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/raid1/www/Hosts/bankrupt/TCRLA_Public/240530.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, May 30, 2024, Vol. 25, No. 109 Headlines A R G E N T I N A ARGENTINA: Economic Activity Plunging Amid Austerity GAUCHO GROUP: Incurs $2.73 Million Net Loss in First Quarter B R A Z I L 3R PETROLEUM: S&P Puts 'B+' ICR on CreditWatch Positive AZUL SA: Strike Codeshare Deal with GOL Amid Merger Talk UNIGEL: Pimco-Led Creditors Back Out-of-Court Restructuring C O L O M B I A CANACOL ENERGY: Fitch Affirms & Withdraws 'CCC' LongTerm IDR D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Economy Expands by 7.8% in April 2024 J A M A I C A JAMAICA: BOJ Says Low Productivity Hinders Fight Against Inflation M E X I C O SERVICIOS CORPORATIVOS JAVER: Fitch Affirms & Withdraws 'BB-' IDR VINTE VIVIENDAS: S&P Puts 'BB-' LT ICR on CreditWatch Developing P A R A G U A Y FRIGORIFICO CONCEPCION: Fitch Lowers Rating to 'B', On Watch Neg. RUTA 2 AND 7: Fitch Affirms 'BB+sf' Rating on 2019-1 Secured Notes P E R U PERU: Recovers From Consecutive Climate-Related Shocks, IMF Says V E N E Z U E L A CITGO PETROLEUM: Parent Weighs U.S. Bankruptcy to Slow Sale - - - - - ================= A R G E N T I N A ================= ARGENTINA: Economic Activity Plunging Amid Austerity ---------------------------------------------------- Buenos Aires Times reports that Argentina's economic activity continued to plummet in March, with the construction and manufacturing industries leading the slowdown as President Javier Milei's government slashed spending. In a report published, the INDEC national statistics bureau said that economic activity had slowed 8.4 percent year-on-year in March - the biggest such interannual change since the days of the Covid-19 pandemic, according to Buenos Aires Times. In the first quarter of 2024, the body's monthly estimate of economic activity shows a 5.3 percent decline from the previous year, the report notes. Milei took office in December, vowing to halt Argentina's economic decline and reduce the budget deficit to zero, the report relays. He slashed public spending, downgraded government ministries, did away with tens of thousands of government jobs, suspended new public works contracts and ripped away fuel and transport subsidies, the report relays. Buenos Aires Times discloses that shortly after his inauguration, La Libertad Avanza leader devalued the peso by 50 percent. The measures have hit consumers hard. While inflation is slowing, prices are still up some 290 percent from the previous year, the report says. "Without a doubt, the path that the level of activity is following already speaks of a recession," said Joel Lupieri, an economist at the EPyCA consulting firm, the report notes. The construction industry saw economic activity drop 29.9 percent year-on-year after Milei cancelled almost all public works, the report relays. "Today, national public works are almost 100 percent stopped," Gustavo Weiss, president of the Camara Argentina de la Construccion (CAMARCO), told Forbes magazine in May, adding 100,000 jobs had been lost in the sector, the report relays. "If there is no investment in public works, there will be no recovery," he said in a radio interview, the report discloses. Lupieri said that beyond the disappearance of government works, "the sustained increase in the price of materials also leads to a fall in private demand," the report relays. Manufacturing activity dropped 19.6 percent, as aluminium and steel factories, automakers and tyre manufacturers laid off workers and cut production, the report notes. The slump was uneven across the board, with growth in some export-related areas, the report says. The only areas reporting an uptick in activity were agriculture and livestock, which increased 14.1 percent and mining, which is up five percent, along with fishing, up 2.9 percent, the report relays. Minor increases were seen in health and social services (one percent), education (0.9 percent), the report notes. The overall slump in activity is on its fifth consecutive decline since November, the report discloses. "It is unlikely that a rebound will be evident before the second half of the year," said Lupieri, the report notes. The consulting firm Equilibria estimates a total 240,000 job losses in the first quarter of 2024, the report relays. Buenos Aires Times discloses that the latest official data from INDEC in 2023 said some 41 percent of the country was living in poverty. A more recent study from March this year by experts at the Catholic University of Argentina put this figure at 55 percent. The International Monetary Fund expects that Argentina's economy will contract by 2.8 percent this year, the report relays. It welcomed "faster-than-anticipated progress in restoring macroeconomic stability" in the country, but also warned of a "long and difficult road ahead," 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. GAUCHO GROUP: Incurs $2.73 Million Net Loss in First Quarter ------------------------------------------------------------ Gaucho Group Holdings, Inc., filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q reporting a net loss of $2.73 million on $587,378 of sales for the three months ended March 31, 2024, compared to a net loss of $2.70 million on $447,767 of sales for the three months ended March 31, 2023. As of March 31, 2024, the Company had $16.37 million in total assets, $11.60 million in total liabilities, and $4.77 million in total stockholders' equity. "Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months from the date these condensed consolidated financial statements are issued. The aforementioned factors raise substantial doubt about the Company's ability to continue as a going concern," said Gaucho Group in the Report. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1559998/000149315224020719/form10-q.htm About Gaucho Group Headquartered in New York, NY, Gaucho Group Holdings, Inc. was incorporated on April 5, 1999. Effective Oct. 1, 2018, the Company changed its name from Algodon Wines & Luxury Development, Inc. to Algodon Group, Inc., and effective March 11, 2019, the Company changed its name from Algodon Group, Inc. to Gaucho Group Holdings, Inc. Through its wholly-owned subsidiaries, GGH invests in, develops and operates real estate projects in Argentina. GGH operates a hotel, golf and tennis resort, vineyard and producing winery in addition to developing residential lots located near the resort. In 2016, GGH formed a new subsidiary, Gaucho Group, Inc. and in 2018, established an e-commerce platform for the manufacture and sale of high-end fashion and accessories. In February 2022, the Company acquired 100% of Hollywood Burger Argentina, S.R.L., now Gaucho Development S.R.L, through InvestProperty Group, LLC and Algodon Wine Estates S.R.L., which is an Argentine real estate holding company. In addition to GD, the activities in Argentina are conducted through its operating entities: InvestProperty Group, LLC, Algodon Global Properties, LLC, The Algodon - Recoleta S.R.L, Algodon Properties II S.R.L., and Algodon Wine Estates S.R.L. Algodon distributes its wines in Europe under the name Algodon Wines (Europe). On June 14, 2021, the Company formed a wholly-owned Delaware limited liability company subsidiary, Gaucho Ventures I -- Las Vegas, LLC, for purposes of holding the Company's interest in LVH Holdings LLC. New York, NY-based Marcum LLP, the Company's auditor since 2013, issued a "going concern" qualification in its report dated April 29, 2024, citing that the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. =========== B R A Z I L =========== 3R PETROLEUM: S&P Puts 'B+' ICR on CreditWatch Positive ------------------------------------------------------- S&P Global Ratings placed its 'B+' global scale and 'brA+' national scale issuer credit ratings on 3R and its 'brBBB' issuer credit rating on Enauta on CreditWatch with positive implications. S&P also placed the issue-level ratings on both entities on CreditWatch positive. S&P doesn't anticipate material changes to its current recovery analysis. S&P expects to resolve the CreditWatch listing within the next 90 days. On May 17, 2024, 3R Petroleum Oleo e Gas S.A. and Enauta Participacoes S.A. announced they reached an agreement to merge their operations. S&P said, "We expect the new entity will increase daily production capacity to more than 70,000 barrels of oil equivalent (boed) by the end of 2024 and to more than 80,000 boed in 2025. In addition, P1 reserves will be in excess of around 500 million barrels of oil equivalent and reserves life index of more than 20 years. Higher production will stem from 3R's plan to overhaul its past acquisitions, importantly the Potiguar assets, and Enauta to increase production in the Atlanta field, which is transitioning to the definitive production system with the new floating production storage and offloading vessel and the start-up in August 2024. Moreover, the plan incorporates Enauta's mergers and acquisitions to be concluded by the fourth quarter this year. "Of the total capacity, we estimate approximately 20% will come from natural gas and 80% from oil, while 45% from offshore fields and 55% from onshore ones. In our view, the merger will improve 3R's competitive position by enabling it to become a larger and more diversified independent oil and gas company. 3R will consolidate Enauta's operations. These should come from operational efficiencies from offshore operations, commercial strategies, and better terms with suppliers, and fiscal and capital allocation. S&P said, "We expect these factors will enable 3R to generate positive free operating cash flow by reducing lifting costs through a lower number of supporting vessels offshore and the increased daily processing capacity from the floating production storage and offloading vessels. Additionally, we believe the capital allocation and potentially lower cost of debt to bolster cash generation." S&P said, "Finally, we estimate the combined entity's leverage will be controlled with gross debt to EBITDA at about 2.5x and funds from operations (FFO) to debt of 30% by the end of 2024. And we expect these metrics to drop in the coming years as it absorbs synergies." AZUL SA: Strike Codeshare Deal with GOL Amid Merger Talk -------------------------------------------------------- David Casey at aviationweek.com reports that Brazilian carriers Azul and GOL Linhas Aereas have agreed to a commercial partnership to connect their domestic networks, amid ongoing speculation about a potential merger between the two airlines. The codeshare deal will cover all routes within Brazil that are operated by one of the two airlines, but not the other, according to aviationweek.com. Analysis by Routes has found that this equates to almost 380 nonstop domestic sectors. The agreement also encompasses frequent flyer programs, meaning Azul Fidelidade and Smiles members will soon be able to earn points or miles within their preferred program when taking one of the new codeshare flights, the report notes. Azul President Abhi Shah said the partnership would bring "enormous benefits" to passengers, creating more than 2,700 travel opportunities with just one connection, the report relays. "With Azul's highly connected network serving most cities in Brazil, and GOL's strong presence on the main Brazilian markets, our complementary service offerings will offer our customers the broadest range of travel options in the market," he said, the report discloses. GOL CEO Celso Ferrer added that the carrier already has more than 60 commercial agreements with various international airline partners—and GOL is "eager to extend these benefits within Brazil," the report notes. The codeshare deal follows media reports that Azul is exploring a possible merger with GOL, which is currently in Chapter 11 bankruptcy protection, the report relays. One scenario involves Abra Group, the owner of Colombian flag-carrier Avianca and GOL, contributing its GOL shares to Azul in exchange for a stake in the merged airline, the report says. Although Azul, GOL and Abra Group have remained tight-lipped about any potential agreement, Azul CEO John Rodgerson acknowledged on a May 13 earnings call that the airline's management remains "big fans of consolidation," the report says. "I think that that's also something that we've been pretty open about for the last five years or so," he said. "And so, we'll see what happens going forward. There's a process in place, and we're watching very closely. And that's all we can really say," he added. In May 2022, Avianca and GOL formed Abra Group, combining the principal shareholders of Avianca and the controlling shareholder of GOL, the report recalls. Initially, Colombian ULCC Viva was also set to join, but it ceased operations in early 2023 after Avianca's failed acquisition attempt, the report notes. While Abra worked on gaining approvals for the new holding company, GOL continued to face financial challenges, resulting in the Chapter 11 bankruptcy protection filing in the U.S. in January 2024, the report discloses. GOL's restructuring means each of Brazil's three largest airlines has undergone financial reconstruction since the onset of the pandemic, the report says. LATAM Airlines Brasil's parent, LATAM Airlines Group, entered Chapter 11 in May 2020 and emerged in November 2022, the report notes. Meanwhile, Azul completed a restructuring in 2023, reducing lease obligations across its fleet, the report relays. According to OAG Schedules Analyser data, Azul and GOL are the second- and third-largest providers of domestic capacity in Brazil, respectively, the report relays. Azul accounts for about 32.7% of all domestic seats available in May 2024, while GOL has a market share of 29.3%, the report discloses. LATAM Airlines Brasil is the largest operator, with a 36.6% share, the report says. Analysis of schedules data reveals that Azul currently offers about 696,000 weekly domestic seats in Brazil across 5,800 flights and GOL provides 629,000 seats across 3,500 flights, the report notes. Looking at schedules for May, Azul has a network of 337 nonstop domestic routes, while GOL offers 135 domestic routes, the report relays. Their networks overlap on 47 routes, meaning 378 routes are exclusive to just one of the carriers, the report adds. Avianca Holdings SA, Latam Airlines Group SA and Grupo Aeromexico SAB filed for bankruptcy in 2020, the report recalls. Brazil's Gol filed for protection from creditors in late January after a dozen debt exchanges, the report notes. The Azul CEO has met with Brazilian President Luiz Inacio Lula da Silva to discuss a plan to use public funds as collateral for loans, giving airlines some breathing room, the report relays. He said the government understands the importance of providing debt relief, and is actively working on a solution, which should come "in a few months," the report adds. As reported in the Troubled Company Reporter-Latin America in July 2023, Fitch Ratings downgraded Azul S.A.'s (Azul) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'RD' from 'C', following the conclusion of its exchange offer, which Fitch considered a distressed debt exchange (DDE). Simultaneously, Fitch has upgraded Azul's IDRs to 'B-' from 'RD' to reflect its post-restructuring risk profile. UNIGEL: Pimco-Led Creditors Back Out-of-Court Restructuring ----------------------------------------------------------- globalinsolvency.com, citing Bloomberg News, reports that Unigel Participacoes SA, the struggling Brazilian fertilizer maker, obtained approval from a majority of creditors including Pacific Investment Management Co. for its out-of-court restructuring plan. Holders of more than 50% of its debt backed the proposal, according to the people, who asked not to be identified because they're not authorized to speak about it, according to globalinsolvency.com. The company had to gather support from more than 50% of creditors and avoid a bankruptcy filing, the report notes. Unigel didn't immediately reply to a request for comment. globalinsolvency.com relays that Unigel skipped the payment of coupons on its dollar and Brazilian real-denominated notes amid plummeting earnings. Losses piled up after lower prices of urea and ammonia pressured its operations, leading it to breach covenants on its bonds, which include maintaining debt levels low enough relative to a measure of earnings, the report relays. The plan, first presented in February, originally had the backing of Pimco, DoubleLine Capital, Amundi SA, Banco BTG Pactual SA's asset-management unit, Moneda, Verde Asset Management and Vontobel Asset Management, the report notes. Only certain financial creditors will have their claims restructured under the plan, Unigel said earlier this year. The proposal aims at restructuring about 3.9 billion reais ($763 million) in existing debt, the report adds. As earlier reported by the Troubled Company Reporter-Latin America, globalinsolvency.com, citing Bloomberg News, relayed that Unigel Participacoes SA is pitching a last-minute deal to avoid filing for bankruptcy protection as a temporary order shielding it from creditors expires. The company is trying to sell bondholders led by Pacific Investment Management Co. on a plan that would include an injection of $100 million in new money, and allow it to restructure debt out of court, said the people, asking not to be identified because the discussions are private, according to globalinsolvency.com. =============== C O L O M B I A =============== CANACOL ENERGY: Fitch Affirms & Withdraws 'CCC' LongTerm IDR ------------------------------------------------------------ Fitch Ratings has affirmed and withdrawn Canacol Energy Ltd.'s (CNE) Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) of 'CCC', as well as the rating of the senior secured notes due in 2028 of 'CCC'/'RR4'. At the time of the withdrawal, CNE's ratings reflected the deterioration of CNE's liquidity after reporting a cash balance of $25 million in 1Q24, falling below the $40 million negative rating sensitivity. The ratings have been withdrawn for commercial reasons. Fitch will therefore no longer provide rating or analytical coverage on CNE. KEY RATING DRIVERS Key Rating Drivers are not applicable as the ratings have been withdrawn. RATING SENSITIVITIES Rating Sensitivities are not applicable as the ratings have been withdrawn. ISSUER PROFILE Canacol Energy Ltd. (CNE) is a publicly listed exploration and production company focused on onshore natural gas in Colombia. The company's average production was 32,366 boe/d in 2023YE, 98% corresponded to natural gas. As of 2023, CNE had 52mmboe of 2P natural gas reserves and 1P reserve life of 4.4 years. ESG CONSIDERATIONS Canacol Energy Ltd. has an ESG Relevance Score of '4' for Exposure to Social Impacts due to the potential impact of social pressures and possible pushback from the communities in the region where it operates. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Canacol Energy Ltd. has an ESG Relevance Score for Management Strategy of '4' given the change it their contract strategy as it is no longer consistent with its previous assessment of the company's business profile as a utility-like company. In Fitch's view, this change will bring higher volatility to cash flows and profitability. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Canacol Energy Ltd. has an ESG Relevance Score for Financial Transparency to '4' due to untimely disclosure of unexpected production capacity restrictions the Jobo gas treatment facility as well as certain of its producing wells that commenced in August 2023. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Following the withdrawal of ratings for CNE Fitch will no longer be providing the associated ESG Relevance Scores. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Canacol Energy Ltd. LT IDR CCC Affirmed CCC LT IDR WD Withdrawn CCC LC LT IDR CCC Affirmed CCC LC LT IDR WD Withdrawn CCC senior unsecured LT CCC Affirmed RR4 CCC senior unsecured LT WD Withdrawn CCC =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Economy Expands by 7.8% in April 2024 --------------------------------------------------------- Dominican Today reports that the Central Bank of the Dominican Republic (BCRD), committed to transparency and timely data dissemination, reports the preliminary results of economic activity through April 2024. The Dominican economy registered a remarkable year-on-year expansion of 7.8% in April 2024, accumulating an average growth of 5.1% in the January-April period of this year, according to Dominican Today. This April year-on-year growth is the highest in the last twenty-eight months, and stands out as the month with the best performance in the first four months of 2024, the report relays. It is important to note that the results of March 2024 were influenced by the Holy Week holiday and lower economic growth in the United States, our main trading partner, the report notes. The notable performance of the economy is largely due to the liquidity expansion program implemented by the BCRD since May 2023, the report recalls. This program has created favorable monetary and financial conditions, facilitating the channeling of loans for RD$196 billion to productive sectors, MSMEs, and households at interest rates not exceeding 9% per year, the report says. Thanks to these measures, private credit in domestic currency expanded by 21.3% year-on-year in April 2024, equivalent to an additional RD$298,561.1 million, the report notes. This credit dynamism, together with the execution of capital expenditure by the Government, has been crucial for economic growth, the report relays. The recent performance of the Dominican economy is also in line with the projections of international organizations, which position the country as one of the fastest-growing economies in the region for 2024, the report notes. The International Monetary Fund (IMF) projects growth of 5.4%, the World Bank 5.1%, and the Economic Commission for Latin America and the Caribbean (ECLAC) 4.5%, the report discloses. In terms of sectors, hotels, bars, and restaurants stand out with an average growth of 9.5% in the first four months of the year, financial services (7.1%), construction (6.4%), real estate activities (6.1%), free zones (6.0%), energy and water (5.2%), agriculture (3.9%), commerce (3.1%), and local manufacturing (2.8%), the report says. Labor Market The National Continuous Household Labor Survey (ENCFT) for the first quarter of 2024 shows that the total number of employed persons reached 4,941,183 workers, reflecting a net creation of 172,443 jobs compared to January-March 2023, representing a growth of 3.6%, the report notes. Job creation was concentrated in formal employment, with an increase of 130,189 people, while total informality grew by an additional 42,254 employed persons, reducing the informality rate from 56.7% to 55.6%, the report relays. The open unemployment rate stood at 5.1% in January-March 2024, a figure similar to that of the same period of the previous year, the report discloses. The average unemployment rate for the last four quarters remained stable at 5.3%, the report notes. Outlook The results obtained augur a favorable performance of the Dominican economy throughout 2024, with a growth projection of 5%, remaining within the potential rate and being one of the highest in Latin America, the report relays. Year-on-year inflation is currently at 3.03%, within the target range of 4% ± 1%, with core inflation at 3.99%, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCR-LA reported in April 2019 that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. On December 4, 2023, the TCR-LA reported that Fitch Ratings has affirmed Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' and revised the Outlook to Positive from Stable. Fitch says the Positive Outlook reflects a trend improvement in governance, and robust growth prospects that should lead to continued gains in per capita income. According to Fitch, growth has decelerated in 2023, but it expects Dominican Republic to recover to high levels during 2024-2025. External liquidity metrics have improved in recent years, and foreign currency share of government debt is on a downward path. In August 2023, Moody's Investors Service changed the outlook on the Government of Dominican Republic's ratings to positive from stable and affirmed the local and foreign-currency long-term issuer and senior unsecured ratings at Ba3. Moody's said the key drivers for the outlook change to positive are: (i) sustained high growth rates have enhanced the scale and wealth levels of the economy; and (ii) a material decline in the government debt burden coupled with improved fiscal policy effectiveness will support medium-term debt sustainability. The affirmation of the Ba3 ratings balances the Dominican Republic's strong economic growth dynamics and relatively contained susceptibility to event risks, with a comparatively weaker fiscal position, reflecting long-standing credit challenges which include: (i) a shallow revenue base compared to peers, (ii) weak debt affordability metrics, and (iii) high exposure to foreign currency borrowing. S&P Global Ratings, in December 2022, raised its long-term foreign and local currency sovereign credit ratings on the Dominican Republic to 'BB' from 'BB-'. The outlook on the long-term ratings is stable. S&P affirmed its 'B' short-term sovereign credit ratings. S&P also revised its transfer and convertibility (T&C) assessment to 'BBB-' from 'BB+'. The stable outlook reflects S&P's expectation of continued favorable GDP growth and policy continuity over the next 12-18 months that will likely stabilize the government's debt burden. In February 2023, S&P said its BB ratings reflect the country's fast-growing and resilient economy. It also incorporates the country's historical political and social challenges in passing structural reforms to contain fiscal deficits, despite recent improvements in the electricity sector. The ratings are constrained by relatively high debt, a hefty interest burden, and limited monetary policy flexibility. ============= J A M A I C A ============= JAMAICA: BOJ Says Low Productivity Hinders Fight Against Inflation ------------------------------------------------------------------ RJR News reports that the Bank of Jamaica is again flagging low productivity as a major conflict in the fight against inflation. From the latest Monetary Policy Committee meeting, BOJ Governor Richard Byles said "low factor" productivity needs to be addressed, according to RJR News. "A highly productive economy produces goods and services at lower unit costs which dampens inflation. On the flip side, lower productivity means that goods and services will become relatively more expensive over time, which makes it more difficult to reduce inflation," he noted, the report relays. "A significant part of the Consumer Price Index, the basket of goods and services that people buy, includes goods and services for which the prices are regulated by the government. These include PPV (public passenger vehicle) fares and utility rates. In this regard, regulated price adjustments, particularly when they are large and unpredictable, complicate the job of the central bank in containing inflation," Dr. Byles explained, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. In October 2023, Moody's upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to B1 from B2, and senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has been changed to positive from stable. The upgrade of Jamaica's rating to B1 reflects the government's sustained commitment to fiscal consolidation and debt reduction. The positive outlook reflects Moody's assessment that a continuation of the favorable fiscal trajectory will further increase Jamaica's credit resilience. S&P Global Ratings raised on September 13, 2023, its long-term foreign and local currency sovereign credit ratings on Jamaica to 'BB-' from 'B+', and affirmed its short-term foreign and local currency sovereign credit ratings at 'B'. The stable outlook reflects S&P's expectation that the government will remain committed to prudent fiscal policies and reducing debt, as well as supportive economic policies including a flexible exchange rate regime and effective monetary policy. In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. =========== M E X I C O =========== SERVICIOS CORPORATIVOS JAVER: Fitch Affirms & Withdraws 'BB-' IDR ----------------------------------------------------------------- Fitch Ratings has affirmed Servicios Corporativos Javer, S.A.B. de C.V.'s (Javer) Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) at 'BB-' and the Long-Term National Rating at 'A(mex)'. The Rating Outlook for all ratings has been revised to Stable from Positive. Subsequently, Fitch has withdrawn all ratings. Javer's ratings are supported by its strong business position as one of the largest homebuilding companies in Mexico, ability to adjust its sales mix to market dynamics, above average operating margins, low leverage and solid liquidity position. Javer continues to post strong operating results that align with Fitch's prior expectations. The Outlook revision to Stable reflects Fitch's view that an upgrade is unlikely until the final outcome, in terms of business strategy and target capital structure, of Javer's recently announced acquisition by Vinte Viviendas Integrales, S.A.B. de C.V. (Vinte) are defined. The Outlook revision also reflects the low visibility regarding implementation of government housing policies after the upcoming federal elections. The ratings have been withdrawn for commercial reasons. Fitch will therefore no longer provide rating or analytical coverage for Javer. KEY RATING DRIVERS Pending Sale: On May 20, 2024, Javer announced that shareholders who indirectly own 62.69% of the company's capital stock have entered into an agreement with Vinte. Under this agreement, Vinte will initiate a tender offer on the Mexican Stock Exchange (Bolsa Mexicana de Valores, BMV) to acquire up to 100% of Javer's outstanding shares at a predetermined price. Strong Operating Results: EBITDA generation has been strong in recent years, mainly due to a change in the company's sales mix. For the LTM as of March 2024, EBITDA margin was 16.5%, better than 15.9% in December 2023 and 14.1% in December 2022. Javer has continued to diversify its portfolio of projects and locations, driving the sales mix toward higher-margin and higher average price products following market dynamics. Increased revenue generation has allowed the company to strengthen its credit metrics and liquidity. Solid Leverage Metrics: Since December 2022, Javer's net leverage ratio (net debt/EBITDA pre IFRS16) has been around 1.0x; for the LTM as of March 2024 was 1.1x, down from 2.5x in December 2020. The improvement in the company's leverage metrics reflects higher margins and positive FCF as result of the strategy to focus in the middle income and residential segments. Sales Mix Flexibility: Javer's business model has shown flexibility to adapt the sales mix to market conditions and benefit from it. The change in sales mix toward middle-income and residential segments came with an increase in average sales price and a decline in sales volume. LTM March 2024 average sale price for Javer was around MXN796 thousand, up 16.2% from MXN685 thousand during the same period of 2023, driven primarily by the change in sales mix. In terms of units, the company sold 11,878 in the LTM as of 1Q24, down from levels above 18,000 units in 2018. RATING SENSITIVITIES Rating Sensitivities do not apply as the ratings have been withdrawn. LIQUIDITY AND DEBT STRUCTURE Strong Liquidity: As of March 31, 2024, the company's liquidity is strong with an available cash balance of MXN624 million compared to short-term debt of MXN569 million. The change in product mix to higher average-priced housing, coupled with lower land inventory investments, freed up working capital resources which resulted in a positive FCF generation. The company does not have a dividend payout policy, providing a flexible approach to liquidity during volatile periods and in times of large investments. ISSUER PROFILE Javer is one of the largest homebuilding companies in Mexico. The company's growth is based on its participation in the homebuilding market in Mexican states that have above average economic development and population growth. 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 ----------- ------ ----- Servicios Corporativos Javer, S.A.B. de C.V. LT IDR BB- Affirmed BB- LT IDR WD Withdrawn BB- LC LT IDR BB- Affirmed BB- LC LT IDR WD Withdrawn BB- Natl LT A(mex) Affirmed A(mex) Natl LT WD(mex)Withdrawn A(mex) VINTE VIVIENDAS: S&P Puts 'BB-' LT ICR on CreditWatch Developing ---------------------------------------------------------------- S&P Global Ratings placed its 'BB-' long-term global scale issuer credit and 'mxA-' national scale ratings on Mexican homebuilder Vinte Viviendas Integrales S.A.B. de C.V. on CreditWatch with developing implications. S&P plans to resolve the CreditWatch listing once the transaction closes and we have fully assessed the details and potential effects of the acquisition on Vinte's business profile, capital structure, adjusted key credit metrics, and liquidity position. Vinte announced that it entered into an agreement with 63.97% of Javer's shareholders and Javer to launch a tender offer to acquire up to 100% of its shares at $14.9355 pesos per share. At the same time, it was agreed that if Vinte successfully acquires all the capital stock, the company would be paying about MXN4.29 billion. Yet the timing of the transaction closing is still unknown, and Vinte still needs to get its general shareholders assembly and regulatory approvals, including the Federal Economic Competition Commission (COFECE) and National Banking and Securities Commission (CNBV), among other customary conditions for that type of transaction to close the deal. Vinte hasn't yet publicly disclosed the final financial terms of how it will fund the acquisition. Although, S&P understands that it will submit for approval, at its general shareholders' meeting, the issuance and subscription of new shares, as well as the execution and disbursement of long-term financing. Specifically, pro forma revenue and EBITDA could more than double from the MXN4.83 billion and MXN908 million, respectively, reported in the last 12 months ended March 2024. It will also increase Vinte's geographic footprint in Mexico and make the company among the top two homebuilders in Mexico in terms of revenue, EBITDA, and units sold. S&P also believes that the acquisition could bring economies of scale and operating synergies, as well as represent an opportunity for Vinte to expand its sustainable housing business model. =============== P A R A G U A Y =============== FRIGORIFICO CONCEPCION: Fitch Lowers Rating to 'B', On Watch Neg. ----------------------------------------------------------------- Fitch Ratings has downgraded the ratings for Frigorifico Concepcion S.A. (Frigorifico Concepcion) to 'B' from 'B+'. Fitch has also placed the ratings on Rating Watch Negative (RWN). The downgrade to 'B' reflects the company's lack of financial transparency and weakened governance, as evidenced by it receiving a qualified audit, resulting in the lowering of its ESG governance score for Financial Transparency to '5' from '3.' The RWN reflects potential credit risks regarding the company's ability to raise financing, the cost of debt, and the impact on its financial flexibility. KEY RATING DRIVERS Refinancing Risks: Frigorifico Concepcion could face difficulty accessing financing as well as high debt costs following the market's reaction to the news of the qualified audit. The company has USD178 million of short-term debt and plans to raise additional financing for capex. Borrowing at the current market rate of its bond will negatively affect cash flows and stress liquidity. The company reported having approximately USD40 million in cash as of April 2024. FCF Pressures: Frigorifico Concepcion has an aggressive capex and production ramp-up plan that would pressure FCF in 2024, likely resulting in negative FCF of BRL 90 million. In 2023, the company experienced a working capital consumption of USD240 million due to a 110-day working capital cycle, a slight improvement from 118 days in 2022. However, increased export-derived sales from 2024 should prevent the working capital cycle from declining further. Fitch estimates the company's maintenance capex could be reduced, giving it flexibility to cut back capex plans to preserve liquidity. Financial Transparency: Frigorifico Concepcion reported that it received a qualified opinion from its new auditor. The auditor did not have access to the opening balance of its subsidiary, BMG Foods Importacao e Exportacao Ltda (BMG), which represents one-third of its revenues. There was also a lack of clarity regarding trade receivables corresponding to collection agreements by Nostro Beef and Betampex Importacao e Importacao Ltda. DERIVATION SUMMARY Frigorifico Concepcion's rating of 'B'/RWN compares negatively with peers across the region. The company has weaker corporate governance patterns, smaller scale, less geographic and protein diversification, more leveraged capital structure, and tighter liquidity compared to peers. Although both issuers concentrate their operations mainly in beef and assets in South America, Frigorifico Concepcion's rating is three notches below Minerva S.A.'s (BB/Stable) due to its significantly lower scale. Minerva's positive FCF trends, leverage limited to 3.0x, significantly stronger liquidity and stronger corporate governance standards also differentiate the ratings. KEY ASSUMPTIONS - Production of 654 million tons in 2024; - Average prices of export market in Brazil to increase to USD4.8/kg in 2024; - Average prices of local market in Brazil to decline to USD4.9/kg in 2024; - Average prices of export market in Paraguay to decline to USD4.8/kg in 2024; - Average prices of local market in Paraguay to remain stable at USD3.8/kg in 2024; - Capex of USD77 million in 2024, and USD10 million of maintenance capex in 2025. RECOVERY ANALYSIS The recovery analysis assumes Frigorifico Concepcion would be reorganized as a going-concern (GC) in bankruptcy rather than be liquidated. Fitch has assumed a 10% administrative claim. The GC EBITDA assumption of about USD200 million reflects the volatility of the protein industry, potential sanitary risks or temporary shutdown of any export markets. An enterprise value (EV) multiple of 5x EBITDA is applied to the GC EBITDA to calculate a post-reorganization EV. Fitch uses a multiple of 5x that reflects the sector dynamics and the company's business profile as mid-sized company with strong growth prospect and good operating margin. The above assumption result in a recovery rate assumption within the 'RR1' range for the new senior secured notes. Due to the 'RR4' cap for Brazil's corporates, Fitch limits the recovery for the senior secured bond at 'RR4' despite a higher projected recovery. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: - Failure to provide an unqualified audit; - Inability to refinance short-term debt at a cost that does not negatively affect cash flow; - Cash falling below USD40 million; - Material capex overruns or delays in ramping up capacity additions; - Debt/ EBITDA above 4.5x and Net debt/ EBITDA above 3.5x on a sustained basis. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: - An upgrade is unlikely due to the company's financial transparency issues and refinancing risks. An upgrade could be considered if it resolves the qualified audit, addresses its refinancing challenges, and demonstrates positive FCF and debt/EBITDA of 3.0x on a sustained basis. LIQUIDITY AND DEBT STRUCTURE Weak Liquidity: Fitch views Frigorifico Concepcion's liquidity as weak due to its historically low levels of cash and cash equivalents compared to short-term debt. The company's financial flexibility relies on local bank lines to refinance debt and finance working capital for ramp-up operations. Fitch believes the company's ability to raise financing will suffer, following the market reactions to the news of the qualified audit. As of December 2023, cash on hand was USD57 million, and short-term debt totaled about USD178 million. Total debt was USD625 million, comprised of USD300 million secured notes due in 2028, local notes and bank debt. ISSUER PROFILE Frigorifico Concepcion S.A. was founded in 1997 and is based in Concepcion, Paraguay. The company operates as a meatpacker in Paraguay, Bolivia and Brazil. ESG CONSIDERATIONS Frigorifico Concepcion S.A. has an ESG Relevance Score of '5' for Financial Transparency due to the company's financial reporting, following its failure to provide the necessary details for the opening balance of December 2023 for its subsidiary, BMG. The lapse resulted in the issuance of a qualified audit opinion, signaling a deterioration in transparency which could potentially affect stakeholder confidence and the company's access to the capital markets. This has a negative impact on the credit profile, and is highly relevant to the rating, resulting in an implicitly lower rating. Frigorifico Concepcion S.A. has an ESG Relevance Score of '4' for Waste & Hazardous Materials Management; Ecological Impacts due to land use and supply chain management. The company is exposed to cattle sourcing and needs to monitor direct and indirect suppliers in South America, and the beef sector is also exposed to export bans in general. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Frigorifico Concepcion S.A. has an ESG Relevance Score of '4' for Governance Structure due to ownership concentration. The shareholder's strong influence upon management could result in decisions being made to the detriment of the company's creditors. This has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Frigorifico Concepcion S.A. LT IDR B Downgrade B+ LC LT IDR B Downgrade B+ senior secured LT B Downgrade RR4 B+ RUTA 2 AND 7: Fitch Affirms 'BB+sf' Rating on 2019-1 Secured Notes ------------------------------------------------------------------ Fitch Ratings has affirmed the 'BB+sf' rating on the series 2019-1 senior secured notes issued by Rutas 2 and 7 Finance Limited (the issuer), a special purpose vehicle (SPV) incorporated in the Cayman Islands. The Rating Outlook is Stable. Entity/Debt Rating Prior ----------- ------ ----- Rutas 2 and 7 Finance Limited Series 2019-1 78319MAA1 LT BB+sf Affirmed BB+sf TRANSACTION SUMMARY The notes are fully backed by deferred investment payment obligations (PDIs) trust securities after the completion of all bond construction milestones. PDIs are deferred investment recognition payment rights vested upon completion of construction milestones (tramos) of Rutas 2 and 7 projects from the Republic of Paraguay (RoP). PDIs are public debt of the sovereign and their budgeting process follows the same procedure as a sovereign bond's debt service. Fitch's ratings address the likelihood of timely payment of interest and principal on the notes. KEY RATING DRIVERS Rating Linked to Sovereign: Fitch has determined that the primary risk contributor for the transaction is the RoP, and therefore the transaction's rating is linked to the country's Long-Term Foreign Currency Issuer Default Rating (LT FC IDR) of 'BB+'/Stable. The rating reflects Fitch's view of the credit quality of deferred investment payment obligations (PDIs). Government Payment Obligation: After the availability period, Fitch assumes that payment on the notes will rely on the RoP's unconditional and irrevocable payment obligation regarding vested PDIs. Under Paraguayan law 1535, PDIs are considered external public debt of the RoP denominated in USD. Additionally, pursuant to the PPP Trust Agreement, PDI payment right holders will have direct recourse against the country for failure to make timely payments. No Construction/Performance Risk: PDIs are Paraguayan-law governed, freely transferable payment rights. Once issued, they are not related to the Public-Private Partnership (PPP) Contract and therefore do not depend on the status of the construction or operation of the project. This eliminates construction and operating risk. Vested PDIs survive the termination or nullity of the PPP Contract for any reason. Construction Progress in 2024: As of February 2024, the Ministry of Public Works and Communications notified the concessionaire of final commissioning of the project given its near completion stage and marking the beginning of the operational stage of the concession agreement. All project tranches (tramos) related to the PDIs backing the 2019-1 notes were completed as scheduled and PDIs related to these tramos were sold to the issuer and are 100% vested. No Negative Carry Risk: All PDIs related to the 2019-1 notes have been sold to the issuer and are 100% vested. The transaction is no longer exposed to negative carry. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - The ratings on the transactions are linked to the LT FC IDR of RoP; hence, a downgrade of the country's FC IDR would trigger a downgrade of the rated notes in the same proportion. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - The ratings on the transactions are linked to the LT FC IDR of RoP; hence, an upgrade of the country's FC IDR would trigger an upgrade of the rated notes in the same proportion. 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 are linked by the credit risk of Paraguay as measured by its Long-Term Foreign Currency IDR. ======= P E R U ======= PERU: Recovers From Consecutive Climate-Related Shocks, IMF Says ---------------------------------------------------------------- The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation[1] with Peru on May 20, 2024. The economy is recovering from consecutive climate-related shocks and social turmoil at the beginning of 2023. Inflation has receded thanks to the central bank's decisive monetary policy tightening, while the fiscal position and the financial system remain strong. The country is in a period of relative political stability, but lingering political uncertainty is denting the appetite for pressing reforms to boost potential growth. A rebound in growth to 2.5 percent is expected in 2024, supported by a strong recovery in agriculture and fishing, continued momentum in mining, and a looser monetary policy stance. However, only a moderate recovery is expected for private consumption and private investment, as nominal wages gradually regain their purchasing power and elevated political uncertainty weighs on consumer and business confidence. As the effects from El Niño dissipate, inflation would rapidly decline towards the midpoint of the target band, aided by a negative output gap and the normalization of supply shocks, as the Central Bank continues with its cautious monetary policy easing cycle. The current account is envisaged to return to a deficit of 1.1 percent of GDP in 2024 as growth normalizes and to stabilize at 1.5 percent of GDP in the medium term, with external financing and debt rollover risks remaining low. Evolving risks are broadly balanced, and Peru has ample buffers to cope with adverse shocks, although the outlook remains uncertain. In the short term, key domestic risks include an intensification of political uncertainty, social unrest, and climate-related shocks. Key external risks comprise weak trading-partner growth, commodity price volatility, and a sharp tightening of global financial conditions. On the upside, a stronger recovery in confidence could support stronger private consumption and investment growth. Peru's proven macroeconomic resilience is reinforced by very strong buffers including relatively low public debt, abundant international reserves, and access to international capital markets on favorable terms. Executive Board Assessment Executive Directors commended the Peruvian authorities for their sustained track record of very strong macroeconomic policies and institutional frameworks, that have effectively steered the country through social turmoil and severe climate shocks and supported the ongoing recovery. They positively noted that low public debt, abundant international reserves, a robust financial sector, and favorable access to international capital markets provide strong buffers against adverse shocks. Against this background, they supported the authorities' decision to exit the Flexible Credit Line arrangement upon its expiry in May 2024 given broadly balanced risks and the strength of Peru's buffers. Directors noted the authorities' commitment to maintaining sound institutions and policies to further strengthen Peru's resilience against external risks. Directors welcomed the strong fiscal position and the authorities' commitment to fiscal sustainability. They generally agreed that, given available fiscal space, a more gradual fiscal consolidation path could help support growth in the short run. However, Directors highlighted the need for ambitious revenue mobilization to support a more balanced medium‑term consolidation plan. They also called for measures to further strengthen the fiscal framework, including reviewing the optimality of the medium‑term fiscal target, the debt ceiling, and liquidity buffers, supported by Fund TA, and bolstering the effectiveness of the Fiscal Council. Directors highlighted the importance of pension reforms to address subpar income replacement and coverage, early withdrawals, and potential long‑term fiscal contingencies. Directors commended the central bank's early decisive monetary tightening, which was successful in anchoring inflation expectations and reducing inflation towards the target band. In that context, they agreed with the ongoing cautious data‑dependent monetary policy easing. Directors also encouraged the central bank to maintain exchange rate flexibility to act as a shock absorber and support faster economic recovery. Noting the resilience of the financial system, Directors encouraged the authorities to remain vigilant and to continue to facilitate de‑dollarization and capital market deepening. Directors stressed that structural reforms are urgently needed to revive growth. They emphasized that efforts to boost productivity should focus on reforming labor and tax regulations, building resilience to climate shocks, and embracing the digital and artificial intelligence revolution. They commended the authorities' commitment to addressing corruption and encouraged the authorities to strengthen the effectiveness of governance institutions. Directors concurred that the OECD accession process provides a clear roadmap for more ambitious reforms to boost the business climate and ensure sustainable and inclusive growth. ================= V E N E Z U E L A ================= CITGO PETROLEUM: Parent Weighs U.S. Bankruptcy to Slow Sale ----------------------------------------------------------- globalinsolvency.com, citing Bloomberg News, reports that Venezuela's opposition is weighing a move that would slow the sale of oil assets under its control by having Citgo Petroleum Corp.'s holding company file for bankruptcy in the U.S. Opposition-appointed Petroleos de Venezuela executives are seeking to retain control of their most important overseas asset, which is up for auction, and are mulling using a U.S. chapter 11 filing to block finalization of its sale, said the people, who asked not to be identified because they weren't authorized to speak publicly about the tactic, according to globalinsolvency.com. Trade publication Reorg previously reported the plan, the report notes. Final bids are due June 11 for shares of Citgo's US parent – which amount to ownership of the refiner — in a separate legal process, the report relays. If the opposition decides to file for bankruptcy protection, it's unclear whether that would happen before then, or before the winning bidder is announced in July, the people said, the report discloses. "This play would buy them some more time to try and hike what they get for Citgo or bring in an outside party to rescue it," said Charles Tatelbaum, a veteran bankruptcy lawyer who isn't involved in the case, the report notes. Any decision by Citgo's U.S. parent, PDV Holding, to file for bankruptcy would need to be made in consultation with the opposition-led assembly, the only Venezuelan government body recognized by the U.S. since it broke diplomatic relations with President Nicolas Maduro's regime in 2019, said Yon Goicoechea, a member of the council that manages Venezuelan assets abroad known as CAPA, the report adds. About CITGO Petroleum Citgo Petroleum Corporation is a United States-based refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. Based in Houston, Texas, Citgo is majority-owned by PDVSA, a state-owned company of the Venezuelan government (although due to U.S. sanctions, in 2019, they no longer economically benefit from Citgo.) As reported in the Troubled Company Reporter-Latin America in June 2022, S&P Global Ratings affirmed its 'B-' long-term issuer credit ratings on CITGO Holding Inc. and core subsidiary CITGO Petroleum Corp. ********* 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. 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