/raid1/www/Hosts/bankrupt/TCRLA_Public/240322.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Friday, March 22, 2024, Vol. 25, No. 60
Headlines
A R G E N T I N A
ARGENTINA: Milei's Bold Decree Suffers Major Setback
B A H A M A S
FTX GROUP: Owner Deserves 40-50 years in Prison, Prosecutors Say
B R A Z I L
BANCO DO BRASIL: Fitch Assigns 'BB(EXP)' Rating to Sr. Unsec Notes
ELDORADO BRASIL: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
C A Y M A N I S L A N D S
CAYMAN AIRWAYS: COVID-19 & Boeing Max Woes Contribute to Losses
C O L O M B I A
COLOMBIA: Central Banker Says Data Paves Way for Bigger Rate Cuts
C O S T A R I C A
REVENTAZON FINANCE: Fitch Hikes Rating on Two Tranches to 'BB+sf'
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Commonwealth Countries Contributors to Economy
J A M A I C A
JAMAICA: To Cut Corp Income Tax Rate for Renewable Energy IPPs
NATIONAL COMMERCIAL: Fitch Hikes LongTerm IDR to BB-, Outlook Pos.
TRANSJAMAICAN HIGHWAY: Fitch Hikes Rating on Sr. Sec Notes to 'BB'
M E X I C O
GRUPO ELEKTRA: Fitch Lowers LongTerm IDR to 'BB-', Outlook Stable
P U E R T O R I C O
HVP FOODS: Seeks to Tap Juan C. Bigas Law Office as Legal Counsel
LIBERTY COMMUNICATIONS: Fitch Affirms BB- LongTerm IDR, Outlook Neg
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: We Must Hold Gov't Accountable, Harford Says
U R U G U A Y
URUGUAY: IMF Says Fiscal Framework Implementation Should be Lauded
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Milei's Bold Decree Suffers Major Setback
----------------------------------------------------
Manuela Tobias at Bloomberg News reports that President Javier
Milei's initial dose of shock therapy teeters on the edge of
collapse after Argentina's Senate defeated his sweeping executive
decree in a 42-to-25 vote.
The decree now goes to the lower house of Congress where a simply
majority can scrap the more than 300 measures aimed at deregulating
Argentina's economy, which have been in place since late December,
according to Bloomberg News.
Push-back against his initiative comes after he failed to secure
enough votes for his much larger omnibus reform package in
February, stoking investor concern about his legislative strategy
to revive the crisis-prone economy hurtling into recession and 270
percent inflation, Bloomberg News notes.
Bloomberg News says that Milei earlier circulated a new,
trimmed-down draft of his 'omnibus bill' among governors and some
lawmakers that excludes the privatization of oil company YPF SA,
declares some emergency powers and proposes a new formula for
calculating pension payments, among other changes. The move
illustrates Milei's revised negotiating tactic, seeking to build
support among Argentina's governors before trying to rush it
through Congress, Bloomberg News relays.
Opposition lawmakers from the Peronist party had been applying
pressure on Vice-President Victoria Villarruel to hold a special
session to vote down the decree since January, while a handful of
moderate lawmakers signed onto the petition last month, Bloomberg
News discloses.
Resistance to continued calls to a vote became impossible after
regular sessions kicked off this month, according to a person
familiar with Villarruel's decision, Bloomberg News says.
The president's press office fired off an angry statement on social
media condemning the "hurried treatment" of the decree and
expressing "concern over the unilateral decision by some sectors of
the political class," Bloomberg News relays. In a press
conference, spokesman Manuel Adorni denied multiple press reports
of friction between Milei and Villarruel, Bloomberg News says.
Milei's party holds just seven seats in the 72-member upper chamber
and about 15 percent of representatives in the lower house,
Bloomberg News discloses. The decree deregulated various aspects
of Argentina's economy, including steps to privatise companies,
facilitate exports and end rent control, Bloomberg News relays. An
important part of the decree had already been suspended after an
Argentine court in January deemed its labor reforms
unconstitutional, Bloomberg News adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on March 15, 2024, raised its local currency
sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and
its national scale rating to 'raB+' from 'SD'. S&P also raised its
long-term foreign currency sovereign credit rating to 'CCC' from
'CCC-' and affirmed its 'C' short-term foreign currency rating. The
outlook on the long-term ratings is stable. In addition, S&P
revised its transfer and convertibility assessment to 'CCC' from
'CCC-'.
S&P said the stable outlook on the long-term ratings balances the
risks posed by pronounced economic imbalances and policy
uncertainties with the favorable change in near-term debt service
obligations. S&P also expect no further debt exchanges that it
would likely consider to be distressed.
Fitch Ratings upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
=============
B A H A M A S
=============
FTX GROUP: Owner Deserves 40-50 years in Prison, Prosecutors Say
----------------------------------------------------------------
Luc Cohen at Reuters reports that Sam Bankman-Fried should spend
between 40 and 50 years in prison after being convicted for
stealing $8 billion from customers of his now-bankrupt FTX
cryptocurrency exchange, prosecutors said.
In November, a jury found Bankman-Fried, 32, guilty on seven counts
of fraud and conspiracy, according to Reuters. Federal prosecutors
in Manhattan said "thousands of everyday people" including
residents of war-torn and unstable countries had entrusted their
nest eggs to FTX, the report notes.
"Even now Bankman-Fried refuses to admit what he did was wrong,"
prosecutors wrote in a sentencing memorandum, the report relays.
"His life in recent years has been one of unmatched greed and
hubris; of ambition and rationalization; and courting risk and
gambling repeatedly with other people's money."
They are seeking $11 billion in forfeiture, to account for losses
FTX's investors and Alameda's lenders suffered as well, the report
notes.
Reuters discloses that the former billionaire's lawyer Marc Mukasey
told U.S. District Judge Lewis Kaplan that a 5-1/4 to 6-1/2 year
prison term would be appropriate. They said FTX clients would get
most of their money back, and that Bankman-Fried did not set out to
steal, the report relays.
Mark Botnick, a spokesman for Bankman-Fried, said Mukasey would
file a response to prosecutors' memorandum.
Kaplan is scheduled to sentence Bankman-Fried on March 28 in
Manhattan federal court. Bankman-Fried plans to appeal his
conviction and sentence, the report says.
Bankman-Fried is the son of two Stanford Law School professors. A
graduate of the Massachusetts Institute of Technology,
Bankman-Fried worked on Wall Street before riding a boom in the
values of digital assets such as bitcoin to a net worth Forbes
magazine once estimated at $26 billion, the report relays.
His fortune evaporated in November 2022, when FTX declared
bankruptcy after a wave of customer withdrawals, the report notes.
In their sentencing memorandum, prosecutors pointed to his
privileged upbringing and elite education as reasons he should face
an especially harsh sentence, the report adds.
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
billion in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year.
According to Reuters, SBF shared a document with investors on Nov.
10, 2022, showing FTX had $13.86 billion in liabilities and $14.6
billion in assets. However, only $900 million of those assets
were
liquid, leading to the cash crunch that ended with the company
filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims
agent, maintaining the page
https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
===========
B R A Z I L
===========
BANCO DO BRASIL: Fitch Assigns 'BB(EXP)' Rating to Sr. Unsec Notes
------------------------------------------------------------------
Fitch Ratings has assigned an expected Long-Term rating of
'BB(EXP)' to Banco do Brasil S.A.'s (BdB) proposed USD500 million
senior unsecured notes, acting through its Grand Cayman branch. The
bank expects to place a dual tranche issue, due 2027 and 2031.
The net proceeds will be used to finance and/or refinance, in whole
or in part, new or existing eligible green and sustainable projects
in accordance with bank's Sustainability Finance Framework. The
final rating is contingent upon the receipt of final documents
conforming to the information already received.
KEY RATING DRIVERS
The expected rating on the notes corresponds to BdB's Long-Term
Foreign Currency Issuer Default Rating (IDR; BB/Stable) and ranks
equal to its other senior unsecured debt. BdB's ratings are
equalized with Brazil's IDRs (BB/Stable) and are further
underpinned by the bank's Viability Rating. In Fitch's view, the
bank would receive support from the federal government, if needed.
This reflects the majority of federal government ownership, its key
policy role, particularly in rural lending and systemic
importance.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
As the notes are rated at the same level as the IDR, their expected
rating is sensitive to any change in the bank's IDR. The bank's
IDR, in turn, is likely to move in tandem with Brazil's sovereign
rating.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
As the notes are rated at the same level as the IDR, their expected
rating is sensitive to any change in the bank's IDR. The bank's
IDR, in turn, is likely to move in tandem with Brazil's sovereign
rating.
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
----------- ------
Banco do Brasil S.A.
senior unsecured LT BB(EXP) Expected Rating
ELDORADO BRASIL: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Eldorado Brasil Celulose S.A.'s
(Eldorado) Long-Term Foreign and Local Currency Issuer Default
Ratings (IDRs) at 'BB' and National Scale Long-Term Rating at
'AA+(bra)'. Fitch also affirmed the 'AA+(bra)' rating for
Eldorado's debentures, in the amount of BRL700 million and due in
2024. The Rating Outlook on the corporate ratings is Stable.
The ratings reflect Eldorado's solid operating performance and
strong credit metrics. Its strong cash flow generation and low
investments in the past few years allowed the company to
significantly reduce leverage. The ratings also incorporate
Eldorado's limited diversification, with one pulp mill located in
Brazil.
The Stable Outlook reflects Fitch's expectation that Eldorado will
maintain a conservative capital structure, with net leverage below
1.0x absent a new investment cycle. Eldorado's deleveraging
strategy in the past few years should allow the company's balance
sheet to absorb a period of higher investments if the Vanguarda II
project is approved.
KEY RATING DRIVERS
Above-Average Business Profile: Eldorado has only one pulp mill,
located in Brazil, with an annual production capacity of 1.7
million tons of bleached eucalyptus kraft pulp (BEKP). Like other
Latin American pulp companies, Eldorado has a competitive cost
structure, with cash cost of production of approximately USD175 per
ton in 2023, which places it firmly in the lowest quartile of the
cost curve. Eldorado has been able to consistently operate above
its nominal annual capacity. Conversely, its limited scale of
operations compared with peers in Latin America could make it
vulnerable to a prolonged operational disruption as a result of an
accident at the mill.
The company's competitiveness is also related to its modern
production facility, as well the productivity of its forestry
assets. Eldorado's forest assets further enhance the company's
financial flexibility, as the accounting value of the biological
assets of its forest plantations was BRL4.4 billion as of Sept. 30,
2023.
Litigation's Limited Impact on Financial Flexibility: Fitch sees
limited impact of the shareholders litigation process on Eldorado's
financial flexibility, considering that the cash plus the expected
FCF from the company should suffice to meet its maturities in the
rating horizon. The company has demonstrated good access in the
local market, should it need to extend its debt profile; however,
it is not currently within Fitch's rating case. Fitch will reassess
the company's strategy and credit quality once there is a
conclusive outcome of the arbitrage process.
Low Pulp Prices: Average bleached eucalyptus kraft pulp (BEKP)
prices for 2023 reached USD585 per tonne, falling from USD796 per
tonne in 2022. Fitch expects prices to remain around USD600 per
tonne in 2024, with lower volatility than during 2023, due to lower
inventories at the level of pulp buyers and paper producers, which
help maintain a tighter balance between supply and demand.
Strong FCF: Eldorado is expected to generate about BRL2.5 billion
of EBITDA and BRL2.5 billion of cash flow from operations (CFFO) in
2023 and BRL2.4 billion and BRL1.7 billion, respectively, in 2024.
This compares with strong EBITDA of BRL4.3 billion and CFFO of
BRL3.0 billion in 2022. The company's position as a low-cost
producer should support strong operating margins, despite the lower
prices and cost pressure.
Fitch expects the company to report strong FCF between BRL500
million and BRL1.0 billion in 2023 and 2024. Base case projections
consider investments around BRL1.2 billion yearly in the period and
no dividends paid. Fitch's base case considers capex for
maintenance, forestry base and the continuation of its railway
project starting in 2025.
Leverage to Remain Low: Eldorado's net leverage reached 0.8x as of
September 2023, as calculated by Fitch, and the agency expects it
to remain below 1.0x in the rating horizon. Net debt reduced to
BRL1.5 billion as of September 2023, from close to BRL7.0 billion
at the end 2020. Eldorado's continued leverage reduction will
depend on the absence of significant expansion projects and the
company's ongoing focus to use FCF to pay down debt. Eldorado's
deleveraging strategy in the past few years should allow the
company's balance sheet to absorb a period of higher investments if
the Vanguarda II project is approved.
DERIVATION SUMMARY
Similar to other Latin American pulp producers, Eldorado's pulp
production cash costs are among the lowest in the world, ensuring
its long-term competitiveness. This places the company's business
risk profile in line with Latin America pulp companies like Suzano
(BBB-/Stable), Empresas CMPC (BBB/Stable) and Celulosa Arauco
(BBB/Stable). However, Eldorado has only one mill located in
Brazil, while its peers have higher scale of operations and
geographic diversification.
Eldorado is also concentrated only in pulp and is therefore more
exposed to the cyclicality of pulp prices compared with companies
with higher product diversification like Klabin, Arauco and CMPC,
which are leaders in the packaging, wood products segment and
tissue markets, respectively.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer
- Pulp sales volume of 1.75 million tons in 2024 and 2025;
- Average net hardwood pulp prices of USD600 per ton in 2024 and
2025;
- No dividends paid;
- Base case does not incorporate investments in the new pulp mill.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Given the low diversification of the company and uncertain
strategy and capital structure once the litigation ends, an upgrade
is not likely in the near term.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Continued uncertainties regarding the conclusions of the
arbitrage process, which affects Eldorado's ability to access
adequate financing locally or abroad;
- Increase in short-term debt maturities above its cash flow
generation capacity.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Eldorado had cash and marketable securities of
BRL1.3 million as of Sept. 30, 2023 and total debt of BRL2.9
billion, of which BRL1.5 billion was due in the short term. In
addition, Fitch expects positive FCF in 2023 and 2024, which should
be mainly used to reduce debt.
The company does not rely on international debt market due to a
significant decrease in its debt during the past few years, as well
as the successful refinancing of its financial obligations through
local banks debt market.
ISSUER PROFILE
Eldorado started operations in December 2012 and has one pulp mill
located in Mato Grosso do Sul State in Brazil. Eldorado's pulp mill
has an annual production capacity of 1.7 million tons of BEKP.
ESG CONSIDERATIONS
Eldorado Brasil Celulose S.A. has an ESG Relevance Score of '4' [+]
for Energy Management as the company sells excess energy to the
grid from cogeneration based upon a renewable resource, which has a
positive impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Eldorado Brasil Celulose S.A. has an ESG Relevance Score of '4' for
Governance Structure due to the arbitrage process involving J&F and
the company's non-controlling shareholder, Paper Excellence, 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
----------- ------ -----
Eldorado Brasil
Celulose S.A. LT IDR BB Affirmed BB
LC LT IDR BB Affirmed BB
Natl LT AA+(bra)Affirmed AA+(bra)
senior
unsecured Natl LT AA+(bra)Affirmed AA+(bra)
===========================
C A Y M A N I S L A N D S
===========================
CAYMAN AIRWAYS: COVID-19 & Boeing Max Woes Contribute to Losses
---------------------------------------------------------------
RJR News reports that the pandemic and the grounding of Boeing's
Max 8 aircraft amid an international safety crisis contributed to
multi-million-dollar losses for Cayman Airways over the past five
years.
According to analysis from the auditor general, the national
airline received more than $150 million from the government but
still lost $34 million during that time, the report notes.
The report also noted that the border closure due to COVID-19 wiped
out the airline's income for close to a year and continues to
impact revenues, according to RJR News.
Two crashes in Indonesia and Ethiopia involving Boeing's 737 Max
aircraft led regulators to ground the planes for almost two years
from March 2019 -- shortly after Cayman Airways had signed up to
lease four of those jets, the report relays.
The auditor general's report said the airline, which was forced to
lease alternate aircraft to cover its routes, was ultimately paid
around $9.3 million in compensation for the temporary loss of its
new planes, the report adds.
===============
C O L O M B I A
===============
COLOMBIA: Central Banker Says Data Paves Way for Bigger Rate Cuts
-----------------------------------------------------------------
Bloomberg News reports that Colombia's slowing inflation and weak
economy call for more aggressive interest rate cuts, though
policymakers must remain vigilant to potential risks ahead,
according to a member of the central bank's board.
The fact that inflation has been above target for the past three
years demands prudence, even after it eased in February to the
slowest pace in nearly two years, central bank co-director Bibiana
Taboada said in an interview, according to Bloomberg News.
"Since the last meeting, we said that if inflation allows it and
that the data in general allows it, we saw the possibility of
having cuts of a slightly larger size," she said, the report notes.
"The information that has been coming out is moving in that
direction."
The report relays that Colombia still has the highest borrowing
costs among Latin American inflation-targeting economies following
two cuts of a quarter point each, which brought the key rate down
to 12.75%.
Since the bank's board met in January, inflation data has shown
that the El Nino weather phenomenon hasn't delivered big shocks to
food prices, although there are doubts about its impact on energy
from hydroelectric plants, the report says. The effects of
indexation from a 12% hike in the minimum wage haven't been sharp,
except for some metrics in rents and education, the report adds.
In past meetings, notes the report, the central bank's board has
diverged on the magnitude of rate cuts, with Finance Minister
Ricardo Bonilla arguing that Colombia needs to speed up the easing
cycle because the annual inflation rate has declined for 11
straight months and it's time to stimulate internal demand. He has
said the bank should consider cuts of more than half a percentage
point at the March 22 meeting, the report relays.
Governor Leonardo Villar has said the bank needs to be prudent as
inflationary risks remain and rapid rate cuts could cause capital
outflows and weaken the peso, notes Bloomberg News. He's said,
however, that once conditions are in place, policymakers can loosen
monetary policy faster.
According to Bloomberg News, inflation slowed to 7.74% in February
from a peak of 13.34%, while price rises that exclude food and
regulated items have eased to 8.53%, still almost three times the
central bank’s inflation target of 3%, plus or minus 1 percentage
point.
Colombia should be open to making a pause in the cycle if there are
surprises to understand the information and have more certainty,
the report quotes Taboada as saying.
Investment Blow
Bloomberg News notes that Colombia's gross domestic product
expanded by just 0.6% last year, the least since 1999 excluding the
pandemic, with contractions in key sectors such as manufacturing,
construction, and oil and mining. Economists at the central bank
forecast GDP growth of less than 1% this year.
Moreover, the 42-year-old central banker said that while the
slowdown in aggregate gross domestic product was expected, the
crash in private investment was much worse than forecast, the
report relays.
"Investment fell more than expected, surely to some extent due to
the high level of rates, but also due to an environment that has
not been friendly to private investment," she said, the report
adds.
===================
C O S T A R I C A
===================
REVENTAZON FINANCE: Fitch Hikes Rating on Two Tranches to 'BB+sf'
-----------------------------------------------------------------
Fitch Ratings has upgraded Reventazon Finance Trust's USD135
million fixed-rate notes to 'BB+sf' from 'BBsf'. The Rating Outlook
is Stable.
The rating action follows Fitch's upgrade of Instituto
Costarricense de Electricidad's (ICE) rating to 'BB' from 'BB-',
which mirrors the recent upgrade of Costa Rica's sovereign rating.
The one-notch upgrade of Costa Rica's ratings to 'BB' reflects the
continued structural improvement in Costa Rica's fiscal position,
as well as robust economic growth and an improved external
liquidity position. For further details, please see "Fitch Upgrades
Instituto Costarricense de Electricidad to 'BB'; Outlook Stable"
dated March 4, 2024 and "Fitch Upgrades Costa Rica to 'BB'; Outlook
Stable" dated Feb. 28, 2024.
Fitch's rating addresses timely payment of interest and ultimate
principal at legal maturity.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Reventazon Finance
Trust
Notes 76138QAA5 LT BB+sf Upgrade BBsf
Notes REGS
USG75463AA02 LT BB+sf Upgrade BBsf
KEY RATING DRIVERS
Repayment of Notes Reliant on ICE Lease Payments:
The notes are backed by 100% participation interest on the
Inter-American Development Bank's (IDB) B-loan acquired through a
participation agreement, which gives the right to receive payments
under IDB's B-loan. ICE's lease payments from a non-cancellable
financial lease agreement for the operation and maintenance of the
hydropower plant will cover all payments on the loan.
Transaction Rating Linked to ICE's Issuer Default Rating (IDR):
Given the unconditional and irrevocable nature of the lease
payments, Fitch views the credit risk of these payments as linked
to ICE's credit quality. On March 4 2024, Fitch upgraded ICE's
Foreign and Local Currency IDRs. Grupo ICE's ratings are supported
by its linkage to Costa Rica's sovereign rating (BB/Stable -
upgraded on Feb. 28, 2024), which stems from the company's
government ownership and the implicit and explicit expectation of
government support.
Lease Payment Obligation Supported by IDB as Lender of Record:
To determine the strength of the lease payment obligation, Fitch
considered the role of IDB as lender of record of the obligation
being covered by ICE's payments, tied to ICE's ownership structure.
As the IDB will continue to be the lender of record and administer
IDB's B-loan, Fitch believes the holders of the rated notes will
benefit from the B-loan preferential, de facto, status provided by
IDB. Because of this, the credit quality of the payment obligation
is considered in line with other obligations of Costa Rica with the
IDB, and therefore, was notched upward (one notch) from ICE's IDR.
Noteholders Benefit from IDB's Preferred Creditor Status:
Historically, sovereigns have prioritized certain obligations, such
as obligations from multilateral development banks, when the
government cannot service all of the country's external debt. While
the B-loan is not a direct obligation of the sovereign, Fitch
believes treatment of the IDB as a preferred creditor extends to
ICE as the debtor, since ICE is a strategic government-owned entity
that receives underlying sovereign support.
Although Costa Rica has defaulted in the past (1981), neither the
sovereign nor ICE have ever defaulted on debt issued by a preferred
creditor. Currently, IDB's share of Costa Rica's external debt is
approximately 15%, in line with historical figures, which makes it
an essential preferred creditor for the country.
Adequate Liquidity Present:
The rated notes benefit from a debt service reserve account
equivalent to the next principal and interest payment due amount.
This liquidity provides certainty in case the transaction is
exposed to temporary liquidity shock. As of November 2023, the
account had sufficient liquidity to cover debt service on the
issued notes payment due in May 2024.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The notes' ratings are linked to ICE's Long-Term Foreign Currency
IDR; hence, a downgrade of ICE's IDR would trigger a downgrade of
the rated notes in the same proportion;
- Changes in Fitch's view of the treatment of the IDB as a
preferred creditor may trigger a rating action on the notes.
- Although the IDB (AAA/Stable) has an operational role in the
transaction by collecting payments due on the A/B-loans and then
transferring the B-loan portion of the proceeds to the transaction
account bank, Fitch currently deems this exposure immaterial.
However, should the IDB's credit quality deteriorate below the 'AA'
category, Fitch will reassess the exposure that the IDB poses to
the transaction.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The notes' ratings are linked to ICE's Long-Term Foreign Currency
IDR; hence, an upgrade of ICEs IDR would trigger an upgrade of the
rated notes in the same proportion.
CRITERIA VARIATION
Fitch's "Single- and Multi-Name Credit Linked Notes Rating
Criteria," dated Dec. 18, 2023, establishes that the credit quality
of the risk presenting entity (RPE) in a credit-linked notes
transaction is typically determined by an IDR assigned by Fitch.
However, in some situations, a committee would consider using the
actual bond rating (e.g. senior unsecured rating, subordinate
rating) of an asset in place of the IDR.
For this transaction, Fitch has determined that the RPE's credit
quality is not commensurate with the IDR or any particular bond
rating of the obligor, as sovereign ratings do not directly address
all forms of obligations. To determine the credit quality of the
sovereign obligation and its notching from the sovereign IDR, Fitch
incorporated perspectives from its sovereign group. During the
analysis, it was determined that the appropriate notching uplift
from the primary risk contributor would be one notch.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Commonwealth Countries Contributors to Economy
------------------------------------------------------------------
Dominican Today reports that Fernando Gonzalez Nicolas, President
of the Roundtable of Commonwealth Countries in the Dominican
Republic, shed light on the economic and social influence of
Commonwealth nations during his address at the Commonwealth Day
celebration and the organization's 75th anniversary.
He disclosed that India, Canada, the United Kingdom, Trinidad and
Tobago, and Jamaica stand as the Dominican Republic's leading
trading partners within the Commonwealth, boasting significant
trade volumes in 2023, according to Dominican Today.
At a luncheon hosted at the Santo Domingo Country Club, Gonzalez
Nicolas voiced his support for the Dominican government's bid to
secure membership in the Caribbean Community (CARICOM), the report
relays.
Highlighting the burgeoning economic and political ties with
Caribbean nations within the Commonwealth, Gonzalez Nicolas
emphasized the Dominican Republic's strategic diplomatic
engagements, the report discloses. Noteworthy relationships with
countries like British Guyana and CARICOM's involvement in
addressing issues in Haiti underpin the rationale for seeking
CARICOM membership, the report says.
Additionally, the President of the Commonwealth Roundtable shared a
message from His Majesty King Charles III of Britain, commemorating
Commonwealth Day under the theme "A Resilient Common Future:
Transforming Our Shared Wealth," the report relays.
In a separate address, Indian Ambassador Ramu Abaggnni underscored
the significant strides in Indo-Dominican relations, with India
emerging as a key trading partner, the report says.
Ambassador Abaggnni also hailed the recent signing of an economic
and trade cooperation protocol between the two nations, foreseeing
it as a catalyst for bolstering bilateral ties, the report
discloses.
About Commonwealth Countries
This organization currently comprises 56 countries located on all
continents of the world, representing 33% of the world's
population. They share a common British origin, the English
language, and a similar legal and political system, namely
democracy.
The event also saw the participation of presidents of the
binational chambers of Commonwealth countries, as well as
representatives from companies originating from those countries.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCR-LA reported in April 2019 that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
On December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, Moody's Investors Service changed the outlook on
the Government of Dominican Republic's ratings to positive from
stable and affirmed the local and foreign-currency long-term issuer
and senior unsecured ratings at Ba3. Moody's said the key drivers
for the outlook change to positive are: (i) sustained high growth
rates have enhanced the scale and wealth levels of the economy; and
(ii) a material decline in the government debt burden coupled with
improved fiscal policy effectiveness will support medium-term debt
sustainability.
The affirmation of the Ba3 ratings balances the Dominican
Republic's strong economic growth dynamics and relatively contained
susceptibility to event risks, with a comparatively weaker fiscal
position, reflecting long-standing credit challenges which include:
(i) a shallow revenue base compared to peers, (ii) weak debt
affordability metrics, and (iii) high exposure to foreign currency
borrowing.
S&P Global Ratings, in December 2022, raised its long-term foreign
and local currency sovereign credit ratings on the Dominican
Republic to 'BB' from 'BB-'. The outlook on the long-term ratings
is stable. S&P affirmed its 'B' short-term sovereign credit
ratings. S&P also revised its transfer and convertibility (T&C)
assessment to 'BBB-' from 'BB+'. The stable outlook reflects S&P's
expectation of continued favorable GDP growth and policy continuity
over the next 12-18 months that will likely stabilize the
government's debt burden.
In February 2023, S&P said its BB ratings reflect the country's
fast-growing and resilient economy. It also incorporates the
country's historical political and social challenges in passing
structural reforms to contain fiscal deficits, despite recent
improvements in the electricity sector. The ratings are constrained
by relatively high debt, a hefty interest burden, and limited
monetary policy flexibility.
=============
J A M A I C A
=============
JAMAICA: To Cut Corp Income Tax Rate for Renewable Energy IPPs
--------------------------------------------------------------
RJR News reports that the government is to reduce the corporate
income tax rate for independent power producers which generate
energy from renewable sources.
Finance Minister Dr. Nigel Clarke said this is one of the fiscal
measures being used to help the country transition to a cleaner
energy mix, according to RJR News.
"IPPs play an integral role in ensuring a sustainable energy sector
in areas such as solar, wind and energy. Madam speaker, to
facilitate further investments in renewable energy, the Income Tax
Act will be amended to exclude IPPs producing energy from renewable
sources from the definition of regulated companies for the purpose
of Section 30 of the Income Tax Act," Dr. Clarke announced in his
budget presentation in the House of Representatives, the report
relays.
RJR News notes that these amendments will reduce the corporate
income tax rate for IPPs from 33.3 per cent to 25 per cent. This
will be limited to IPPs that produce 75 per cent or more of
renewable energy from wind or solar and are regulated by the Office
of Utilities Regulation, the report relays.
They will not benefit from the employment tax credits, the report
discloses.
The move will divert approximately $31 million from the
government's coffers, the report says.
Dr. Clarke clarified that while the country's main light and power
company, Jamaica Public Service (JPS) is not an independent power
producer, it could benefit from a similar reduction in the future,
if certain criteria are met, the report says.
"We [are] open to discussions at some point in the future of
looking at reducing the corporate income tax rate on JPS once we
can get the assurance that that in turn will lead to a reduction in
the tariff rate to the consumer," he proposed.
Jamaica has set a target of 50 per cent renewal energy sources in
its energy mix by 2030, 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.
NATIONAL COMMERCIAL: Fitch Hikes LongTerm IDR to BB-, Outlook Pos.
------------------------------------------------------------------
Fitch Ratings has upgraded National Commercial Bank Jamaica
Limited's (NCBJ) Long-Term Foreign and Local Currency Issuer
Default Ratings (IDRs) to 'BB-' from 'B+'. Fitch has also upgraded
NCBJ's Viability Rating (VR) to 'bb-' from 'b+'. The Rating
Outlooks on the Long-Term IDRs are Positive following a similar
Outlook on Jamaica's Long-Term IDRs.
The upgrade on NCBJ's ratings follows Fitch's recent upgrade of
Jamaica's sovereign rating to 'BB-'/Positive from 'B+'/Positive, as
Fitch expects current improvements in Jamaica's operating
environment (OE) to benefit the bank's financial profile. The
rating actions also follow Fitch's revision of its assessment for
Jamaica banking system's OE to 'b+'/Outlook Positive from
'b'/Outlook Positive.
The Positive Outlook on the Long-Term IDRs is aligned with the
Positive Outlook on Jamaica's sovereign rating and reflects Fitch's
expectations of continued improvement in the OE. For additional
details on Jamaica's upgrade, see "Fitch Upgrades Jamaica to 'BB-';
Outlook Positive",.
KEY RATING DRIVERS
VR Driven Ratings: NCBJ's VR drives its IDRs. The bank's VR is
highly influenced by NCBJ's Bussiness Profile due to its strong
local competitive position as the largest bank in Jamaica with a
consolidated market share by assets of 38% and deposits of 32% at
December 2023.
The VR is also influenced by Jamaica's sovereign rating and broader
OE considerations. The OE revision reflects Jamaica's favorable
performance of Fitch's core metrics, Operational Risk Index (ORI)
percentile rank and per-capita income. To date, the ORI percentile
rank was 35.9, while the GDP per capita was USD7,082 (2022:
USD6,847). Moreover, the OE revision incorporates Jamaica's stable
economic performance and significant progress with fiscal
flexibility and governance indicators. Fitch expects all these
improvements will benefit the banking business expansion and the
banks' financial performance.
Stable Asset Quality: Fitch expects the nonperforming loan (NPL)
ratio to improve slightly in 2024 due to lower inflation, lower
interest rates, and stricter risk management, particularly in the
consumer segment. Fitch's assessment of the bank's asset quality
considers 28% of total assets are government investment securities
with similar creditworthiness of the sovereign. In turn, at the end
of September 2023 (FYE 2023), the 90-day NPL ratio remained stable
at 3.2% (FYE 2022: 3.3%), mainly reflecting conservative repricing
of assets amid a high inflation environment and the sound
diversification of the loan portfolio. Loan loss allowances cover
68.8% of impaired loans; however, including the non-distributable
reserve held in the equity, the coverage increases to 106% of NPLs
at FYE 2023 vs. 105% the prior year.
Lower Profitability but with Positive Trend: Fitch expects
profitability to improve at FYE 2024 due to lower operating and
credit costs. The operating profit to average total assets ratio
reduced to 0.9% at FYE 2023 (2.0% at FYE 2022), mainly due to the
significant increase in loan impairment charges and operating
expenses. The need for provisions increased significantly in 2023,
given that in 2022, the bank reversed voluntary provisions created
during the pandemic, which was an outlier.
Improved Capitalization: Fitch expects earnings generation to
sustain adequate capitalization over the rating horizon. Fitch does
not use the core metrics to assess NCBJ's profitability and
capitalization as no public risk-weighted assets are available for
the consolidated banking group. NCBJ's capital ratio of tangible
common equity to tangible assets improved to 10.8% at FYE 2023,
from 9.8% at FYE 2022, reflecting lower unrealized losses arising
from investments designated as fair value through other
comprehensive income, as well as low asset growth.
Conservative Liquidity: Fitch expects liquidity to remain sound as
NCBJ benefits from the largest market share in the country, a
well-diversified and low-cost deposit base that covers more than
one-half of the bank's funding needs and proven access to debt
markets. NCBJ's liquidity position is conservative and has remained
sound as core deposits grew by 5.9% at FYE 2023. Accordingly, the
loan-to-deposit ratio is sound at 83.2% at FYE 2023.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
IDRs and VR
- Given NCBJ's government support assessment at the sovereign
rating level, its IDRs are sensitive to changes in the sovereign
rating actions;
- The VR could be downgraded if the bank's tangible equity ratio is
sustained below 10%, due to either accelerated growth, a relevant
deterioration in asset quality or profitability.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
IDRs and VR
- Given NCBJ's government support assessment at the sovereign
rating level, its IDRs are sensitive to sovereign rating actions;
- An upgrade of NCBJ's VR would also be positive for the bank's
IDR. NCBJ's VR could be upgraded if the bank is able to maintain
its strong franchise, sound financial profile relative to its
rating level, and a capital ratio of tangible common equity to
tangible assets above 10%, in the context of an improvement of the
OE.
Government Support Rating
Fitch has upgraded NCBJ's Government Support Rating (GSR) to 'bb-'
from, 'b+' at the same level of the sovereign rating, to reflect
NCBJ's high systemic importance. However, NCBJ's GSR of 'bb-'
reflects moderate probability of support being forthcoming because
of uncertainties about the ability or propensity of the sovereign
to do so, based on its 'BB-' Long-Term IDRs.
- NCBJ's GSR could be upgraded if Jamaica's rating is upgraded;
- NCBJ's GSR would be affected if Fitch negatively changes its
assessment of the Jamaican government's propensity to provide
timely support to the bank. This could also arise in the event of a
sovereign negative rating action.
VR ADJUSTMENTS
- NCBJ's VR of 'bb-' has been assigned above the 'b+' implied VR
due to the following adjustment reason: Business Profile
(Positive).
- The Business Profile score has been assigned above the implied
score due to the following adjustment reason: Market Position
(Positive).
- The Funding & Liquidity score has been assigned above the implied
score due to the following adjustment reason: Deposit Structure
(Positive).
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
National Commercial
Bank Jamaica Limited LT IDR BB- Upgrade B+
ST IDR B Affirmed B
LC LT IDR BB- Upgrade B+
LC ST IDR B Affirmed B
Viability bb- Upgrade b+
Government Support bb- Upgrade b+
TRANSJAMAICAN HIGHWAY: Fitch Hikes Rating on Sr. Sec Notes to 'BB'
------------------------------------------------------------------
Fitch Ratings has upgraded the TransJamaican Highway Limited's
(TJH) senior secured notes to 'BB' from 'BB-'. The Rating Outlook
is Positive.
RATING RATIONALE
The upgrade on TJH's rating follows Fitch's recent upgrades of
Jamaica's sovereign ratings to 'BB-' with a Positive Outlook from
'B+' and its Country Ceiling to 'BB' from 'BB-'.
The upgrade of Jamaica's ratings reflects significant progress with
debt reduction, backed by a sound fiscal framework and a strong
political commitment to deliver large primary surpluses. Jamaica's
'BB-' rating is also supported by governance indicators that are
substantially stronger than the 'BB' median. The ratings remain
constrained by deep structural weaknesses, including subdued growth
potential owing to a high crime rate, low productivity and weak
demographics, as well as vulnerability to external (including
weather-related) shocks. For additional details see "Fitch Upgrades
Jamaica to 'BB-'; Outlook Positive" dated March 5, 2024.
KEY RATING DRIVERS
The rating reflects the stability and resiliency of a commuting
asset strategically located in the outskirts of Kingston, Jamaica's
capital city. The rating is also supported by a satisfactory
rate-setting mechanism, which allows tariffs to be adjusted
annually by U.S. inflation and the variations in foreign exchange
(FX) rate between the Jamaican dollar (JMD) and the U.S. dollar
(USD). Debt is senior secured, with typical project finance
features that include limitations on additional indebtedness.
Rating case minimum and average debt service coverage ratio (DSCR)
are at 1.7x in 2035 and 2.2x, respectively, which are strong for
the rating category according to applicable criteria. The
transaction presents robust break-even values for its most
important variables and no dependency on traffic growth in order to
repay the rated debt. The credit profile can withstand domestic
economic shocks beyond those observed during 2008-2014 or the
pandemic when the Jamaican economy deeply deteriorated. However,
the transaction rating is ultimately capped at Jamaica's Country
Ceiling of 'BB' because of transfer and convertibility risk.
TJH's Positive Outlook mirrors the Positive Outlook of Jamaica's
'BB-' as a reflection of the reduced concerns of higher risk of
controls on convertibility and the transfer of foreign currency to
serve the debt.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Weakening of the credit profile of the Jamaican sovereign,
particularly the risk of imposing capital controls affecting the
ability to convert currency;
- Nil or negative traffic growth rate for a sustained period.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Strengthening of the credit profile of the Jamaican sovereign,
particularly the risk of imposing capital controls affecting the
ability to convert currency.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
TransJamaican
Highway Limited
TransJamaican
Highway Limited/Toll
Revenues - First
Lien/1 LT LT BB Upgrade BB-
===========
M E X I C O
===========
GRUPO ELEKTRA: Fitch Lowers LongTerm IDR to 'BB-', Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has downgraded Grupo Elektra, S.A.B. de C.V.'s
(Elektra) Long-Term Local-Currency and Foreign-Currency Issuer
Default Ratings (IDRs) to 'BB-' from 'BB' and its National
Long-Term Rating to 'A(mex)' from 'A+(mex)'. Fitch has also
downgraded Elektra's National Short-Term Rating to 'F1(mex)' from
'F1+(mex)'. Fitch has downgraded Nueva Elektra del Milenio, S.A. de
C.V.'s (NEM) Long-Term Local-Currency and Foreign-Currency IDRs to
'BB-' from 'BB'. The Rating Outlooks for Elektra and NEM are
Stable.
The downgrade reflects Fitch's concerns about corporate governance
practices at Grupo Salinas, which controls Elektra, Total Play and
TV Azteca through different entities. Investors at Total Play
(CCC+) were negatively affected by a recent private exchange of
unsecured notes that subordinated non-participating note holders.
Grupo Salinas has engaged in similar practices that negatively
impacted creditors before, such as TV Azteca's selective default on
its international bonds and repurchase of local bonds with the cash
balance.
Elektra's ratings also reflect its long-term retail trajectory and
market position as one of Mexico's main department store chains
with a focus on the middle to middle-low income population. Elektra
has operational and financial linkage with Banco Azteca S.A. (BAZ;
A+[mex]/F1+[mex]; Stable Outlook) and an adequate liquidity
position.
NEM's ratings are equalized to those of its parent company,
Elektra, when applying the stronger-parent approach. Fitch
incorporates the high legal, strategic and operational incentives
between both companies. Elektra guarantees NEM's future flows
issuance, and some of NEM's cash flows are used to pay Elektra's
debt. NEM is a strategic subsidiary for the economic group as it
operates the Mexican retail business and is the parent company of
the retail businesses in Latin America. NEM's operations are also
integral to Elektra's core business as they provide operational
benefits and share a common management structure.
KEY RATING DRIVERS
Governance Concerns: Fitch believes Grupo Salinas'
governance-related events add uncertainty about similar practices
at Elektra's level. TV Azteca's default and Total Play's private
exchange support Fitch's previous assessment that Grupo Salinas is
uneven in its treatment of stakeholders. Fitch believes these
practices could impact Elektra's ability to access funding.
Improving Retail-Only Adjusted Leverage: Fitch's analysis focuses
primarily on Elektra's retail business and excludes its financial
arm based on the assumption of a self-sustaining financial
business. Elektra's retail-only adjusted debt/EBITDAR during the
past two years was above Fitch's expectations due to lower
profitability related to logistics and digital investments as well
as operational challenges. Fitch believes this effect should be
temporary and Elektra's retail-only gross adjusted leverage metrics
will return to close to 4.0x by YE 2024 and in the range of
3.5x-4.0x going forward, based mainly on profitability recovery. In
addition, Fitch estimates Elektra's retail-only net debt-to-EBITDAR
should be close to 3.0x by the end of 2024. Delays or inability of
the company to reduce leverage metrics will put pressure on its
credit profile.
Using the captive finance adjustment, as per Fitch's criteria,
consolidated gross adjusted debt/EBITDAR was 3.2x as of Dec. 31,
2023. This adjusted leverage ratio is expected to be below 3.0x by
YE 2024. When financial services (FS) activities are consolidated
by a rated entity, Fitch criteria assumes a capital structure for
the FS operations, which is strong enough to indicate that FS
activities are unlikely to be a cash drain on retail operations
over the rating horizon. Then the FS entity's debt proxy, or its
actual debt (if lower), can be deconsolidated and the remainder
debt used for credit metric calculations.
Retail Profits Gradually Recovering: Elektra's consolidated
performance in 2023 was slightly below its expectations of profit
recovery. Logistics and IT investments started to show gradual
returns and the company expects this trend to continue in the short
to medium term, given additional operating efficiencies executed,
an ongoing strategy calibration and logistics cost absorption.
Strong Market Position: Elektra's market position is supported by
diversification of its operations and linkage with BAZ, which has
widespread banking franchises across the country. Elektra has more
than 70 years of experience in the commercialization of durable
goods, with operations in four Latin American countries, including
Mexico. The company also has a presence in the U.S. through its
Purpose Financial, Inc. subsidiary, a provider of payday lending
and other short-term financial services.
Holistic Omnichannel Strategy: Elektra's omnichannel strategy
includes not only the retail division but also a financial business
and various IT components. The company has invested in IT platforms
and other digital tools to support innovations to stay updated with
consumer trends. Elektra has been able to quickly adapt its
business model and strategy execution to latest trends without
overlooking profitability.
BAZ Complements Elektra's Business Model: The linkage between
Elektra's retail and financial divisions is strong, as they depend
on each other to complete service offerings to customers. The
retail division complements its product sales by offering BAZ
credit services, while BAZ maintains a strong base of customers
derived from Elektra and Salinas y Rocha shoppers.
Fitch's approach for Elektra's ratings incorporates the assessment
of Elektra's credit profile considering potential future capital
injections BAZ might require from Elektra. Current assumptions
consider no capital injections to Banco Azteca over the rating
horizon. BAZ's National Long-Term Rating of 'A+(mex)' reflects its
strong business profile and profit generation capacity.
Consolidated Positive FCF: Fitch expects the company's consolidated
FCF to be positive for the next three to four years. During 2023,
the company generated consolidated cash flow from operations (CFO)
of MXN12.3 billion, executed capex for MXN5.5 billion and paid
dividends for MXN1.2 billion, resulting in a consolidated FCF of
MXN5.7 billion. Fitch does not have clear visibility on which
portion of this consolidated cash generation is related to the
retail-only business but estimates that most of the cash is
generated by the financial business.
For 2024 and going forward, Fitch estimates Elektra's gross credit
portfolio to growth around 8% with consolidated capex of around
MXN8 billion and consolidated FCF of at least MXN11 billion per
year.
Currency Exposure Mitigated: Although debt mainly consists of local
currency issuances, some of Elektra's inventory is exposed to
currency variations, as a portion of it is linked to the U.S.
dollar. This could pressure profit margins for some products if
this effect is not reflected in price increases, or might affect
sales volumes if it is passed through prices. However, this
exposure is mitigated by Purpose Financial's cash flows and money
transfer fees collected in U.S. dollars.
ESG - Governance Structure: Elektra is owned by Ricardo Salinas and
his family. Grupo Salinas has taken various actions that illustrate
disparate treatment toward different stakeholders, in addition to
arrangements, that in Fitch's view, benefit shareholders but affect
creditors' interests.
DERIVATION SUMMARY
Elektra's ratings reflect the company's profile as a department
store business focused in the mid- to low income segment of the
population in Mexico and some countries in Central America. The
ratings also reflect weaker governance relevance scores compared to
other peers. Elektra's stores scale is larger than Grupo Unicomer
(BB-/Stable), and it has one of the largest credit portfolios held
by a retailer in the region. The company is less geographically
diversified than Unicomer; however, Mexico and the U.S. are the
countries that generate most of Elektra's cash and have lower
country risk than most of Unicomer's countries of operations.
Compared with other non-food retailers in the region such as Grupo
Sanborns and Unicomer, Elektra is around 1.5x-2.5x the scale in
retail-only absolute sales, reflecting the ample market the company
is focusing. The company's retail-only EBITDAR margins have been
higher than the median of regional non-food retailers rated by
Fitch of around 13%, with some pressures emerging from the digital
offering development.
KEY ASSUMPTIONS
- Consolidated revenues grow an average of 7.6% annually in
2024-2027;
- Annual average growth of 3% in banking deposits;
- Consolidated gross credit portfolio growth of 8% per year on
average in 2024-2027;
- NPL provisions of MXN21 billion per year on average;
- Average annual capex of MXN8 billion;
- Dividend payments growing at 5.5% per year;
- The company refinances most of its short-term debt maturities and
annually amortizes NEM's future flows issuance.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Sustained adjusted debt to EBITDAR for the retail division above
4.0x;
- Sustained adjusted net debt to EBITDAR for the retail division
above 3.0x (including readily available cash equivalents, as per
Fitch's calculations);
- Sustained consolidated adjusted debt to EBITDAR (as per Fitch's
criteria) above 3.0x;
- Continued capital increases to BAZ;
- Materialization of contingent fiscal liabilities that require
large debt funding;
- Deterioration in BAZ's creditworthiness;
- A further deterioration in Grupo Salinas entities' corporate
governance practices.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- A sustained decrease in adjusted leverage and adjusted net
leverage for the retail division to levels below 3.5x and 2.0x,
respectively;
- Sustained consolidated adjusted debt to EBITDAR (as per Fitch's
methodology) below 2.0x;
- A strengthening of the bank's creditworthiness coupled with solid
performance of the retail business revenue, profitability and cash
flow dynamics;
- Fitch's perception of a sustained track record of strengthening
corporate governance practices over time.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Elektra's cash for the retail division was
MXN9.5 billion, as of December 2023, and short-term debt was MXN5.1
billion, mainly composed by local issuances. In addition, the
retail division presented MXN5 billion of short-term marketable
securities and MXN6.3 billion of available long-term marketable
securities. Fitch considers the retail division's cash and
marketable securities as readily available cash as there are no
constrains for its disposition.
ISSUER PROFILE
Grupo Elektra is one of the largest specialty retailing, consumer
finance and banking services companies in Mexico in terms of number
of stores, branches and revenues. It also operates in the U.S.,
Guatemala, Honduras and Panama.
ESG CONSIDERATIONS
Grupo Elektra, S. A. B. de C. V. has an ESG Relevance Score of '5'
for Governance Structure due to ownership concentration and the
company's related-parties' disparate 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.
Grupo Elektra, S. A. B. de C. V. has an ESG Relevance Score of '4'
for Financial Transparency due to the level of detail and
transparency of financial disclosure, which has a negative impact
on the credit profile, and is relevant to the ratings in
conjunction with other factors.
Fitch has revised Elektra's ESG Relevance Score of Group Structure
to '4' from '3' due to the complexity of the group structure, 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
----------- ------ -----
Nueva Elektra del
Milenio, S.A. de C.V. LT IDR BB- Downgrade BB
LC LT IDR BB- Downgrade BB
Grupo Elektra,
S. A. B. de C. V. LT IDR BB- Downgrade BB
LC LT IDR BB- Downgrade BB
Natl LT A(mex) Downgrade A+(mex)
Natl ST F1(mex)Downgrade F1+(mex)
=====================
P U E R T O R I C O
=====================
HVP FOODS: Seeks to Tap Juan C. Bigas Law Office as Legal Counsel
-----------------------------------------------------------------
HVP Foods Corp. seeks approval from the U.S. Bankruptcy Court for
the District of Puerto Rico to hire Juan C. Bigas Law Office to
handle its Chapter 11 case.
The firm received a retainer in the amount of $5,000, against which
the firm will bill on the basis of $300 per hour. The firm will
also seek reimbursement for work-related expenses.
As disclosed in court filings, Juan C. Bigas Law Office is a
"disinterested person" pursuant to Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Juan Carlos Bigas Valedon, Esq.
Juan C Bigas Law Office
515 Ferrocarril
Urb. Santa Maria
Ponce, PR 00717
Phone: (787) 259-1000
Email: cortequiebra@yahoo.com
citas@preguntalegalpr.com
About HVP Foods Corp.
HVP Foods Corp. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-00878)
on March 5, 2024, listing $100,001 to $500,000 in assets and
$500,001 to $1 million in liabilities.
Juan Carlos Bigas Valedon, Esq., at Juan C Bigas Law Office
represents the Debtor as counsel.
LIBERTY COMMUNICATIONS: Fitch Affirms BB- LongTerm IDR, Outlook Neg
-------------------------------------------------------------------
Fitch Ratings has affirmed Liberty Communications of Puerto Rico
LLC's (LCPR) revolving credit facility (RCF), LCPR Loan Financing
LLC's 2028 Term Loan, and LCPR Senior Secured Financing Designated
Activity Company's 2027 and 2029 senior secured notes at
'BB+'/'RR2'. Fitch has also affirmed LCPR's Long-Term Issuer
Default Rating (IDR) at 'BB-'. The Rating Outlook remains
Negative.
The Negative Outlook reflects high leverage ratios, a slower pace
of deleveraging than initially expected, and high competition in
Puerto Rico's mobile segment. Fitch expects the company to start
generating stronger FCF in 2H24 and to significantly improve its
performance over the next 18 months, as the company enters the
final months of mobile integrations in Puerto Rico and the USVI.
The 'BB-' rating also considers that the company does not face
significant debt repayment obligations until 2027.
A downgrade could occur if the company doesn't show significant
operating margin improvement in 2H24, or if there are further
delays or underperformance in profitability post-completion of the
migration costs. Fitch uses the accounts of Liberty Communications
of Puerto Rico Holding (LCPRH), as it encompasses the performance
of the restricted group.
KEY RATING DRIVERS
Expected Deleveraging: Fitch expects material deleveraging based on
improved EBITDA post-integration costs, with the net debt-to-EBITDA
ratio trending to below 5x by YE 2025. Fitch projects the net
debt/EBITDA ratio to remain elevated and steady at close to 6x in
2024 due to integration costs, pressure on the mobile segment, and
acquisition costs related to DISH spectrum assets in Puerto Rico
and the United States Virgin Islands (USVI), as well as
approximately 120,000 prepaid mobile subscribers in those markets,
in exchange for an aggregate purchase price of $256 million to be
paid in four annual instalments.
Ramp-up in EBITDA by 2025: Fitch forecasts a rapid ramp-up in
profitability post-migration, as the group won't have to incur
additional integration costs and will be able to develop its
commercial initiatives. EBITDA is projected to reach close to $560
million by 2025, up from $430 million in 2023. Fitch estimates
integration costs to remain elevated at about USD110 million
(mostly incurred in 1H24), weighing on the group's profitability in
2024. More than 800,000 mobile subscribers have already migrated to
the company's platform.
Operating Environment: LCPRH benefits from a U.S. dollarized
economy with relatively high GDP per capita within the region and
favorable systemic governance characteristics. High per-capita GDP
supports Puerto Rico's mobile base, which is comprised mainly of 4G
post-paid customers and compares favorably with other markets in
Latin America and the Caribbean.
Strong Market Position: LCPRH is a leading telecom in broadband and
Pay-TV, and it is positioned at number three in the mobile segment
in Puerto Rico (number two in postpaid). The company's fixed,
mobile, and B2B segments represented 34%, 28%, and 16% of LCPRH's
2023 consolidated revenue, respectively. The remaining 22% comes
from residential fixed non-subscription revenue, interconnect,
equipment sales, and other revenue. T-Mobile US, Inc. (BBB+/Stable)
holds the number one mobile market share on the island but does not
have a significant broadband or fixed-line presence.
América Móvil S.A.B. de C.V. (A-/Positive) Claro unit is number
two in broadband and number two in mobile, although LCPRH's mobile
subscriber base is weighted toward post-paid. América Móvil is
more heavily weighted toward pre-paid customers, which typically
generate lower average revenue than post-paid users.
Stand Alone Credit Profile: Fitch rates LCPRH on a stand-alone
basis from Liberty Latin America (LLA) as each pool is an
independent, ring-fenced structure with no cross-guarantees or
cross-default clauses. Fitch estimated that LCPRH represented
approximately 27% of LLA's consolidated EBITDA and 33% of
consolidated debt, while Cable & Wireless Communications Limited
(BB-/Stable), which operates in much of the rest of the Caribbean
and in Panama, generated about 64% of EBITDA and holds around 59%
of debt (excluding leases) at YE 2023. A deterioration of the
financial profile of one of the credit pools, or the group more
broadly, could place more financial burdens on LCPRH. LLA's
management is targeting a 3.5x leverage for the group (4.8x based
on OIBDA at YE 2023).
Secured Instrument Recovery Prospects: The instrument ratings
reflect Fitch's approach to Recovery Ratings under its Corporate
Recovery Ratings and Instrument Ratings Criteria. Secured debt
ratings of 'BB+' incorporate collateral support included in the
transaction structure. The instruments qualify as 'Category 2
First-Lien' with an 'RR2' and a two-notch uplift from LCPR's IDR.
DERIVATION SUMMARY
LCPRH is smaller and with less geographic diversification compared
with CWC while it operates in a much safer jurisdiction. LCPR's
ratings have a Negative Outlook as its net leverage could remain at
about 6x given increased competition and various cost pressures.
Compared to WOM Mobile S.A. (B-/RWN), LCPRH has a more mature
growth profile, greater service diversification and scale and a
history of positive pre-distribution FCF generation. LCPRH also has
a much larger post-paid subscriber base, which tends to be more
stable and profitable.
LLA has a business profile similar to Millicom International
Cellular S.A. (BB+/Stable), a holding company with subsidiaries in
leading positions in several markets.
LLA's revenue base has more U.S. dollars and subscription revenue,
while Millicom's revenue is primarily local currency denominated.
Both have seen leverage increase from acquisitions; however, LLA's
leverage is higher than Millicom, which Fitch expects to decline to
below 3.0x. LCPRH's business profile and diversified service
offerings in Puerto Rico are similar to those of Millicom's
Telecomunicaciones Digitales, S.A. (BB+/Stable) in Panama
(BBB-/Negative).
KEY ASSUMPTIONS
- Fixed revenue generating units grow about 2%-3% overall in 2024;
- Slight increase in blended fixed average monthly revenue per user
(ARPU);
- Pressured ARPU on mobile due to promotional activity;
- Group EBITDA margins close to 31% in 2024 (OIBDA close to 34%)
and close to 37% in 2025 (or OIBDA close to 41%);
- Capex of around USD230 million to USD240 million, or
approximately 15%-16% of revenues.
Dish Spectrum acquisition ($67million) and boost payments for
subscribers acquisitions ($32 million) are included in 2024.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Fitch does not anticipate an upgrade in the near term, given the
company's elevated leverage;
- Longer-term positive actions are possible if total debt/EBITDA
and net debt/EBITDA are sustained below 4.50x and 4.25x,
respectively, at LCPRH and LLA;
- (CFO-Capex)/Debt ratio trending towards 7.5%;
- A Stable Outlook will result from the company's showing OIBDA
margin improvement post-integration toward 40% and gradual
deleveraging to below 5.00x by 2025.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- A meaningful contraction of mobile or fixed market share or
increased competition that leads to negative FCF generation;
- Further delay in the integration process or subdued EBITDA margin
improvement post-integration;
- Total debt/EBITDA and net debt/EBITDA at LCPRH sustained above
5.25x and 5.00x, respectively, due to organic cash flow
deterioration;
- While the three credit pools are legally separate, net
debt/EBITDA at LLA sustained above 5.0x could result in negative
rating actions for one or more entities in the group.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: The company does not face any large debt
maturities until 2027 when USD1.2 billion of notes are due.
Liquidity is mainly supported by expectations of pre-distribution
FCF and access to a USD173 million revolving credit facility
maturing in 2027. Readily available cash and equivalents of USD120
million as of YE 2023.
ISSUER PROFILE
Liberty Cablevision of Puerto Rico (LCPR) is a telecommunications
operator that offers mobile, Pay-TV, broadband and fixed telephony
services to residential customers, as well as medium and large
businesses in Puerto Rico and the US Virgin Islands.
ESG CONSIDERATIONS
Liberty Communications of Puerto Rico LLC has an ESG Relevance
Score of '4' for Exposure to Environmental Impacts due to its
operations in a hurricane-prone region, which has a negative impact
on the credit profile, and is relevant to the rating[s] in
conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
LCPR Senior Secured
Financing Designated
Activity Company
senior secured LT BB+ Affirmed RR2 BB+
Liberty Communications
of Puerto Rico LLC LT IDR BB- Affirmed BB-
senior secured LT BB+ Affirmed RR2 BB+
LCPR Loan Financing
LLC
senior secured LT BB+ Affirmed RR2 BB+
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: We Must Hold Gov't Accountable, Harford Says
---------------------------------------------------------------
Trinidad Express reports that former chairman of Republic Financial
Holdings Ltd (RFHL) Ronald Harford called on citizens to remember
their crucial role in holding the Government accountable.
He emphasized it was imperative to recognize that the Government
serves the people-not the other way around, according to Trinidad
Express.
Harford made the comment as he was speaking at the T&T Chamber of
Industry and Commerce's (TTCIC) annual business meeting at the
Hyatt Regency (Trinidad), Wrightson Road, Port of Spain, the report
notes.
"We belong in this damn country and the politicians are here to
serve us. And when we see things going wrong, it is your money
that is going wrong, that's your tax money that is being wasted. We
must no longer be spectators. We must be citizens and assume the
rightful position and responsibilities to guide this country,"
Harford said, the report relays.
Harford made the comment in response to a question posed by Kiran
Maharaj, the re-elected president of TTCIC, the report discloses.
In addition to Harford, the panel included economists Dr Terrence
Farrell and Dr Marlene Attzs; John Hadad, the group co-chief
executive officer of the Hadco Group of Companies; Jean-Paul
Dookie, the vice-president and country executive of Fujitsu
Caribbean; and Dr Christian Stone, the CEO of Term Finance TT (SME
TT), the report relays.
The report notes that Harford added, "It's quite remarkable that
this is an oil and gas country and we have no plan for oil and gas
production. It's the absolute essence of this country that the gas
and oil should be produced—but we have no idea, we don't talk
about those things."
Farrel noted if the public sector were held accountable with
consequences, then T&T might see some improvement, the report
says.
Putting his comment in the context of the crime rate, he said,
"When crime is escalating, who is responsible for crime? The prime
minister is. But you have a system in which our prime minister
cannot appoint a commissioner of police. So, if the commissioner of
police does not perform, the prime minister cannot fire him or
her," the report relays.
The report discloses that discussing escalating crime, Maharaj said
that while she understood it was not an overnight fix, she
questioned whether enough was being done, asking:
"Are we addressing it properly via public-private partnerships? Are
we leveraging the strengths and resources of both the public and
private sectors to enhance the effectiveness of crime prevention
and law enforcement strategies? Is there room for technological
collaborations, community-based initiatives, and resource and
infrastructural support?"
Speaking on her re-election, Maharaj appreciated being able to
serve for a second term, saying:
"As we chart our course for the future, it is crucial that we
remain steadfast in our commitment to forging pathways to
prosperity for all. This means embracing innovation, fostering
collaboration, and investing in the talent and potential of our
people," the report adds.
=============
U R U G U A Y
=============
URUGUAY: IMF Says Fiscal Framework Implementation Should be Lauded
------------------------------------------------------------------
International Monetary Fund Deputy Managing Director, Antoinette M.
Sayeh, issued the following statement in Montevideo at the
conclusion of her visit to Uruguay:
"I wish to thank Vice-president Beatriz Argimon, Minister of
Economy and Finance Azucena Arbeleche, President of the Central
Bank of Uruguay Diego Labat, and other senior officials for their
hospitality and engagement. I was pleased to have the opportunity
to hear about recent economic developments, including the
normalization of rain conditions following a once-in-a-century
severe drought, which should have a positive impact on growth this
year.
"During my visit I have learned about the country's notable
track-record of macroeconomic stability and of its strong
institutions. The implementation of a new fiscal framework during
the pandemic should be lauded. The authorities' efforts to reduce
debt to pre-pandemic levels amid difficult external conditions are
commendable. Furthermore, Uruguay has made significant progress
with upgrading its monetary policy framework. Following careful
monetary policy management, inflation declined during 2023 and has
remained within the Central Bank's target band for the last nine
months. This is particularly important because low-income
households suffer disproportionally from high inflation.
"Uruguay's implementation to date of sound macroeconomic policies
in a challenging environment has enhanced the country's resilience
to shocks. I welcomed the authorities' efforts to support a
state-of-the-art innovation ecosystem, an innovation hub, that
could make Uruguay a regional research and innovation powerhouse.
Together with the education reform, these efforts could promote
skilled employment and boost non-traditional exports and contribute
to raising the economy's growth potential.
"I also welcomed the authorities' climate-resilient, green, and
sustainable policies. Uruguay remains at the forefront in the
implementation of climate change policies. The majority of
electricity generation comes from renewable sources and the country
is promoting climate-smart agriculture and livestock practices.
Uruguay is a pioneer in green financing, having successfully issued
sustainability-linked bonds and negotiated new innovative loans
linked to climate targets with other international financial
institutions."
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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of the same firm for the term of the initial subscription or
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