water levels causing reduced volumes or higher cost. HBSA also has a high degree of client concentration, although the clients' good credit quality and history of contract compliance mitigate related risks. Finally, despite recent efforts to reduce its currency mismatch, seventy six of HBSA's debt is indexed to the US dollar (down from 90% in July 2022), leaving the company's gross leverage ratios exposed to currency volatility risk. LIQUIDITY HBSA has an adequate liquidity profile, with BRL797 million in cash at the end of September 2023, well above its minimum requirements of around BRL300 million, and only around BRL80 million in principal debt maturities in 2024. Their next bond maturity is in January 2025, Moody's expects HBSA to continue engaging in liability management to maintain its liquidity and refinance its Notes before the maturity date. The current outstanding amount of the 2025 Notes is of $171 million, of which $25 million has been already been acquired by HBSA. RATING OUTLOOK The stable outlook incorporates Moody's expectations that HBSA's credit metrics will remain adequate with operations performing in line with the terms and conditions established by the existing take-or-pay agreements, and that the company will prudently manage its dividend distribution and future investments to preserve its good liquidity profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of HBSA's ratings could occur if the company is able to reduce leverage sustainably, while maintaining its current business model and profitability levels and generating stable cash flows on a sustained basis. Quantitatively, a rating upgrade would require the maintenance of adjusted leverage (measured as debt/EBITDA) sustainably below 4.0x and interest coverage (measured by adjusted FFO+ interest/interest) above 3.5x. The maintenance of a strong liquidity profile would also be necessary for an upgrade. The ratings could be downgraded if HBSA's operating performance remains weak, such that leverage remains high and liquidity deteriorates without prospects for improvement. A deterioration in the company's business profile because of the loss of any existing take-or-pay agreement without a financial compensation or further debt-financed expansion into the spot market would also put negative pressure on the ratings. Quantitatively, a downgrade could occur if leverage remains sustainably above 5.0x and interest coverage below 2.0x. A deterioration in the company's liquidity profile, stemming from large shareholder distribution or more aggressive financial policies, would also result in a downgrade of the ratings. Headquartered in Sao Paulo, Hidrovias do Brasil S.A. is South America's largest independent provider of integrated logistics focused on waterway transportation. The company's operations include shipping, transshipment, storage and port services for dry bulk cargo, including grains, iron ore, bauxite, fertilizers and pulp in the Parana-Paraguay waterway and the Amazon river systems. In the 12 months that ended September 2023, the company generated BRL2.0 billion ($398 million) in revenue, with an adjusted EBITDA margin of 45.1%, mainly from shipping activities and other logistics services. The principal methodology used in these ratings was Shipping published in June 2021. LIGHT SA: BTG, Farallon Weigh Lending to Troubled Utility --------------------------------------------------------- globalinsolvency.com, citing Bloomberg News, reports that Banco BTG Pactual SA and Farallon Capital Management are considering injecting fresh money into troubled utility Light SA. The firms, both of which are Light creditors, are mulling new loans for company, including convertible notes, said the people, who asked not to be named discussing internal deliberations, according to globalinsolvency.com. The loans would be contingent on Light reaching an agreement with regulators to allow it to charge higher rates for the power it sells in Rio de Janeiro, the report notes. Light filed for bankruptcy protection last year, after warning that government regulators weren't authorizing it to charge customers enough to pay its obligations, the report relays. The company has been grappling with energy theft and high delinquency rates among its customers, the report says. The new debt would add to a proposed injection from Nelson Tanure, the Brazilian tycoon that has become Light's largest shareholder, the report notes. While debt investors rushed to dump notes from the 120-year-old company, the stock price has nearly tripled after hitting all-time lows, thanks in part to Tanure's investments, the report adds. As reported in the Troubled Company Reporter-Latin America on March 5, 2021, Moody's Investors Service has completed a periodic review of the ratings of Light Energia S.A. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 24, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. =================================== D O M I N I C A N R E P U B L I C =================================== [*] DOMINICAN REPUBLIC: Cap Cana Reveals $500MM Investment Project ------------------------------------------------------------------ Dominican Today reports that the Destination City Cap Cana revealed an ambitious project during the FITUR 2024 Tourism Fair, entailing an investment exceeding 500 million dollars. This project is strategically located in the heart of the picturesque Juanillo beach. Named the Juanillo Village project, it encompasses 22 lots, and its development will unfold in various phases, featuring boutique hotels, condo hotels, apartments, a spacious commercial area, and beach clubs, according to Dominican Today. The commencement of the development is scheduled for 2024. The project promises an unparalleled experience, boasting a commercial promenade that seamlessly integrates restaurants, art galleries, shops, boutiques, and entertainment areas in one centralized space, the report notes. This concept offers an ideal setting for a vacation with a distinct lifestyle, conveniently located just five minutes away from the new Las Iguanas golf course by Jack Nicklaus, currently under construction, the report relays. Juanillo Village distinguishes itself with a unique concept not commonly seen in the Dominican Republic, encompassing around 1,000 apartment units and accommodating 30 to 40 commercial premises, the report notes. The announcement of this substantial investment was jointly made by Cap Cana's Executive President, Jorge Subero Medina, along with the Minister of Tourism, David Collado, and the Commercial and Marketing Director, Noribel Medina, 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. ============= J A M A I C A ============= JAMAICA: Household Equipment & Maintenance Cost Rose 10.5% in Dec. ------------------------------------------------------------------ RJR News reports that Jamaicans paid an average 10.5 per cent more for household equipment and maintenance services on an annual basis as at December. Looking at the inflation rate for the month of December alone, STATIN says the 'Furnishings, Household Equipment and Routine Household Maintenance' grouping saw a 0.3 per cent increase in prices, according to RJR News. The main contributor to the rise was the cost for 'Goods and Services for Routine Household Maintenance', up 0.2 per cent, the report notes. That was linked to higher prices for some household cleaning products in December, compared with November, the report relays. There was also a 0.8 per cent increase in the index for the other groups, which includes 'Furniture, Furnishings and Loose Carpets,' the report says. 'Household Appliances' had the strongest impact, with those costs going up by an average 0.4 per cent, 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. ********* 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 2024. 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 * * *