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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
Wednesday, April 24, 2024, Vol. 25, No. 83
Headlines
A R G E N T I N A
ARGENTINA: Dreams of a Single Digit as Inflation Begins to Slow
ARGENTINA: Milei to Halt Private Health Scheme Price Surge
PAN AMERICAN: Moody's Affirms 'Caa1' CFR, Outlook Stable
PROVINCIA CASA: Fitch Affirms 'CCC-' LongTerm IDRs
B R A Z I L
LIGHT SA: Closes Deal With Creditors For Debt Restructuring
E L S A L V A D O R
FIFTEENTH MORTGAGE-BACKED TRUST: Fitch Affirms 'B-' C Notes Rating
J A M A I C A
DIGICEL GROUP: Appoints Leopoldo Gutierrez as Group CFO
JAMAICA URBAN: Gov't to Spend Over $2 Billion to Boost Fleet
JAMAICA: Annual Cost of Apparel up 3.7% in March
M E X I C O
BANCO AZTECA: Fitch Affirms Then Withdraws 'BB-' LongTerm IDR
U R U G U A Y
BANCO DE LA NACION: Fitch Affirms 'CCC-' LongTerm IDR
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A R G E N T I N A
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ARGENTINA: Dreams of a Single Digit as Inflation Begins to Slow
---------------------------------------------------------------
Martin Fernandez Nadale at Buenos Aires Times reports that
following the 11-percent inflation recorded in March, price hikes
are continuing to slow. A significant slowdown was recorded in the
first half of the month and the monthly inflation rate in April
could finally return to a single digit, according to Buenos Aires
Times.
This is the conclusion of the high-frequency calculations by
multiple consultancy firms, in addition to forecasts by Javier
Milei's government of inflationary dynamics, the report notes.
According to Economy Minister Luis Caputo, the downward path for
the cost of living responds to the implementation of a battery of
measures aimed at ensuring fiscal balance and restoring the
international reserves of the Central Bank, the report relays.
Even though monetary pressure and the stability of Argentina's
various exchange rates have had an effect on the prices of the
economy, there is consensus among economists about the major role
the recession is playing as a moderating factor of inflation, the
report discloses.
Salaries and hence Argentines' purchasing power has weakened,
consumption has dropped and consumers no longer validate steep
price increases with purchases, the report notes. Consequently,
the contraction of demand fixes a ceiling for product mark-ups and
has slowed the inflationary process, the report relays.
A report from the EcoGo consultancy firm informs that in the second
week of April, food prices increased by just 0.2 percent - marking
a considerable decline from previous weeks, the report notes.
"With these data points and considering increases projected for the
remaining weeks of 1.3 percent, inflation in food consumed in
households might only amount to 5.4 percent in April," they
claimed, the report discloses.
In that vein, the firm led by economist Marina Dal Poggetto
projected an overall 8.9-percent inflation rate for the entire
month, the report relays.
"The lower projections than in the previous week are in keeping
with food inflation data [which is] well below expectations,
together with slight rises in the remaining sectors, which leads to
a downward modification of our projections for the next few weeks,"
said an EcoGo report, Buenos Aires relays.
In turn, the Fundacion Libertad y Progreso has calculated a monthly
9.5-percent increase in the first half of April, slowing 1.1 points
from 10.6 percent seen as of the close of March, the report
discloses.
The report relays that "In the second week of April, the variation
was a weekly 0.4 percent, the lowest level recorded in six months.
One must go back to October 2023 to find a similar rise. Thus, we
project the rise of the foundation's CPI in April at nine percent,
the first single-digit variation since October 2023," it stated.
The foundation's economist Emilio Prado held that "even though
inflation in April will be explained to a larger extent by the
increase of regulated prices, the other goods in the economy are
slowing down as shown by the second week of the month, and [are]
reflected in the monthly core inflation of around seven percent,"
the report relays.
"Looking onwards, we expect the average pace of price increases to
be increasingly lower. Its speed will depend on the Central Bank
continuing its austere [money-]printing [levels] and [if] the
commitment to reach zero fiscal deficit consolidates as the months
go by. In that vein, a legislative scenario accompanying a fiscal
reform will be a better alternative to the current vaporisation of
pesos," Prado added, the report notes.
According to the LCG consultancy firm, the second week of the month
closed with a 0.2-percent inflation in food and beverages - the
lowest monthly level recorded since July 2023, the report
discloses. At the same time, the measurement slowed down by 0.2
percent compared to the previous week, the report says. Thus, the
cumulative rise equals 0.6 percent in the first half, the report
notes.
The indicator covered four consecutive weeks with an inflationary
dynamic under one percent, the report relays. "The rise has
averaged 6.2 percent over the last four weeks and 2.1 percent point
to point over the same period," the authors of the report
explained, the report relays.
Within the report, only four of the ten categories registered
increases: dairy and eggs (4.2 percent), condiments and other food
products (1.1 percent), beverages and infusions for household
consumption (0.6 percent) and meats (0.4 percent), the report
discloses.
On the contrary, fruits (down 0.1 percent), oils (down 1.5
percent), vegetables (down 1.8 percent), bread, cereals and pasta
(down 2.2 percent), and sugar, honey, sweets and cocoa (down 3.3
percent) were deflationary. In other words, the price of said
products fell, the report says.
Meanwhile, C&T Asesores Economicos has disseminated an optimistic
zero-percent inflation rate for the second week of this month, the
report notes.
"In food and beverages it dropped by 0.4 percent and when looking
at food consumed in the household in particular, the decrease is by
0.8 percent," explained the firm's director, Maria Castiglioni
Cotter, 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: Milei to Halt Private Health Scheme Price Surge
----------------------------------------------------------
Buenos Aires Times reports that President Javier Milei's government
has won a price war with the so-called 'prepagas,' announcing that
private health schemes will roll back their prices after it
launched legal action to intervene against the soaring cost of the
scheme.
Presidential Spokesperson Manuel Adorni declared that companies
offering prepaid medicine coverage accounting for 75 percent of all
such clients will roll back their increases to the levels of the
end of last year, recalculating them on the basis of the official
monthly inflation data, according to Buenos Aires Times.
The cost of the schemes will match their prices in December 2023,
when a decree issued by President Milei - who often describes price
caps as "an aberration" - removed controls and unleashed prices,
the report notes.
"By order of the Economy Ministry, a group of private medical
companies, which represent almost 75 percent of the affiliates,
will back the value of their fees to December 2023, adjusted by CPI
[consumer price index] from there," confirmed Adorni, who detailed
that the seven companies in question would have to apply this index
when updating their billing in the first six months of this year,
the report notes.
The report relays that the resolution also obliges companies to
stop swapping information and to supply data to the National
Commission for the Defence of Competition (CNDC, in its Spanish
acronym) on the number of members and the nominal prices of the
health plans offered.
Prepaid medicine firms, which under previous regulations increased
prices at a rate below inflation, have raised fees 150 percent
since the publication of the DNU 70/2023 emergency mega-decree
which deregulated the setting of prices, the report discloses.
"The Argentina of wise guys ended last December 10," remarked
Adorni, declaring that "the government of President Milei will not
validate speculative manoeuvres from any viewpoint," the report
relays.
The report discloses that The government trusts that it will be
able to resolve a grievance mainly affecting the middle class,
triggering an important clash with that social stratum.
Some days ago Economy Minister Luis Caputo had assured that "the
prepaid are declaring war on the middle class" with their excessive
increases, pointing out that the government would do "everything
within their scope" to defend that sector of the population, even
leaving open the possibility of taking the matter to court, the
report notes.
Legal Pressure
The Milei government's challenge to the firms was backed up by
legal threats, the report relays.
The national government formally asked the courts to halt all the
increases in the charges of the prepaid medicine companies in
excess of general inflation since last December, the report
relays.
Through the Superintendencia de Servicios de Salud (Health
Superintendency), it filed an injunction to oblige the companies
concentrating some 90 percent of the market to roll back their
charges and return to their clients the sums in excess of inflation
collected since December, the report notes.
"This organism does not control prices any longer but it does seek
to guarantee free competition and the freedom to choose for the
benefit of Argentines," said the government in a statement obtained
by the news agency.
The Milei administration targeted 18 firms in its move, the report
relays. They include such well-known names as Galeno Argentina SA,
the British Hospital, the German Hospital, Medife, Swiss Medical,
Omint and OSDE (Organizacion de Servicios Directos Empresarios, the
report relays. The companies will have to recalculate the
increases in the billing of their plans on the basis of general
inflation, announced the government, the report discloses.
Adorni confirmed that the companies' shift came in response to a
"complaint of alleged cartelisation," the report notes.
'Cartelisation'
In a statement released to the local press, the Trade Secretariat
explained that "in the framework of an investigation into alleged
collusion, the National Commission for the Defence of Competition
(CNDC) determined, on a preliminary basis, that there are solid
indications of a collusive agreement between prepaid medicine
companies," the report discloses
According to the official information, the CNDC had determined, in
preliminary form, that "There exist solid indications of collusion
between the prepaid medicine companies," said the CNDC, the report
says.
Despite professing liberal ideas against price-fixing, Caputo
celebrated the ruling, the report relays. This stance goes with
his complaints against supermarkets and food producers for not
including their promotions in their price lists, the report notes.
He celebrated the news, calling it a "relief for the middle class"
and highlighting the work of the officials who forced the firms
into hefty rollbacks, the report notes.
"Great work, Juan Pazo and Pablo Lavigne at the Trade Secretariat,
using the corresponding institutional tools and, of course, a great
relief for the middle class," pointed out Caputo in a post on
social media, the report relays.
Milei Takes on Belcopitt
Until this week, the face of the prepaid medicine companies had
been Claudio Belocopitt, the owner of Swiss Medical and the head of
the Union Argentina de Salud chamber of the sector, the report
notes.
Facing a wave of criticism both online and in the press, he stepped
down as UAS president while denying accusations of wrongdoing, the
report relays.
In the preceding days, President Milei endorsed a series of
críticisms and insults against Belocopitt on the X (ex-Twitter)
social network calling him "garca" ("oligarch") and "sorete"
("piece of shit"), the report discloses.
"As you all know, in recent days, the prívate health sector has
received reproaches and observations from national government
officials," pointed out Belocopitt in his letter of resignation,
the report relays.
"With the need to preserve the possibility of all channels of
dialogue being considered and understanding that perhaps the debate
over my personality might be an obstacle to finding solutions, I
have considered it appropriate and necessary to resign from the
presidency of the Unión Argentina de Salud," added the
businessman, the report says.
According to Belocopitt, "it must be the priority of all
associations in the Federation to be able to continue providing
health services to over 70 percent of the Argentine population with
the same quality into which so much effort has been invested for so
many years," the report relays.
In a TV interview, he observed that many other sectors of the
economy - such as fuel producers - hiked prices almost
simultaneously, as did the healthcare providers associated with the
UAS, 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.
PAN AMERICAN: Moody's Affirms 'Caa1' CFR, Outlook Stable
--------------------------------------------------------
Moody's Ratings has affirmed Pan American Energy, S.L.'s (PAE)
corporate family rating at Caa1. At the same time, Moody's has
assigned a Caa1 rating to the proposed backed senior unsecured
notes for up to $500 million to be issued by Pan American Energy,
S.L., Argentine Branch (PAE Argentine Branch), a wholly-owned
subsidiary of PAE. The notes are guaranteed by PAE and rank pari
passu with PAE Argentine Branch's and PAE's other present and
future unsecured and unsubordinated debt obligations. PAE outlook
remains stable and PAE Argentine Branch outlook is assigned
stable.
The company will use the net proceeds of the notes for capital
expenditures in Argentina, working capital, and/or general
corporate purposes.
The rating of the proposed notes assumes that the final transaction
documents will not be materially different from draft legal
documentation reviewed by Moody's to date and that these agreements
are legally valid, binding and enforceable.
RATINGS RATIONALE
The Caa1 rating assigned to Pan American Energy, S.L., Argentine
Branch's (PAE Argentine Branch) proposed backed senior unsecured
notes mirrors the rating of its parent company and guarantor, PAE,
which fully and unconditionally guarantees the instruments.
Given Pan American Energy, S.L.'s (PAE) high exposure to
Argentina's (Government of Argentina, Ca stable) business
environment (88% of revenues as of fiscal-year 2023 were derived
from operations in Argentina), its rating reflects Moody's view
that PAE's creditworthiness cannot be completely de-linked from the
credit quality of the Argentine government and, thus, the ratings
need to closely reflect the risk that the company shares with the
sovereign. However, PAE's Caa1 rating surpasses Argentina's bond
rating by three notches. This exceptional distinction is primarily
attributed to the company's robust sponsors, sound credit metrics,
and diverse income sources, including Argentina's exports
(contributing to 27% of revenues as of 2023) and operations across
various countries. These elements, in conjunction with its
substantial liquidity, enhance its ability to service foreign
currency debt.
PAE's credit profile is supported by its status as the
second-largest integrated oil and gas producer and largest exporter
of hydrocarbons in Argentina, with a sound market position and
financial and operating performance; good foreign-currency
liquidity; and sizable exports. PAE also has exploration,
development and production interests in Bolivia (Government of
Bolivia, Caa1 negative) and Mexico (Government of Mexico, Baa2
stable), and renewable power generation projects in Argentina and
Brazil (Government of Brazil, Ba2 stable). PAE's strong sponsors,
which provide certain operational advantages in terms of technical
knowledge, administrative practices and corporate governance
policies, also support the rating.
PAE is 50% owned by BP p.l.c. (BP, A1 stable) and 50% owned by BC
Energy Investments Corp (BC, formerly known as Bridas Corporation).
BC is a privately owned oil and gas company, which is 50% owned by
Bridas Energy Holdings Ltd. and 50% owned by CNOOC International
LTD, a subsidiary of CNOOC Limited (CNOOC, A1 negative).
PAE's credit metrics will remain robust in the next 12-18 months
despite a weak economic environment in Argentina. Although PAE's
profitability derived from its Argentine operations will likely
remain constrained by lower overall economic activity, some
potential regulatory changes and the new government's deregulation
stance could benefit PAE. In addition, PAE can partially mitigate a
troubled domestic environment through its integrated business
models, strong market share, and solid liquidity. The company
currently exports around 30% of crude produced, 13% of natural gas,
which the company sales at international prices. PAE also exports
around 27% of its refined products production.
In 2023, PAE's EBITDA (Moody's adjusted) rose to $2.8 billion from
$2.6 billion in 2022, and Moody's expects EBITDA at around
$2.3-$2.5 billion in 2024-25, which will enable the company to
maintain robust credit metrics in the period, with gross
debt/EBITDA at around 1.1x-1.2x, up from 0.9x in 2023, and interest
coverage as measured by EBIT to interest expenses at 2.3x-2.5x,
from 2.8x in 2023. Rising oil and gas production through 2022 and
2023, particularly in Mexico and Neuquen province, combined with
high overall international crude prices will support the company's
top-line in the period.
PAE's liquidity is good and will likely remain necessary to support
its rating in the medium term. As of December 2023, cash and
equivalent holdings and cash from operations compared favorably
with debt maturing in the next 24 months. PAE's financial leverage,
in terms of debt/capital, at 17.5% (Moody's-adjusted) as of
December 2023 is conservative and well below that of its peers with
a Caa1 rating. Also, PAE has a long track record of securing a
diversified pool of funding sources through international and local
financial institutions and capital markets. Moreover, PAE will
adjust its investments to protect its liquidity, in case of need.
PAE's stable outlook reflects the company's solid credit metrics
for its rating category and good liquidity. However, PAE's
creditworthiness cannot be completely de-linked from the credit
quality of the Argentine government, from which it generates the
bulk of its revenue, and thus its ratings and outlook incorporate
the risks that it shares with the sovereign, in line with Moody's
cross-sector rating methodology, Assessing the Impact of Sovereign
Credit Quality on Other Ratings, published in June 2019.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
PAE's ratings could be upgraded if there is an upgrade of the
government of Argentina's Ca rating and PAE maintains good
liquidity and good credit metrics for its rating category.
Additionally, if PAE broadens and diversifies its operations beyond
Argentina, this could also exert upward pressure on its ratings.
PAE's ratings could be downgraded if the company registers a
significant deterioration in liquidity or registers a significant
deterioration of credit metrics on a sustained basis. PAE's ratings
could also be downgraded if there is a downgrade of the government
of Argentina's rating.
Pan American Energy, S.L. (PAE) is a privately owned integrated
energy company, engaged in upstream and downstream operations in
Argentina and upstream operations in Mexico and Bolivia. The
company reported proved reserves of 1,647 million barrels of oil
equivalent in December 2023, equivalent to a 19-year reserve life;
and average production of 219 thousand boe per day (excluding
natural gas consumed in operations) in 2023, of which 53% was crude
oil and liquefied petroleum gas and 47% was natural gas.
The principal methodology used in these ratings was Integrated Oil
and Gas published in September 2022.
PROVINCIA CASA: Fitch Affirms 'CCC-' LongTerm IDRs
--------------------------------------------------
Fitch Ratings has affirmed Provincia Casa Financiera's (Provincia)
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
at 'CCC-'.
KEY RATING DRIVERS
Branch of Banco de la Provincia de Buenos Aires: Provincia is a
branch of Banco de la Provincia de Buenos Aires (BAPRO).
Provincia's IDRs are aligned with those of BAPRO, because it is
part of the same legal entity, and in absence of country risk
constraints, therefore reflecting Fitch's opinion of BAPRO's
stand-alone credit profile. BAPRO's credit profile considers its
leading franchise and systemic importance in Argentina and the
Province of Buenos Aires, as the bank is the second largest entity
in terms of deposits and the third in terms of assets as of
December 2023. Despite the bank's ample liquidity, Fitch also
considers BAPRO's very weak operating environment in Argentina, as
well as its low capital base, weaker asset quality relative to
domestic peers and high exposure to the Argentine public sector.
Owned by Province of Buenos Aires: BAPRO and Provincia are wholly
owned by the government of the Province of Buenos Aires. BAPRO's
liabilities (including those of its branches abroad) are guaranteed
by the Province of Buenos Aires.
Small Franchise in Uruguay: As of December 2023, Provincia
represented less than 1% of financial system's total assets. In
2023, Provincia resumed its credit activity with a focus on serving
Uruguayan and Argentine companies that have operations in both
countries. Provincia has a single office and is highly integrated
with its parent company in terms of strategy, corporate governance
and risk management processes and reports directly to the CEO of
BAPRO.
The branch's profitability increased in 2023 but remained negative
as the operating income could not surpass the entity's expenses
structure. Despite increased lending activity, the ratio of
operating income to risk-weighted assets (RWA) reached -1.1% as of
December 2023 (from -4.1% at 2022).
The Capitalization and Liquidity remained high at December 2023.
Provincia's Fitch Core Capital to risk weighted assets indicator
reached a high 63.4%, and the consolidated liquidity coverage
indicator reached 391%, despite funding concentration, which are
mainly non-resident deposits which represented the largest portion
of funding. In all, Provincia's securities portfolio represented
83.1% of assets and was mainly allocated to Uruguayan and United
States sovereign securities, as well as foreign banks with
investment-grade ratings.
The outcome of the committee would be the same if applying the
methodology registered in Uruguay (from Sept. 28, 2023) or Fitch's
new Bank Rating Methodology published on March 15, 2024.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The IDRs would be pressured by a significant deterioration in
BAPRO's financial profile caused by a deterioration in the
Argentine operating environment;
- Any policy announcement in Argentina that would be detrimental to
either BAPRO or Provincia's ability to service their obligations
would be negative for their creditworthiness.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The IDRs could benefit from an upgrade of Argentina's Long-Term
IDRs above 'CCC-'.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Provincia is a branch of Banco de la Provincia de Buenos Aires
(BAPRO). Provincia's IDRs are aligned with those of BAPRO, because
it is part of the same legal entity, and in absence of country risk
constraints, therefore reflecting Fitch's opinion of BAPRO's
stand-alone credit profile.
Entity/Debt Rating Prior
----------- ------ -----
Provincia Casa
Financiera LT IDR CCC- Affirmed CCC-
LC LT IDR CCC- Affirmed CCC-
===========
B R A Z I L
===========
LIGHT SA: Closes Deal With Creditors For Debt Restructuring
-----------------------------------------------------------
Bloomberg News reports that Rio de Janeiro's utility Light SA
reached an agreement with creditors, moving a step closer to
leaving a bankruptcy protection process that started last year.
The deal includes 1 billion reais ($200 million) in equity
injection from the company's main shareholders, Nelson Tanure,
Ronaldo Cezar Coelho and Carlos Alberto Da Veiga Sicupira, who own
a combined 65% of the company, according to Bloomberg News.
The binding agreement will become a full restructuring plan that
must be approved at the creditors' meeting scheduled for tomorrow,
April 25, the report discloses.
The deal includes a debt-to-equity conversion up to 2.2 billion
reais and the issuance of two new bonds - one with a 8 years
maturity paying inflation plus 5%, and another with a 13 years
maturity paying inflation plus 3%, the report adds.
Light, which has about 11 billion reais in total debt, filed for
bankruptcy protection almost a year ago, after warning regulators
it lacked enough revenue to cope with an increasing debt burden,
blaming energy theft and high delinquency rates, the report relays.
As previously reported in Troubled Company Reporter-Latin America,
Light filed for bankruptcy protection after warning that government
regulators weren't authorizing it to charge customers enough to pay
its obligations.
=====================
E L S A L V A D O R
=====================
FIFTEENTH MORTGAGE-BACKED TRUST: Fitch Affirms 'B-' C Notes Rating
-------------------------------------------------------------------
Fitch Ratings has affirmed Salvadoran RMBS transactions originated
by El Salvador La Hipotecaria, S.A. de C.V. (subsidiary of Banco La
Hipotecaria, S.A., rated BBB-/Stable) and underlying U.S.
transactions. Fitch has affirmed the 'Bsf' rating for the series A
notes on the Eleventh Mortgage-Backed Notes Trust, the Thirteenth
Mortgage-Backed Notes Trust, and series A and B notes on the
Fifteenth Mortgage-Backed Notes Trust. In addition, Fitch has
affirmed the Series C notes issued by the Fifteenth Mortgage-Backed
Notes Trust at 'B-sf'. The Rating Outlook is Stable for all of the
ratings.
Fitch has also affirmed the ratings for La Hipotecaria El
Salvadorian Mortgage Trust 2013-1 certificates and La Hipotecaria
El Salvadorian Mortgage Trust 2016-1 certificates at 'AA+sf' with a
Stable Outlook.
Entity/Debt Rating Prior
----------- ------ -----
Thirteenth
Mortgage-Backed
Notes Trust
A PAL3008861A4 LT Bsf Affirmed Bsf
La Hipotecaria El
Salvadorian
Mortgage Trust 2013-1
Series 2013-1
Certificates
501716AA2 LT AA+sf Affirmed AA+sf
La Hipotecaria El
Salvadorian
Mortgage Trust 2016-1
2016-1 50346VAA7 LT AA+sf Affirmed AA+sf
Eleventh
Mortgage-Backed
Notes Trust
Series A Notes
PAL3005461A6 LT Bsf Affirmed Bsf
Fifteenth
Mortgage-Backed
Notes Trust
A LT Bsf Affirmed Bsf
B LT Bsf Affirmed Bsf
C LT B-sf Affirmed B-sf
KEY RATING DRIVERS
RMBS TRANSACTIONS
Country of Assets Caps Ratings: El Salvador's Country Ceiling is
'B'. According to Fitch's 'Structured Finance and Covered Bonds
Country Risk Rating Criteria' the ratings of Structured Finance
notes cannot exceed the Country Ceiling (CC) of the country of the
assets, unless the transfer and convertibility (T&C) risk is
mitigated. While the Series A notes of the three RMBS transactions
have sufficient credit enhancement to be rated above the country's
Issuer Default Rating (IDR), the T&C risk is not mitigated, so the
ratings remain constrained by the CC and are ultimately linked to
the Long-Term IDR of El Salvador.
Operational Risk Mitigated: Grupo ASSA, S.A. (BBB-/Stable, primary
servicer) has hired La Hipotecaria S.A. de C.V. (the sub-servicer)
to be the servicer for the mortgages. Fitch has reviewed La
Hipotecaria's systems and procedures and is satisfied with its
servicing capabilities. Additionally, Banco General S.A.
('BBB-'/Stable) has been designated as back-up servicer in order to
mitigate the exposure to operational risk, and it would replace the
defaulting servicer within five days of a servicer disruption
event.
Eleventh Mortgage-Backed Notes Trust
Transaction Performance Supports Rating: CE has been increasing
given the standard waterfall allocation and good asset performance.
As of February 2024, CE has increased to approximately 67.1% up
from 58.9% observed in April 2023 for the Series A notes. The
Series A notes also benefit from reserve accounts equivalent to 6x
their next interest payment.
Frequency of Foreclosure Remained Stable: Under Fitch's assumptions
in a 'Bsf' scenario, the A notes would need to support a weighted
average foreclosure frequency (WAFF) of 21.2% and a weighted
average recovery rate (WARR) of 98.3% compared with WAFF of 20.9%
and WARR of 97.9% from previous review. These assumptions consider
the main characteristics of the assets, where OLTV is 87.2%, the
seasoning average 179 months and remaining term 171 months, WA
current loan-to-value is 62.3% and the majority of performing
borrowers (52.2%) pay through a payroll deduction mechanism. The
assumptions also consider a Performance Adjustment Factor of 0.7x
considering the historical performance of the portfolio.
Thirteenth Mortgage-Backed Notes Trust
Transaction Performance Supports Rating: CE has increased during
the last year due to the sequential nature of the structure. As of
February 2024, CE has increased to approximately 22.8% up from
20.5% observed in April 2023 for the Series A notes. The Series A
notes also benefit from reserve accounts equivalent to 1.0625% the
outstanding balance of the series A notes, covering almost 3x their
next interest payment and senior expenses.
Frequency of Foreclosure Remained Stable: Under Fitch's assumptions
in a 'Bsf' scenario, the A notes would need to support a WAFF of
16.1% and a WARR of 79.8% compared with WAFF of 15.3% and WARR of
79.7% from previous review, at the same rating level. These
assumptions consider the main characteristics of the assets, where
OLTV is 87.1%, the seasoning average 130 months and remaining term
217 months, WA current loan-to-value is 70.0% and the majority of
performing borrowers (59.0%) pay through a payroll deduction
mechanism. The assumptions also include a Performance Adjustment
Factor of 0.7x based on the historical performance of the
portfolio.
Fifteenth Mortgage-Backed Notes Trust
Transaction Performance Supports Ratings: CE has increased during
the last year due to the sequential nature of the structure. As of
February 2024, CE has increased approximately 19.6% up from 18.5%
observed in April 2023 for the Series A notes, 8.6% up from 6.8%
observed in April 2023 for the Series B notes, and 5.4% up from
3.7% observed in April 2023 for the Series C notes. A few factors
contributed, such as stability in the excess spread and good asset
performance. The series A notes and the series B notes also benefit
from reserve accounts equivalent to 3x their next interest payment
in the form of a letter of credit. Fitch has modelled the
transaction, and the results support the affirmation on all
classes.
Frequency of Foreclosure Remained Stable: Under Fitch's assumptions
in a 'Bsf' scenario, the A and B notes would need to support a WAFF
of 14.0% and a WARR of 67.2%, compared with WAFF of 13.7% and WARR
of 66.9% from previous review, at the same rating level. For the C
notes, in a 'B-sf' scenario, it would need to support a WAFF of
11.2% and a WARR of 71.8%, compared with WAFF of 11.1% and WARR of
71.5% from previous review. These assumptions consider the main
characteristics of the assets, where OLTV is 87.0%, the seasoning
averages 104 months and the remaining term is 248 months, WA
current loan-to-value is 74.4% and the majority of performing
borrowers (63.3%) pay through a payroll deduction mechanism. The
assumptions also consider a Performance Adjustment Factor of 0.7x
considering the historical performance of the portfolio.
CLN TRANSACTIONS
La Hipotecaria El Salvadorian Mortgage Trust 2013-1 and La
Hipotecaria El Salvadorian Mortgage Trust 2016-1
DFC's Credit Quality Supports Rating: The rating assigned to the La
Hipotecaria El Salvadorian Mortgage Trust 2013-1 and La Hipotecaria
El Salvadorian Mortgage Trust 2016-1 certificates is commensurate
with the credit quality of the guarantee provider. The credit
quality of U.S. International Development Finance Corporation (DFC)
is directly linked to the U.S. sovereign rating (AA+/F1+/Stable),
as guarantees issued by, and obligations of, DFC are backed by the
full faith and credit of the U.S. government, pursuant to the
Foreign Assistance Act of 1969.
Reliance on DFC Guaranty: Fitch assumes the payment on the La
Hipotecaria El Salvadorian Mortgage Trust 2013-1 and La Hipotecaria
El Salvadorian Mortgage Trust 2016-1 certificates will rely on the
DFC guaranty. Through this guaranty, DFC will unconditionally and
irrevocably guarantee the receipt of proceeds from the underlying
notes in an amount sufficient to cover timely scheduled monthly
interest amounts and the ultimate principal amount on the
certificates.
Ample Liquidity: The La Hipotecaria El Salvadorian Mortgage Trust
2013-1 and La Hipotecaria El Salvadorian Mortgage Trust 2016-1
certificates benefit from liquidity, in the form of a five-day
buffer between payment dates on the underlying notes and payment
dates on the certificates. Additionally, the certificates benefit
from liquidity in the form of a reserve account. Fitch considers
this sufficient to keep debt service current on the guaranteed
certificates until funds under a claim of DFC are received.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The ratings of Eleventh Mortgage-Backed Notes Trust Series A Notes,
Thirteenth Mortgage-Backed Trust Series A Notes and Fifteenth
Mortgage-Backed Notes Trust Series A, B and C Notes could be
downgraded in case of severe increases in foreclosure frequency as
well as reductions in recovery rates. Also, ratings could be
downgraded if El Salvador's CC level changes.
In the case of La Hipotecaria El Salvadorian Mortgage Trust 2013-1
certificates and La Hipotecaria El Salvadorian Mortgage Trust
2016-1 certificates, the rating assigned could be downgraded if
there is a negative change in Fitch's perception of the credit
quality of DFC, which currently is directly linked to the U.S.
sovereign rating.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
The ratings of Eleventh Mortgage Backed Notes Trust Series A Notes,
Thirteenth Mortgage-Backed Notes Trust Series A Notes and Fifteenth
Mortgage Backed Notes Trust Series A and Series B Notes are
currently capped at El Salvador's CC level. These ratings could
only be upgraded if El Salvador's CC is upgraded. The ratings of
Fifteenth Mortgage-Backed Notes Trust Series C Notes could be
upgraded due to improvement of asset performance and consistent CE
growth.
In the case of La Hipotecaria El Salvadorian Mortgage Trust 2013-1
certificates and La Hipotecaria El Salvadorian Mortgage Trust
2016-1 certificates, the rating could be upgraded if there is a
positive change in Fitch's perception of the credit quality of DFC,
which currently is directly linked to the U.S. sovereign rating.
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.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
- The ratings of the Eleventh Mortgage-Backed Notes Trust Series A
Notes, Thirteenth Mortgage-Backed Trust Series A Notes and
Fifteenth Mortgage-Backed Notes Trust Series A & B Notes are driven
by El Salvador's credit quality as measured by its CC.
- The rating of the 2013-1 certificates issued by La Hipotecaria El
Salvadorian Mortgage Trust 2013-1 and the 2016-1 certificates
issued by La Hipotecaria El Salvadorian Mortgage Trust 2016-1 is
directly linked to the credit quality of the U.S. International
Development Finance Corporation.
ESG CONSIDERATIONS
The Eleventh Mortgage-Backed Notes Trust Series A Notes has a Human
Rights, Community Relations, Access & Affordability of '+4' for its
exposure to accessibility to affordable housing, which has a
positive impact on the credit profile and is relevant to the rating
in combination with other factors.
The Thirteenth Mortgage-Backed Notes Trust has a Human Rights,
Community Relations, Access & Affordability score of '+4' for its
exposure to accessibility to affordable housing, which has a
positive impact on the credit profile and is relevant to the rating
in combination with other factors.
The Fifteenth Mortgage-Backed Notes Trust has a Human Rights,
Community Relations, Access & Affordability score of '+4' for its
exposure to accessibility to affordable housing, which has a
positive impact on the credit profile and is relevant to the rating
in combination 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.
=============
J A M A I C A
=============
DIGICEL GROUP: Appoints Leopoldo Gutierrez as Group CFO
-------------------------------------------------------
RJR News reports that Digicel Group has appointed El Salvadoran
national Leopoldo Gutierrez as its Group Chief Financial Officer,
effective May 1.
He will be based in Kingston.
Mr Gutierez has over 20 years of experience in global operations,
15 of them with Latin American operator Tigo, in a variety of
senior finance roles, according to RJR News.
About Digicel Group
Digicel Group is a mobile phone network provider operating in 33
markets across the Caribbean, Central America, and Oceania
regions.
The company is owned by the Irish billionaire Denis O'Brien, is
incorporated in Bermuda, and based in Jamaica.
As reported in the Troubled Company Reporter-Latin America in
April
2020, Moody's Investors Service downgraded Digicel Group Limited's
probability of default rating to Caa3-PD from Caa2-PD. At the same
time, Moody's downgraded the senior secured rating of Digicel
International Finance Limited to Caa1 from B3. All other ratings
within the group remain unchanged. The outlook is negative.
Also in April 2020, the TCR-LA reported that Fitch Ratings has
downgraded Digicel Limited to 'C' from 'CCC', and its outstanding
debt instruments, including the 2021 and 2023 notes to 'C'/'RR4'
from 'CCC'/'RR4'. Fitch has also downgraded Digicel International
Finance Limited to 'CCC+' from 'B-'/Negative, and its outstanding
debt instruments, including the 2024 notes and the 2025 credit
facility, to 'CCC+'/'RR4' from 'B-'/'RR4'. Fitch has removed the
Negative Rating Outlook from DIFL.
JAMAICA URBAN: Gov't to Spend Over $2 Billion to Boost Fleet
------------------------------------------------------------
RJR News reports that Jamaica government will be spending more than
$2.63 billion to purchase 100 buses to boost the fleet at the
Jamaica Urban Transit Company.
The Cabinet has approved the award of US$18.9 million contract to
Von's Motor and Company Limited for the supply and delivery of the
Compressed Natural Gas (CNG) buses, according to RJR News.
This was disclosed by Information Minister, Robert Morgan, during
the post-media briefing at Jamaica House, the report notes.
The CNG-fueled buses are expected to arrive in time for the start
of the 2024/25 academic year in September, the report relays.
They will form part of the 300 mixed-energy units that the
Government will be acquiring over the next three years to boost the
State-run JUTC's fleet and address needs in the public
transportation system, the report notes.
RJR News, citing a March 7, 2022, CVM-TV report, recalls that
according to the Opposition Spokesman on Transport, Mikael
Phillips, the Jamaica Urban Transit Company (JUTC) is facing a
possible shutdown due to bankruptcy and poor policy. Phillips says
the company is unable to cover its own expenses, the report relays.
He is calling on the government to work with stakeholders to take
a different approach to save the company, the report discloses.
About Jamaica Urban Transit Company
Jamaica Urban Transit Company was established in 1998 to provide
a centrally managed state-of-the-art public bus service. The
government invested US6 billion aiming to have an efficient
transport system and for the Jamaican people.
* * *
As reported in the Troubled Company Reporter-Latin America on
February 13, 2009, RadioJamaica said JUTC defaulted on loan
obligations with RBTT Bank and Petrocaribe Development Fund,
among others, due to cash flow problems. The Ministry of
Information, as cited by Radio Jamaica, stated that the JUTC
operates an overdraft facility of US520 million at the National
Commercial Bank which expired in February. The report noted that
the Ministry said this facility is consistently utilized at the
upper limit and, on occasions, exceeds the limit giving rise to
the imposition of penalty charges above 43%.
JAMAICA: Annual Cost of Apparel up 3.7% in March
------------------------------------------------
RJR News reports that consumers paid an average 3.7 per cent more
for apparel between March 2023 and March 2024.
These price movements were influenced by supply chain movements and
overall increases in manufacturing prices, according to RJR News.
The Statistical Institute of Jamaica (STATIN) says for the month of
March alone, prices of items in the group 'Clothing and Footwear'
moved upwards by 0.2 per cent, the report discloses.
The cost of 'Clothing' and 'Footwear' each increased by an average
0.2 per cent, the report relays.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. The upgrade of Jamaica's
rating to B1 reflects the government's sustained commitment to
fiscal consolidation and debt reduction. The positive outlook
reflects Moody's assessment that a continuation of the favorable
fiscal trajectory will further increase Jamaica's credit
resilience.
S&P Global Ratings raised on September 13, 2023, its long-term
foreign and local currency sovereign credit ratings on Jamaica to
'BB-' from 'B+', and affirmed its short-term foreign and local
currency sovereign credit ratings at 'B'. The stable outlook
reflects S&P's expectation that the government will remain
committed to prudent fiscal policies and reducing debt, as well as
supportive economic policies including a flexible exchange rate
regime and effective monetary policy.
In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
===========
M E X I C O
===========
BANCO AZTECA: Fitch Affirms Then Withdraws 'BB-' LongTerm IDR
-------------------------------------------------------------
Fitch Ratings has affirmed Banco Azteca, S.A. Institucion de Banca
Multiple's (Banco Azteca) Long- and Short-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) at 'BB-'/'B', respectively,
and simultaneously withdrawn the ratings. Fitch has also affirmed
and withdrawn the bank's Viability Rating (VR) at 'bb-', its Long-
and Short-Term National Ratings at 'A(mex)'/'F1+(mex)' and its
Government Support Rating (GSR) at 'bb-'. The Rating Outlooks of
the Long-Term IDRs and National Rating were Stable prior to the
ratings withdrawal.
Fitch has chosen to withdraw the ratings of Banco Azteca for
commercial reasons. Fitch will no longer provide ratings or
analytical coverage to the issuer.
KEY RATING DRIVERS
ESG - Governance Structure: As of YE 2023, Banco Azteca accounted
for approximately 2.9% of total deposits within the Mexican banking
sector, positioning itself as the ninth-largest bank in this
category. At the same time, the bank held a 7.9% market share in
the consumer lending segment, ranking fifth among its local
competitors.
With a strong position in consumer lending and retail deposits, the
bank maintains a good business profile. However, in Fitch's
opinion, the weak corporate governance practices of its controlling
group and the sustained high related-party transactions, which
represented 28.2% the bank's common equity Tier 1 (CET1), weigh
negatively in its business profile assessment.
Reasonable Financial Profile: Banco Azteca's commercial loan
portfolio underwriting standards continue to add pressure on its
asset quality. At YE 2023, Stage 3 loans to total loans ratio
decreased to 4.2% from 5.3% in 3Q23, although write-offs increased
compared to 2022 (+47.3%). Its profitability, while benefiting from
a high interest margin model, faces pressure from rising loan
impairment charges (LICs) in both its core and commercial loan
portfolios.
The bank's operating profit to risk-weighted assets (RWA) ratio was
1.8% at YE 2023, adequate to its rating levels. Also, Banco
Azteca's capitalization remains reasonable with a CET1 to RWA ratio
of 14.5% and maintains a robust funding and liquidity profile,
which is attributed to its ample, diversified, and low-cost
customer deposit base, showcasing consistent stability across the
cycle. At YE 2023, the loans-to-deposits ratio was 79.0%.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Negative rating sensitivities are not applicable as the ratings
have been withdrawn.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Positive rating sensitivities are not applicable as the ratings
have been withdrawn.
Government Support Rating (GSR): Before the withdrawal, Banco
Azteca 'bb-' GSR reflected Fitch's expectation that although the
bank is not a domestic systemically important bank (D-SIB), there
was a moderate probability of sovereign support in case of need,
given the bank's ample base of retail depositors and moderate
market share of customer deposits.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Negative GSR sensitivities are not applicable as the ratings have
been withdrawn.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Positive GSR sensitivities are not applicable as the ratings have
been withdrawn.
VR ADJUSTMENTS
Fitch has assigned a Business Profile score of 'bb', which is below
the 'bbb' category implied score, due to the following adjustment
reason(s): Management and Governance (negative).
Fitch has assigned an Asset Quality score of 'b+', which is below
the 'bb' category implied score, due to the following adjustment
reason(s): Concentrations (negative).
Fitch has assigned a Funding & Liquidity of 'bbb-', which is above
the 'bb' category implied score due to the following adjustment
reason(s): Deposit Structure (positive).
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch classified pre-paid expenses and other deferred assets as
intangibles and deducted from total equity due to the low loss
absorption capacity under stress of these assets.
Sources of Information
Financial figures are in accordance to the Comision Nacional
Bancaria y de Valores criteria. Figures for 2022 and 2023 include
recent accounting changes in the process to converge to
International Financial Reporting Standards. Prior years did not
include these changes and Fitch believes they are not directly
comparable.
ESG CONSIDERATIONS
Following the withdrawal of Banco Azteca's ratings, Fitch will no
longer be providing the associated ESG Relevance Scores. Prior to
ratings withdrawal, Banco Azteca had an ESG Relevance Score of '5'
for Governance Structure due to the corporate governance concerns
and the relevant related-party transactions, which had a negative
impact on the credit profile, and were highly relevant to the
rating, resulting in one notch downgrade.
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
----------- ------ -----
Banco Azteca,
S.A. LT IDR BB- Affirmed BB-
LT IDR WD Withdrawn BB-
ST IDR B Affirmed B
ST IDR WD Withdrawn B
LC LT IDR BB- Affirmed BB-
LC LT IDR WD Withdrawn BB-
LC ST IDR B Affirmed B
LC ST IDR WD Withdrawn B
Natl LT A(mex) Affirmed A(mex)
Natl LT WD(mex) Withdrawn A(mex)
Natl ST F1+(mex)Affirmed F1+(mex)
Natl ST WD(mex) Withdrawn F1+(mex)
Viability bb- Affirmed bb-
Viability WD Withdrawn bb-
Government Support bb- Affirmed bb-
Government Support WD Withdrawn bb-
=============
U R U G U A Y
=============
BANCO DE LA NACION: Fitch Affirms 'CCC-' LongTerm IDR
-----------------------------------------------------
Fitch Ratings has affirmed Banco de la Nacion Argentina's (Sucursal
Uruguay) (BNAUY) Long-Term Foreign and Local Currency Issuer
Default Ratings (IDRs) at 'CCC-'.
KEY RATING DRIVERS
Branch of Banco de la Nacion Argentina: BNAUY is a full branch of
Banco de la Nacion Argentina (BNA), which has a leading franchise
and systemic importance in Argentina. Additionally, BNAUY has
international coverage through branches and representative offices
in seven countries, mainly to attend domestic needs related to
intraregional foreign trade, and supporting the commercial activity
of Argentina in the region.
BNAUY is the same legal entity as BNA. Therefore, its IDRs reflect
Fitch's opinion on BNA's stand-alone credit profile in absence of
country risk constraints. BNA is fully owned by the Argentine state
and its liabilities (including its branches abroad) are guaranteed
by the sovereign. Fitch believes BNA's creditworthiness is highly
influenced by Argentina's volatile operating environment. However,
BNAUY is the smallest bank in Uruguay due to its narrow business
focus. It is fully integrated with the head office's structure,
strategies, corporate governance, practices, risk management
procedures, and it operates through one main office. BNAUY has
volatile profitability, a strong liquid balance sheet, adequate
capitalization and limited lending activity.
Low-Risk Assets: As of December 2023, gross loans represented 13%
of total assets. The bank's securities accounted for another 55% of
that. BNAUY's securities portfolio is mainly comprised of sovereign
bonds from countries outside the LATAM region, with investment
grade, and corporate bonds with the same condition. BNAUY's credit
growth had been recently limited due to its narrow business
strategy. However, in 2023 the bank reversed this trend, with
portfolio growth of 45%, although from a low base.
Improving Profitability and Capitalization: As of December 2023,
BNAUY's Fitch Core Capital to risk weighted assets indicator was
18.1% from 15.1% a year earlier, on improved profitability.
Operating Profit/RWA was 4% in 2023 from 0.8% in 2022.
The outcome of the committee would be the same if applying Fitch's
methodology for rating Uruguay (from Sept. 28, 2023) or Fitch's new
"Bank Rating Methodology" published on March 15, 2024.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The IDRs would be pressured by a significant deterioration in
BNA's financial profile caused by a deterioration in the Argentine
operating environment;
- Any policy announcement in Argentina that would be detrimental to
either BNA or BNAUY's ability to service their obligations would be
negative for their creditworthiness.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The IDRs of BNA and, hence, BNAUY would benefit from an upgrade
of Argentina's sovereign rating.
Entity/Debt Rating Prior
----------- ------ -----
Banco de la Nacion
Argentina (Sucursal
Uruguay) LT IDR CCC- Affirmed CCC-
LC LT IDR CCC- Affirmed CCC-
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
.
* * * End of Transmission * * *