/raid1/www/Hosts/bankrupt/TCRLA_Public/240709.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Tuesday, July 9, 2024, Vol. 25, No. 137
Headlines
A R G E N T I N A
ARGENTINA: Milei Now Faces Challenge of Governing
B R A Z I L
AMERICANAS SA: Exec Tied to Fraud Probe Returns to Brazil
BADESC: Fitch Affirms 'BB/B' LongTerm IDRs, Outlook Stable
BRAZIL: Lula's Efforts to Win Over Brazilian Farmers Fall Short
DESENVOLVE SP: Fitch Affirms 'BB/B' LongTerm IDRs, Outlook Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Abinader Reviews 2025 Budget Guidelines
P E R U
RUTAS DE LIMA: S&P Affirms 'CCC+' Debt Rating, Outlook Negative
P U E R T O R I C O
GRUPO HIMA: Asset Sale Proceeds to Fund Plan Payments
T R I N I D A D A N D T O B A G O
CL FINANCIAL: CLICO Policyholders Group 'Deeply Troubled'
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A R G E N T I N A
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ARGENTINA: Milei Now Faces Challenge of Governing
-------------------------------------------------
Buenos Aires Times reports that the political agreements that gave
Javier Milei his first victory in Congress, despite his
parliamentary minority, could dissolve in the new stage facing the
ultra-liberal president, warn analysts.
Milei, 53, will be pressured to show he can govern an Argentina
gripped by economic crisis, they warn, according to Buenos Aires
Times.
"Approval of the 'Ley de Bases' omnibus bill was important but it's
just a step in a process facing new difficulties in terms of
governability," said pundit Rosendo Fraga, the report notes.
Against every forecast, bearing in mind the few seats he commands
in both chambers of Congress, Milei was able to win approval for
his first package of reforms to liberalize the economy, something
which he celebrated as "a historic and monumental" milestone, the
report relays.
Buenos Aires Times discloses that achieved after a tortuous
legislative process lasting half a year, the reform push suffered a
setback in February when the government was forced to sacrifice
more than half of the 600 articles contained in the bill's initial
draft, the report discloses.
Milei was close to heading the first democratic government to have
no law approved by the midpoint of its first year in office, the
report relays. "This is explained by its incapacity to create a
political coalition and organise a ruling party," pointed out
Fraga, who envisions a legislative storm in the Senate, where the
centre-left Peronist opposition is stronger, the report notes.
In the next few weeks, the Upper House will have to tackle a bill
to amend the pension updating index in favor of beneficiaries and
against the fiscal objectives of Milei, the report relays.
Deputies in the lower house have already approved a bill with the
vote of 160 of the 257 legislators in an unprecedented opposition
"scrum," including members usually closer to the government who on
June 28 helped Milei to approve his 'Ley de Bases,' the report
discloses.
"This is a central change in terms of parliamentary majorities,"
warned Fraga.
Are Youth Votes Wasted on the Young?
Milei himself reacted to the development, the report relays. "They
can vote whatever they like, I'll veto everything, I couldn't care
less," he warned some weeks ago in a speech to businessmen, in
which he said he was ready to govern "purely with vetoes" against a
Congress which he has described as a "nest of rats," the report
notes.
But then Congress conceded to the President the delegation of
extraordinary prerogatives for a year, tax increases, more flexible
labor laws, a controversial set of investment incentives over 30
years and approval for advancing in the privatization of several
public companies, the report relays.
"Faced with insults, we feigned insanity," was how Union Cívica
Radical caucus chief Rodrigo de Loredo justified their vote in
favor, the report discloses.
A Limited Success
Passage of the 'Ley de Bases' "is definitely a success for a
government with 10 percent of the seats," is the opinion of Juan
Negri, director of the Political Sciences course at the Universidad
Torcuato Di Tella, the report relays.
But with that objective achieved, "we are entering a phase in which
results will be demanded of the government," he added.
The backdrop is an economic recession with rising unemployment and
poverty affecting half the population, the report notes. Inflation
is running at an annual 280 percent and a horizon of income tax,
increases introduced in the fiscal package approved by Congress,
looms, the report relays.
The limits on the President's fragile political alliances seems to
be sinking into the patience of the people who continue to give
Milei their vote of confidence, according to surveys, the report
says.
"If the government starts losing popularity, the moderate
opposition will start displaying much more resistance," evaluated
Negri, the report discloses.
Gabriel Vommaro, director of the masters programme in Political
Sociology at the Universidad Nacional de San Martín, predicted:
"The great doubt from now on is whether, now that this stage of
granting reforms is over, the political tension might begin," the
report notes.
Political analyst Carlos Germano, director of the Germano y
Asociados consultancy, considered this to be a crossroads. "A line
has been drawn and from now on begins a completely different
political scenario," he added.
"Milei will have to be much more a president of the Republic and
stop boosting the personality cult which brought him here," said
Germano, the report relays.
"That moderate opposition, in order not to become diluted, will
have to make an abrupt change from what they have been doing until
now," he 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.
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B R A Z I L
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AMERICANAS SA: Exec Tied to Fraud Probe Returns to Brazil
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globalinsolvency.com, citing Reuters, reports that a former
executive of Brazilian retailer Americanas accused of connection
with an alleged billion-dollar accounting fraud landed at an
airport in Sao Paulo and handed over her passport to the country's
federal police.
Anna Saicali was one of the main targets of raids launched by
Brazil's police as part of their probe into the 25.3 billion-real
(US$4.53 billion) accounting scandal that led Americanas to file
for bankruptcy in January 2023, according to globalinsolvency.com.
A court in Rio de Janeiro ordered Saicali's arrest while the former
executive was abroad, the report notes.
The arrest warrant was later overturned by the court and the former
executive boarded a flight to Brazil from Portugal, where she had
been living, the report relays.
Saicali handed her passport over to police upon her arrival and
will not be able to leave Brazil for now, the report discloses.
Her lawyers did not respond to a Reuters request for comment.
Saicali was targeted by the court-ordered raids alongside former
Americanas CEO Miguel Gutierrez, who was arrested in Madrid before
being released, the report says. As part of the raids, federal
police agents also served 15 search and seizure warrants for the
houses of former Americanas directors, the report adds.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in
Rio de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25, 2023. White &
Case LLP, led by John K. Cunningham, is the U.S. counsel.
BADESC: Fitch Affirms 'BB/B' LongTerm IDRs, Outlook Stable
----------------------------------------------------------
Fitch Ratings has Affirmed Agencia de Fomento do Estado de Santa
Catarina S.A. - Badesc's (Badesc) Long- and Short-Term Local- and
Foreign Currency Issuer Default Ratings (IDRs) at 'BB' and 'B',
respectively. Fitch has also affirmed the Shareholder Support
Rating (SSR) at 'bb', the Long- and Short-Term National Ratings at
'AAA(bra)' and 'F1+(bra)', respectively. The Rating Outlook of the
Long-Term IDRs and National Rating remains Stable.
KEY RATING DRIVERS
Ratings Driven by SSR: Badesc's IDRs and National Ratings are
driven by the Shareholder Support Rating (SSR) and based on the
State of Santa Catarina's ability and propensity to provide support
if needed. The assessment of ability reflects Fitch's opinion of
the credit quality of the shareholder, while the assessment of
propensity to support is mainly driven by Badesc's core role for
the development and economic growth of Santa Catarina.
Core Regional Role: Badesc's policy role involves promoting the
State of Santa Catarina's economic growth and social development,
and its SSR is highly influenced by its core role. Its strategy is
aligned with regional development objectives and is highly
influenced by regional government policy. The institution is
focused on microfinance, local corporations as well as financing
municipalities' development projects and initiatives.
Structure and Regulation Favor Shareholder Support: Fitch believes
that local regulation favors support for policy agencies as it
imposes limitations on development agencies' scope of products and
ownership. Development agencies like Badesc can only be owned by
their state of origin and cannot be sold. In its assessment, Fitch
also considers the current size of Badesc relative to the financial
capacity of Santa Catarina, the high reputational risk and the high
level of operational integration between both.
Higher Delinquency, Good Profitability: Although Badesc's ratings
are based directly on support from its parent, its financial
performance only moderately important to Fitch's assessment of
support propensity. For the second year Badesc reported a
contraction of its loan portfolio in 2023, 4% down compared with a
year before. Badesc's delinquency deteriorated in 2023 with
impaired loans reaching 8.9% compared with 5.6% in 2022, stemming
from the portfolio originated during the pandemic years. Despite
this, Fitch doesn't expect further and significant deterioration of
asset quality metrics in 2024. Its profitability is good, with a
high pre-tax profit/average assets ratio of 8.3% at end- 2023.
Profitability has also been supported by good efficiency ratios and
by the low dependency of funding, which reduces funding costs.
Robust Capitalization, Strong Liquidity: Badesc has a comfortable
capital structure. Fitch's calculation of debt to tangible equity
ratio was a low 0.36x at end-2023, with a common Equity Tier 1
Ratio at a comfortable 70% in the same period, both ratios kept
stable in the past year. Badesc's liquidity position is strong,
with liquid assets corresponding to one-third of its assets.
A regulatory limitation prevents development agencies from raising
deposits in the market. Therefore, Badesc's main source of funding
(excluding capital) is from federal government lines established
with government entities and funds which has a perfect match with
its corresponding portfolio. The entity's strategy is to diversify
its funding options, both domestically and abroadx to support
growth.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
IDRs, SSR and National Ratings
- The ratings could be affected by a negative change in Fitch's
assessment of Santa Catarina's credit quality.
- The ratings could be affected by a reduction of
propensity/capacity from Santa Catarina to support, which Fitch
views as unlikely.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
IDRs and SSR
- The IDR and SSR are currently at the sovereign level with a
limited upside potential.
National Ratings
- The National Scale Ratings of Badesc are at the highest level on
the national scale; therefore, they cannot be upgraded.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Badesc ratings are driven by the Shareholder Support of Santa
Catarina IDRs BB/Stable
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
----------- ------ -----
Agencia de Fomento
do Estado de Santa
Catarina S.A. –
Badesc LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Natl LT AAA(bra)Affirmed AAA(bra)
Natl ST F1+(bra)Affirmed F1+(bra)
Shareholder Support bb Affirmed bb
BRAZIL: Lula's Efforts to Win Over Brazilian Farmers Fall Short
---------------------------------------------------------------
Richard Mann at Rio Times Online reports that Brazilian President
Luiz Inacio Lula da Silva recently unveiled a record crop financing
plan worth 400 billion reais (US$73 billion).
This strategy, which once made him highly popular, aims to boost
the economy and gain support from the agricultural sector,
according to Rio Times Online.
However, 18 months into his second term, Lula faces significant
challenges in a polarized political environment, the report notes.
His approval ratings have plummeted below 40%, a stark contrast to
the over 80% approval he enjoyed at the end of his first presidency
in 2010, the report relays.
His ambitious agenda has stalled in a conservative Congress
resistant to his methods, the report discloses.
With October elections nearing, Lula's crop plan likely won't sway
the right-leaning agribusiness sector, the report relays.
Agribusiness leader Pedro Lupion says farmers oppose Lula's support
for the Landless Workers' Movement and indigenous land rights, the
report discloses.
Agriculture has become a global political battleground, the report
relays. Farmers worldwide, reacting to economic transitions driven
by climate change, have increasingly backed right-wing movements,
the report notes.
This trend has impacted Lula, who once enjoyed strong ties with the
agricultural sector during the commodity boom of his first
presidency, the report says.
Lula's Efforts to Win Over Brazilian Farmers Fall Short
Agriculture remains vital to Brazil, accounting for 24% of GDP, 50%
of exports, and a quarter of the jobs, the report relates.
However, under former President Jair Bolsonaro, these ties were
severed as Bolsonaro aligned closely with the sector on various
conservative issues, the report discloses.
Rebuilding connections has been hard for Lula, who narrowly beat
Bolsonaro in 2022 with an environmental and economic platform, the
report recalls.
Lula has attempted to bridge the gap by including agribusiness
leaders in trade missions and setting record crop financing levels,
the report notes.
However, his criticisms of the sector, especially regarding the
2023 insurrection attempt and indigenous land rights, have fueled
opposition, the report says.
The agribusiness caucus has pledged to fight Lula's agenda in
Congress, further complicating his efforts, the report notes.
Recent actions, including a controversial fiscal proposal by
Finance Minister Fernando Haddad, have strained relations with the
agricultural sector, the report discloses.
Although the Senate blocked the proposal, the damage was done,
eroding trust in Lula's administration, the report relays.
Lula has time to recover before the 2026 presidential elections,
but current struggles suggest a challenging path ahead, the report
notes.
The global rise of right-wing leaders, like Argentine libertarian
Javier Milei, indicates shifting political winds that could further
complicate Lula's efforts, the report relates.
Milei will attend a conservative rally in Brazil, underscoring the
growing strength of the right in the region, the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
S&P Global Ratings raised on Dec. 19, 2023, its long-term global
scale ratings on Brazil to 'BB' from 'BB-'. The outlook on the
long-term ratings is stable. S&P affirmed Brazil's global scale
short-term ratings at 'B' and its national scale long-term rating
at 'brAAA'. S&P also raised the transfer and convertibility
assessment on the country to 'BBB-' from 'BB+'. S&P said, "The
stable outlook reflects our expectation that Brazil will maintain
A strong external position, thanks to strong commodity output and
limited external financing needs. We also believe Brazil's
institutional framework can sustain stable and pragmatic
policymaking based on extensive checks and balances across the
executive, legislative, and judicial branches of government. We
expect a very gradual fiscal correction but anticipate fiscal
deficits will remain large."
Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable
Outlook. Fitch said Brazil's ratings are supported by its large and
diverse economy, high per-capita income, and deep domestic markets
and a large cash cushion that support the sovereign's financing
flexibility and its high local-currency debt share. Strong external
finances support resilience to shocks, underpinned by a flexible
exchange rate, robust international reserves and a sovereign net
external creditor position. The ratings are constrained by weak
economic growth potential, relatively low governance scores, high
and rising government debt/GDP, and budgetary rigidities. A new
fiscal framework introduced this year aims to anchor a gradual
consolidation process and address these fiscal weaknesses, but its
effectiveness is increasingly unclear.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS Inc., on August 15, 2023, upgraded Brazil's Long-Term
Foreign and Local Currency - Issuer Ratings to BB from BB (low).
At the same time, DBRS Morningstar confirmed Brazil's
Short-term Foreign and Local Currency - Issuer Ratings at R-4.
The trend on all ratings is Stable (March 2018).
DESENVOLVE SP: Fitch Affirms 'BB/B' LongTerm IDRs, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed Desenvolve SP - Agencia de Fomento do
Estado de Sao Paulo S.A.'s (Desenvolve SP) Long- and Short-Term
Local and Foreign Currency Issuer Default Ratings (IDRs) at 'BB'
and 'B', respectively. Fitch has also affirmed the Long- and
Short-Term National Ratings at 'AAA(bra)' and 'F1+(bra)',
respectively. The Rating Outlook for the Long-Term IDRs and
National Rating remains Stable.
KEY RATING DRIVERS
Ratings Driven by SSR: Desenvolve SP's IDRs and national ratings
are driven by its Shareholder Support Rating (SSR) of 'bb'. The SSR
is based on Fitch's assessment of expected support from the
agency's parent, the State of São Paulo (São Paulo, IDRs
'BB'/Stable). Fitch considers Desenvolve SP a core subsidiary of
the state. Fitch's assessment of São Paulo's capacity to provide
support reflects its credit quality while its propensity to support
is mainly driven by Desenvolve SP's core role for the development
and economic growth of Sao Paulo.
Core Policy Entity: The strategy is aligned with regional
development objectives, and therefore, the SSR is highly influenced
by its role. The agency is focused on lending to micro and small
enterprises (SMEs), as well as providing resources for
municipalities of Sao Paulo State.
Challenged Asset Quality, Strong Profitability: Desenvolve SP's
impaired loans/gross loans ratio increased to 16.4% in 2023, from
14.7% a year before due to late impacts of pandemic. Fitch expects
the company's impaired loans will recover in 2024 but remain above
the historical average.
The pre-tax income/average assets ratio was at 6.0% in 2023. The
strong profitability reflects higher income on loans, gains with
securities and fee income. Loan loss provisions doubled in the
period, which reflected the worsening in asset quality metrics. For
2024 Fitch expects Desenvolve SP's earnings will remain adequate
but be pressured by the decline in interest rates, which could
affect its securities portfolio earnings.
Strong Regulatory Capital, High Liquidity: Desenvolve SP has very
strong capitalization metrics, reflecting two significant tranches
of capital injection in 2021/2022, totaling BRL2.1 billion. The
Common Equity Tier 1 Ratio was 83% in December 2023, up from 73.3%
in December 2022. Fitch expects Desenvolve SP's capitalization to
remain strong even with anticipated growth in the upcoming
quarters.
Desenvolve SP maintains a highly liquid balance sheet. Liquid
assets totaled BRL2.2 billion in December 2023, which was
sufficient to cover 5x its short-term funding. As a development
agency, there are limitations on its options to diversify its
funding base. The loan portfolio has been financed mainly by equity
or on-lendings from official entities, such as BNDES, FINEP and
FUNGETUR. Other major funding has been sourced from multilateral
institutions such as IFC, CAF, NDB and BID.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
IDRs, SSR and National Ratings
- The ratings could be affected by a reduction of
propensity/capacity from São Paulo to provide support, although
Fitch does not anticipate such a change.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
IDRs, SSR
- The IDR and SSR are at the same level as the sovereign with
limited upside potential.
National Ratings
- The national scale ratings of Desenvolve SP are at the highest
level on the national scale; therefore, they cannot be upgraded.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Desenvolve SP's ratings are driven by the SSR of the State of São
Paulo (BB/Stable)
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
----------- ------ -----
Desenvolve SP -
Agencia de Fomento
do Estado de Sao
Paulo S.A. LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Natl LT AAA(bra)Affirmed AAA(bra)
Natl ST F1+(bra)Affirmed F1+(bra)
Shareholder Support bb Affirmed bb
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Abinader Reviews 2025 Budget Guidelines
-----------------------------------------------------------
Dominican Today reports that President Luis Abinader and Vice
President Raquel Pena led a Council of Ministers and Directors
meeting to discuss the main parameters and guidelines for the 2025
budget. The government aims for a 5% growth rate by 2025, aligned
with the budget guidelines, according to Dominican Today. This
information was provided by Minister of the Presidency Joel Santos
at the end of the meeting at the National Palace, which lasted an
hour and a half, the report relays.
Government Priorities
Santos outlined the new budget's priorities, focusing on education,
health, the Integrated Transportation System, completion of metro
line 2C, extensions of metro lines 1 and 2, and the completion of
the Santo Domingo Oeste cable car and the Metropolitan Train, the
report discloses.
"The government has until October 1 to present the budget, the
report notes. A Government Council meeting will be held before
then to review it, after which it will be sent to the legislative
chambers," Santos stated, the report discloses. He also reported a
5% growth and inflation estimated at 4%, within the base range of
+1-1%, the report says.
Roadworks
High-priority road projects include the Plaza de la Bandera,
traffic improvements between Jacobo Majluta and Los Proceres
avenues, and the expansion of the Presidente Peynado bridge, the
report relays. "Additionally, efforts will focus on Police Reform
and the 911 National Emergency System, which will play significant
roles in the 2025 budget," Santos added.
Monetary Poverty
Santos noted that monetary poverty decreased from 24.2% in the
first quarter of 2023 to 18.9% in 2024, the report notes. In the
first quarter of 2019, it was 26.1%, the report discloses. This
reduction was seen across rural and urban areas and at the gender
level, the report relays.
Employment
Regarding economic employment, Santos reported a 3.6% reduction in
unemployment from one quarter to the next, with a 75% increase in
formal jobs, the report relays. Real wage growth in the same
period rose by 8.6%, and nominal wage growth by 12.2%, the report
discloses. Santos emphasized the social programs' critical role in
fostering greater equity in the Dominican economy, 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.
=======
P E R U
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RUTAS DE LIMA: S&P Affirms 'CCC+' Debt Rating, Outlook Negative
---------------------------------------------------------------
S&P Global Ratings affirmed its issue-level rating on Rutas de Lima
S.A.C. (RdL or the project) at 'CCC+' and maintained its negative
outlook. The 'CCC+' rating already captures the weaknesses of the
project.
The negative outlook incorporates the chance of a further downgrade
in the next 6-12 months if RdL's cash flow deteriorates. This can
occur, for example, due to an unexpected decrease in traffic volume
or any additional measure that could jeopardize Panamericana Sur's
(PS's) cash flow, pressuring the project's debt service coverage
ratio (DSCR). In addition, if S&P believes that incentives for
noteholders to accelerate the debt payment increase, we could
downgrade the project.
According to the Cash Flow Trust Agreement, upon the receipt of a
cash flow default notice, any transfers to RdL's restricted
payments account and transfers that exceed 117.5% of its annual
budget will require consent of a majority of the noteholders
following their vote. S&P said, "We do not anticipate such approval
in the next 12 months, as we do not forecast the project to exceed
its budget that should flow to the restricted account. Therefore,
we view the default notice as neutral for the rating."
Although in this case the noteholders have the right to take
enforcement actions, such as accelerating the payment of the notes,
our base-case scenario assumes that they currently have incentives
and the intention not to do so. These incentives include continue
receiving almost 70% of the originally expected cash flow stemming
from PS's toll collections, which should be enough to cover debt
service until 2030 with the release from the robust reserve
account.
S&P said, "Assuming that the project's ability to reduce costs is
limited, we continue to anticipate cash flow available for debt
service from PS, which represents almost 70% of expected cash flow.
Still, we believe that those funds, in combination with the release
from the debt service reserve account, should be sufficient to meet
debt payments at least until 2030." This scenario does not include
any outcome from the arbitration process, which could provide
additional financial resources to the project.
As of April 30, 2024, RdL's liquidity consisted of a debt service
reserve account of PEN58 million, accessible cash and accounts of
PEN170 million, an additional project reserve account of PEN151
million, a major maintenance reserve account of PEN23 million (of
which only 25% can be used to fulfill any shortfall), and an O&M
reserve account of PEN59 million.
=====================
P U E R T O R I C O
=====================
GRUPO HIMA: Asset Sale Proceeds to Fund Plan Payments
-----------------------------------------------------
Grupo Hima San Pablo, Inc., and its affiliates, the DIP Agent, and
the Unsecured Creditors' Committee (the "UCC") filed with the U.S.
Bankruptcy Court for the District of Puerto Rico a Disclosure
Statement for Joint and Consolidated Plan of Liquidation dated June
24, 2024.
Grupo HIMA San Pablo, Inc. was incorporated under the laws of the
Commonwealth of Puerto Rico on December 20, 2005, to serve as a
diversified healthcare services holding company pursuant to a
corporate reorganization of several businesses related by common
ownership.
Through its subsidiaries and affiliates (referred together as the
"HIMA GROUP"), the Company primarily owns and operates hospital
facilities and other healthcare related businesses.
By the time of filing of these bankruptcy petitions, the HIMA GROUP
operated four hospitals, with over 1,100 licensed beds, including
an Oncological Hospital, a multi-specialty physician practice, a
Home Care Service (including infusion therapies and wound care), a
freestanding Ambulatory Center, a 16-Ambulance Service Company,
food services, two external pharmacies, a security service, and a
provider of a certified health record platform.
In December of 2023, negotiations commenced by and among the
Debtors, the Secured Lenders and the Creditors Committee towards a
consensual plan of Reorganization. The negotiations were complex
and protracted, but ultimately resulted in an agreement to a Term
Sheet executed by the Debtors, the Secured Lenders and the
Creditors Committee. The Term Sheet is divided into 2 sections: one
governing the conduct of the parties thereto between May 23, 2024,
and the Effective Date of the Plan, and the second, setting the
Terms of the Proposed Plan.
Pursuant to Section I of the Term Sheet entitled "Pre-Effective
Date Agreements," the parties thereto agreed that an
"Administrative Claim Escrow Fund" would be created, pending
confirmation of the Plan, to be used to discharge administrative
claims on the Effective Date.
It was further agreed that the Administrative Claim Escrow Fund
would be funded with $4 million, from the pre-effective date
collection of accounts receivables, plus, once that $4 million
funding level was achieved, with an additional 20% of the net
proceeds of all accounts receivable (regardless of age) collected
after: (i) payment of SJU Healthcare Consulting, LLC's 24.5%
commission, as applicable, and (ii) payment of regular wind-down
expenses of the estate, including payment of allowed professional
fees, provided that the Wind-Down estate shall maintain a minimum
cash balance of $500,000 at all times prior to the Effective Date.
The Debtors commenced the Chapter 11 Cases to facilitate a timely
and efficient sale process aimed at maximizing the value of the
Debtors' estates for the benefit of all stakeholders. Following a
prepetition marketing process, the Debtors determined, in
consultation with their advisors, that an expedited marketing and
sale process was the best path forward to consummate a value
maximizing Sale for the benefit of all stakeholders under the
circumstances.
Following the approval of the Bidding Procedures Order, the Debtors
pursued active marketing efforts seeking to sell all assets
associated with the Hima San Pablo operations, including all of the
applicable real estate and facilities that entail the four hospital
units.
Class 9 consists of General Unsecured Claims. This Class shall
receive Pro Rata Share of Liquidating Trust Distributable Cash,
capped at $20,000,000.00; payment waiver for Class 7 and 8 claim
holders. This Class is impaired.
On the Effective Date, (i) the Liquidating Trust shall be
established pursuant to the Liquidating Trust Agreement; (ii) the
Liquidating Trustee shall be appointed as trustee of the
Liquidating Trust; (iii) except as otherwise provided herein, the
Debtors and/or the DIP Agent, as applicable, shall transfer the
Initial Liquidating Trust Funding Amount to the Liquidating Trust;
and (iv) all Liquidating Trust Causes of Action and Liquidating
Trust Assets shall be transferred to and vested in the Liquidating
Trust.
A full-text copy of the Disclosure Statement dated June 24, 2024 is
available at https://urlcurt.com/u?l=IodzBr from Epiq Corporate
Restructuring, LLC, claims agent.
Attorneys for the Debtors:
Wigberto Lugo Mender, Esq.
Alexis A. Betancourt Vincenty, Esq.
Lugo Mender Group, LLC
100 Carr. 165 Suite 501
Guaynabo, PR 00968-8052
Tel: (787) 707-0404
Fax: (787) 707-0412
Email: wlugo@lugomender.com
About Grupo Hima San Pablo
Grupo HIMA San Pablo, Inc. serves as a diversified healthcare
services holding company pursuant to a corporate reorganization of
several businesses related by common ownership. Through its
subsidiaries and affiliates, Grupo HIMA San Pablo primarily owns
and operates hospital facilities and other healthcare related
businesses. As of August 2023, the HIMA GROUP operates four
hospitals, with over 1,200 licensed beds, including an Oncological
Hospital, a multi-specialty physician practice management company,
Home Care Service (including infusion therapies and wound care), a
free-standing ambulatory center and a 16-ambulance service
company.
Grupo HIMA San Pablo and its affiliates filed Chapter 11 petitions
(Bankr. D. P.R. Lead Case No. 23-02510) on Aug. 15, 2023. In the
petition signed by its chief executive officer, Armando J.
Rodriguez-Benitez, Grupo HIMA San Pablo disclosed $500 million to
$1 billion in assets and $100 million to $500 million in
liabilities.
Judge Enrique S. Lamoutte Inclan oversees the cases.
Wigberto Lugo Mender, Esq., at Lugo Mender Group, LLC and
Pietrantoni Mendez & Alvarez, LLC serve as the Debtors' bankruptcy
counsel and special counsel, respectively.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on Sept. 7, 2023. Porzio, Bromberg & Newman,
P.C. is the committee's legal counsel.
Edna Diaz De Jesus is the patient care ombudsman appointed in the
Debtors' Chapter 11 cases.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
CL FINANCIAL: CLICO Policyholders Group 'Deeply Troubled'
---------------------------------------------------------
Trinidad Express reports that the Clico Policyholders Group (CPG)
says it is "disappointed and deeply concerned" by KPMG's disclaimer
on Colonial Life Insurance Co (Trinidad) Ltd's 2023 accounts.
Clico has reported a profit of $2.3 billion for the year ended
December 31, 2023, marking a 271% increase compared to the previous
year, according to financial statements posted on its website,
according to Trinidad Express.
Its auditors, KPMG Chartered accountants, have however issued a
"disclaimer of opinion" saying that they were denied access to
critical information on two significant transactions that
positively impacted Clico's balance sheet: the sale of Methanol
Holdings and the investment in CL World Brands, the report notes.
CPG head Peter Permell told the Express: "We feel very strongly
about this, in light of the similar set of circumstances
surrounding the two previous disclaimers of opinions for 2022 and
2021 and the three consecutive 'qualified opinions' before that for
2018 to 2020 in connection with Clico's former subsidiary Methanol
Holdings International Ltd and associate company CL World Brands,
the report relays.
"Clearly, this cannot reflect well on the new board of directors
appointed in October last year nor does it augur well for a company
which has high hopes of turning the page so that some day in the
not too distant future it can resume writing new insurance
business," the report discloses.
On a more positive note, however, Permell said the audited accounts
also revealed an after-tax profit of $2.30 billion for 2023 and the
repayment of the Government of Trinidad and Tobago (GORTT) in the
sum of S500 million and a subsequent or post balance sheet event
disclosure that "Clico reduced its debt to GORTT by an additional
$605 million," the report relays.
"Unfortunately, it is not clear whether this means that GORTT has
now been repaid in full the $1.07 billion balance owed as at
November 30, 2022, referenced by the Central Bank in its final
report to Parliament," he added.
Permell said that the CPG is now calling on the board of directors
of Clico to state unequivocally, whether the Government, and by
extension the taxpayers of Trinidad and Tobago, have been paid the
outstanding balance owed to them in full, the report notes.
He stressed that there has been no official statement from either
Clico or the Government on this important matter to date, the
report relays.
"We are confident, this material disclosure would not only warm the
hearts of taxpayers but it more importantly it would mean that
GORTT is now legally required to release the EFPA (Executive
Flexible Premium Annuity) policies currently assigned to it by the
assenting policyholders so that this group can finally be paid the
residual balance owed to them by Clico as trustee. That is to say
the difference between the pay-out value EFPA policyholders
received in 2011 when they accepted the GORTT offer and the present
fund value of their policies, which incidentally remain valid and
in force," Permell stated, the report relays.
"In the interim, CPG remains committed to working with Clico to
bring about an amicable and satisfactory resolution to this long
outstanding issue," he added.
About CL Financial/CLICO
CL Financial was one of the largest privately held conglomerate in
Trinidad and Tobago. It was originally founded as an insurance
company and has since expanded to be the holding company for a
diverse group of companies and subsidiaries.
CL Financial is the parent company of Colonial Life Insurance
Company (Trinidad) Limited (Clico). CLICO is now the Company's
insurance division.
CL Financial however experienced a liquidity crisis in 2009 that
resulted in a "bail out" agreement by which the government of
Trinidad and Tobago loaned the company funds ($7.3 billion as of
December 2010) to maintain its ability to operate, and obtained a
majority of seats on the company's board of directors.
The companies to be bailed out were: CL Financial Ltd (CLF);
Colonial Life Insurance Company Ltd (CLICO); Caribbean Money Market
Brokers Ltd (CMMB); Clico Investment Bank (CIB) and British
American Insurance Company (Trinidad) Ltd (BAICO).
As reported in the Troubled Company Reporter-Latin America in July
2017, CL Financial Limited shareholders vowed to pay back a TT$15
billion (US$2.2 billion) debt to the Trinidad Government.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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