/raid1/www/Hosts/bankrupt/TCRLA_Public/240314.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, March 14, 2024, Vol. 25, No. 54
Headlines
A R G E N T I N A
ARGENTINA: Financing Milei's Fiscal Surplus
ARGENTINA: Industrial Output Plunges Again as Austerity Bites
GAUCHO GROUP: Receives Second Default Notice From 3i LP
PROVINCE OF CHACO: Fitch Lowers LongTerm Local Currency IDR to 'CC'
PROVINCE OF ENTRE RIOS: Fitch Cuts Local Currency IDR to 'CC'
PROVINCE OF SALTA: Fitch Lowers Local Currency IDR to 'CC'
B E R M U D A
BORR DRILLING: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
B R A Z I L
BRAZIL: Drought Risks Impact on Sugarcane and Worldwide Sugar
PETROBRAS: Dividend Proposals for Q4 2023
H A I T I
HAITI: IDB Commits $160 Million Aid Package to Crisis
HAITI: Violence is Battering Fragile Economy & Causing Shortages
J A M A I C A
JAMAICA: Earns US$473MM From Mining Exports for Jan-Oct 2023
M E X I C O
TOTAL PLAY: Fitch Lowers LongTerm Issuer Default Ratings to 'CCC+'
P E R U
PERU LNG: Moody's Affirms 'B2' CFR & Alters Outlook to Negative
P U E R T O R I C O
NATURAL DISASTER: Rental Income to Fund Plan
S U R I N A M E
SURINAME: Program Performance Has Been Strong, IMF Says
T R I N I D A D A N D T O B A G O
TRINIDAD PETROLEUM: S&P Withdraws 'BB' LT Issuer Credit Rating
- - - - -
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A R G E N T I N A
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ARGENTINA: Financing Milei's Fiscal Surplus
-------------------------------------------
Agustina Bordigoni at Buenos Aires Times, citing a new report by
the Instituto Argentino de Analisis Fiscal (IARAF), reports that in
its first full month in office, President Javier Milei's government
recorded the biggest interannual public spending cuts of the last
30 years in Argentina. The fiscal surplus recorded in January –
the country's first in 12 years – is basically explained by
those cuts. And the sector most "contributing" to this result were
pensioners, representing 33 percent of that effort, according to
Buenos Aires Times.
"The total saved was 2.7 trillion pesos with the biggest spending
reductions coming in pensions (down 885.074 billion pesos), energy
subsidies (down 366.451 billion), direct real investment (down
321.474 billion) and total transfers to provinces (down 310.781
billion), the report notes. Those four items contributed 70
percent of total savings," the IARAF explained in its report,
Buenos Aires Times discloses.
With this month's update, plus a bonus of 70,000 pesos for the
minimum pension, those receiving the least will collect just
200,445 pesos (around US$240), the report relays. According to
economist and IARAF president Nadin Arganaraz, pensioners already
kicked off this year with a 17 percent loss of purchasing-power as
against last December, the report relays. In the last few years,
the plunge has been pronounced: comparing the data with figures
from 2017, the loss is 57 percent for those without a bonus and 35
percent for those with access to the benefit, Buenos Aires Times
discloses.
Besides state trimming of money for pensioners, the chopping the
subsidies for energy and transport also help to explain the
historic January surplus, the report notes.
Over the last 10 years, according to the Catholic University of
Argentina's (UCA) Observatorio de la Deuda Social ("Social Debt
Observatory), jobs with a full range of accompanying rights have
not risen above 45 percent of the total of persons employed,
falling to 40.3 percent in 2022, the report relays. According to
the latest data from the INDEC national statistics bureau, in the
third quarter of 2023, 35.8 percent of wage-earners were not making
any pension contributions at all, the report discloses.
Up until February, the minimum pension was 105,000 pesos with the
extra compensation of a bonus of 55,000 pesos, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
0its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions within the government coalition, and infighting among the
opposition, constrain the sovereign's ability to implement timely
changes in economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
ARGENTINA: Industrial Output Plunges Again as Austerity Bites
-------------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Argentina's
industrial output slid 12.4% in January from a year earlier, the
second straight month it has plunged in double digits amid a tough
austerity and cost-cutting drive since new libertarian President
Javier Milei took office in December.
The decline was the eighth straight month falling, official data
showed, amid a prolonged economic contraction and soaring inflation
running at over 250%, that has badly hurt consumer spending power
and consumption, according to globalinsolvency.com.
The INDEC statistics agency also said industrial production
decreased 1.3% from December in seasonally adjusted terms, the
report notes.
Latin America's third-largest economy has been hit by soaring
inflation that clocked in at over 20% in the month of January
alone, while foreign reserves are depleted and the peso is only
held in check by strict currency controls, the report notes.
Milei, who took office on Dec. 10, has looked to tame inflation
with tough cost-cutting, which has helped improve the country's
fiscal position, but hurt economic growth, the report says. A
sharp currency devaluation also dented the value of people's
savings, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on June 13, 2023, raised its local currency
sovereign credit ratings on Argentina to 'CCC-/C' from 'SD/SD' and
0its national scale rating to 'raCCC+' from 'SD'. S&P also affirmed
its 'CCC-/C' foreign currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings is negative. S&P's
'CCC-' transfer and convertibility assessment is unchanged. None of
its rated bond issues are affected.
S&P said the negative outlook on the long-term ratings is based on
the risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections.
Divisions within the government coalition, and infighting among the
opposition, constrain the sovereign's ability to implement timely
changes in economic policy.
Fitch Ratings also upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
GAUCHO GROUP: Receives Second Default Notice From 3i LP
-------------------------------------------------------
As previously disclosed on its Form 8-K Report filed on February
21, 2023, Gaucho Group Holdings, Inc. entered into a Securities
Purchase Agreement with 3i, LP, pursuant to which the Company sold
to 3i a series of senior secured convertible notes of the Company
in the aggregate original principal amount of $5,617,978, and a
series of common stock purchase warrants of the Company, which
warrants shall be exercisable into an aggregate of 337,710 shares
of common stock of the Company for a term of three years (the
"Warrants," and together with the Purchase Agreement and Notes, the
"Note Documents").
As disclosed on the Company's Form 8-K Report filed on February 27,
2024, the Company received on February 21, 2024, an Event of
Default Redemption Notice from 3i providing notice of Events of
Default arising under the Note Documents and demanding immediate
payment of the Event of Default Redemption Price equal to a minimum
of $3,437,645.74.
On February 28, 2024, the Company received a second Event of
Default Redemption Notice from 3i providing notice of an additional
Event of Default arising under the Note Documents, and demanding
immediate payment of the Event of Default Redemption Price equal to
a minimum of $3,450,711.22.
Upon an Event of Default, the interest rate on the outstanding
principal will automatically be increased from 7% to 18% per annum,
and 3i may require the Company to redeem all or any portion of the
Note at a price equal to the greater of (i) the product of (A) the
amount to be redeemed multiplied by (B) the redemption premium of
115%, and (ii) the product of (X) the conversion rate in effect at
such time as 3i delivers an Event of Default redemption notice,
multiplied by (Y) the product of (1) the redemption premium of 115%
multiplied by (2) the greatest closing sale price of the common
stock on any trading day during the period commencing on the date
immediately preceding such Event of Default and ending on the date
the Company makes the entire payment required to be made under the
Note Documents.
Additionally, 3i may, at its option, convert the Note into shares
of common stock of the Company at an alternate conversion price.
The remedies provided in the Note are cumulative and in addition to
all other remedies available to 3i at law or in equity (including a
decree of specific performance and/or other injunctive relief).
In addition to the remedies provided under the Note Documents, 3i
also holds a security interest in all of the assets of the Company,
including intellectual property and the Company's ownership
interests in each of its subsidiaries, pursuant to that certain
Security and Pledge Agreement and Intellectual Property Security
Agreement each dated February 21, 2023 (together, the "Security
Agreement"). Upon the occurrence of an Event of Default under the
Note, the collateral agent appointed under the Security Agreement
may exercise all of the rights and remedies of a secured party upon
default under the New York Uniform Commercial Code, and may, among
other things, (i) take absolute control of the collateral and
receive, for the benefit of 3i, all payments made thereon, give all
consents, waivers, and ratifications in respect thereof and
otherwise act with respect thereto as through it were the outright
owner thereof, (ii) require each grantor to make the collateral
available to the collateral agent, and (iii) sell, lease, license,
or dispose of the Collateral.
The Company believes that this Event of Default Redemption Notice
from 3i is in response to the Company's lawsuit filed in the United
States District Court for the District of Delaware alleging that 3i
engaged in an unlawful securities transaction with the Company as
an unregistered dealer under U.S. securities laws. 3i is considered
a "dealer" within the meaning set forth in Section 3(a)(5)(A) the
Securities Exchange Act of 1934 ("Exchange Act") and, therefore,
violated Section 15(a) by engaging in interstate securities
transactions with the Company absent effective dealer
registration.
Because of 3i's violations of Section 15(a) of the Exchange Act,
the Company is seeking to have certain contracts between it and 3i
declared void and transactions effectuated thereunder rescinded
pursuant to Section 29(b) of the Exchange Act.
About Gaucho Group
Headquartered in New York, NY, Gaucho Group Holdings, Inc.'s
mission has been to source and develop opportunities in
Argentina's
undervalued luxury real estate and consumer marketplace. The
Company has positioned itself to take advantage of the continued
and fast growth of global e-commerce across multiple market
sectors, with the goal of becoming a leader in diversified luxury
goods and experiences in sought after lifestyle industries and
retail landscapes. With a concentration on fine wines
(algodonfinewines.com & algodonwines.com.ar), hospitality
(algodonhotels.com), and luxury real estate
(algodonwineestates.com) associated with its proprietary Algodon
brand, as well as the leather goods, ready-to-wear and accessories
of the fashion brand Gaucho - Buenos Aires (gaucho.com), these are
the luxury brands in which Argentina finds its contemporary
expression.
Gaucho reported a net loss of $21.83 million for the year ended
Dec. 31, 2022, compared to a net loss of $2.39 million for the year
ended Dec. 31, 2021. As of Sept. 30, 2023, the Company had $18.91
million in total assets, $11.02 million in total liabilities, and
$7.89 million in total stockholders' equity.
New York, NY-based Marcum LLP, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated April
17, 2023, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
The Company's operating needs include the planned costs to operate
its business, including amounts required to fund working capital
and capital expenditures. Based upon projected revenues and
expenses, the Company believes that it may not have sufficient
funds to operate for the next twelve months from the date these
financial statements are made available. Since inception, the
Company's operations have primarily been funded through proceeds
received from equity and debt financings. The Company believes it
has access to capital resources and continues to evaluate
additional financing opportunities. There is no assurance that the
Company will be able to obtain funds on commercially acceptable
terms, if at all. There is also no assurance that the amount of
funds the Company might raise will enable the Company to complete
its development initiatives or attain profitable operations. The
aforementioned factors raise substantial doubt about the Company's
ability to continue as a going concern for a period of one year
from the issuance of these financial statements, according to the
Company's Quarterly Report for the period ended Sept. 30, 2023.
PROVINCE OF CHACO: Fitch Lowers LongTerm Local Currency IDR to 'CC'
-------------------------------------------------------------------
Fitch Ratings has downgraded Province of Chaco's Long-Term (LT)
Local Currency (LC) Issuer Default Rating (IDR) to 'CC' from
'CCC-'. In addition, Fitch has affirmed Chaco's LT Foreign Currency
(FC) IDR and step-up USD262.6 million senior unsecured notes at
'CC'. Fitch has also lowered Chaco's Standalone Credit Profile
(SCP) to 'cc' from 'ccc'.
Fitch relied on its rating definitions to position Chaco's ratings
and SCP. In the next 12 months a default of some kind appears
probable. Chaco could have significant refinancing risks and high
liquidity risk accompanied by a projected actual debt service
coverage ratio (ADSCR) below 1x in the next 12 months (versus
higher than 2.0x in Fitch's 2023 annual review), on the back of a
significant depreciation of the real exchange rate, and lower
operating margins. The province's next semi-annual payment on its
senior unsecured USD notes is for USD38.8 million due in August
2024.
KEY RATING DRIVERS
Risk Profile: 'Vulnerable'
The 'Vulnerable' assessment, for all Argentine local and regional
governments (LRGs) reflects Fitch's view that there is a very high
risk of the issuer's ability to cover debt service with the
operating balance weakening unexpectedly over the 2024-2025
scenario horizon due to lower revenue, higher expenditure, or an
unexpected rise in liabilities or debt-service requirements. LRGs
in Argentina operate in the context of a weak institutional revenue
framework, high expenditure structures, tight liquidity and foreign
exchange risks.
Revenue Robustness: 'Weaker'
The assessment reflects the complexity and imbalance of the
national fiscal framework, dependence on 'CC' sovereign
counterparty risk for 83.4% (three-year average) of its total
revenue, which mostly stems from national automatic coparticipation
tax transfers. Federal co-participation tax transfers are a very
important component of subnational fiscal performance. As of
September 2023, coparticipation tax transfers showed an accumulated
116.1% annual nominal term growth. Own-revenues could increase
95.9% for the same period, for a total operating revenue growth of
114.0%, driven by historically high inflation levels.
As per law, federal co-participation transfers to provinces have
never been interrupted. However, during the last quarter of 2023
the government imposed significant modifications (exemptions) that
are negatively affecting the co-participation resources. Recent
changes (an increase in the non-taxable minimum of income tax and
exemption from VAT on the basic food basket) are leading to a
strong slowdown in provincial co-participation transfers. Since
late 2023 real-term estimated decreases were -13.5% in November
2023, -18.5% in December, and -11.1% in January 2024.
Revenue Adjustability: 'Weaker'
Chaco's ability to generate additional revenue in response to
possible economic downturns is limited, like all Fitch-rated
Argentine LRGs. However, for Chaco this is further exacerbated by
its high reliance on national automatic transfers. Tax
revenue/total revenue averaged 12.1% between 2018-2022 (11.4% in
2022).
Fitch considers local revenue adjustability low and challenged by
the country's large and distortive tax burden. Structurally high
inflation also constantly erodes real-term revenue growth and
affects affordability. Chaco's weak socioeconomic indicators are
below the national average and lag international peers, which also
weighs on the assessment of this key rating factor.
Expenditure Sustainability: 'Weaker'
In Fitch's view, spending decentralization could continue to rise
to fulfill Argentina's IMF Extended Fund Facility (EFF) fiscal
targets. Fitch will monitor how this agreement unfolds and impact
the provinces' fiscal framework. Since 2017, the province has
turned its margins from negative territory toward a positive
operating balance averaging 19% from 2020-2022. As of September
2023, its operating margin is 4.7 percentage points lower than in
the same period of 2022; for YE 2023 Fitch expects an operating
margin of 14.0% and then decreasing toward 4.2% in 2025.
Fitch expects margins will converge toward lower levels in the
short to medium term given the lag effect that inflation tends to
have on real-term wages and the strong economic deceleration
expected in 2023-2024. For 2024-2025, Fitch estimates opex will
increase above inflation and will lower operating balance to 14.0%
in 2023, hovering 4.0% towards 2024-2025, below the 2020-2022
average of 19.0%. High inflation hinders expenditure sustainability
and predictability. Currency depreciation also affects expenditure
costs, such as capex projects.
Expenditure Adjustability: 'Weaker'
Fitch views Chaco's leeway or flexibility to cut expenses as weak
relative to international peers, considering an average of only
around 11.8% of consolidated provincial total expenditures going to
capex from 2018 to 2022, which decreased to 12.5% at YE 2022 from
22.2% in 2021. Similar to other Argentine peers, the province has
very high infrastructure needs; therefore, increasing capex does
not necessarily translate into economic growth due to the important
infrastructure lag, which also reflects minimal flexibility to
adjust capex. Compared with international peers, Chaco has a high
share of opex to total expenditure with an 83.4% average for the
last three years. In 2022, staff expenses represented 53.3% of
total expenses (five year-average 52.7%), which is high relative to
international peers. Chaco's socioeconomic indicators are below the
national average and further constrain its opex flexibility.
Liabilities and Liquidity Robustness: 'Weaker'
Direct debt increased by 52.2% in 2022 mainly due to currency
depreciation, totaling ARS102.4 billion. As of 3Q23, the
outstanding amount stands at ARS183.5 billion; approximately 64.7%
of Chaco's direct debt is denominated in foreign currency and is
unhedged, mainly in U.S. dollars, which is a rating risk in the
current environment of high inflation and currency depreciation.
However, 79% of its total debt has fixed interest rates. The
external market remains closed.
National capital controls are an additional weakness captured in
this key risk factor (KRF); the uncertain evolution of exchange
regulations could affect LRGs' abilities to fulfill their financial
obligations in case of regulatory changes. Nevertheless, for
February 2024's principal payment, Chaco honored its debt service
using own-resources and cash-advancement from coparticipation
transfers.
Chaco completed its DDE on June 25, 2021. The debt restructuring
provided some external debt service relief for the province until
2024, when capital repayments begin. However, despite this relief,
the 'CC' IDRs reflect challenges ahead that could hinder the
province's repayment capacity. Also, Chaco is among the provinces
that did not transfer their pension scheme to the nation, thus when
considering the weight of this additional burden, the operating
balance stands at 15.6% (from 20.5%) in 2022.
Liabilities and Liquidity Flexibility: 'Weaker'
Fitch perceives the Argentine national framework in place for
liquidity support and funding available to subnationals as
'Weaker', as there are no formal emergency liquidity support or
bail-out mechanisms established. The current context of national
capital controls is another risk captured in the liquidity
flexibility assessment, as the imposition of exchange regulations
could ultimately affect LRGs' ability to fulfil their financial
obligations.
Argentine provinces rely mainly on their own unrestricted cash for
liquidity. Fitch expects total cash to progressively shrink towards
2025 due to outturns and capex outlays increasing above inflation.
The province has been tapping the local currency capital market by
issuing short-term treasury bills to cover seasonal cash imbalances
on a regular basis. Chaco's short-term treasury bill program stood
at ARS5 billion in 2022, ARS8 billion for 2023 and ARS30 billion
for 2024. The context of economic downturn in 2023-2025 coupled
with expenditure pressures would converge liquidity to structurally
tight and weak levels in the short term.
Debt sustainability: 'aa' category
Under Fitch's rating case scenario (2023 based on 3Q23
figures-2025), the debt payback ratio (net adjusted
debt-to-operating balance), the primary metric, will remain below
5.0x in 2025 (2022: 1.1x), which corresponds to a 'aaa' assessment.
In addition, ADSCR (operating balance-to-debt service), the
secondary metric of debt sustainability, is projected to remain
below 1.0x in 2024-2025 (3.3x in 2022), at the 'b' assessment
category. The final debt sustainability assessment at the 'aa'
level reflects an override for a significantly weaker debt service
coverage ratio that deteriorated from 'aa' in the previous annual
review, on the back of a significant depreciation of the real
exchange rate and lower operating margins. The projected fiscal
debt burden below 50% of operating revenue also drives the score.
DERIVATION SUMMARY
Fitch based its rating derivation for Chaco on the agency's rating
definitions. The 'cc' Standalone Credit Profile is derived from a
'Vulnerable' Risk Profile and a 'aa' debt sustainability score but
also reflects substantial credit risk, including the risk that a
default on USD notes in the short term is probable. Consequently,
in the next 12 months, Chaco could have significant refinancing
risks and high liquidity risk accompanied by weak debt coverage
metrics. The SCP reflects comparisons with peers, including the
Provinces of Salta and Entre Rios. Fitch does not apply any
asymmetric risk or extraordinary support from upper-tier
government.
KEY ASSUMPTIONS
Qualitative Assumptions
- Risk Profile: 'Vulnerable';
- Revenue Robustness: 'Weaker';
- Revenue Adjustability: 'Weaker';
- Expenditure Sustainability: 'Weaker';
- Expenditure Adjustability: 'Weaker';
- Liabilities and Liquidity Robustness: 'Weaker';
- Liabilities and Liquidity Flexibility: 'Weaker'.
- Debt sustainability: 'aa' category.
- Support (Budget Loans): 'N/A'
- 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
In line with its LRG criteria, for an entity with base case
financial profile indicating an SCP of 'b' or below, the base case
analysis alone may be sufficient to evaluate the risk of default
and transition for the debt. Therefore, in the case of Chaco,
Fitch's base case is the rating case which already incorporates a
very stressful scenario. It is based on 2018-2022 figures, updated
figures as of 3Q23, and 2023-2025 projected ratios. The key
assumptions for the scenario include:
- Operating revenue average growth of 74% for 2023-2025; assuming
growth below average inflation towards the medium term given the
current expected economic downturn in 2024 and the negative impact
of revenue framework impositions in federal coparticipation
transfers;
- Operating expenditure average growth of 80% for 2023-2025;
assuming growth above average inflation towards the medium term to
assume real term expenditure re-composition;
- Average net capital balance of approximately negative ARS306
billion during 2023-2025;
- Cost of debt considers non-cash debt movements due to currency
depreciation with an average exchange rate of ARS351.1 per U.S.
dollar for 2023, ARS1,589.9 for 2024 and ARS3,621.5 for 2025;
- Consumer price inflation (annual average % change) of 130% for
2023, 244% for 2024, and 150% for 2025.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Signs of deeper liquidity stress that could compromise debt
repayment capacity in the short term, including evidence of
increased refinancing risk in its local and foreign currency debt
as well as any regulatory restrictions to access FX.
- If there are indications of any credit event that reflects a near
default situation including a DDE under Fitch's rating
definitions.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An improved operating balance that strengthens the actual debt
service coverage ratio above 1.0x on a sustained basis under Fitch
rating case projection horizon.
LIQUIDITY AND DEBT STRUCTURE
Debt Ratings
Chaco's step-up USD262.6 million senior unsecured notes
(restructured in 2021) are rated 'CC'. The bonds are rated at the
same level as the province's IDR. The notes start amortization
payments in 2024 (payments are due in Feb. 18 and Aug. 18).
February's payment was carried out using own-resources plus
cash-advancement from coparticipation transfers, signaling large
liquidity needs. Total debt service from the province's senior
unsecured notes will amount to USD76.5 million during 2024. Fitch
will monitor the province's compliance with its debt obligations in
the coming 12 months in a context of high inflation pressures, a
significant depreciation of the real exchange rate, and
discretional and regulatory uncertainty regarding the imposition of
exchange regulations. Upcoming debt service payments are
uncertain.
ISSUER PROFILE
Chaco is located in the northeast region of Argentina and has a
small, low value-added economy. The estimated population is around
1.1 million, less than 3% of Argentina's population. GDP per capita
is estimated at USD6,103 in 2022 (below the national average of
USD13,724), and the poverty rate is at 60.3% (national average:
40.1%) as per first semester 2023 official figures.
The services (tertiary) sector represents 65.5% of the province's
gross domestic product, followed by manufacturing and construction
(secondary) sector at 24.2%, and the agriculture, fishing and
mining at 10.3. Cotton production is one of the most important
commodities, followed by sunflower seeds, and soybean.
Fitch classifies Chaco as a Type B LRG, as it covers debt service
from cash flow on an annual basis.
SUMMARY OF FINANCIAL ADJUSTMENTS
No material adjustments were made to figures reported by the
province.
ESG CONSIDERATIONS
Chaco, Province of has an ESG Relevance Score of '4' for Rule of
Law, Institutional & Regulatory Quality, Control of Corruption
reflecting the negative impact of a weak regulatory framework and
national policies have over the province, which has a negative
impact on the credit profile, and is relevant to the rating in
conjunction with other factors.
Chaco, Province of has an ESG Relevance Score of '4' for Creditor
Rights, in spite of the province's compliance with the negotiated
terms throughout 2021-2023, the 2021 DDE continues to weigh on its
credit profile and debt coverage is expected to remain pressured,
which 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 Prior
----------- ------ -----
Chaco, Province of LT IDR CC Affirmed CC
LC LT IDR CC Downgrade CCC-
senior unsecured LT CC Affirmed CC
PROVINCE OF ENTRE RIOS: Fitch Cuts Local Currency IDR to 'CC'
-------------------------------------------------------------
Fitch Ratings has downgraded Province of Entre Rios' Long-Term
Local Currency Issuer Default Rating (IDR) to 'CC' from 'CCC-'. In
addition, Fitch has affirmed the province's Long-Term Foreign
Currency IDR at 'CC'. Fitch has revised Entre Rios' Standalone
Credit Profile (SCP) to 'cc' from 'ccc-'. Fitch relied on its
rating definitions to position Entre Rios' ratings and SCP.
The downgrade of Entre Rios' Long-Term Local Currency IDR follows a
deterioration in Fitch's assessment of the province's SCP to
'ccc-'. The affirmation of the Long-Term Foreign Currency IDR
follow's Fitch's view that a default of some kind is probable in
the next 12-month horizon. Fitch expects the province's actual debt
service coverage ratio (ADSCR) and liquidity coverage ratio to
decline below 1x. Therefore, Entre Rios could have significant
refinancing risks and high liquidity risk.
Entre Rios' SCP also reflects a significant deterioration of the
province's operating balance and liquidity position in 2023. The
operating margin was negative in 2023 considering the pension
burden. Fitch also believes a weakening of national-provincial
relations and recent revenue impositions at the national level are
negatively impacting automatic transfers from the co-participation
regime, a main determinant of provincial finances. These factors
resulted in a deterioration of Entre Rios' debt sustainability
score to 'b' from 'aa' in Fitch's rating case scenario.
The province's next principal bank loan payment of ARS40,000
million is due in June 2024, and its next semi-annual payment on
its senior unsecured USD notes for USD64 million is due in August
2024.
KEY RATING DRIVERS
Risk Profile: 'Vulnerable'
The 'Vulnerable' assessment, for all Argentine local and regional
governments (LRGs) reflects Fitch's view that there is a very high
risk of the issuer's ability to cover debt service. The operating
balance has weakened unexpectedly over the scenario horizon due to
lower revenue, higher expenditure, or an unexpected rise in
liabilities or debt-service requirements.
Revenue Robustness: 'Weaker'
Entre Rios' revenue robustness is assessed as 'Weaker' and reflects
its high dependence on federal transfers, which account for 62.3%
(average for 2019-2023) of its operating revenues. These federal
transfers are mostly automatic from the co-participation
tax-sharing regime, which stem from a 'CC'-rated sovereign
counterparty. In YE 2023, these accounted for 62.5% of Entre Rios'
operating revenues.
Although federal co-participation transfers have never been
interrupted to provinces, during the last quarter of 2023 the
government imposed relevant modifications (exemptions) that are
negatively affecting the federal revenue-sharing resources. Recent
changes (increase in the non-taxable minimum of income tax and
exemption from VAT on the basic food basket) are leading to a
strong slowdown in provincial co-participation transfers since the
last months of the year. There were real-term estimated decreases
of 13.5% in November 2023, a further 18.5% in December and 11.1% as
of January 2024. In 2023, Entre Rios recorded an estimated
real-term decrease of around 2% in transfers received.
The latter is aggravated by the country's negative economic
prospects for 2024, with an estimated drop in national real GDP of
around 4.26% and historically high inflation levels estimated to
average more than 244% during the year.
Revenue Adjustability: 'Weaker'
For Argentine LRGs, Fitch views local revenue adjustability as low,
and challenged by the country's large and distortive tax burden and
high inflation that impacts affordability. The negative
macroeconomic environment further limits the subnational's ability
to increase tax rates and expand tax bases to boost local operating
revenues. Structurally high inflation also constantly erodes
real-term revenue growth and affects affordability. For Entre Rios,
local taxes represented a low 20% of total revenues, on average,
during 2019-2023.
Expenditure Sustainability: 'Weaker'
Argentine LRGs have high expenditure responsibilities, in a context
of structurally high inflation. The country's fiscal regime is
structurally imbalanced regarding revenue-expenditure
decentralization, leading to Fitch's 'Weaker' assessment of its
expenditure sustainability.
In 2020-2022, Entre Rios controlled opex in real terms, resulting
in operating margins equivalent to 8.1% on average. However, in
2023 the operating margin fell to -3% considering the impact of
pensions burden on its budgetary performance. Entre Rios is among
the provinces that did not transfer its pension scheme to the
nation. As Fitch expected, such strong operating margins in
2020-2022 were unsustainable due to staff expenditure pressures.
During 2022 and 2023, there was a significant recomposition in
staff expenditure as the opex grew in real terms 15% and 9% yoy,
respectively.
For 2024, Fitch forecasts opex is likely to increase above
inflation and the operating balance would remain low due to wage
adjustments, pension burden and the reduction of
co-participaciones.
Expenditure Adjustability: 'Weaker'
Entre Rios' staff expenses in its opex structure is high, relative
to international peers, at 70.5% in 2023, with opex totaling around
92.2% of total expenditure. In 2019-2023, staff expenses
represented a rigid 69.3% of total expenses, on average, limiting
the province's budgetary flexibility. Fitch believes Entre Rios'
has little flexibility to cut expenses relative to international
peers, as a low average of 5.4% for 2019-2023 of the province's
total expenditure was capex.
The province's capex has remained at roughly 6% of total
expenditure in 2021-2023, compared with an average of 4.9% in
2018-2020. However, like other Argentine peers, the province has
very high infrastructure needs, which means increasing capex does
not translate into economic growth due to infrastructure lags, as
there is little flexibility to adjust capex.
Liabilities & Liquidity Robustness: 'Weaker'
Unhedged foreign currency debt exposure is an important weakness
Fitch considered, along with the weak national framework for debt
and liquidity and underdeveloped local market. The assessment also
considers a 'CC' sovereign that restructured its debt during 2020,
thus curtailing external market access to LRGs.
Entre Rios restructured its foreign currency notes for USD 517.5
million on March 15, 2021 after a distressed debt exchange (DDE)
process. Direct debt totaled ARS584.2 billion at YE 2023 with 95.8%
foreign currency denominated. Total debt grew around 280%, with
regard to 2022 due to sharp currency depreciation. Hence, Entre
Rios' fiscal burden ratio reached 42.1% at YE 2023.
The province's notes started amortization payments in 2023
(payments are due in February 8 and August 8). The province covered
its first two repayments during 2023 smoothly due to its improved
liquidity position triggered by fiscal surpluses in 2020-2022.
Furthermore, Entre Rios created a sinking fund to cover debt
service payments in 2023.
At 1Q24, sinking fund resources were eroded by the sharp
depreciation and were thus insufficient to cover entirely the debt
service of USD65.8 million. Such resources covered 40% of the
province's step-up notes' debt service. The remaining part was paid
with a bank loan with Banco de Entre Rios for ARS40, 000 million,
which will be fully repaid in one installment on June 23rd, 2024.
The province's next semi-annual payment on its senior unsecured USD
notes is for USD64 million due in August 2024.
While BCRA regulation regarding capital controls for subnationals
has expired as of December 2023 in practice, an additional weakness
captured in this key risk factor, is discretional and regulatory
uncertainty regarding the imposition of exchange regulations that
could affect the LRGs' abilities to fulfil their financial
obligations.
In addition, this year the province intends to issue a Treasury
Bills Program for approximately ARS57,000 million for seasonal cash
expenses (already approved by the 2024 budget).
Liabilities & Liquidity Flexibility: 'Weaker'
Fitch assesses the Argentine national framework in place for
liquidity support and funding available to subnationals as
'Weaker', as there are no formal emergency liquidity support or
bail-out mechanisms established. The national government can
support Entre Rios in the form of a friendly creditor, such as
making some programs and loans available to provinces from federal
trust funds. However, the macroeconomic environment constrains the
predictability, size and timing of this support. Impeding access to
liquidity from international market and concentration of
counterparty risk below 'BBB-' also drives the 'Weaker' assessment
of such support.
For 2020-2022, the entity showed improved liquidity coverage
metrics (current operating balance plus unrestricted cash from
previous year to debt service) averaging 2.7x. At YE 23 Entre Rios'
liquidity position worsened as the payables were higher than cash
and the liquidity coverage ratio fell to 0.3x. For 2024, Fitch
forecasts that the debt service requirements and a deteriorated
financial performance amid a context of economic downturn in
2024-2026 will continue to significantly impair the province's
liquidity.
Debt Sustainability: 'b category'
Debt Sustainability assessed at 'b'.
Debt sustainability deteriorated to 'b' from 'aa' in the previous
review. The score resulted from a 'b' payback ratio and a 'b' debt
service coverage ratio assessment, given Fitch's forecasts for
negative operating balances and a significant fall in liquidity for
the next three years. In Fitch's rating case (2024-2026), the
primary metric of payback will be above 25x with a score of 'b',
reflecting the province's weakening financial performance, revenue
dynamics below growing expenditure pressures in a context of
historically high inflation, and rising debt service requirements.
Fitch expects ADSCR below 1.0x; a 'b' score, resulting in a final
'b' assessment.
DERIVATION SUMMARY
Entre Rios' 'cc' SCP is derived from a 'Vulnerable' Risk Profile
and an 'a' debt sustainability score. It also reflects its very
high level of credit risk, including the risk that a default of
some kind is probable. The SCP considers comparison with peers,
including the Provinces of Chubut, La Rioja, Chaco and Salta. Fitch
does not apply any asymmetric risk or extraordinary support from
upper-tier government. The rating is based on Fitch's rating
definitions. Fitch classifies the Province of Entre Rios as a type
B LRG, as it covers debt service from cash flow on an annual
basis.
KEY ASSUMPTIONS
Risk Profile: 'Vulnerable'
Revenue Robustness: 'Weaker'
Revenue Adjustability: 'Weaker'
Expenditure Sustainability: 'Weaker'
Expenditure Adjustability: 'Weaker'
Liabilities and Liquidity Robustness: 'Weaker'
Liabilities and Liquidity Flexibility: 'Weaker'
Debt sustainability: 'b'
Support (Budget Loans): 'N/A'
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 2019-2023 figures and 2024-2026 projected
ratios. The key assumptions for the scenario include:
Operating revenue average growth of 155.7% for 2023-2026; assuming
growth below average inflation towards the medium term given the
current expected economic downturn in 2024 and the negative impact
of revenue framework impositions in federal co-participation
transfers;
Operating expenditure average growth of 158.2% for 2023-2026;
assuming growth above average inflation towards the medium term to
assume real term expenditure re-composition.
Average capital expenditure/ total expenditure levels of around 1%;
below the 2021-2023 historical average of 6% reflecting lower
operating balances and liquidity availability.
Cost of debt considers non-cash debt movements due to currency
depreciation with an average exchange rate of ARS351.1 per U.S.
dollar for 2023, ARS1,589.9 for 2024, ARS3,621.5 for 2025 and ARS
7,333.5 for 2026;
Consumer price inflation (annual average % change) of 244% for
2024, 150% for 2025, 102.5% for 2026.
Issuer Profile
The Province of Entre Rios has an exceptional geographic location
and endowment of natural resources. It is located in the northeast
region of Argentina, the heart of Mercosur. Entre Rios is next to
the Province of Buenos Aires, the main market of production and
consumption in Argentina. Its territory is suitable for livestock,
while 53% of the province's surface is suitable for agricultural
activity and agribusiness, which represent the core of the
productive and exportation structure. Entre Rios exports mainly to
Asia. The province's population, at 1.4 million, equals approximate
3.1% of Argentina's.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Signs of deeper liquidity stress that could compromise debt
repayment capacity in the short to medium term, including evidence
of increased refinancing risk in its local and foreign currency
debt; as well as any regulatory restrictions to access FX by LRGs.
The ratings would be downgraded if there are indications of any
credit event that reflects a near default situation.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An improved operating balance that strengthens the actual debt
service coverage ratio above 1.0x on a sustained basis, fueled by a
containment in the operating expenditure front.
ESG CONSIDERATIONS
Entre Rios, Province of has an ESG Relevance Score of '4' for Rule
of Law, Institutional & Regulatory Quality, Control of Corruption
due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative
impact on the credit profile, and is relevant to the rating[s] in
conjunction with other factors.
Entre Rios, Province of has an ESG Relevance Score of '4' for
Creditor Rights due to {DESCRIPTION OF ISSUE/RATIONALE}, 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.
DISCUSSION NOTE
There was an appropriate quorum at the committee and the members
confirmed that they were free from recusal. It was agreed that the
data was sufficiently robust relative to its materiality. During
the committee no material issues were raised that were not in the
original committee package. The main rating factors under the
relevant criteria were discussed by the committee members. The
rating decision as discussed in this rating action commentary
reflects the committee discussion.
Entity/Debt Rating Prior
----------- ------ -----
Entre Rios, Province of LT IDR CC Affirmed CC
LC LT IDR CC Downgrade CCC-
PROVINCE OF SALTA: Fitch Lowers Local Currency IDR to 'CC'
----------------------------------------------------------
Fitch Ratings has affirmed the Province of Salta's Long-Term (LT)
Foreign-Currency Issuer Default Rating (IDR) at 'CC' and downgraded
the LT Local Currency IDR to 'CC' from 'CCC-'. Salta's Standalone
Credit Profile (SCP) is assessed at 'cc'. Fitch has also affirmed
Salta's USD357.4 million senior unsecured step-up notes due in 2027
at 'CC', the same level as the province's LT FC IDR. Fitch relied
on its rating definitions to position Salta's ratings and SCP.
The downgrade of Salta's LT LC IDR follows its downward assessment
of the province's SCP to 'cc' from 'ccc', and the affirmation of
the LT FC IDR is due to its rating definitions view that a default
of some kind appears 'probable' in the next 12 months.
The SCP was lowered due to a worsening of the province's operating
balance as of October 2023 that amidst the current negative
economic context will further deteriorate the entity's budgetary
performance in 2024. Fitch also perceives a weakening of
national-provincial relations as recent revenue impositions at the
national level are negatively impacting automatic transfers from
the co-participation regime, a main determinant of provincial
finances. This resulted in a deterioration of Salta's debt
sustainability score to 'b' in Fitch's rating case due to an actual
debt service coverage ratio below 1x in 2024 and 2025. The
province's next semi-annual payment on its senior unsecured notes
is for USD40.4 million due in June 2024.
KEY RATING DRIVERS
Risk Profile: 'Vulnerable'
The 'Vulnerable' assessment, for all Argentine local and regional
governments (LRGs) reflects Fitch's view that there is a very high
risk of the issuer's ability to cover debt service with the
operating balance weakening unexpectedly over the scenario horizon
due to lower revenue, higher expenditure, or an unexpected rise in
liabilities or debt-service requirements.
Revenue Robustness: 'Weaker'
Salta's revenue robustness is assessed as 'Weaker' and reflects its
high dependence on federal transfers, which account for 74%
(average for 2018-2022) of its operating revenues. These federal
transfers are mainly automatic from the co-participation
tax-sharing regime, which stem from a 'CC' rated sovereign
counterparty. Recently, Fitch perceives a weakening of the
provincial-national framework and relations amidst persistent
policy uncertainty.
Although as per law, federal co-participation transfers have never
been interrupted to provinces during the last quarter of 2023 the
government imposed relevant modifications (exemptions) that are
negatively affecting the co-participating resources. Recent changes
(increase in the non-taxable minimum of income tax and exemption
from VAT on the basic food basket) are leading to a strong slowdown
in provincial co-participation transfers since the last months of
the year with real-term estimated decreases of -13.5% in November
2023, a further -18.5% in December and - 11.1% as of January 2024.
As of October 2023, Salta recorded an estimated real-term decrease
of around 11% in transfers of national origin.
The latter is aggravated by the country's negative economic
prospects for 2024, with an estimated drop in national real GDP of
around 4.26% and historically high inflation levels estimated to
average more than 244% during the year.
Revenue Adjustability: 'Weaker'
For Argentine LRGs, local revenue adjustability is perceived as
low, and challenged by the country's large and distortive tax
burden and high inflation that impacts affordability. The negative
macroeconomic environment further limits the subnational's ability
to increase tax rates and expand tax bases to boost local operating
revenues.
For Salta, local taxes represented a low 20.8% of total revenues,
on average, during 2018-2022. As of October 2023, local tax revenue
decreased an estimated 4.2% in real-terms, that coupled with the
decrease in transfers of national origin, resulted in an overall
estimated 9.5% real-term decrease in the entity's operating
revenue.
Expenditure Sustainability: 'Weaker'
Argentine LRGs have high expenditure responsibilities, in a context
of structurally high inflation. The country's fiscal regime is
structurally imbalanced regarding revenue-expenditure
decentralization, leading to Fitch's 'Weaker' assessment of its
expenditure sustainability.
In a context of inflation accelerating at historically high levels
and a deteriorating operating environment at the national level,
leading to revenue and expenditure pressures, Fitch estimates that
during 2023 Salta's operating balance will stand at a low 0.6% of
operating revenues (down from 5.9% in YE 2022) and decrease to a
-1.5% in 2024.
As of October 2023, the province's operating balance decreased
towards 2.4% from 12.4% in October 2022 given opex accelerating
above inflation levels while operating revenue decreased in real
terms. Budgetary risks remain from the growing expenditure
pressures due to high inflation, weakening expenditure
predictability, although Salta is among the provinces that
transferred its pension system to the national government and,
therefore, is not pressured by pension deficits.
Expenditure Adjustability: 'Weaker'
For Argentine sub-nationals, infrastructure needs and expenditure
responsibilities are deemed as high, with leeway or flexibility to
cut expenses viewed as low. National capex is low and insufficient
in translating capex burdens to LRGs.
Salta's capex corresponded to 9.0% of total expenditure in 2022 and
7.1% on average for 2018-2022. Salta's level of staff expenditure/
total expenditure averaged 57% during 2018-2022, among the highest
for Argentine LRGs, also a relevant limitation to the province's
budgetary flexibility.
Liabilities and Liquidity Robustness: 'Weaker'
Unhedged foreign currency debt exposure is an important weakness
considered, along with the weak national framework for debt and
liquidity and underdeveloped local market. The assessment also
considers a 'CC' sovereign that restructured its debt during 2020,
thus curtailing external market access to LRGs.
Salta faces growing debt capital amortizations from its USD357.4
million senior unsecured step-up notes that were restructured in
February 2021. During 2023 the province began to amortize the notes
with two principal amount payments of 5% in June 1, 2023 and Dec.
1, 2023. Debt service will continue to rise followed by two
principal amount payments of 7.5% in June 1, 2024 and Dec. 1, 2024.
Total debt service from the province's senior unsecured notes will
amount to USD79.8 million during 2024.
While BCRA regulation regarding capital controls for subnationals
appear to have expired as of Dec. 2023 in practice, an additional
weakness captured in this KRF, is discretional and regulatory
uncertainty regarding the imposition of exchange regulations that
could affect the LRGs' abilities to fulfil their financial
obligations.
Liabilities and Liquidity Flexibility: 'Weaker'
Fitch perceives the Argentine national framework in place for
liquidity support and funding available to subnationals as
'Weaker', as there are no formal emergency liquidity support or
bail-out mechanisms established, and considering that the current
lack of external market access affects the entity's refinancing
capacity. For liquidity, Argentine provinces rely mainly on their
own unrestricted cash.
At YE 2022, and as per Salta's public accounts, available
unrestricted cash totaled an estimated ARS39.6 billion, although no
public data is available for 2023, Fitch considers that the context
of economic downturn in 2024 coupled with expenditure pressures
would converge liquidity to structurally tight and weak levels in
the short to medium-term.
Debt Sustainability - 'b category'
Debt sustainability deteriorated to a 'b' score from 'aa' in the
previous review. The score resulted from a 'b' payback ratio and a
'b' coverage ratio assessment. In Fitch's rating case (2023-2025),
the primary metric of payback will be above 25x with a score of
'b', reflecting the province's weakening budgetary performance,
revenue dynamics below growing expenditure pressures in a context
of historically high inflation. And due to rising debt service
requirements, actual debt service coverage ratio is expected below
1.0x; a 'b' score, resulting in a final 'b' assessment.
DERIVATION SUMMARY
Salta's 'cc' SCP is derived from a 'Vulnerable' Risk Profile and a
'b' debt sustainability score, but also reflects its very high
level of credit risk, including the risk that a default of some
kind is probable. The SCP considers comparison with peers,
including the Provinces of Chubut, Neuquen, and La Rioja. Fitch
does not apply any asymmetric risk or extraordinary support from
upper-tier government. The rating is based on Fitch's rating
definitions.
Fitch classifies Province of Salta as a type B LRG, as it covers
debt service from cash flow on an annual basis.
KEY ASSUMPTIONS
Qualitative Assumptions
Risk Profile: Vulnerable
Revenue Robustness: Weaker
Revenue Adjustability: Weaker
Expenditure Sustainability: Weaker
Expenditure Adjustability: Weaker
Liabilities and Liquidity Robustness: Weaker
Liabilities and Liquidity Flexibility: Weaker
Debt Sustainability: 'b' category
Support (Budget Loans): 'N/A'
Support (Ad Hoc): 'N/A'
Asymmetric Risk: 'N/A'
Sovereign 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 2023-2025 projected
ratios. The key assumptions for the scenario include the
following:
- Operating revenue average growth of 165.9% for 2022-2025;
assuming growth below average inflation towards the medium term
given the current expected economic downturn in 2024 and the
negative impact of revenue framework impositions in federal
co-participation transfers;
- Operating expenditure average growth of 171% for 2022-2025;
assuming growth above average inflation towards the medium term to
assume real term expenditure re-composition;
- Average capital expenditure/ total expenditure levels of around
1%; below the 2018-2022 historical average of 7% reflecting lower
operating balances and liquidity availability;
- Cost of debt considers non-cash debt movements due to currency
depreciation with an average exchange rate of ARS351per U.S. dollar
for 2023, ARS1,589for 2024 and ARS3,621for 2025;
- Consumer price inflation (annual average % change) of 130% for
2023, 244% for 2024, 150% for 2025.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An improved operating balance that strengthens the actual debt
service coverage ratio above 1.0x on a sustained basis, fueled by a
containment in the operating expenditure front.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Signs of deeper liquidity stress that could compromise debt
repayment capacity in the short term, including evidence of
increased refinancing risk in its local and foreign currency debt;
as well as any regulatory restrictions to access foreign exchange
by LRGs.
-- The ratings would be downgraded if there are indications of any
credit event that reflects a near default situation.
LIQUIDITY AND DEBT STRUCTURE
At YE 2022, debt totaled ARS96.8 billion and will increase
significantly in YE 2023, considering that after primary elections
during 2023 the central bank devaluated the official exchange rate
around 20% to relieve market pressures. In YE 2023, an estimated
78% of the province's debt was denominated in foreign currency,
unhedged. Currency depreciation, coupled with Salta's deteriorating
budgetary performance observed in 2023, as well as rising USD notes
capital amortization, pressured projected debt service coverage
ratios during the rating case scenario to levels below 1x and will
erode current liquidity reserves throughout 2024.
ISSUER PROFILE
The Province of Salta is located in northwest Argentina. It has a
small and weak local economy concentrated in the tertiary sector,
heavily weighted in social services and the public sector. The
primary sector also contributes, and includes hydrocarbon
extraction. Salta has a low GDP per capita and a higher than
average percentage of the population with unsatisfied basic needs,
which translates into structurally high infrastructure needs.
Salta's economy corresponded to around 1.5% of national GDP. The
province's population is estimated at 1.5 million, around 3.2% of
the national population.
ESG CONSIDERATIONS
Salta, Province of has an ESG Relevance Score of '4' for Rule of
Law, Institutional & Regulatory Quality, Control of Corruption due
to weak management practices and regulations towards its financial
obligations, which has a negative impact on the credit profile, and
is relevant to the ratings in conjunction with other factors.
Salta, Province of has an ESG Relevance Score of '4' for Creditor
Rights due to the 2021 Distressed Debt Exchange, 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 Prior
----------- ------ -----
Salta, Province of LT IDR CC Affirmed CC
LC LT IDR CC Downgrade CCC-
senior unsecured LT CC Affirmed CC
=============
B E R M U D A
=============
BORR DRILLING: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed Borr Drilling Limited's (Borr) Long-Term
Issuer Default Rating (IDR) at 'B' with a Stable Outlook and Borr
IHC Limited and Borr Finance LLC's notes senior secured rating at
'B' following the tap of its existing 2028 senior secured bonds.
The Recovery Rating is 'RR4'.
The notes will fully conform with the terms and conditions of the
existing 2028 senior secured bonds and will likewise be guaranteed
by Borr.
Borr's IDR reflects exposure to Petroleos Mexicanos (PEMEX;
B+/Stable), moderate scale, a concentrated rig fleet of only
jack-up rigs and the inherent cyclicality of the offshore drilling
market. Borr has high leverage but also a strong deleveraging
trajectory from 2025 and a new capital structure that consists
mostly of amortising debt.
Rating strengths are strong near-term revenue visibility from a
robust contracted order backlog, a high-specification jack-up fleet
and its strong relationship with key customers.
KEY RATING DRIVERS
Deleveraging Delayed to 2025: The tap will result in Borr's
deleveraging being delayed by approximately one year. Contrary to
its previous expectations that Borr would reduce debt to below 3.5x
EBITDA by end-2024, this will now likely occur in 2025, assuming
around USD100 million of the tap proceeds are used to repay a
newbuild delivery financing facility. The delayed deleveraging is,
however, mitigated by Borr's healthy liquidity, a high share of
contracted near-term revenue, and strong potential for cash flow
generation. However, any use of the proceeds for shareholder
distributions will pose downside risk to the rating.
Developing Financial Policy: The announcement of Borr's inaugural
dividend of USD0.05/share, equating to around USD50 million per
year, as well as the establishment of a USD100 million share
repurchase programme provide additional clarity around its
long-term financial policy. Fitch previously expected shareholder
distributions of around USD150 million per year beginning in 2025,
so while the announced distributions have come earlier than
expected, they are smaller in size than previously assumed and
therefore neutral to the rating.
Positive Industry Trend: The jack-up rig market is showing signs of
recovery as some supply of rigs has left the market over the last
five years. Further security-of-supply concerns alongside
supportive hydrocarbon prices have resulted in renewed demand for
jack-up rigs from major producers as they look to replace reserves.
Fitch expects Borr's day rates and rig utilisation, which have been
increasing in the year-to-date, will continue to improve as
recently signed contracts ramp up and existing contracts expire and
are repriced.
Backlog Provides Near-term Revenue Visibility: Borr's 4Q23 backlog
was USD1.8 billion. This will cover over 90% and over 60%,
respectively, of its revenue forecasts for 2024 and 2025. This
substantially reduces the downside risk both to deleveraging
prospects and a return to positive free cash flow (FCF)
generation.
High-Spec Jack-Up Fleet: With an average age of around six years,
Borr's jack-up fleet is among the newest on the market. The fleet
of high-specification rigs is expected to have fairly low run-rate
capex requirements of around USD30 million-USD40 million a year,
with assets able to service complex projects in a variety of
geographies. Fitch expects Borr's assets to be sought after by
customers looking to develop higher complexity shallow-water
projects where efficiency and technical specifications of rigs are
key.
Newbuild Rigs Excluded: Borr's last two newbuild rigs are expected
to be delivered in late 2024, which will mark the end of the
company's growth cycle. Delivery of the rigs will entail payment of
a USD295 million final instalment, of which USD260 million will be
financed with operating company debt, effectively ring-fenced from
the rest of Borr's debt, and the remaining USD35 million will be
funded internally. Fitch therefore excludes the two newbuild rigs
from its recovery analysis.
Backlog and Utilisation Volatility: Since its inception in 2017,
Borr's backlog and fleet utilisation has been volatile during
periods of weakness in the oil market. This has resulted in low
EBITDA generation and negative FCF during 2019-2021. Current market
trends are favourable, and customers are willing to accept higher
rates and longer contracts amid high oil prices. Consequently,
Fitch expects that day rates, utilisation, and backlog will remain
volatile across economic cycles. This is partly mitigated by the
end of growth capex, which will help Borr preserve liquidity during
periods of lower EBITDA generation.
Mixed Customer Base: As of end-September 2023, Borr's customer base
was diversified across geographies and customer groups. It had 36%
of backlog coming from the Americas, 15% west Africa, 20% south
east Asia, and 29% the Middle East, and 37% from international oil
companies and 63% from national oil companies.
Borr nevertheless has substantial exposure to PEMEX, which
contributed 17% of 9M23 revenues, is currently in financial
distress, and has in the past delayed payments to its suppliers.
This is partially offset by Borr's strong relationships with other,
higher-quality customers such as Saudi Arabian Oil Company (Saudi
Aramco; A+/Stable), QatarEnergy (AA-/Positive), PTT Exploration and
Production Public Company Limited (BBB+/Stable), and European oil
and gas majors.
DERIVATION SUMMARY
Fitch rates Borr in line with Shelf Drilling, Ltd. (B/Stable) as
the latter's higher mid-cycle EBITDA, lower order book volatility
and higher-quality customer base are offset by Borr's better asset
quality. The latter is due to its very young fleet and wider
geographic diversification, alongside higher profitability per
rig.
Borr also shares the same rating as CGG SA (B/Stable) due to
similar mid-cycle EBITDA and comparable order book volatility.
However, Fitch expects CGG to generate stronger FCF and have lower
mid-cycle leverage. This is offset by Borr's good demand prospects
for the jack-up rig market over its forecast period, alongside
access to more varied funding sources.
Fitch rates Borr one notch below Valaris Limited (B+/Stable) due to
the latter's higher mid-cycle EBITDA, stronger liquidity, and lower
mid-cycle leverage, alongside a more diversified asset base. This
is partially offset by Borr's higher EBITDA margins.
Fitch rates Borr one notch below KCA DEUTAG ALPHA LIMITED
(B+/Positive) due to the latter's more diversified business profile
with high exposure to lower-risk onshore drilling in the Middle
East, lower leverage, stronger liquidity, and larger size. This is
partially offset by Borr's higher profitability.
KEY ASSUMPTIONS
- Utilisation averaging 92% for 2023-2026
- Day rates averaging around USD120,000 per day for 2023-2026
- EBITDA margin averaging around 53% for 2023-2026
- Capex averaging USD222 million per year for 2023-2026
- Dividend payments commencing in 2024, and growing 20% per year
through 2026
- Contractual amortisation of new debt
- No share repurchases for 2024-2026
RECOVERY ANALYSIS
The recovery analysis assumes that Borr would be liquidated in a
bankruptcy rather than reorganised as a going concern (GC). This is
driven by Borr's new assets, with several decades of remaining
useful life absent large-scale investment needs. Other oilfield
services companies in its rating universe, such as Shelf Drilling
and Valaris, have older assets with less useful life left or
requiring more substantial investments leading to lower asset
valuations, although EBITDA generation within its forecast horizon
may be similar or even higher than Borr's.
Fitch assumes Borr's USD150 million super senior revolving credit
facility (RCF; excluding the letter-of- credit portion) is fully
drawn. The RCF is super senior to its senior secured bonds.
Fitch excludes Borr's newbuild assets to be delivered in 2024 and
their attributable debt as they are not part of the restricted
group.
Fitch bases its recovery analysis on a liquidation value, which
takes into account 3Q23 reported accounts receivable of USD150
million with a 70% advance rate. The latter reflects the quality of
its customer base, and USD3.4 billion of net property, plant and
equipment primarily comprising the value of rigs per third-party
provider valuation report dated September 2023, with a 30% advance
rate.
- After a deduction of 10% for administrative claims its analysis
generated a waterfall-generated recovery computation (WGRC) in the
'RR4' band, indicating a 'B' instrument rating. The WGRC output
percentage on current metrics and assumptions was 50%. Borr's
revenue base is strongly concentrated in countries under Country
Group D, which will cap Recovery Rating at 'RR4' when the amount of
debt starts decreasing and imply a WGRC, before country-specific
considerations, above 50%.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- EBITDA gross leverage sustained below 2.5x
- Improvement of liquidity and reduction of gross debt with no
material near-term refinancing risk
- Sustained stronger jack-up market fundamentals, including
higher day rates, larger contracted backlog value, and
longer average contract tenor
- Increased geographical diversification of cash flows
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- EBITDA gross leverage above 3.5x on a sustained basis
- Aggressive financial policy, including excessive shareholder
distributions and/or aggressively-funded M&As
- Weakening liquidity
- Deteriorating market fundamentals, including lower day rates
or rig utilisation
LIQUIDITY AND DEBT STRUCTURE
Healthy Liquidity: Borr is well-funded at least to 2025 as the
high-yield notes have had their maturities extended to 2028-2030
with manageable amortisation averaging USD115 million per year
following the USD200 million tap. At end-2023, the company's cash
balances were USD102.5 million, and availability under its RCF (net
of guarantees) was USD150 million.
Delivery of the two newbuilds in 2024, if fully financed by
delivery financing, will add another USD35 million-USD45 million of
amortisation in 2025-2026, which is still manageable.
Fitch expects FCF, following delivery of the newbuilds, to turn
positive in 2025 and beyond as capex winds down. Liquidity is
further supported by the USD150 million RCF (excluding the
letter-of-credit portion) maturing in 2028.
ISSUER PROFILE
Borr is an offshore contract drilling company, operating a fleet of
high-spec jack-up rigs globally.
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 Recovery Prior
----------- ------ -------- -----
Borr Drilling Limited LT IDR B Affirmed B
Borr Finance LLC
senior secured LT B Affirmed RR4 B
Borr IHC Limited
senior secured LT B Affirmed RR4 B
===========
B R A Z I L
===========
BRAZIL: Drought Risks Impact on Sugarcane and Worldwide Sugar
-------------------------------------------------------------
Lachlan Williams at Rio Times Online reports that Brazil faces an
expected shortfall in sugarcane harvest next month, with dry
conditions posing a significant threat to crop development.
Plinio Nastari of Datagro highlighted that weak spring rainfall
could degrade sugarcane quality for the second half of the year,
according to Rio Times Online.
An early-year drought has already prompted mills to postpone
harvesting, the report notes.
Early-season productivity may initially seem promising, but Ulysses
Carvalho from Sucden predicts a steep decline in yields as the
season progresses, the report relays.
Crops harvested late in 2023 are particularly vulnerable, needing
water for growth, the report notes.
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).
PETROBRAS: Dividend Proposals for Q4 2023
-----------------------------------------
Richard Mann at Rio Times Online reports that Petrobras on outlined
plans to issue regular and extraordinary dividends for the final
quarter of 2023.
The board's endorsement of this proposal precedes a shareholder
vote scheduled for April 25, according to Rio Times Online.
The oil corporation aims to disburse R$ 14.2 billion ($2.87
billion) in dividends as part of a remuneration policy that commits
to distributing 45% of its free cash flow to shareholders if the
company's gross debt stays under US$65 billion, 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.
In January 2024, S&P Global Ratings assigned a new management &
governance (M&G) assessment of moderately negative to Brazil-based
Petroleo Brasileiro S.A. - Petrobras. At the same time, S&P has
affirmed its issuer credit ratings on Petrobras at 'BB' on the
global scale and 'brAAA' on the Brazilian national scale. S&P has
also affirmed its issue-level ratings on the company, and removed
all its ratings from under criteria observation (UCO).
=========
H A I T I
=========
HAITI: IDB Commits $160 Million Aid Package to Crisis
-----------------------------------------------------
Dominican Today reports that the Inter-American Development Bank
(IDB) has declared a commitment of $160 million to be allocated as
aid to Haiti, addressing the pressing political and humanitarian
crisis unfolding in the country.
Ilan Goldfajn, the President of the IDB, outlined that the donation
is intended to mitigate the escalating economic and social
challenges exacerbated by armed gangs, instilling fear, death, and
tension among the population, according to Dominican Today.
During the Annual Meeting of Governors of the IDB, a private
session was convened to deliberate on the organization's actions
and potential interventions for Haiti, the report notes.
The report relays that Goldfajn, in discussions with journalists
during a break in the plenary session, emphasized the need for
collaborative thinking to respond effectively to the crisis. He
revealed that the organization has directed the allocation to be
distributed in the areas of food, health, and education,
demonstrating solidarity with the heightened situation, notably
marked by the recent assaults on several prisons in Port-au-Prince,
the report says.
Acknowledging the critical state in Haiti, where armed gangs
facilitated the escape of 3,600 inmates following attacks on
prisons, the president of the IDB expressed a firm awareness of the
urgency surrounding the situation, the report says.
HAITI: Violence is Battering Fragile Economy & Causing Shortages
----------------------------------------------------------------
Danica Coto and Evens Sanon at Associated Press report that rotting
fruit, withered vegetables, empty water jugs and spent gas
canisters now stock the stores and stands that serve Haiti's poor -
a consequence of the unrelenting gang attacks that have paralyzed
the country for more than a week and left it with dwindling
supplies of basic goods.
The terrifying violence as anti-government gangs battle police in
the streets has crippled the fragile economy and made it extremely
difficult for many of the country's most vulnerable to feed
themselves, according to Associated Press.
The main port in the capital, Port-au-Prince, closed down,
stranding scores of containers full of food and medical supplies at
a time when U.N. officials say half the country's more than 11
million inhabitants don't have enough to eat, and 1.4 million are
starving, the report notes.
Associated Press relays that grocery stores in upscale parts of the
capital remain stocked, but their goods are out of reach to most in
a country where most people earn less than $2 a day, the report
notes.
"People are desperate for water," said Jean Gerald, who was hawking
blackened tomatoes and shriveled scallions on a recent day,
confident they would sell quickly because food is so scarce in
parts of Port-au-Prince. "Because of gang violence, people will go
hungry."
Next to him were rows of empty jugs he hadn't been able to refill
because the violence had forced one of the country's main bottled
water operators to shut down, the report discloses.
The report relays that Gerald noted that he was running out of
things to sell because the depot where he usually buys rice, oil,
beans, powdered milk and bread had been set on fire and its owner
had been kidnapped.
As he spoke, gunfire echoed in the distance.
Scores of people have been killed and more than 15,000 have been
forced from their homes since coordinated gang attacks began on
Feb. 29 while Prime Minister Ariel Henry was in Kenya to push for
the U.N.-backed deployment of a police force from the East African
country to fight gangs in Haiti, the report notes. A Kenyan court,
however, ruled in January that such a deployment would be
unconstitutional, the report says.
As the gangs rampaged through Port-au-Prince, freeing more than
4,000 inmates from the country's two biggest prisons, attacking its
main airport and setting police stations on fire, Haiti's least
powerful have suffered the most, the report says.
"It's a pretty bad situation," said Mike Ballard, intelligence
director at Global Guardian, a Virginia-based international
security company. "The gangs are trying to fill a power vacuum."
Schools, banks and most government agencies remain closed. Gas
stations have also shuttered, and the few who can afford to pay $9
a gallon - more than twice the usual rate - have flocked to the
black market, the report discloses.
Street vendors are slowly losing their livelihoods and wonder how
they'll feed their families, the report notes.
Michel Jean, 45, sat to the makeshift metal shack where he normally
sells rice, beans, milk and toilet paper, the report says.
"If you take a look inside, there's nothing," he said, gesturing to
a few cans of sardines. "I don't know how long this is going to
last. I'm hoping this crisis is over, and that people can go back
to their regular life."
That seems unlikely for now.
Henry, who is facing calls to resign or form a transitional
council, remains unable to return home. He arrived in Puerto Rico
after he was unable to land in the Dominican Republic, which
borders Haiti, the report discloses. The Dominican government said
he lacked a required flight plan as they closed their country's
airspace with Haiti, the report relays.
Meanwhile, Haitian officials extended a state of emergency and
nightly curfew as gangs continued to attack key state institutions,
the report notes.
"They are saying essentially that they are prepared to take over
the government," said Robert Fatton, a Haitian politics experts at
the University of Virginia, referring to the gangs. "I think we
should take them fairly seriously."
Valdo Cene, 38, said he worries that elderly people are dying in
their homes, with some people unable to venture out for food and
water because gangs control their neighborhoods, the report says.
Cene used to sell propane, which many use for cooking. But he has
been unable to resupply because gangs are blocking the roads and
seizing control of more territory, including parts of Canaan, a
community north Port-au-Prince, the repotr relays.
"The whole area is suffering," he said. "They are not getting any
water. They are not getting any propane."
Cene said he and his family are living off their remaining rice,
beans, sardines and plantains, along with a handful of yams and
carrots, the report notes. He wonders when he'll be able to make a
living again.
As more and more people are left unemployed, street vendors are
selling smaller amounts of essential goods, the report relays.
On a recent afternoon, Gerald poured less than a cupful of cooking
oil into an old water bottle and handed it to a young boy, the
report relays. It was all the boy's family could afford, and not
enough for Gerald to continue making a living.
"If the foreign force comes in, it will give a break to the little
people like me to have a life and continue fighting for a better
future," he said, the report adds.
=============
J A M A I C A
=============
JAMAICA: Earns US$473MM From Mining Exports for Jan-Oct 2023
------------------------------------------------------------
RJR News reports that Jamaica more than doubled its export earnings
from mining and quarrying for the first 10 months of 2023, compared
with the similar period in 2022.
The Statistical Institute of Jamaica says the industry sent
US$473.3 million worth of goods overseas, according to RJR News.
That's compared with the US$216.5 million made for January to
October 2022, the report notes.
The increased income was linked to a US$250.2 million rise in
earnings from alumina, the report relays.
Alumina earnings amounted to US$395.7 million, compared with
US$145.5 million for the corresponding period in 2022, the report
discloses.
The resumption of operations at Jamalco in Clarendon after a fire
also positioned the country to ramp up mining related activities,
the report notes.
The value of bauxite exports, however, came in 8.2 per cent lower
at US$57.8 million, 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.
===========
M E X I C O
===========
TOTAL PLAY: Fitch Lowers LongTerm Issuer Default Ratings to 'CCC+'
------------------------------------------------------------------
Fitch Ratings has downgraded Total Play Telecomunicaciones, S.A.P.I
de C.V. (Total Play) Long-Term Foreign and Local Currency Issuer
Default Ratings (IDRs) to 'CCC+' from 'B-'. Fitch has also
downgraded the company's outstanding balance of its senior
unsecured debt due 2025 and 2028 to 'CCC'/'RR5' from 'B-/RR4'.
Fitch has also removed the Rating Watch Negative.
The downgrade of Total Play's IDRs follows its announcement of a
private exchange with a group of investors of USD213.5 million of
its USD575 million senior unsecured notes due 2025 for amortizing
senior secured bonds due in 2028 with a higher interest rate. The
new 2028 notes will be secured by accounts receivables leaving the
remaining of the original 2025 and 2028 notes in a weaker debt
ranking.
Fitch views the private exchange negatively as it did not include
an unconditional offer to all of the bondholders. Fitch's view of
subordination of the existing notes due 2025 and 2028 reflects the
seniority of the new notes. After the new secured issuance, around
45% of total accounts receivables that flow through trusts are
labeled and committed to service secured debt, compared with 38% at
Dec. 31, 2023.
KEY RATING DRIVERS
Limited Refinancing Options: Fitch believes that an exchange could
be a potential outcome given the very challenging credit market
conditions faced by Total Play. The private exchange of USD213.5
million allows Total Play to extend its debt maturity profile. The
company has announced that it intends to offer a similar
alternative for the remaining 2025 notes in the short term. Fitch
views the private exchange as negative since it was not offered to
all the 2025 bondholders. The original 2025 and 2028 notes will be
subordinated one notch from the IDR as the new notes are secured by
accounts receivables and, in Fitch's view, have lower recovery
prospects in an event of default.
An increase in the percentage of secured debt that further
subordinates the original 2025 and 2028 senior unsecured notes
could lead to a two-notch subordination from the IDR.
Increasing Cost of Debt: The use of secured debt further limits
Total Play's financial flexibility. The new secured senior notes
interest rate is 10.5%, which is higher than the original 2025
senior unsecured notes. The company's percentage of secured debt
and cash interest expense will increase given its limited financing
options, impacting cash flow generation.
Expectation of Neutral FCF: Fitch expects FCF to be neutral in
2024, given Total Play's MXN12.5 billion capex plan, a level that
would not allow the company to address its refinancing needs and
prioritize debt repayment by strengthening liquidity. Total Play
also faces higher interest expense and a more competitive
landscape.
Fitch expects FCF to be neutral to positive in 2025-2026,
considering average annual capex of MXN13 billion. In Fitch's view,
the company has the ability to cut non-essential capex temporarily
by nearly half from a current 2024 capex budget of MXN12.5 billion
toMXN6 billion.
Total Play has historically always reported negative FCF
generation. The company has invested MXN70 billion, mainly in
network deployment in the last five years, with capex/revenue
ratios of 62% in 2022, 64% in 2021 and 73% in 2020.
Profitability Continuously Improving: Operational performance is in
line with Fitch's expectations and enabled the company to generate
positive cash flow from operations (CFO) in 2023. Total Play's
services are performing well, with solid revenue and EBITDA
expansion in recent years, backed by extensive network deployment
that increased homes passed, business scale and profitability.
Increased network penetration, while maintaining a low-cost
structure and working capital requirements, is key to growing
revenue and expanding margins. Fitch expects network penetration to
increase to 29.0% as of YE 2024, compared with 12% in 2018, while
EBITDA margins reach about 42.7% at YE 2024. Fitch expects EBITDA
to continue to improve in 2024, maintaining leverage ratios below
3.5x.
Market Share and Diversification: Total Play is an important
participant in the industry in terms of network coverage, homes
passed and revenue generating units. The company has maintained
strong growth despite operating in a competitive industry. Total
Play reached 17.6 million homes passed and 4.6 million subscribers
in 4Q23, a faster growth rate of 35% than the industry average of
6%. Total Play has a balanced revenue mix and customer and service
diversification.
ESG - Governance Structure: Total Play's access to funding sources
is limited by its ownership concentration and Grupo Salinas'
disparate treatment of different stakeholders and its arrangements
with related companies that benefit shareholders but affect
creditors' interests.
DERIVATION SUMMARY
Total Play's ratings reflect its tight liquidity position,
refinancing risk and weaker governance relevance scores compared to
other issuers. Compared with consolidated Grupo Televisa, S.A.B.
(BBB/Negative), which has a more diversified business, Total Play
has higher leverage, a smaller market share and lower network
penetration.
Cable & Wireless Communications Limited (C&W; BB-/Stable) has
similar leverage to Total Play and a solid liquidity position, with
a long-dated debt amortization profile and better service and
geographic diversification. C&W benefits from operations in a
series of mainly duopoly markets, excluding Panama mobile. Revenue
mix per service is well-balanced, with mobile accounting for around
26% of total sales, fixed-line at 26% and business to business with
48% of revenue in 2022. C&W's strengths are tempered by Liberty
Latin America Ltd.'s financial management, which limits any
material deleveraging.
VTR Finance N.V. (CCC-) has higher leverage than Total Play and
also faces limited financial flexibility. Its rating also reflects
the expectation of a weak operational performance in 2024 due to
the continuation of a highly competitive environment in Chile and a
sustained negative FCF.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
Include:
- Revenue growth of 10% in 2024 due to the company's strategy of
increasing in-network penetration;
- EBITDA margins of 43% in 2024;
- Capex to sales ratio at around 28.1% in 2024, capex should be
more aligned to customer increases;
- FCF generation turning neutral in 2024;
- No dividend payments.
RECOVERY ANALYSIS
Fitch criteria consider bespoke recovery analysis for issuers with
IDRs of 'B+' and below. The bespoke recovery analysis assumes that
Total Play would be considered a going concern in bankruptcy and
that the company would be reorganized rather than liquidated.
Total Play's going concern EBITDA of MXN10.2 billion is based on
Fitch's expectation of a sustainable, post-reorganization EBITDA
level. This compares with an LTM EBITDA of MXN17.2 billion and
reflects the increased competition in the Mexican market and the
company's limited financial flexibility. Fitch applied an
enterprise value/EBITDA multiple of 5.0x. This figure reflects
Total Play's market position.
Fitch applies a waterfall analysis to the post-default enterprise
value based on the relative claims of debt in the capital
structure. Fitch's debt waterfall assumptions consider total debt
as of Dec. 31, 2023. The waterfall results in a 'RR5' Recovery
Rating for senior unsecured debt. Due to the high amount of
cashflows (42%) that go into the master trust, there is
subordination in the original 2025 notes and 2028 notes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
The possibility of any positive ration action in the short term in
unlikely. However, factors that could be considered positive for
the issuer's credit quality include:
- Change in the funding mix towards unsecured debt and a
diversification of its funding sources;
- A more balanced capital structure between liabilities and
equity;
- A CFO-Capex/Total Debt ratio consistently at or above 2.5%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Failure to address its refinancing needs, launching of a
coercive
debt exchange or announcing a debt restructuring;
- Neutral to negative CFO-Capex/Total debt ratio that prevents
further liquidity improvements;
- Weaker operating performance and loss of market share;
- Unfavorable regulatory changes.
LIQUIDITY AND DEBT STRUCTURE
Private Exchange intended to Improve Liquidity: The private
exchange of USD213.5 million reduces but does not eliminate
refinancing risks. Total Play's financial flexibility is limited,
and it is still exposed to risk from the remaining USD361.5 million
of the 2025 unsecured notes and MXN9.1 billion (including factoring
and leasing of MXN4.5 billion) that matures in 2024. The company
had readily available cash and equivalents of MXN2.3 billion as of
Dec. 31, 2023 and restricted cash of MXN3.3 billion, which Fitch
assumes will be used for debt repayment. The company expects to
refinance MXN1.0 billion in local bonds that mature in April 2024.
The increase in the percentage of secured debt limits Total Play´s
financial flexibility. Its liquidity position is tempered by still
elevated capex in 2024, (at 28.1% capex/revenue), that continues to
pressure its FCF generation, higher interest expense and a
difficult market environment as it aims to execute on refinancing
short-term debt.
Fitch includes factoring of accounts payable of approximately
MXN2.2 billion in its debt calculations. The factoring adjustment
allows Fitch to compare issuers that may use different sources of
funding, as immediate replacement funding is required if the
payables financing shuts down.
ISSUER PROFILE
Total Play Telecomunicaciones, S.A.P.I. de C.V. is a Mexican
provider of fixed telecommunications services to residential and
enterprise customers including government entities. The company
offers pay-television, fixed-broadband and fixed-voice services
through its competitive fiber-to-the-home (FTTH) via a gigabit
passive-optical network (GPON).
ESG CONSIDERATIONS
Total Play Telecomunicaciones, S.A.P.I. de C.V. has an ESG
Relevance Score of '5' for Governance Structure due to the
ownership concentration and the company's aggressive related-party
treatment toward different stakeholders which has a negative impact
on the credit profile and is highly relevant to the rating,
resulting in an implicitly lower rating.
Total Play Telecomunicaciones, S.A.P.I. de C.V. has an ESG
Relevance Score of '4' for Financial Transparency due to the level
of detail and transparency of financial disclosure that is weaker
than other industry peers which 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
----------- ------ -------- -----
Total Play
Telecomunicaciones,
S.A.P.I. de C.V. LT IDR CCC+ Downgrade B-
LC LT IDR CCC+ Downgrade B-
senior unsecured LT CCC Downgrade RR5 B-
=======
P E R U
=======
PERU LNG: Moody's Affirms 'B2' CFR & Alters Outlook to Negative
---------------------------------------------------------------
Moody's Ratings affirmed PERU LNG S.R.L.'s (PLNG) B2 Corporate
Family Rating and B2 senior unsecured rating on the company's
existing notes and changed the outlook to negative from stable. The
rating action was based on Moody's expectation that PLNG's
liquidity will deteriorate, a consequence of the dividend payment
announced for 2024, in a context of volatile commodities prices.
RATINGS RATIONALE
The change in PERU LNG S.R.L.'s rating outlook to negative from
stable was based on the company's decision to distribute $130
million of dividends during 2024, when the notes' amortization will
start, eroding the company's liquidity position. The negative
outlook also reflects that PLNG's production and EBITDA generation
have remained below Moody's expectations as the company has
experienced plant stoppages either due to external events,
unplanned shutdowns or major maintenance, which evidence continued
high operating risk.
For 2024, Moody's expects PLNG's EBITDA to reach roughly $220
million, below previous management's expectations, with a
production equivalent to 196 trillion British thermal units (TBtus)
and if Henry Hub averages $2.75 per million BTU in the year, as per
the rating agency's estimates. While the company registered a
strong cash position as of December 2023 of $267 million, $130
million will be distributed as dividend payment. Additionally,
capital spending will hover around $22 million, annual interest
payments will amount $51 million and debt amortization will
represent $78 million. Moody's estimates that the company will
register a negative free cash flow in 2024, which increases
liquidity risk for 2025, when maturities will represent $156
million. Governance risk is a consideration in the rating action.
The company operates with more aggressive financial policies
reflected in an expectation of tight liquidity.
PLNG's B2 ratings are based on its exposure to natural gas market
prices volatility; high operating risk; fluctuating leverage given
volatile cash flow; and small, single operational asset base. These
risks are somewhat counterbalanced by PLNG's low supply risk, high
capacity utilization rates, limited competition risk, minimum
foreign-exchange risk, implicit shareholders support and its high
relevance to Peru's trade balance and energy industry. While PLNG's
shareholders are mostly financially strong and can provide support,
it remains to be seen how they will help the company in a situation
of liquidity stress.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of PLNG's B2 ratings is unlikely in the next 12 to 18
months given the negative rating outlook. A stabilization of PLNG's
rating outlook could occur if the company improves the notes'
maturity profile and/or its liquidity position becomes at least
adequate when comparing to its capital investment and debt payment
obligations.
PLNG's B2 ratings could be downgraded if its cash flow generation
does not improve in 2024 and its liquidity position and interest
coverage ratio remain weak.
The principal methodology used in these ratings was Midstream
Energy published in February 2022.
=====================
P U E R T O R I C O
=====================
NATURAL DISASTER: Rental Income to Fund Plan
--------------------------------------------
Natural Disaster Proof Homes, Inc., filed with the U.S. Bankruptcy
Court for the District of Puerto Rico a Plan of Reorganization
dated March 4, 2024.
This Plan of Reorganization proposes to pay all creditors of the
Debtor from its monthly income 100% of all allowed claims.
Unsecured creditors are not treated as the debtor has no unsecured
creditors. This Plan also provides for the payment of
administrative and priority claims.
This Plan provides for the treatment of one class of secured
creditors, Frederico Leone Togni; one Priority Creditor, PR
Treasury (1 claim), no class of unsecured claims; and no class of
equity security holders.
The claim of Frederico Leone Togni in the amount of $140,000.00
will be paid 10 equal monthly installments of $14,000.00
commencing
6 months from effective date. This Class will receive a total
payout of $140,000.00.
The claim of PR Treasury Department in the amount of $708.56 will
be paid 2 monthly payments of $355.00, from effective date,
including 3% interest rate.
The debtor will continue to administer all the assets of the
estate, and to fund the plan, it will apply the rental income to
fund the plan.
A full-text copy of the Plan of Reorganization dated March 4, 2024
is available at https://urlcurt.com/u?l=IPeSmN from
PacerMonitor.com at no charge.
Counsel to the Debtor:
Modesto Bigas Mendez, Esq.
Modesto Bigas Law Office
P.O. Box 7462
Ponce, PR 00732
Telephone: (787) 844-1444
Facsimile: (787) 842-4090
Email: mbiasmendez@gmail.com
About Natural Disaster Proof Homes
Natural Disaster Proof Homes, Inc., filed a petition under Chapter
11, Subchapter V of the Bankruptcy Code (Bankr. D.P.R. Case No.
23-03863) on Nov. 27, 2023. In the petition signed by Hector M.
Rodriguez Edwards, president, the Debtor disclosed under $1
million
in both assets and liabilities.
Modesto Bigas Mendez, Esq., serves as the Debtor's counsel.
===============
S U R I N A M E
===============
SURINAME: Program Performance Has Been Strong, IMF Says
-------------------------------------------------------
An International Monetary Fund (IMF) team led by Ms. Anastasia
Guscina conducted an in-person mission with the Surinamese
authorities during January 29-February 9 to discuss policies to
complete the fifth review of the Extended Fund Facility approved by
the IMF Executive Board on December 22, 2021.
At the conclusion of the mission, Ms. Guscina issued the following
statement:
"The IMF team reached a staff-level agreement with the authorities
on the fifth review of Suriname's economic reform program that is
supported by the EFF arrangement. Program performance has been
strong and all performance criteria for this review were met. This
staff level agreement is subject to approval by the IMF's Executive
Board, contingent on the fulfillment of all relevant Fund policies.
Upon completion of this review, Suriname will have access to SDR
46.7 million (about USD 62.5 million), bringing total program
disbursements to date to SDR 243.7 million (about USD 326
million).
"The authorities' efforts to stabilize the economy are bearing
fruit. Growth is projected to return to its 3 percent potential in
2024, inflation is on a steady downward trend, investor confidence
is returning, and international reserves are increasing.
Maintaining prudent fiscal and monetary policies will help bring
inflation to under 15 percent by end-2024. The authorities face
important near-term risks, including policy implementation
challenges stemming from a challenging socio-political climate and
capacity constraints. Over the medium to long term, there are
significant upside risks to growth due to the development of large
new oil fields.
"Program performance during the fifth review has been solid. All
quantitative performance criteria and indicative targets under the
program were met, except for the spending floor on social
assistance. The structural reform agenda is progressing, albeit
with delays.
"Protecting the poor and vulnerable during this difficult time of
economic adjustment is a priority. The increases in social
transfers should be coordinated with phasing out of electricity
subsidies. The authorities are doubling their efforts to meet the
social protection targets in 2024, both by increasing the size of
various cash transfer programs and expanding the social safety net
to include all eligible beneficiaries. The authorities have
recently published information on the number of beneficiaries and
amounts spent on the social program in each district of the
country, which is the right step in increasing fiscal transparency
and accountability.
"Public sector reform is progressing. Promptly removing
unregistered and chronically absent civil servants from public
payroll will create fiscal space for a more meaningful increase in
salaries for productive civil servants.
"Excellent progress has been made with debt restructuring.
Agreements-in-principle have been reached with all major external
creditors, including recently with China. Agreements with the Paris
Club, India and bondholders have been finalized. Domestic debts to
the central bank and commercial banks have been restructured. The
authorities remain committed to finalizing the debt restructurings
with the remaining external commercial creditors and to swiftly
resolve all outstanding domestic debt arrears. Enhanced commitment
controls are necessary to prevent accumulation of supplier
arrears.
"The central bank is actively working to improve the monetary
policy traction through improvement in processes and actively
communicating with the banks on their monetary policy targets. The
current monetary policy stance remains appropriate to anchor
inflation expectations. The central bank has also demonstrated its
commitment to a flexible, market-determined exchange rate while
working to improve the functioning of the foreign exchange market.
"The central bank is committed to addressing vulnerabilities in the
banking system. The authorities will ensure the timely completion
of bank recapitalization plans. The central bank is also enhancing
its supervisory capacity and its powers and tools for early
intervention, recovery and resolution of banks. In January 2024,
revisions to the Banking and Credit Supervision Act and the new
Bank Resolution Act helped align legislation with international
best practices in banking supervision and resolution.
"The central bank is continuing to make progress in clearing the
backlog of financial statements audits and continues to conduct
special audits of program monetary data. A recapitalization plan
for the central bank is being prepared and governance reforms are
well underway in various areas including anti-money
laundering/combating the financing of terrorism, anti-corruption,
and public sector procurement.
"The mission would like to thank the authorities for a
collaborative and fruitful dialogue. A wide-ranging set of meetings
was held with the President of the Republic of Suriname, the
Minister of Finance and Planning, the Minister of Justice and
Police, the Minister of Social Affairs and Housing, the Minister of
Internal Affairs, the Minister of Spatial Planning and Environment,
the Minister of Labor, the Minister of Natural Resources, the
Central Bank Governor, members of parliament, other senior
officials, representatives of the private sector, and development
partners."
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD PETROLEUM: S&P Withdraws 'BB' LT Issuer Credit Rating
--------------------------------------------------------------
S&P Global Ratings has withdrawn its 'BB' long-term global scale
issuer credit rating on Trinidad Petroleum Holdings Ltd. (TPHL) at
the issuer's request. S&P Global Ratings is withdrawing the rating
on TPHL as the company has no outstanding debt facilities rated on
it. The outlook was stable at the time of the withdrawal.
S&P's ratings on TPHL's subsidiary Heritage Petroleum Co. Ltd.
remain unchanged.
*********
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
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Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
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