/raid1/www/Hosts/bankrupt/TCRLA_Public/240522.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
Wednesday, May 22, 2024, Vol. 25, No. 103
Headlines
A R G E N T I N A
ARGENTINA: Beef Consumption at Lowest Level in Three Decades
ARGENTINA: Cabinet Chief Posse Predicts 139% Inflation
ARGENTINA: IMF Expects Economy 'to Start Growing' in 2nd Semester
BUENOS AIRES: Subway's Heavily Subsidized Fares Set to Quadruple
B A H A M A S
FTX GROUP: Lawsuit is Innuendo Masquerading as Facts, Lawyers Say
B R A Z I L
GOL LINHAS: Swings to Net Loss in First Quarter
C O L O M B I A
BANCO GNB SUDAMERIS: Fitch Affirms 'BB' IDR, Outlook Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Proposed Mechanism Will Cut Chicken Price
J A M A I C A
JAMAICA: Annual Cost of Alcoholic Beverages Up 4.3% at April
- - - - -
=================
A R G E N T I N A
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ARGENTINA: Beef Consumption at Lowest Level in Three Decades
------------------------------------------------------------
Buenos Aires Times reports that consumption of beef dropped by 17.5
percent in the first four-month period of the year, as against the
same period of 2023, and is once again the worst on record in the
last 30 years, according to data from the CICCRA industry group.
A survey conducted by CICCRA, the Argentine Chamber of Industry and
Trade of Meat and Related Products, specified that "apparent
consumption of beef had totalled 663,400 tonnes of beef on the
bone" between January and April, some 141.1 tonnes less than the
first four months of last year, according to Buenos Aires Times.
The report also showed that "with these figures, the apparent
consumption of beef per inhabitant had amounted to 42.4 kilos/year
in the first four months of 2024, 18.5 percent less than recorded
in the same period of 2023 (-9,6 kilos/inhabitant/year)," Buenos
Aires Times notes.
Thus, just as in the previous calculation, for the first quarter of
the current calendar year, meat consumption continues to suffer a
historic fall, Buenos Aires Times relays.
As for the price variation in the context of high inflation with an
impact on the decline of consumption, the report included the fact
that during April, the average cost of "meat and related products"
once again was among the ones with the lowest increases (4.9
percent), the report discloses.
In this respect, the report stated that "it was the average value
of beef cuts surveyed by INDEC which contributed to this slowdown,
since it increased by 4.7 percent from March" and, conversely, they
pointed out that "on the other hand, the price of chicken rose by
8.2 percent during the month," the report notes.
In the year-to-year comparison, the average price of beef cuts
measured by INDEC recorded a 284.3-percent rise, with up to 304.8
percent in the case of common mince and at least 265.7 percent in
the case of round steak, the report relays. The rise was below the
price increase of live cattle (+321.8 percent per year), and the
evolution of the general consumer price levels (+292.2 percent),
the report notes.
From CICCRA, they explained that "what prevented butchers from
transferring these rising costs immediately to the counter and the
contraction of consumption being even higher, was the dive in
purchasing power of wage-earners over the last year, especially
employees in the public sector and informal employees in the
private sector," 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: Cabinet Chief Posse Predicts 139% Inflation
------------------------------------------------------
Better late than never – three weeks shy of half a year as
Cabinet chief, Nicolas Posse finally condescended to show up in
Congress for an eight-hour Senate session to answer questions about
the 'Ley de Bases' deregulatory reform amid the committee debate,
Buenos Aires Times reports.
Given that the National Constitution establishes that the head
minister should report monthly, alternating between the two
chambers as they go, there was a long backlog of questions –
Posse had not shown up in Congress since taking office last
December, according to Buenos Aires Times.
Throughout the session, the official addressed a broad range of
issues with the economic projections of the Javier Milei government
at the forefront, the report notes. According to the Cabinet
chief, the government forecasts that this year will end with an
annual inflation of 139 percent, marked by deceleration in the
remaining months of year, and the dollar at 1,016 pesos, the report
relays.
Posse, 58, further took aim against the administration of social
plans on the part of the picket organisations in the framework of
recent court raids and the diffusion of preliminary conclusions,
also referring to the presumed "punishments and threats" of a
system which he compared to a system of "modern slavery," the
report discloses.
Another question tackled, due to the insistent questions of
opposition senators, was the halt to public works projects
nationwide, the report relays. Posse bluntly explained that the
entire system was under review due to the government inheriting
multi-billion debts which had caused most contracts to collapse due
to lack of funding, the report relays.
"We're not going to finance that by printing money, we are halting
hyperinflation," he elaborated, the report discloses.
The Cabinet chief also crunched numbers from the macro-economic
projections of the libertarian administration, following a question
from Senator Anabel Fernandez Sagasti (Unión por la
Patria-Mendoza), the report notes.
"Annual inflation of 139.7 percent is projected for December,
2024,″ said Posse in relation to consumer price increases, the
report notes.
"As for the Budget, which has been rolled over, the Economy
Minister projects a fall of 3.5 percent for Gross Domestic Product
this year. The nominal exchange rate, as measured by the A3500 of
the Central Bank with the dollar, is projected to reach 1,016 pesos
(58 percent growth this year)," stated the official, the report
relays.
Posse then highlighted the administration's achievements,
underlining that "we are [moving] in the correct direction," the
report discloses
He indicated: "The objective was always to lower the deficit
towards zero deficit and the surprise we had is that everybody
considered it improbable that it would happen in 2024 and reaching
December with zero deficit unattainable," the report relays.
On the contrary, he maintained that not only was this objective
achieved but a "surplus" of some four trillion pesos was also
reached during the first quarter of the year, he detailed, the
report notes.
At the same time, he underlined that "we are a solvent country with
a surplus for the first time since 2008 so we have no need to run
up new debts nor to resort to new taxes nor, the worst option of
them all, to print money," the report notes.
'Ley de Bases'
Posse launched a firm defence of President Milei's flagship 'Ley de
Bases' reform bill (also known as the 'Omnibus' bill) during his
exposure before lawmakers, the report relays.
Notably, he leapt to the defence of its RIGI (Regimen de Incentivo
a las Grandes Inversiones) investment incentives, affirming that
they would promote industry and regional economies, the report
notes.
"The investments are awaiting legal security in the regions," he
maintained about the scheme, which rewards those putting down more
than US$200 million by exempting them from national and provincial
taxes and allowing them to import goods without paying duties, the
report discloses.
At the same time he referred to the protests over Fondo Nacional de
Incentivo Docente (FONID) teacher bonuses, assuring that the fund
had been discontinued because the period established by the law
creating it had expired, the report relays.
During the eight-hour session in which Posse presented his first
report, the Cabinet chief received fierce criticisms from
opposition caucuses, especially the Kirchnerite wing of the
Peronist coalition, the report notes.
"They assembled a fiction whereby austerity is possible, thus
constructing the surplus," assured Senator Juliana Di Tullio
(Unión por la Patria-Buenos Aires Province), the report notes.
"Notify the President that wages are not keeping up with inflation.
People sell dollars to pay their utility bills. They have blown up
the middle class, that's why poverty has gone up. The people are
paying for austerity," she added.
Caucus chief Jose Mayans (Unión por la Patria-Formosa) said: "The
Ley Bases is tailor-made for 20 businessmen to do what they like in
Argentina. Ah, but the picket with three plans, poor him," the
report relays.
Senator Ezequiel Atauche (La Libertad Avanza-Jujuy) defended
Posse's presentation, the report notes.
"We have brought in people who know how to manage things and that
hurts them. I understand them because they've been around for 20
years and they don't know how to manage anything but their time is
up," he said, pointing the finger at the Peronist ranks, the report
discloses.
"The Argentines are fed up with their lies," concluded the
libertarian, 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: IMF Expects Economy 'to Start Growing' in 2nd Semester
-----------------------------------------------------------------
Buenos Aires Times reports that the International Monetary Fund
insists that Argentina's adjustment plan is giving "better results
than expected" and foresees the economy as "starting to grow" in
the second half of the year, a spokeswoman of the financial
organisation stated.
The IMF is satisfied with the progress made since President Javier
Milei was inaugurated in December with one goal: to drastically cut
public expenditure, which he dubbed the "chainsaw" plan, according
to Buenos Aires Times.
"The strong involvement and application by authorities of its
stabilisation plan is delivering results that are better than
expected," said Julie Kozack, director of communications of the
Fund at a press conference in Washington, the report notes.
She cited as cause for the remarks the first quarterly fiscal
surplus in 16 years, the "swift recovery" of international reserves
and an improvement in the figures of the Central Bank, as well as a
rapid reduction of inflation – which went from 25 percent in
December to around 8.8 percent in April, the report relays.
Kozack also repeated the conclusions of the IMF's technical team,
which reached an agreement with Argentina over the eighth review of
the aid package which will enable a disbursement of nearly US$800
million as soon as the Fund's executive board green-lights it, the
report notes.
It is the first review "where all criteria have been met," said
Kozack, referring to Argentina's credit programme with the Fund,
through which the country receives US$44 billion over 30 months in
exchange for an increase of international reserves and a reduction
of the fiscal deficit, the report discloses.
"These are all steps in the right direction and we expect the
economy to start growing again the second half of this year," but
"the road ahead is still difficult," the spokeswoman stressed, the
report relays.
The IMF believes that the Milei government must contain the crisis
on three fronts: fiscal, monetary and reforms to generate formal
employment and attract private investment, the report relays.
Fiscally, the efficacy of the tax system must improve, but
authorities in Argentina must also "continue to ensure that social
aid is sufficient and properly orientated towards protecting the
most vulnerable" to ensure that the burden of the adjustment "does
not fall disproportionately on working families," the report
notes.
Around 50 percent of the population is currently living below the
poverty line, according to multiple surveys, the report discloses.
Monetary policy "must continue to evolve to anchor inflation" and
the foreign exchange policy "must become more flexible over time,"
Kozack stated, the report relays.
The spokeswoman did not mention the foreign exchange restrictions
Milei wishes to lift, which have been in place since 2019 and limit
access to dollars in a country where the US currency serves as
wealth reserve for savings, the report notes.
Yet she claimed that "policy changes will be necessary as foreign
exchange controls become gradually relaxed" and authorities "make
the transition" towards a new regime whereby "the peso and other
currencies such as the US dollar can coexist and be used freely."
This is what happens in Peru and Uruguay, she added.
She did not mention whether the IMF would lend Argentina more money
than agreed under the terms of its current credit program either,
the report relays.
"Current conversations with authorities are centred on this ongoing
review," the spokeswoman added.
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.
BUENOS AIRES: Subway's Heavily Subsidized Fares Set to Quadruple
----------------------------------------------------------------
Patrick Gillespie at Bloomberg News reports that commuters in
Buenos Aires will see subway fares quadruple, a consequence of
President Javier Milei's austerity drive.
Prices on Latin America's oldest subway system will rise to 574
pesos (64 cents) from 125 pesos, one of steepest overnight changes
since Milei's government took office December 10, according to
Bloomberg News. While the subway is regulated by the City and
operated by a company, Milei is cutting federal subsidies for
public transport across the board, forcing some local governments
to raise prices, Bloomberg News notes.
An Argentine judge lifted a temporary court order that had
suspended the scheduled price increase, allowing the plan to move
forward, according to newspaper La Nacion, Bloomberg News relates.
Prices for buses and trains in the Buenos Aires metro area have
already gone up too, but neither with a one-time move like the
subway's, Bloomberg News discloses. In fact, Milei's government
has postponed additional transport price hikes, and the jump in
subway fares was supposed to happen earlier this year, Bloomberg
News relays. Rides on the subway were scheduled to reach 757 pesos
by June, according to the City government's Official Gazette in
February, though it's unclear now if prices will still go up again
next month, Bloomberg News notes.
While the heavily subsidised subway fares were widely seen as
unsustainable, Argentines nationwide were already struggling with
289 percent annual inflation, lagging wage growth and a deepening
recession even before the price hike, Bloomberg News adds.
As reported in the Troubled Company Reporter-Latin America on Feb.
18, 2022, S&P Global Ratings affirmed its 'CCC+' foreign and local
currency long-term issuer credit ratings on the city of Buenos
Aires. The outlook remains stable.
=============
B A H A M A S
=============
FTX GROUP: Lawsuit is Innuendo Masquerading as Facts, Lawyers Say
-----------------------------------------------------------------
Alison Frankel at Reuters reports that U.S. law firm Sullivan &
Cromwell asked, opens new tab a Florida federal judge to dismiss a
lawsuit, opens new tab by FTX customers who accuse the firm of
helping the crypto exchange cheat them out of billions of dollars.
Sullivan & Cromwell argued that the customers' lawyers offered no
plausible allegation that the law firm was aware of wrongdoing by
FTX insiders when it provided legitimate legal services to FTX in
about 20 matters before the exchange filed for federal bankruptcy
protection in late 2022, according to Reuters.
The customers' claims, argued the firm's lawyers at Hunton Andrews
Kurth, are nothing more than "innuendo masquerading as facts,"
unsupported by specific allegations that Sullivan & Cromwell
lawyers knew FTX CEO Sam Bankman-Fried and other FTX executives
were illegally diverting customer money, the report notes.
"If a claim existed against S&C, plaintiffs have had every
opportunity to find that claim and plead it," the law firm said in
its motion to U.S. District Judge Michael Moore of Miami, citing
customers' cooperation agreements with Bankman-Fried and several
other FTX insiders. "Their failure to do so speaks volumes," the
motion said, the report relays.
If anything, Sullivan & Cromwell suggested in its motion to dismiss
the prospective class action, FTX customers should be grateful for
the law firm's "around the clock" efforts as FTX's bankruptcy
counsel "to unwind the fraud perpetrated by Bankman-Fried and his
inner circle," the report discloses.
Thanks to that hard work of Sullivan & Cromwell lawyers, the firm
said, almost all of FTX's onetime customers will be repaid the full
amount of money in their accounts at the time the exchange went
bankrupt, plus 9% interest, the report discloses.
The report relays that customers' counsel Adam Moskowitz of The
Moskowitz Law Firm and David Boies of Boies Schiller Flexner did
not respond to my email query on the Sullivan & Cromwell motion.
As the customers' complaint alleges in great detail, Sullivan &
Cromwell's pre-bankruptcy work for FTX has been scrutinized by
judges, regulators and lawmakers amid questions about whether the
firm was too conflicted to investigate the exchange's collapse as
FTX bankruptcy counsel, the report notes.
Sullivan & Cromwell, which has reaped more than $180 million in
fees from the FTX bankruptcy, pointed out in its dismissal motion
that the judge presiding over the Chapter 11 proceeding rejected
those arguments, but the 3rd U.S. Circuit Court of Appeals ruled in
January that an independent examiner should have been appointed in
the sprawling, multibillion-dollar Chapter 11 case, the reprot
relays.
Reuters relays that the customers' lawsuit centers on allegations
that through its pre-bankruptcy assignments for FTX, Sullivan &
Cromwell "placed itself in a unique position to gain deep insight
into the FTX entities' convoluted organizational structure, abject
lack of internal controls and dubious business practices."
By representing FTX in, among other matters, the acquisition of
derivatives trading company LedgerX and the contemplated
acquisition of assets from bankruptcy crypto exchange Voyager, the
complaint asserted, Sullivan & Cromwell conducted due diligence
that should have exposed FTX's illegal use of customer funds, the
report notes.
The complaint noted that rival exchange Binance needed only hours
to spot the potential misuse of customer deposits when it backed
out of plans to acquire FTX as FTX steamed toward bankruptcy in
2022, the report discloses.
Sullivan & Cromwell, according to the complaint, had far more
exposure to FTX's inner workings than Binance. Through work on
LedgerX matters, the complaint alleged, the law firm was privy to a
software audit revealing a "back door" in FTX's platform code that
allowed Bankman-Fried and other insiders to divert customer money
to FTX's sister hedge fund, Alameda Research, the report notes.
The complaint asserted that FTX's lead in-house lawyer, a former
Sullivan & Cromwell partner, likely told Sullivan partners about
the back door, the report says.
But the firm's dismissal motion said those allegations are far too
vague and speculative to justify claims that it was part of FTX's
fraud, the report relays.
"Based on the facts set forth in the complaint, all that can be
inferred is that S&C agreed to perform lawful legal services for
FTX," Sullivan & Cromwell argued. "The complaint pleads no facts
suggesting the existence of some other corrupt agreement, let alone
one to misappropriate billions of dollars' worth of FTX assets,"
the report relays.
If you've been keeping track of the consolidated FTX customer
litigation, you'll recall that Sullivan & Cromwell's arguments
sound a lot like defenses asserted by the crypto exchange's other
main outside law firm, Fenwick & West, the report notes. As I told
you last September, Fenwick also insisted that its routine legal
work for FTX was not evidence of conspiracy or abetting fraud under
Florida state law, the report discloses.
In response, plaintiffs' lawyers argued, opens new tab last
November that California law should apply to claims against
Fenwick, a California firm, the report relays. Under California
law, FTX customers argued, lawyers can be liable for knowingly
helping a fraudster, even if that assistance is in the form of
ordinary legal work, the report notes.
Interestingly, Sullivan & Cromwell's dismissal motion attempts to
turn customers' choice-of-law arguments against them, the report
relays. The law firm argued that under customers' reasoning, New
York law should apply to claims against the New York-based firm –
and New York law is extremely protective of professional service
providers, including law firms, the report discloses.
In fact, according to the motion, customers are precluded from
claiming fraud against the law firm because they did not contract
for its services, the report says. New York law also does not
allow plaintiffs to claim that lawyers abetted fraud merely by
providing legal advice to fraudsters, according to Sullivan &
Cromwell, which contends that customers must show that the law firm
had actual knowledge of wrongdoing by FTX insiders, the report
notes.
Under New York law, according to Sullivan's motion, it's not even
enough for plaintiffs to allege that the law firm ignored warning
signs or could have figured out the fraud based on the work it
provided, the report relays.
The law firm asked Moore to rule that plaintiffs' lawyers cannot
attempt to address the holes in their case by amending their
complaint, since they've already had a chance to capitalize on
their cooperation deals with Bankman-Fried and other insiders, the
report adds.
The customers' response is due on May 28.
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
===========
GOL LINHAS: Swings to Net Loss in First Quarter
-----------------------------------------------
Gabriel Araujo at Reuters reports that Brazilian airline Gol
(GOLL4.SA) reported a first-quarter recurring net loss of 130.2
million reais ($25.39 million), swinging into the red after a 136.4
million-real net profit a year ago, mainly hit by financial
expenses.
Gol filed for Chapter 11 bankruptcy protection in the United States
in January as it struggles with a heavy debt load after a fall in
traffic due to the pandemic and delays in Boeing (BA.N), opens new
tab deliveries, according to Reuters.
The carrier lost its position as Brazil's No.2 airline by market
share to rival Azul, as its traffic as measured by revenue
passenger kilometer (RPK) dropped 4.1% in the first quarter from a
year earlier, the report notes.
Gol said in a securities filing it remains "true to its low-cost,
high-productivity business model" during the restructuring process,
which it dubbed necessary to improve its capital structure and
create conditions for growth going forward, the report relays.
Net revenue for the first quarter came in at 4.7 billion reais,
down 4.2% on a yearly basis, while recurring earnings before
interest, taxes, depreciation and amortization (EBITDA) rose 15.2%
to 1.43 billion reais, Gol said, the report discloses.
The closely watched EBITDA margin expanded by 510 basis points to
30.3%, the report relays.
The operating figures as Latin America's largest economy enjoys
healthy demand for air travel, Gol's Chief Executive Celso Ferrer
said, "demonstrates our consistency and efficiency in our path
during the financial restructuring," the report relays.
About Gol GOLL4.SA
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and cargo;
and maintenance services for aircraft and components in Brazil and
internationally. The company offers Smiles, a frequent-flyer
program to approximately 20.5 million members, allowing clients to
accumulate and redeem miles. It operates a fleet of 146 Boeing 737
aircraft with 674 daily flights. The company was founded in 2000
and is headquartered in Sao Paulo, Brazil.
GOL Linhas Aereas Inteligentes S.A. and its affiliates and its
subsidiaries voluntarily filed for Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 24-10118) on Jan. 25, 2024.
GOL Linhas estimated $1 billion to $10 billion in assets as of the
bankruptcy filing.
The Debtors tapped Milbank Llp as counsel, Seabury Securities Llc
as restructuring advisor, financial advisor and investment banker,
Alixpartners, LLP, as financial advisor, and HUGHES Hubbard & Reed
LLP as aviation related counsel. Kroll Restructuring
Administration LLC is the claims agent.
===============
C O L O M B I A
===============
BANCO GNB SUDAMERIS: Fitch Affirms 'BB' IDR, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Banco GNB Sudameris S.A. (GNB) Long-Term
Foreign Currency and Local Currency Issuer Default Ratings (IDRs)
at 'BB', its Viability Rating (VR) at 'bb' and its Government
Support Rating (GSR) at 'b+'. The Rating Outlook is Stable.
KEY RATING DRIVERS
Challenging Operating Environment: Fitch expects a stable operating
environment for Colombian banks in 2024, with modest GDP growth and
inflation rates slowly retroceding, yet still above the central
bank's target of 3+/-1%. Funding costs are expected to gradually
decrease, and asset quality should see a steady enhancement.
Nonetheless, the local economy' exposure to volatile global markets
and ongoing political instability may present obstacles to economic
growth.
Fitch believes GNB's conservative risk profile, diverse business
model, strong asset quality and liquidity, along with improving
profitability, provide sufficient resilience to face the stresses
brought by the current challenging operating environments of
Colombia, Peru and Paraguay. Despite the bank's relevant presence
outside of Colombia, its operating environment score of 'bb' is due
to the fact that most of its operations remain in the country.
Diversified Business Model: GNB's IDRs are driven by the bank's VR,
which is aligned with its implied VR. The bank's business profile
continues to be diverse with a dual focus in the wholesale and
lower risk retail segments in Colombia, Paraguay and Peru. Fitch
also considers the bank's strong market positions in payroll-backed
lending products known locally as 'Libranza'. The bank has made
significant progress in growing its digital banking capabilities
and greatly expanding the number of digital customers, which is
expected to lower operational costs, as well as consolidating its
local position in Paraguay.
Conservative Risk Profile: The bank's business and risk profile
assessment of 'bb+' considers its consolidated retail segment
exposure, which is composed mostly of lower-risk, payroll-backed
loans. As of YE23, GNB's payroll lending portfolio represented
approximately 27.2% of gross loans and where it has a market share
of 7.9%. Fitch also considers the conservative underwriting
policies for its consolidated commercial segment focused on medium
to large sized companies with high levels of collateral.
Solid Asset Quality Metrics: GNB's asset quality metrics remain
strong and compare very well with domestic and regional peers. As
of YE23, the bank's 90-day Non-Performing Loans (NPL) ratio stood
at 1.8% decreasing from 2.1% from YE22 and driven by improvements
in underwriting standards and more conservative loan placement
policies. Breaking down by geography, the bank in Colombia still
has the lowest 90-day NPLs ratio within the Colombian banking
system (2023: 0.6%), and the other subsidiaries in Paraguay and
Peru evidenced relatively steady impairment levels, with 90-day
NPLs ratios of 3.0% and 3.3% respectively.
Fitch anticipates that the bank's asset quality will remain stable
over the foreseeable future, driven by GNB's moderate growth
prospects, conservative policies, relatively robust underwriting
standards and adequate risk controls and its robust and
conservative risk management practices.
Resilient Profitability despite NIM decline: As of YE23 GNB's
operating profit to risk weighted assets (RWAs) improved to 1.5%
from 1.0% in 2022 despite a deterioration in its net interest
margin (NIM), due to higher funding costs evidenced at a systemic
level and a 2.8% contraction of gross loans, that was
overcompensated by profits generated by other income streams such
as securities portfolio' gains, profits related to stock issuances,
and the additional selling of 12.0% stake in GNB Paraguay' to Grupo
Vierci which generated a profit of USD10.4 million.
Fitch considers that the bank's revenue diversification from
multiple business lines has proven to be effective in maintaining
an adequate performance with positive operating profits amid
economic cycles. In recent years, GNB has experienced important
operating expenses stemming from the merger process of former BBVA
Paraguay in Paraguay (formalized in 2021), however given that in
2023 the process was fully completed, operating expenses are
expected to stabilize and earnings to strengthen, which will lead
to a moderate improvement on core profitability metrics in the
mid-term.
Low but Stable Capital Ratios: GNB's capitalization metrics have
evidenced stability over time, however they remain low, being this
its weakest rating factor. As of YE23, Common Equity Tier 1 (CET1)
ratio stood at 9.8% improving from the 8.3% from YE22, but still
comparing below its regional peers rated in the 'bb' category.
During 2023 capitalization metrics benefited by lower RWAs due to
the contraction of gross loans, driven from a more conservative
risk appetite amid the challenging operating environment; in
addition to this, capital ratios also benefited by an earnings
retention of approximately 50% of GNB Colombia's profits in 2023.
Fitch considers that the bank's current capitalization metrics
remain commensurate to the bank's business model, risk profile and
current ratings, and these are expected to remain fairly stable
over the medium term. Strong asset quality metrics and low risk
appetite mitigates GNB's relatively low CET1 ratio.
Sound Liquidity Levels: GNB's funding structure and liquidity
position remains sound, with adequate ability to meet its
short-term obligations and sustain its operations. This is
reflected by a solid loans-to-deposit ratio of 73.7% at YE23
(four-year avg.: 68.1%), which compares favorable among its local
and regional peers. Customer deposits have reliably constituted a
significant portion of GNB's funding, accounting 72.8% of total
funding at YE23, with savings accounts representing 49.2% of total
deposits and term deposits 38.7%. Liquidity remains commensurate
with the bank's current ratings, and Fitch does not anticipate any
changes to the bank's funding liquidity structure.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Negative VR and IDR pressure would arise if the CET1 ratio is
consistently below 9% and the operating profit to RWA ratio
continues below 1.25%, in addition to deterioration in asset
quality and its business model;
- The ratings are sensitive to operating environment
deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The ratings could be positively affected if the bank sustains or
rebuilds its profitability;
- Upside potential depends heavily upon material improvement in
GNB's capitalization and profitability. An upgrade to the VR and
IDRs could occur if the bank can reach and sustain a CET1 capital
ratio greater than 14% while avoiding material deterioration of its
other financial and qualitative credit fundamentals, with
consistently better results, in the form of operating profit over
RWAs greater than 2.5%.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
DEBT ISSUANCES RATINGS:
GNB's subordinated debt and Tier 2 subordinated debt are rated two
notches below its VR to reflect their subordinated status and
expected high loss severity. The rating on the Tier 2 notes does
not incorporate incremental non-performance risk, given the
relatively low write-off trigger (Regulatory CET1 ratio at or below
4.5%) and considering the fact that coupons are not deferrable or
cancellable before the principal write-off trigger is activated.
GOVERNMENT SUPPORT:
Possible Government Support: The bank's GSR of 'b+' is driven by
its moderate systemic importance as a market maker and its payroll
lending share of the Colombian market of 7.9%. GNB is also working
to grow its share of retail deposits, though this metric is still a
modest 3.5% when compared with local systemically important banks.
Fitch believes there is a limited probability that the bank would
receive sovereign support if needed, which underpins its GSR.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
RATING SENSITIVITIES:
- The subordinated debt rating of GNB's issuances is two notches
below GNB's VR anchor. As such, the rating will move in tandem with
the anchor rating;
- The rating is also sensitive to a wider notching from the VR if
there is a change in Fitch's view on the non-performance risk of
these instruments on a going-concern basis, which is not the
baseline scenario.
RATING SENSITIVITIES:
- GNB's GSR would be affected by a positive change in the bank's
systemic importance that would affect Fitch's perception of the
government's willingness and ability to support the bank;
- GNB's GSR would be affected by a negative change in Fitch's
perception of the government's willingness and ability to support
the bank.
VR ADJUSTMENTS
The earnings and profitability score has been assigned above the
implied score due to the following adjustment reason: Historical
and Future Metrics (positive).
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Banco GNB
Sudameris S.A. LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Viability bb Affirmed bb
Government Support b+ Affirmed b+
Subordinated LT B+ Affirmed B+
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Proposed Mechanism Will Cut Chicken Price
-------------------------------------------------------------
Dominican Today reports that the president of the Central Nacional
de Detallistas Unidos, Ricardo Rosario, announced that the guild is
working on a cost structure to reduce the pound of frozen chicken
by 25%.
Rosario explained that thanks to the Government's setting up a
pledging program for more than RD$900 million for the surplus
chicken to the poultry sector, the trade association is designing a
mechanism that will allow grocers to receive a pound of frozen
chicken at RD$35.00 and deliver it to consumers at RD$55.00,
according to Dominican Today.
He added that due to the intermediation chain, the current price of
16 ounces is between RD$85.00 and RD$90.00, the report notes.
In another order, the commercial leader, like other leaders of the
retail sector, described "abusive and inhuman" statements made
against the social programs in favor of the low-income population,
which also benefits the retailers, the report relays.
He valued the positive impact of the Superate card, the A comer del
Campo al Colmado program, the Inespre combos, the solidarity
pensions, and the bonuses that the Government punctually delivers
for the benefit of the most needy population, the report
discloses.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCR-LA reported in April 2019 that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
On December 4, 2023, the TCR-LA reported that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Positive
from Stable. Fitch says the Positive Outlook reflects a trend
improvement in governance, and robust growth prospects that should
lead to continued gains in per capita income. According to Fitch,
growth has decelerated in 2023, but it expects Dominican Republic
to recover to high levels during 2024-2025. External liquidity
metrics have improved in recent years, and foreign currency share
of government debt is on a downward path.
In August 2023, Moody's Investors Service changed the outlook on
the Government of Dominican Republic's ratings to positive from
stable and affirmed the local and foreign-currency long-term issuer
and senior unsecured ratings at Ba3. Moody's said the key drivers
for the outlook change to positive are: (i) sustained high growth
rates have enhanced the scale and wealth levels of the economy; and
(ii) a material decline in the government debt burden coupled with
improved fiscal policy effectiveness will support medium-term debt
sustainability.
The affirmation of the Ba3 ratings balances the Dominican
Republic's strong economic growth dynamics and relatively contained
susceptibility to event risks, with a comparatively weaker fiscal
position, reflecting long-standing credit challenges which include:
(i) a shallow revenue base compared to peers, (ii) weak debt
affordability metrics, and (iii) high exposure to foreign currency
borrowing.
S&P Global Ratings, in December 2022, raised its long-term foreign
and local currency sovereign credit ratings on the Dominican
Republic to 'BB' from 'BB-'. The outlook on the long-term ratings
is stable. S&P affirmed its 'B' short-term sovereign credit
ratings. S&P also revised its transfer and convertibility (T&C)
assessment to 'BBB-' from 'BB+'. The stable outlook reflects S&P's
expectation of continued favorable GDP growth and policy continuity
over the next 12-18 months that will likely stabilize the
government's debt burden.
In February 2023, S&P said its BB ratings reflect the country's
fast-growing and resilient economy. It also incorporates the
country's historical political and social challenges in passing
structural reforms to contain fiscal deficits, despite recent
improvements in the electricity sector. The ratings are constrained
by relatively high debt, a hefty interest burden, and limited
monetary policy flexibility.
=============
J A M A I C A
=============
JAMAICA: Annual Cost of Alcoholic Beverages Up 4.3% at April
------------------------------------------------------------
RJR News reports that the cost of 'Alcoholic Beverages' in Jamaica
increased by 4.3 per cent on an annual basis as at April.
Higher costs for inputs, production and shipping likely influenced
to increased average prices passed on to consumers, according to
RJR News.
The Statistical Institute of Jamaica (STATIN) says for the month of
April alone, there was a 0.2 per cent increase in the division, the
report notes.
The month's inflation for 'Alcoholic Beverages' was influenced by a
0.3 per cent rise in the average prices for beer, spirits, liquors
and wine, the report adds.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. The upgrade of Jamaica's
rating to B1 reflects the government's sustained commitment to
fiscal consolidation and debt reduction. The positive outlook
reflects Moody's assessment that a continuation of the favorable
fiscal trajectory will further increase Jamaica's credit
resilience.
S&P Global Ratings raised on September 13, 2023, its long-term
foreign and local currency sovereign credit ratings on Jamaica to
'BB-' from 'B+', and affirmed its short-term foreign and local
currency sovereign credit ratings at 'B'. The stable outlook
reflects S&P's expectation that the government will remain
committed to prudent fiscal policies and reducing debt, as well as
supportive economic policies including a flexible exchange rate
regime and effective monetary policy.
In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
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