/raid1/www/Hosts/bankrupt/TCRLA_Public/240423.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
Tuesday, April 23, 2024, Vol. 25, No. 82
Headlines
A R G E N T I N A
ARGENTINA: Beef Consumption Plummets to Historic Lows
ARGENTINA: Bug Plagues Crops in Setback for Milei's Recovery Plan
ARGENTINA: Central Bank Cuts Interest Rate to 70%
B A H A M A S
FTX GROUP: Founder OKs Settlement, Aids Legal Action v. Celebrities
B R A Z I L
AZUL SA: In Talks With Gol Shareholder for Stock-Based Deal
PETROLEO BRASILEIRO: To Invest $73BB for Oil Exploration
D O M I N I C A N R E P U B L I C
[*] DOMINICAN REPUBLIC: Notes $75M Coffee Exports Between 2020-2023
M E X I C O
AXTEL SAB: S&P Alters Outlook to Stable, Affirms 'BB-' ICR
P E R U
AENZA SAA: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable
P U E R T O R I C O
EYEWEAR SHOP: Amended Plan Clarifies Oriental Bank's Claims Pay
- - - - -
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A R G E N T I N A
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ARGENTINA: Beef Consumption Plummets to Historic Lows
-----------------------------------------------------
Buenos Aires Times reports that beef consumption has fallen to
near-record levels amid a biting economic crisis, an industry body
said on Tuesday, April 16.
In the first quarter of 2024, beef consumption in Argentina -- one
of the world's top producers and consumers of the meat -- dropped
to its lowest level in three decades, according to the CICCRA
(Camara de la Carne de Argentina) meat industry chamber, noted
Buenos Aires Times.
This amounted to nearly 10 kilogrammes (22 pounds) less per person,
per year, the report notes.
"The apparent consumption of beef was 17.6 percent lower than in
the same quarter last year, marking the lowest record in the last
three decades," the March report released detailed, the report
relays.
According to the UN's Food and Agriculture Organisation, Argentina
has some of the world's most carnivorous inhabitants -- until
recently consuming nearly 50 kilograms (110 pounds) per person, per
year.
Argentina is battling an economic crisis that has seen purchasing
power slashed in four months under self-declared
"anarcho-capitalist" President Javier Milei and his budget-cutting
measures, the report discloses.
Poverty affects nearly 60 percent of Argentina's population, the
report notes.
Inflation in March reached 11 percent, less than in the previous
three months but still at a high of 288.9 percent, the report says.
In the same month, beef prices rose 9.8 percent from February and
278 per cent year-on-year, prompting customers to migrate to
cheaper cuts, the report said, the report discloses.
Butcher Carlos Principe told AFP in Buenos Aires he now sells more
cheap cuts of meat and said his sales dropped by 25 percent in the
first quarter of this year, the report relays.
"Consumption went down a lot, people who used to buy monthly now
buy by the day," the 75-year-old said, the report notes.
"I see that the popular cuts - which were not sold before - are now
selling a lot, such as roast beef, paleta and osobuco," said
Principe, the report says.
Argentine beef exports, meanwhile, increased by 22.9 percent in
March from the year before. But despite this small green shoot,
between January and March 2024 there was 7.6 percent less
production than in the same period last year, according to CICCRA,
the report relays.
Beef consumption in Argentina has been declining year after year
from about 78 kilograms (172 pounds) per capita in the 1980s, the
report notes. Meanwhile, consumption of cheaper meats such as pork
and poultry has doubled in the last 30 years, 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 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.
ARGENTINA: Bug Plagues Crops in Setback for Milei's Recovery Plan
-----------------------------------------------------------------
Jonathan Gilbert at Buenos Aires Times reports Argentina corn
farmers had high hopes for this season's harvest after near-perfect
weather conditions ended years of drought. A record crop would
also bode well for President Javier Milei's plan to turn around the
nation's embattled economy, according to Buenos Aires Times.
Now a bug is getting in the way.
Corn farmers are seeing their fields ravaged by a plague of
leafhopper insects, the report relays. The infestation is slashing
production potential for the world's third-largest exporter of corn
just as harvesting gathers speed, the report notes.
Swarms of the tiny insects -- spreading a disease on plants called
spiroplasma -- have grown so vast across the Pampas crop belt that
analysts at the Rosario Board of Trade will likely continue to trim
their output estimate, the report discloses.
"There's a concern that the damage will keep increasing as the crop
cycle progresses," they wrote in a report, after calling the
widespread impact of the pest "unprecedented," the report says.
It's a severe setback for a country still recovering from the worst
drought in living memory, the report notes. Farming is a huge
component of Argentina's economic activity, and its Central Bank
desperately needs crop export dollars in the second quarter to
boost its reserves of hard currency in order to scrap money
controls, the report relays.
The controls were designed to protect the peso, but they're
counterproductive for the broader economy, the report says. Milei,
who's served as president since December, has vowed to ditch them
as he moves to free up business and lure investment, the report
relays.
Argentina's corn and soybean harvests are just getting started, the
report discloses. Prospects earlier in the year were for a record
corn crop of 56.5 million metric tons, but that forecast has since
plunged 12 percent to 49.5 million, according to the Buenos Aires
Grain Exchange, the report notes.
There are also some problems for soy: Rains have been hampering
field work, and delays to the harvest could reduce the quality of
the crop, with subsequent discounts to prices paid by traders, the
report relays.
"If the forecast for more rains is right, the harvest pace will
slow," said Bruno Ferrari, a researcher at the Rosario bourse.
"We'll see damage from excess moisture, affecting quality, and
potentially a cut to our national production estimate," the report
notes.
Argentina is the world's biggest supplier of soy meal and soy oil,
the report notes.
Deformed Corn
Meanwhile, the attacks by leafhoppers are choking the internal
workings of corn plants, causing deformities and ultimately
reducing the number and size of corn kernels that farmers truck to
ports, the report discloses.
Corn production in powerhouse farming province Cordoba is now seen
26 percent lower than last month and is expected to keep falling,
with month-on-month losses exceeding US$1.1 billion, according to
the regional grain exchange, the report relays. In the prime swath
of farmland, known as zona nucleo, average corn yields are expected
to plunge by roughly a third, to six metric tons a hectare, the
report says. Before the leafhopper plague, they were due to be
around nine tons, the report notes.
Late-planted corn, which isn't yet ready for harvest, is most
affected, the report relays. That's bad news as two thirds of
Argentine corn acreage is now late-planted, a strategy that's
developed to combat drier weather, the report discloses.
"My latest corn, planted in January, was younger and weaker when
the leafhoppers came, so those yields could fall by half," said
Daniel Calaon, a farmer in Serodino in the zona nucelo, the report
notes.
Calaon is also struggling to collect his soybeans because of the
rains, the report relays. "It's too wet to get tractors in the
field," he added. "We may lose some acreage and it's very likely
we'll see quality losses," he said.
For Argentina, these curbs to production are compounding low global
prices for both corn and soy, the report relays. The combination
will be detrimental to export revenue, with US$4.5 billion wiped
from the estimated value of Argentine crop shipments from December
to March, according to Rosario, the report notes. The losses have
grown in recent weeks as the leafhopper swarms intensified, said
researcher Ferrari, the report relays.
To be sure, smaller corn harvests in Argentina and neighbouring
Brazil haven't yet been fully factored in at the US Department of
Agriculture, the report says. When they are, it could fuel an
uptick in corn prices that are trading at three-year lows, the
report discloses.
Further out, Milei's plans to open up the economy could see
headwinds from a La Nina climate pattern that's forming in the
Pacific Ocean, the report relays. La Nina usually brings drought
to Argentina and could shrink the 2025 harvest, 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 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.
ARGENTINA: Central Bank Cuts Interest Rate to 70%
-------------------------------------------------
Bloomberg News reports that Argentina's central bank cut its main
interest rate for the third time since President Javier Milei took
office as investors bet on a fresh inflation slowdown in the South
American nation.
Policymakers lowered rates to 70% from 80%, according to a person
with direct knowledge of the matter, according to the report. The
drop was later confirmed by a central bank statement and
communicated to traders on the local Siopel system, the report
notes.
Borrowing costs have fallen from 133% in December, when the
reference instrument was the Leliq note, the report relays.
Argentina will publish consumer price data, and economists are
expecting the third straight slowdown in the month-on-month
increase, the report relays.
At the same time, authorities are trying to rein in the amount of
the money the central bank must issue to pay its liabilities, thus
further reducing cost-of-living pressures, the report discloses.
Still, annual inflation is running at a three-decade high of 276%,
the report notes.
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: Founder OKs Settlement, Aids Legal Action v. Celebrities
-------------------------------------------------------------------
Jamie Redman at news.bitcoin.com reports that in a significant turn
of events, former FTX CEO Sam Bankman-Fried has agreed to a
settlement with investors, providing crucial cooperation in ongoing
lawsuits against high-profile celebrities. The settlement, pending
court approval, could mark a pivotal moment in the extensive legal
battles following the crypto exchange's colossal collapse,
according to news.bitcoin.com.
Following his recent 25-year prison sentence for fraud, Sam
Bankman-Fried's cooperation is poised to be a key asset in the
class action suit targeting celebrity endorsers of FTX, including
David Ortiz, Udonis Haslem, Orlando Bloom, Larry David, Katy Perry,
Shaquille O'Neal, Gisele Bundchen, and Tom Brady, the report
relays.
As detailed in court documents first reported on by Bloomberg, the
agreement necessitates that Bankman-Fried deliver all
non-privileged information regarding his assets and investments,
the report relays. This cooperation aims to bolster the
plaintiff's case against the slew of celebrities who allegedly
promoted the crypto exchange's unregistered securities, the report
notes.
The potential impact of this settlement is profound, with
plaintiffs hoping to recover significant losses from these famous
people incurred from the FTX debacle, the report discloses. Legal
representatives for the celebrities involved have yet to respond,
highlighting the ongoing uncertainty and high stakes of the
litigation, the report says.
Under the terms of the deal, Bankman-Fried is set to reveal
substantial financial information and contribute to the wider
initiative to bring to justice those associated with FTX's
marketing strategies, the report disclsoes. This development comes
after Bankman-Fried submitted an appeal against his conviction and
sentence to the New York Court of Appeals, the report notes.
Should the agreement be accepted, it would absolve the crypto
exchange's co-founder of any liability claims, 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, 2022, 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. Bankman-Fried 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
===========
AZUL SA: In Talks With Gol Shareholder for Stock-Based Deal
-----------------------------------------------------------
Bloomberg News reports that Azul SA's pursuit of a merger with Gol
Linhas Aereas Inteligentes SA has gained momentum, with talks
underway for a deal with the controlling shareholder of the rival
Brazilian airline.
In one scenario under consideration, holding company Abra Group
Ltd. would contribute its Gol shares to Azul in exchange for a
stake in the combined airline, one of the people said, asking not
to be identified because discussions are still private, according
to the report.
That type of transaction could appeal to Azul because it wouldn't
have to commit much cash, if any, the report discloses.
Abra would retain full ownership of its stake in another Latin
American airline, Avianca Holdings SA, in that scenario, the report
relays. Any deal would need to be approved by the companies'
controllers, creditors and shareholders, along with regulators, the
report says.
Shares of both Brazilian airlines gained on Bloomberg's report, and
trading in their shares was briefly halted in Sao Paulo. Gol
climbed 8% to 1.48 reais, while Azul reversed losses, jumping as
much as 2.2% to 10.70 reais, the report adds.
As reported in the Troubled Company Reporter-Latin America in July
2023, Fitch Ratings downgraded Azul S.A.'s (Azul) Long-Term Foreign
and Local Currency Issuer Default Ratings (IDRs) to 'RD' from 'C',
following the conclusion of its exchange offer, which Fitch
considered a distressed debt exchange (DDE). Simultaneously, Fitch
has upgraded Azul's IDRs to 'B-' from 'RD' to reflect its
post-restructuring risk profile.
PETROLEO BRASILEIRO: To Invest $73BB for Oil Exploration
--------------------------------------------------------
Richard Mann at Rio Times Online reports that Brazil's
state-controlled company, Petroleo Brasileiro S.A. or Petrobras,
the largest enterprise in the nation, has announced a $73 billion
investment plan.
This substantial investment is directed towards expanding its oil
exploration and production capacities, according to Rio Times
Online.
This funding promises to invigorate not just the oil sector but
also the maritime and offshore industries, marking a significant
economic thrust, the report notes.
The investment strategy encompasses the development of oil
platforms, maritime support vessels, and cabotage ships, the report
relays.
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).
===================================
D O M I N I C A N R E P U B L I C
===================================
[*] DOMINICAN REPUBLIC: Notes $75M Coffee Exports Between 2020-2023
-------------------------------------------------------------------
Dominican Today reports that during the 'Specialty Coffee Expo
2024', Biviana Riveiro, Executive Director of the Export and
Investment Center of the Dominican Republic (ProDominicana),
disclosed that Dominican coffee exports from 2020 to 2023 amounted
to US$75 million. This marks an impressive 85% average growth
compared to the period from 2016 to 2019, when exports stood at
US$40 million, according to Dominican Today.
Riveiro highlighted that in 2023, the primary destinations for
Dominican coffee exports were Puerto Rico, valued at US$10.4
million, and the United States, contributing US$3.5 million, which
accounts for 65.5% of total exports, the report notes. Other
significant markets included Italy, Japan, Germany, Saint Martin,
Canada, Aruba, and Belgium, the report relays.
Several Dominican coffee companies, such as Natura Bella, SRL,
Samir, SRL, Bella Aldea SRL, and Pushbox Services SRL, showcased
their premium products at the country's stand, the report
discloses. Brands like Kora, Villar, and Monte Bonito were also
represented.
The Dominican Republic pavilion's inauguration featured
distinguished guests, including Sonia Guzman, the extraordinary and
plenipotentiary ambassador of the Dominican Republic to the United
States, Elias Brache, the consul of Chicago, and Leonidas Batista
Diaz, the executive director of the Dominican Coffee Institute, the
report discloses.
The expo provided an opportunity to extend invitations to buyers
for Hub Camara Santo Domingo, scheduled for September 2024 in the
Dominican Republic, the report relays. This event aims to
facilitate networking and foster business relationships within the
coffee industry, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCR-LA reported in April 2019 that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
On December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, Moody's Investors Service changed the outlook on
the Government of Dominican Republic's ratings to positive from
stable and affirmed the local and foreign-currency long-term issuer
and senior unsecured ratings at Ba3. Moody's said the key drivers
for the outlook change to positive are: (i) sustained high growth
rates have enhanced the scale and wealth levels of the economy; and
(ii) a material decline in the government debt burden coupled with
improved fiscal policy effectiveness will support medium-term debt
sustainability.
The affirmation of the Ba3 ratings balances the Dominican
Republic's strong economic growth dynamics and relatively contained
susceptibility to event risks, with a comparatively weaker fiscal
position, reflecting long-standing credit challenges which include:
(i) a shallow revenue base compared to peers, (ii) weak debt
affordability metrics, and (iii) high exposure to foreign currency
borrowing.
S&P Global Ratings, in December 2022, raised its long-term foreign
and local currency sovereign credit ratings on the Dominican
Republic to 'BB' from 'BB-'. The outlook on the long-term ratings
is stable. S&P affirmed its 'B' short-term sovereign credit
ratings. S&P also revised its transfer and convertibility (T&C)
assessment to 'BBB-' from 'BB+'. The stable outlook reflects S&P's
expectation of continued favorable GDP growth and policy continuity
over the next 12-18 months that will likely stabilize the
government's debt burden.
In February 2023, S&P said its BB ratings reflect the country's
fast-growing and resilient economy. It also incorporates the
country's historical political and social challenges in passing
structural reforms to contain fiscal deficits, despite recent
improvements in the electricity sector. The ratings are constrained
by relatively high debt, a hefty interest burden, and limited
monetary policy flexibility.
===========
M E X I C O
===========
AXTEL SAB: S&P Alters Outlook to Stable, Affirms 'BB-' ICR
----------------------------------------------------------
S&P Global Ratings revised its outlook on Axtel S.A.B. de C.V. to
stable from negative and affirmed its 'BB-' issuer credit rating on
the company.
The stable outlook reflects S&P's view that the company's new
business model will enable it to recover revenue growth and
generate stable cash flows.
In 2023, Axtel concluded the restructuring of its operational
model, resulting in revenue growth of 4.5% for the year, reverting
the previous years' trend. The restructuring allows Axtel to focus
its workers and investments on the clients with the highest demand
potential (commercial, financial, logistics/transportation, and
manufacturing). This will enable the company to vertically
integrate clients' needs through their service offerings and offer
a more complete set of services. In this model, Axtel can sell
built-to-suit cloud or cybersecurity services to clients for which
it previously only offered connectivity, according to their
specific needs.
S&P said, "We expect that in 2024, after the first full year of
operating under this model, revenue growth will accelerate toward
7.5% in our base-case scenario, in line with private- and
public-sector signed contracts. In addition, we expect more than
90% of the new contract volumes in the enterprise segment to result
in recurring income, which will be key for Axtel to maintain its
competitive position and stable cash flow generation.
"As a result of the acceleration of top-line growth, we forecast
Axtel will increase EBITDA and cash flow generation, even if it
continues to face one-off expenses related to the expansion of
existing relationships with customers or the execution of new
contracts. In addition, we expect the company's cash flow
generation to serve the necessary capital expenditure (capex) and
working capital outflows in the next three years.
"At the end of 2023, about 60% of the company's debt was
denominated in U.S. dollars. At the same time, 100% of consolidated
debt has a variable rate. Although Axtel uses short-term derivative
instruments to partially protect some of its cash flows, the
company doesn't fully hedge its debt principal and interest. In our
view, this doesn't translate into a material risk in the short
term, given our expectation that Axtel will maintain adjusted debt
to EBITDA below 3.0x.
"However, if the company was to increase leverage above such level,
we would view FX volatility as a downside risk to the rating.
Likewise, interest rate volatility could pressure the company's
compliance with its debt covenants."
While the impact of nearshoring in Mexico by U.S. companies remains
somewhat uncertain, we think the current expansion of industrial
park capacity in the country could have an impact. The company is
seeking to enter this potential market to have its services
available as new companies begin to operate. Axtel is
well-positioned, in terms of geographic presence and infrastructure
capabilities, to provide connectivity and other services to these
facilities. This could accelerate results above S&P's base-case
scenario and, thus, support the rating.
=======
P E R U
=======
AENZA SAA: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has assigned Aenza S.A.A. (Aenza) Foreign and Local
Currency Long-Term Issuer Default Ratings (IDRs) of 'BB-' with a
Stable Outlook. Fitch has also assigned a 'BB-' rating to Aenza's
US dollar senior secured notes of up to USD350 million, maturing in
2029 or 2031. Proceeds will be used to refinance debt, increase
economic stake in subsidiaries and for other corporate purposes.
The ratings reflect Aenza's leading position as the largest
infrastructure concessions conglomerate in Peru and one the main
contractors in South America with long track record of operations.
The company is diversified in terms of services and geography with
subsidiaries in Chile and Colombia. The ownership of mature and
liquid concessions, such as toll roads, a subway line, and water
and waste water treatment, increases revenue and cash flow
visibility and attenuates the margin volatility of the Engineering
and Construction (E&C) civil construction and Oil & Gas (O&G)
segments. The ratings also incorporate the success of a bond
issuance, which will contribute to improve the company's liquidity,
to extend its debt maturity profile, and to support its growth
strategy.
The Stable Outlook incorporates the maintenance of conservative
capital structure, with net leverage below 2.0x over the next three
years and considers that the company will be able to replenish its
E&C backlog and increase oil production.
KEY RATING DRIVERS
Medium-sized Diversified Business Profile: Leading infrastructure
conglomerate in Peru, Aenza has a medium-sized scale and is
diversified in terms of geography and services. Near 40% of its
EBITDA comes from mature infrastructure concessions that will only
expire in the medium to long term. The group owns majority stakes
in toll roads, a subway line, and a wastewater treatment plant.
Aenza also operates in three other complementary segments: Oil&Gas
(29% of EBITDA), Engineering and Construction (E&C, 23%), and Real
Estate (7%). Activities are concentrated in Peru, while Chile and
Colombia represent 18% of sales. Exposure to public clients is low,
at around 9% of sales.
Concessions Provides Revenues Visibility: Aenza's infrastructure
concessions segment contributes to improve revenues and cash flow
visibility and reduces operating margin volatility. The ownership
of mature concessions that stream up dividends help to attenuate
the intrinsic volatility of the E&C and O&G sectors. Aenza is in
the process of shifting the focus to concessions, from E&C, and the
strategy is to use part of the proceeds of the new issuance to
expand the economic stakes in infrastructure subsidiaries, namely
Norvial and Linea 1 subway. If Aenza is unable to increase the
stake in current concessions, Fitch believes the group can use
proceeds to acquire other concessions in Latin America.
Aenza operates in the Exploration & Production (E&P) from blocks
III and IV in Talara basin nearby the second largest refinery of
the country. Proven reserves have reached 27.2 million barrels.
These fields are mature with limited exploration risk and are
operated under long-term contracts with Petroperu. The E&C segment
is cyclical and volatile, as it depends in most cases on economic
growth of the regions it operates. The company has already bided
for USD1.1 billion in projects and is preparing proposals for an
additional USD3.5 billion in contracts. Aenza reported a backlog in
E&C of USD700 million in December 2023. Nearly half of Aenza's
contracts is related to the other three business segments of the
group.
FCF Pressured by Capex and WCN: Aenza is expected to generate
adjusted EBITDA of PEN641 million in 2024 and PEN665 million in
2025, considering 67% of Norvial, which is broadly in line with the
PEN639 million registered in 2023, as per Fitch's criteria. Cash
flow from operations (CFFO) should be negative at PEN310 million in
2024 on high working capital needs, turning to positive PEN304
million in 2025. Capex is expected to reach PEN251 million in 2024
and PEN315 million in 2025, boosted by E&P investments to increase
oil production. Free cash flow (FCF) is expected to average a
negative at PEN282 million from 2024 until 2026, to be funded with
the bond issuance. Base case also considers the acquisition of
48.8p.p. stake in Norvial in 2024.Fitch forecasts interest covered
ratios on the bond varying from 2.1x in 2025 to 3.3x in 2028.
coverage ratios tend to increase from larger economic stake in
Norvial and an acceleration of oil extraction and backlog execution
in E&C.
Adequate Capital Structure: Aenza is expected to maintain an
adequate capital structure, in the absence of material debt-funded
acquisitions. In 2023, net debt/EBITDA was 1.1x, compared to an
average of 3.9x between 2019 and 2022, as per Fitch's calculations.
On March 31, 2022, bondholders of USD90 million (PEN356 million)
convertible bonds accepted the exchange for equity, benefiting the
company's leverage. As the company aims to use around USD250
million of the new bond issuance in acquisitions, growth capex, and
working capital needs, Fitch projects net adjusted leverage to
reach 2.1x in 2024 and 1.9x in 2025.
DERIVATION SUMMARY
Aenza's rating is weaker than larger contractors such as Ferrovial
SE (BBB/Stable), KAEFER SE & Co. KG (BB+/Stable), and Webuild
S.p.A. (BB/Stable) that benefit from their substantially larger and
global scale, conservative capital structure and moderate to strong
liquidity. The company's credit profile is however materially
stronger than Andrade Gutierrez Engenharia S.A. ('CCC-') and OEC
S.A. (CC), which are facing liquidity pressures to service their
bonds.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Infrastructure revenues being benefited by tariff readjustments
in line with inflation and recovery of the traffic;
- Average oil production of 5.4k barrels per day (bpd) in 2024,
7.3k in 2025, and 9.5k in 2026, with in average oil prices of
USD75, USD65, and USD60 per barrel, respectively;
- E&C backlog of USD760 million in 2024 and USD800 million in 2025,
executed on average in 1.2 year;
- Annual Real Estate units delivered of 1,000 in 2024 and 731 in
2025;
- Consolidated Adjusted EBITDA margins of 15% in 2024 and 2025, and
17% in 2026, as per Fitch's criteria;
- Capex of PEN251 million in 2024 and PEN315 million in 2025;
- No dividends in the rating horizon paid from Aenza to its
shareholders.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Stronger diversification into concessions and to other countries
in Latin America;
- Net adjusted leverage below 1.5x, sustainably;
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Net adjusted leverage above 3.0x, consistently;
- Fail to issue long-term bond and improve liquidity;
- Deterioration of the E&C backlog in terms of size and quality
(i.e. profitability) of the contracts;
- Weaker liquidity profile.
LIQUIDITY AND DEBT STRUCTURE
Liquidity to Improve: Aenza's liquidity is expected to improve with
the USD350 million seven-year senior secured bond issuance.
Proceeds will be used to refinance the USD100 million bridge loan
that expires in October 2024, while the rest will support growth
capex; and fund working capital needs. In 2023, readily available
cash of USD197 million was enough to cover debt maturities over the
next three years. Total and net debt are estimated to reach PEN2.1
billion and PEN 1.4 billion in 2024 (USD555 million and USD376
million, respectively), as most of the issuance will be directed to
foster organic and inorganic growth.
As of 2023, Aenza's total debt of USD355 million, after
deconsolidating 81.8% of Norvial's debt as per Fitch's criteria.
The debt was composed of bonds of USD178 million (or 50% of total),
a bridge loan of USD102 million (29%) including accrued interests,
term loans of USD59 million (17%), and working capital lines and
other debts of USD16 million (4%). At the same time, 52% of the
group's debt was allocated in infrastructure, 9% in energy, 3% in
E&C, 6% in Real Estate, and the remaining 30% at the holding level.
Approximately 50% of the total debt is in USD and is naturally
hedged. Fitch excludes the debt from Norvial's dividend
monetization (also known as IASA) from the total debt calculation.
ISSUER PROFILE
Aenza S.A.A. is one of the largest engineering and infrastructure
conglomerates in South America, operating mainly in Peru
('BBB'/Negative) and also in Chile ('A-'/Stable) and Colombia
('BB+'/ Stable). In 2023, infrastructure concessions represented
41% of the group's EBITDA, while energy (oil & gas), engineering &
construction, and real estate, contributed with 29%, 23% and 7%,
respectively.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch has deconsolidated 81.8% of Norvial's results from Aenza's
consolidated figures. If Aenza manages to buyback the 48.8p.p.
economic interest in the subsidiary from BCI Peru, the agency will
deconsolidate 33% of Norvial. Fitch also excludes IASA's debt (debt
from dividend monetization). Net hedge positions on the balance
sheet are added to the total debt. Fitch also excludes assets sales
and impairments from the EBITDA. Linea 1 EBITDA incorporates the
financial expenses, as well as the capital amortization applied to
the corresponding long-term account receivable of the train
acquisition.
DATE OF RELEVANT COMMITTEE
27 March 2024
ESG CONSIDERATIONS
Aenza S.A.A. has an ESG Relevance Score of '4' for Group Structure
due to its complexity, related party transactions, and other joint
operations, 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
----------- ------
Aenza S.A.A. LT IDR BB- New Rating
LC LT IDR BB- New Rating
senior secured LT BB- New Rating
=====================
P U E R T O R I C O
=====================
EYEWEAR SHOP: Amended Plan Clarifies Oriental Bank's Claims Pay
---------------------------------------------------------------
Eyewear Shop LLC submitted a Second Amended Disclosure Statement
and Second Amended Reorganization Plan.
The Amended Disclosure Statement and Amended Plan does not alter
any rights of creditors. The only purpose of the amendment was to
consistently specify that the payments to Class 1 will be made
during 47 consecutive months.
Class 1 is for secured creditor Oriental Bank, which provides for
a secured amount of $70,161 payable in 47 monthly installments of
principal and annual interest at 5.25%. The first 12 monthly
installments shall be made in the amount of $999.91; from month
thirteen until month forty-six, the monthly installments shall be
made in the amount of $1,910.37; and the last payment will be made
on month 47 in the amount of $1,643.98.. The remainder of the claim
of $164,923 is unsecured and is treated in class 3.
The Second Amended Disclosure Statement does not alter the proposed
treatment for unsecured creditors and the equity holder:
* Class 2 consists of General unsecured claims in the amount
$10,000 or less (convenience class). One-time cash dividend of
$1,000, payable at effective date on a pro-rata basis over the
amount of allowed claims in this class. Currently, the cash
dividend represents 5.55% of the allowed claims within this class.
* Class 3 consists of General unsecured in the amount of
$10,001 or more. Monthly cash dividend of $250, beginning on the
effective date of the plan, during a period of 60 consecutive
months, distributed on a pro-rata basis over the amount of allowed
claims in this class. The sum of these 60 monthly payments is
$15,000 and currently represents 7.67% of the allowed claims within
this class.
* Class 4 consists of Equity Interest Holders. There will be
no distribution to this class.
Payments and distributions under the Amended Plan will be funded by
the cash flow from future income of the Debtor.
A full-text copy of the Second Amended Disclosure Statement dated
April 11, 2024 is available at https://urlcurt.com/u?l=A2PWiv from
PacerMonitor.com at no charge.
Attorney for the Debtor:
Carlos A. Ruiz Rodriguez, Esq.
Licenciado Carlos Alberto Ruiz, LLC
P.O. Box 1298
Caguas, PR 00726
Telephone: (787) 286-9775
Email: carlosalbertoruizquiebras@gmail.com
About Eyewear Shop
Eyewear Shop, LLC, operates an optical and lens store in San Juan,
Puerto Rico.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.P.R. Case No. 23-01967) on June 28, 2023,
with as much as $1 million in both assets and liabilities.
The Debtor tapped Carlos A. Ruiz Rodriguez, Esq., at Licenciado
Carlos Alberto Ruiz, LLC as bankruptcy counsel and Albert Tamarez
Vasquez, CPA, at Tamarez CPA, LLC as accountant.
*********
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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Information contained herein is obtained from sources believed to
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of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
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