/raid1/www/Hosts/bankrupt/TCRLA_Public/240710.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, July 10, 2024, Vol. 25, No. 138
Headlines
A R G E N T I N A
ARGENTINA: Indicators Cast Doubt Over 'Catastrophe' Averted Claim
ARGENTINA: President Milei Proves Boon and Curse for Bank Stocks
TELECOM ARGENTINA: Fitch Affirms 'B-/B' LongTerm IDRs
B R A Z I L
BRAZIL: Market Position Halved in Global Index
OEC SA: Fitch Lowers LongTerm IDR to 'D' & Then Withdraws Rating
XP INC: Fitch Assigns 'BB' Final Rating on $500MM Unsecured Notes
C O L O M B I A
AVIANCA GROUP: Plans to Confidentially File for U.S. IPO
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Tax Reform to Boost Economic Growth
J A M A I C A
JAMAICA: BOJ to Conduct Full Assessment of Beryl's Impact
JAMAICA: Financially Protected in Case of Hurricane Damage
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Poultry Sector Beset by Institutional Problems
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A R G E N T I N A
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ARGENTINA: Indicators Cast Doubt Over 'Catastrophe' Averted Claim
-----------------------------------------------------------------
Buenos Aires Times reports that in a recent radio interview,
President Javier Milei said that the world has acknowledged the
"monumental" and "historic" task his administration faced in
lowering inflation while introducing a steep fiscal adjustment.
Milei argued that his government's social policy has been extremely
good, because, "If we hadn't acted properly, it would have been a
catastrophe," according to Buenos Aires Times.
Late last month, however, two key measurements offered not very
encouraging signs: unemployment has risen to 7.7 percent and the
Gini coefficient, which measures the gap between those who have the
most and the least, recorded the highest inequality reading since
2016, when the INDEC national statistics bureau started measuring
it again, the report notes. The latter indicated a major leap in
inequity: on a scale of 0 (absolute equality) to 1 (absolute
inequality), Argentina went from 0.435 in the fourth quarter of
2023 to 0.467 in the first quarter of 2024, the report discloses.
The information calls into question President Milei's claims about
avoiding a "catastrophe," the report says.
Meanwhile, Argentina's SIEMPRO (Sistema de Información,
Evaluación y Monitoreo de Programas Sociales) government
monitoring system is preparing its latest quarterly report that
tracks the evolution of indicators including the job market,
poverty and destitution, social security, education and access to
healthcare, the report relays.
Backward steps can be observed in all these indicators, both in
statistics and budgetary items allocated to solve the main
problems, the report notes.
Job Market
SIEMPRO's latest report for May shows the preceding unemployment
rate to date, which was 5.7 percent in the last two quarters of
2023. INDEC data disseminated showed a rise to 7.7 percent for the
first quarter of 2024, the report relays.
A CEPA political economy think tank report on official data pointed
out that increased unemployment "resulted from the destruction of
some 77,000 jobs compared to the first quarter of 2023, with a loss
of 404,000 jobs compared to the immediately previous quarter," the
report discloses.
Meanwhile, "the economically active population increased from the
same quarter last year by 37,000, thus giving rise to an increase
in the absolute number of unemployed people year-to-year by
114,000," it added.
The unemployment rate in the first quarter of this year, CEPA
observed, is the highest for a first quarter in the post-pandemic
era, the report relays.
The latest SIEMPRO report analyses, within this indicator, the
evolution of the minimum wage: purchasing power fell 29.3 percent
in April 2024 from the same month in 2023, the report recalls.
Poverty
INDEC's next poverty report will be published on September 26, the
report discloses. Its most recent measurement, dating back to the
second half of 2023, indicated a rate of 41.7 percent of the
population, with 11.9 percent considered destitute, the report
says.
Private studies for the start of 2024 show far greater numbers of
people living in poverty and extreme poverty, the report relays.
In the first quarter of the year, according to estimates by the
Catholic University of Argentina (UCA) Social Debt Observatory and
the Caritas NGO, more than half of the population is now poor, with
some projecting as high as 55 percent, the report relays. More
than 15 percent of Argentines are considered destitute, the report
says.
These figures would mean approximately 24 million people are living
in poverty, with more than eight million in extreme poverty, the
report notes.
Social Security
Indicators from the SIEMPRO monitoring system on social security
track welfare such as the evolution of pensions and child benefit
allowance, the report discloses.
For the latter, SIEMPRO published in May that the overall value of
child benefit payments rose by 20,661 pesos in December 2023 to
33,058 pesos in January 2024 and to 42,043 pesos in March, by April
2024, the report relays. However, "purchasing power of the child
benefit [allowance] had a minus 5.8-percent variation from the same
month last year." Over the last 24 months, the fall was 18.9
percent, the report notes.
As for pensions, the report stated by April 2024 that the
purchasing power of the minimum pension had fallen by 49.3 percent
year-on-year, the report discloses.
Pensions account for roughly three out of every ten pesos saved by
the government in achieving its fiscal surplus in the first quarter
of the year, the report says.
Education
In the third quarter of 2023, according to UCA, 23 percent of
children aged three to five did not attend formal educational
institutions, while 9.1 percent of children aged six to twelve were
attending primary school at an older age, the report relays. The
university said 35.3 percent of youths aged 18 to 29 had dropped
out of secondary school and not completed their studies, the report
notes.
According to a report published in June by UCA's observatory,
"these indicators show adverse values even though the overall
public administration system (80.7 percent of students aged 18 and
under) is strengthened by private action (12.6 percent in private
lay institutions and 6.8 percent in religious institutions)," the
report discloses.
Social policy implemented can also be measured by the national
government's open budget data: as of June 28, or in the first half
of the year, the Milei administration had used 0.27 percent of the
budget of the Education Quality Improvement programme and 9.5
percent of the funds for building improvements of nursery schools,
the report says.
Healthcare
According to the latest SIEMPRO report, moving into the fourth
quarter of 2023, 32 percent of the population was covered
exclusively by the public healthcare system, the report relays.
The document highlights large disparities by income level. "After
breaking down family income per capita by decile, 73.5 percent of
people in the first decile are observed to be exclusively covered
by the public system. This percentage dwindles when considering
higher-income deciles," , the report discloses.
The budget of a program dedicated to the 'Strengthening of the
Public Healthcare System's Capacity' was reduced from 2.638 billion
pesos to 1.915 billion pesos this year, the report says. Only 5.33
percent of funds had been used by the end of June 28, the report
relays.
Out of the Health Ministry's 29 government programmes, 20 recorded
a fall in their assigned budget from the allocated budget set at
the start of the year (which was the same as in 2023), the report
notes.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on March 15, 2024, raised its local currency
sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and
its national scale rating to 'raB+' from 'SD'. S&P also raised its
long-term foreign currency sovereign credit rating to 'CCC' from
'CCC-' and affirmed its 'C' short-term foreign currency rating. The
outlook on the long-term ratings is stable. In addition, S&P
revised its transfer and convertibility assessment to 'CCC' from
'CCC-'.
S&P said the stable outlook on the long-term ratings balances the
risks posed by pronounced economic imbalances and policy
uncertainties with the favorable change in near-term debt service
obligations. S&P also expect no further debt exchanges that it
would likely consider to be distressed.
Fitch Ratings upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
ARGENTINA: President Milei Proves Boon and Curse for Bank Stocks
----------------------------------------------------------------
Buenos Aires Times reports that Argentine banking stocks in New
York are tumbling as the government slashes interest rates and
crimps new borrowing, robbing them of the easy money that had been
driving profits higher.
New York-listed shares of Banco Macro, BBVA Argentina, Grupo
Supervielle and Grupo Financiero Galicia have dropped at least 18
percent from their highs for the year, according to Buenos Aires
Times. That's a turnaround for a group of stocks that handed
investors the best returns among the 30 Latin American banks with
American Depository Receipts in the first five months of the 2024,
the report notes.
The problem is, the banks are being forced to ween themselves off
earnings from Central Bank debt and return to their traditional
role as lenders to individuals and industry -- at a time when the
economy is in deep recession, the report relays. Argentina's gross
domestic product contracted 5.1 percent in the first quarter from
the year earlier and probably extended the decline in the next
three months, the report notes.
For lenders to resume their rally, "there has to be a economic
rebound that will push banks to start lending to the private
sector," said Juan Jose Vazquez, head of research at Cohen SA in
Buenos Aires, the report says.
Not only does lending need to grow, it needs to grow a lot as it's
coming off a low base, the report discloses. Traditional loans
made up roughly a third of the assets of Argentina's four largest
private lenders in the fourth quarter of 2023, compared with at
least 55 percent a decade ago, during the same period, the report
notes.
Falling Rates
The rally in shares earlier this year came after the industry
reported roughly 2.42 trillion pesos (US$2.65 billion) in net
income in its best first quarter since 2010, according to Buenos
Aires-based consultancy Econviews and data from Argentina's Central
Bank, the report relays.
Returns on public securities, including inflation-linked notes,
made up some 47 percent of Grupo Galicia's banking division's total
net income in the quarter, according to company data, the report
discloses.
But analysts and traders warn that the easy money that drove those
earnings is now over, the report says.
The central bank has slashed the key interest rates by 93
percentage points to 40 percent since December, the report relays.
At the same time, five months of budget surpluses have crimped
supply, the report notes.
Index-linked treasury notes also face limited upside, as President
Javier Milei's team manages to slow the pace of monthly inflation,
the report discloses. Consumer prices rose 4.2 percent in May,
compared with 8.8 percent the month before and a whopping 25.5
percent in December, the report says.
What's more, Argentine authorities said that they will phase out
the one-day repo notes, replacing them with treasury notes as a
tool for handling monetary policy, the report relays.
Back to Lending
The government now hopes that banks pivot toward consumer loans,
such as mortgages, which haven't been available for several years
in Argentina, the report relays.
"For the past 20 years, the only thing that banks have done is to
take people's deposits and lend them to the public sector, either
to the Central Bank or to the Treasury," Economy Minister Luis
Caputo said during remarks to reporters, the report notes. "We are
so accustomed to this that we hardly imagine that banks should
actually be banks that lend to the private sector, which is what
we're aiming for," he added.
Buenos Aires Times relays that Wall Street strategists and banks
are bullish on the outlook. Bank of America analysts expect loan
growth for the sector to take off in 2025. Grupo Galicia officials
said during a May earnings presentation that they expect loans to
grow around 30 percent in real terms by the end of the year, the
report says. Supervielle also forecasts lending to expand, telling
analysts that it plans to maintain its focus on corporate over
retail loans, the report discloses.
To be sure, analysts and strategists also tie market optimism over
banks to Milei's rise to power, the report notes. ADRs for BBVA,
Galicia, Macro and Supervielle posted returns of at least 120
percent since the firebrand libertarian won in a November vote, the
report relays.
Milei wooed investors with pledges to stabilise a cratering
economy, reverse years of budget deficits and attract back the
billions of dollars Argentines hold abroad, the report discloses.
Many investors remain optimistic he will achieve just that,
reviving the credit market and sending bank stocks back up. But it
is likely to be a rocky ride, the report notes.
"If banks manage to shift the share of assets exposed to the public
sector and begin to lend to the private sector, that will be a very
gradual process," said Cohen's Vázquez. "I don't see it being
immediate," 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.
TELECOM ARGENTINA: Fitch Affirms 'B-/B' LongTerm IDRs
-----------------------------------------------------
Fitch Ratings has affirmed Telecom Argentina S.A.'s ratings,
including its Long-Term Foreign Currency (FC) Issuer Default Rating
(IDR) at 'B-', Long-Term Local Currency (LC) IDR at 'B', and
instrument ratings at 'B'/'RR3'. The Rating Outlook is Stable.
These ratings reflect Fitch's expectation that Telecom Argentina
will be able to continue mitigating inflationary pressures while
maintaining its strong market position. Despite the macroeconomic
instability in Argentina, where the majority of its operations and
assets are located, the company has historically managed to pass
most inflation effects onto consumers, thereby alleviating some
macroeconomic concerns.
Telecom Argentina's robust financial and operational profile is
supported by its strong cash flow generation, relatively
conservative capital structure, and competitive strengths in both
fixed and mobile services.
KEY RATING DRIVERS
Country Ceiling Limits Foreign Currency Ratings: Telecom
Argentina's Long-Term FC IDR is limited by Argentina's 'B-' Country
Ceiling. Fitch assesses that any default by the company would
likely stem from transfer and convertibility restrictions rather
than a significant decline in its operational performance.
Strong Operator, Weak OE: Telecom Argentina is the leading
integrated operator in the country, holding strong competitive
positions in both fixed and mobile services. The company's robust
product offerings and brand recognition bolster its ability to
generate strong cash flow. Historically, Telecom Argentina has
managed the volatile macroeconomic environment by adjusting service
prices to counteract rising operational costs, thus maintaining
solid credit metrics. However, macroeconomic risks remain, as
demonstrated by the sharp devaluation of the Argentine peso in
December 2023, which temporarily increased the company's leverage.
Fitch anticipates appreciation of the peso in real terms in 2024,
allowing leverage to revert to its long-term trend.
Price-Setting Independence: In April 2024, the Argentine government
repealed a prior policy that regulated the prices of internet,
mobile phone, and cable television services, granting telecom
service providers the freedom to set their own tariffs. Since March
2023, Telecom Argentina has been raising prices monthly to keep
pace with accelerated inflation. Fitch expects the company to
continue adjusting prices as necessary to mitigate inflationary
pressures, maintaining an EBITDA margin around 25% over the rating
horizon.
Financial Profile Comparable to Investment-Grade Peers: Telecom
Argentina's financial structure is among the strongest of
Fitch-rated telecom companies in the region, characterized by a
conservative capital structure and positive cash flow. Fitch
projects the company's net debt/EBITDA ratio to remain between 1.8x
and 2.4x over the rating horizon, aligning with stronger
investment-grade operators in the region. However, fluctuations in
the Argentine peso introduce volatility to the company's leverage
profile. Fitch expects Telecom Argentina to refinance upcoming
maturities as needed and maintain debt levels around USD 2.2
billion.
DERIVATION SUMMARY
The speculative ratings of Telecom Argentina compare with those of
other Argentine issuers YPF S.A. (CCC-) and Arcor S.A.I.C.
(B/Stable) that have solid business and capital structures but
whose ratings are restricted by the difficulties of operating in
Argentina. Arcor's ratings are higher than those of YPF and Telecom
Argentina due to its operations in Brazil and the cash it holds
abroad in its foreign subsidiaries.
The company's business and financial profile are in line, or
superior to, regional IG telecom operators including Telefonica
Moviles Chile S.A. (BBB-/Stable) and Empresa Nacional de
Telecomunicaciones S.A. (BBB-/Stable). Telecom Argentina has either
a more conservative capital structure, or a stronger market
position, or both. Ultimately, both the Foreign Currency (FC) and
Local Currency (LC) IDR of Telecom Argentina will continue to be
driven by the difficulties of the Argentine OE.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
Include:
- The company is able to pass on the majority of inflation to
consumers each year;
- Net leverage trending near 2.0x;
- EBITDA margins around 25-26%;
- Capital intensity around 17%-18%.
RECOVERY ANALYSIS
For going-concern EBITDA, Fitch assumes that the company would be
unable to pass on a significant portion of the projected inflation
of Argentina, while the company's expenses would rise at inflation.
This scenario implies a significant drop in EBITDA margins to 20%.
Fitch uses a 4x multiple, lower than the average telecom Enterprise
value/EBITDA multiple of 5x-7x, to account for a discount for
Argentine assets.
Although Fitch's recovery methodology suggests a 'RR2' recovery for
Telecom Argentina, the methodology also applies a standard cap of
'RR4' for instrument ratings in Argentina. Fitch applies
country-specific caps to instrument ratings for a given
jurisdiction, reflecting Fitch's view that average recoveries could
be lower in regimes that are debtor-friendly and/or have weak
enforceability, and higher in regimes that are creditor-friendly
and/or have strong enforceability. The caps limit the assignment of
higher Recovery Ratings for obligations of issuers that are
incorporated, or whose assets or cash flows are located in less
creditor-friendly jurisdictions.
However, per Fitch's Country Specific Treatment of Recovery
Criteria, when an issuer actually enters a distressed or defaulted
state, such as Argentina (CC), Fitch can assign a higher recovery
rating for an issuer instrument if it believes that recoveries in
the individual case will be consistent with a higher Recovery
Rating, as is in this case. Therefore, the recovery rating for
Telecom Argentina's senior unsecured notes is assessed at 'RR3'.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Telecom Argentina's FC IDR is bound by Argentina's 'B-' Country
Ceiling; therefore, an upgrade of the Argentine sovereign rating
and concurrent upgrade of the Argentine Country Ceiling would
result in an upgrade;
- Telecom Argentina's LC IDR is constrained by the difficult
Argentine OE; therefore, a decrease in macroeconomic turmoil could
result in an upgrade.
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Telecom Argentina's FC IDR is bound by Argentina's 'B-' Country
Ceiling; therefore, a downgrade of the Argentine sovereign rating
and concurrent downgrade of the sovereign's Country Ceiling would
result in a downgrade.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Telecom Argentina maintains sufficient
liquidity, with ARS466 billion in cash available against ARS718
billion in short-term debt as of March 2024. The company also
possesses ample borrowing capacity in local capital markets. The
majority of Telecom Argentina's cash and debt is denominated in
U.S. dollars.
While Telecom Argentina has smaller operations outside of Argentina
in Paraguay, Uruguay, Chile, and the U.S., Fitch does not view
these operations as substantial enough to bypass the Argentine
Country Ceiling (B-).
Telecom Argentina's refinancing risk is deemed manageable. The
company's liquidity and financial flexibility are bolstered by
strong cash flow, which Fitch expects to sufficiently cover capital
expenditures. Telecom Argentina also has a long-standing track
record of refinancing and rolling over bank debt and loans from
international agencies, such as the International Finance
Corporation.
Fitch anticipates that Telecom Argentina will maintain a debt level
of approximately USD2.2 billion over the coming years. The
company's ability to transfer inflation costs to consumers has been
vital in sustaining its cash flow.
ISSUER PROFILE
Telecom Argentina S.A. is the largest integrated telecommunications
services provider in Argentina, offering broadband, pay TV and
fixed and mobile telecommunications services throughout the
country. The company also has smaller operations in Paraguay,
Uruguay, Chile, and the U.S.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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 Recovery Prior
----------- ------ -------- -----
Telecom Argentina S.A. LT IDR B- Affirmed B-
LC LT IDR B Affirmed B
senior unsecured LT B Affirmed RR3 B
===========
B R A Z I L
===========
BRAZIL: Market Position Halved in Global Index
----------------------------------------------
The Rio Times Online reports that the Brazilian stock market's
19.5% drop in the Ibovespa may lead to its reduced role in the MSCI
Emerging Markets Index.
This rebalancing is expected in mid-August and may negatively
impact Brazilian investments, according to The Rio Times Online.
Currently, Brazil holds a 4.66% share in the MSCI EM, significantly
lower than its past share of over 10%, the report notes.
China and India, however, have seen their shares increase to 35-40%
and 10-12%, respectively, the report relays.
Also smaller countries, like South Korea and Taiwan, each hold more
than 10% of the market share, the report discloses.
The rebalancing aims to reflect the performance and sector weight
of emerging markets accurately, the report relays.
Experts predict Brazilian companies will lose ground, facing a
tough outlook for the second half of the year, the report
discloses.
Brazilian firms are losing market value, especially in dollar
terms, while companies in other emerging markets perform better,
the report notes.
For instance, China's Shanghai Index has risen about 1% in 2024,
and India's NIFTY 50 has gained over 11%, the report relays.
This trend suggests Brazilian assets will shrink in comparison as
the index adjusts, the report says.
Marcelo Vieira, head of equities at Ville Capital, explains the
process: "The rebalancing keeps the index aligned with market
performance, scope, and sector weights," the report notes.
In addition to market value loss, Brazilian trading volumes have
decreased, the report relays. The Ibovespa has struggled with low
liquidity since the year's start, with B3's volume down 27%, the
report says.
Commodity companies like Vale (VALE3) have had a negative 2024,
while tech firms, dominant in China, are on the rise, the report
discloses.
The growing influence of passive management adds to these
challenges. ETFs that replicate the MSCI Emerging Markets Index,
such as iShares, have significant capitalizations, influencing
global investment flows, the report relays.
Passive management is gaining traction over active management due
to similar performance and lower fees, the report notes.
In 2023, passive funds accounted for over 53% of U.S.-domiciled
assets, potentially reaching 60% by 2024, the report says.
Changes in the index's allocation impact all countries involved,
leading to resource inflows or outflows accordingly, the report
relays.
By the end of June, B3 recorded a foreign outflow exceeding R$40
($7.2) billion, highlighting the broader implications of these
market dynamics, the report adds.
Share in MSCI EM Index
-- China: Roughly 35 -40%
-- India: Around 10-12%
-- South Korea: Approximately 12-14%
-- Taiwan: Around 12-13%
-- Brazil: About 4-5%
-- South Africa: Roughly 3-4%
-- Russia: Previously around 3-4% (Note: Russian stocks may
currently have a lower or zero share due to geopolitical
issues and sanctions.)
-- Mexico: Approximately 2-3%
-- Thailand: About 2-3%
-- Malaysia: Roughly 1-2%
-- Indonesia: Around 1-2%
-- Turkey: Approximately 0.5-1%
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).
OEC SA: Fitch Lowers LongTerm IDR to 'D' & Then Withdraws Rating
----------------------------------------------------------------
Fitch Ratings has downgraded OEC S.A.'s Foreign and Local Currency
Long-Term Issuer Default Rating (IDR) to 'D' from 'CC'. Fitch has
also downgraded OEC S.A.'s National Long-Term Rating to 'D(bra)'
from 'CC(bra)'. Fitch has additionally affirmed OEC Finance Limited
senior secured notes at 'C' that are fully and irrevocably
guaranteed by OEC. The Recovery Rating (RR) of the bonds was
revised to 'RR6' from 'RR5', as OEC is including the HoldCo
Instrument in the reorganization. Fitch has simultaneously
withdrawn all ratings for commercial reasons.
The downgrade to 'D' and 'D(bra)' follows a court's decision to
grant judicial reorganization for OEC S.A. on June 27, 2024. The
company seeks to restructure USD4.6 billion in financial and
operational debt.
Fitch has withdrawn all ratings for commercial reasons.
KEY RATING DRIVERS
Key Rating Drivers are not applicable as the ratings have been
withdrawn.
DERIVATION SUMMARY
Derivation Relative to Peers is not applicable as the ratings have
been withdrawn.
KEY ASSUMPTIONS
Key Assumptions are not applicable as the ratings have been
withdrawn.
RECOVERY ANALYSIS
Assumptions
- The recovery analysis assumes that OEC would be liquidated in a
bankruptcy rather than considered a going concern;
- Fitch assumed a 10% administrative claim.
Going-Concern Approach
Fitch excluded the going concern approach due to expectations of
low EBITDA in the foreseeable future. In a scenario which OEC
starts reporting substantial positive EBITDA, the going concern
will be the preferred approach as Brazilian judicial recovery
legislation tends to favor the maintenance of the business to
preserve direct and indirect jobs.
Liquidation Approach
Fitch includes 75% of the accounts receivables, 50% of the
inventory and net PP&E reported in December 2023 when calculating
the liquidation value. The allocation of value in the liability
waterfall corresponds to a 'RR6' Recovery Rating for the senior
unsecured notes and other bank debt of USD4.6 billion. The 'RR6'
Recovery Rating reflects poor recovery prospects.
RATING SENSITIVITIES
Rating Sensitivities are not applicable as the ratings have been
withdrawn.
LIQUIDITY AND DEBT STRUCTURE
Liquidity and Debt Structure are not applicable as the ratings have
been withdrawn.
ISSUER PROFILE
Brazilian-based OEC is one of the largest Latin American
contractors, operating in four countries mostly in the Americas and
Africa. OEC Finance Limited is the investment vehicle that issues
the bonds that are irrevocably guaranteed by OEC.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG CONSIDERATIONS
OEC S.A. has an ESG Relevance Score (RS) of '4' for Management
Strategy, as it relies mostly on winning sizable contracts in
coming years, which has a high degree of uncertainty and depends on
economic growth, funding availability, client financials and
competition. This has a negative effect on the credit profile and
is relevant to the ratings in conjunction with other factors. This
RS could be lowered to '3' if the company manages to win and
execute sizable contracts without sacrificing profitability.
OEC S.A. has an ESG Relevance Score of '4' for Group Structure due
to its complexity with participations within sister companies,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors. Fitch sees the
provisions made by the company to simplify related-party
transactions with other entities of the Novonor Group as
constructive, and a lower relevance score would require a more
tangible simplification of the group structure.
OEC S.A. has an ESG Relevance Score of '4' for Governance Structure
due to and qualified financial statements in the past, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors. OEC has made progress
since car wash investigations began in 2014. Plea bargain
agreements have been signed, and most of the top management was
replaced. Stringent compliance rules and internal controls were
implemented to guide stakeholder relationships and to avoid
repeating misconduct practices. Lowering this ESG.RS to '3' would
require more concrete steps such as publishing unqualified
financial statements on a sustainable basis.
OEC S.A. has an ESG Relevance Score of '4' for Financial
Transparency due to consolidation of assets with minority economic
stake, and several partnerships that retain cash before it reaches
the parent, which 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.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
OEC Finance Limited
senior unsecured LT C Affirmed RR6 C
senior unsecured LT WD Withdrawn C
OEC S.A. LT IDR D Downgrade CC
LT IDR WD Withdrawn D
LC LT IDR D Downgrade CC
LC LT IDR WD Withdrawn D
Natl LT D(bra) Downgrade CC(bra)
Natl LT WD(bra)Withdrawn D(bra)
XP INC: Fitch Assigns 'BB' Final Rating on $500MM Unsecured Notes
-----------------------------------------------------------------
Fitch Ratings has assigned a final rating of 'BB' to XP Inc's.
USD500 million senior unsecured notes. The notes have a five-year
tenor with a 6.75% annual interest rate.
The net proceeds will be used to finance and/or refinance, in whole
or in part, existing issuances and also to support the entity's
general corporate purpose.
The final rating is in line with the expected rating that Fitch
assigned to the proposed debt on June 20, 2024. Please see "Fitch
Assigns Expected Ratings to XP Inc's Senior Notes'".
KEY RATING DRIVERS
The rating on the notes corresponds to XP Inc.'s Long-Term Local
and Foreign Currency Issuer Default Rating (IDR; BB/Stable) and
ranks equal to its other senior unsecured debt. XP's 'BB' Long-Term
Local and Foreign Currency IDRs are driven by its Standalone Credit
Profile (SCP), which considers the company's strong franchise and
business model, coupled with a robust financial profile.
XP Inc. has a solid business model with a strong retail brokerage
franchise. Additionally, its investment platform has evolved into a
full financial solution encompassing complementary products for
both retail and corporate clients such as insurance, banking and
retirement plans. XP Inc.'s solid execution reflects its ability to
generate sustained growth despite domestic challenges.
XP Inc.'s ratings also consider its strong management, corporate
governance and risk management framework, a strong asset quality,
resilient profitability, robust funding structure and increasing
but still adequate leverage ratios.
For more information, please refer to XP´s latest RAC "Fitch
Affirms XP Inc.'s IDRs at 'BB'; Affirms Banco XP National Ratings;
Outlook Stable".
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Debt rating downgrades would be dependent on downgrades of XP
Inc.'s IDRs.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Debt rating upgrades would be dependent on upgrades of XP Inc.'s
IDRs.
Entity/Debt Rating Prior
----------- ------ -----
XP Inc.
senior unsecured LT BB New Rating BB(EXP)
===============
C O L O M B I A
===============
AVIANCA GROUP: Plans to Confidentially File for U.S. IPO
--------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Avianca Group
plans to confidentially file for an initial public offering in the
U.S., the holding company for the Colombian airline said.
The Bogota-based airline, with over 100 years of operation since
1919, is moving ahead with its listing more than two years after it
emerged from bankruptcy, according to globalinsolvency.com.
Avianca - which serves domestic markets of Colombia, Ecuador and
Central America — was one of the major Latin American airlines
that filed for bankruptcy during the pandemic, hurt by a downturn
in travel demand, the report relays.
The airline, which had filed for chapter 11 bankruptcy in May 2020
after it failed to meet a bond payment deadline, exited bankruptcy
proceedings in December 2021, the report discloses.
In May 2022, Avianca and Brazilian carrier Gol struck an agreement
to combine under a single leadership named Abra Group, the report
says.
The timing and execution of the IPO are subject to market
conditions, Avianca said, the report notes.
Avianca, which is the second-oldest airline in the world currently
in operation, swung to a profit of $13 million in the first
quarter, as it transported 9.3 million passengers, a 37.5% jump
compared to a year earlier, the report adds.
As reported in the Troubled Company Reporter-Latin America on
Feb. 12, 2024, S&P Global Ratings withdrew the 'B-' issuer credit
rating on Avianca Group International, as well as the 'B' issue
rating on Avianca Midco 2's senior secured debt (with expected
substantial recovery prospects of 85%), at the company's request.
The outlook was stable at the time of the withdrawal.
The issuer credit and issue ratings on Avianca's subsidiary
LifeMiles remain unchanged at 'B-'.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Tax Reform to Boost Economic Growth
-------------------------------------------------------
Dominican Today reports that Minister of Economy, Planning, and
Development Pavel Isa Contreras emphasized that tax reform should
be viewed as part of a broader set of reforms aimed at sustaining
and accelerating economic growth and enhancing its impact on public
well-being.
Speaking at the "Discussion Forum on Tax Reform" organized by the
Santo Domingo Institute of Technology (INTEC), Isa Contreras
explained that tax reform must generate sufficient resources to
ensure macroeconomic stability and enable the state to provide
essential public goods for development and well-being, according to
Dominican Today.
"We must aim to sustain or increase economic growth and promote
well-being for more people through better jobs and public
services," said Isa Contreras, the report notes. He also noted
that the reform should help reduce inequalities and strengthen
state effectiveness," the report relays.
"Even if the tax reform is not progressive, other reforms must be
powerful enough to reduce inequalities," he stressed, 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 to Conduct Full Assessment of Beryl's Impact
---------------------------------------------------------
Karena Bennett at Jamaica Observer reports that senior deputy
governor of the Bank of Jamaica (BOJ), Wayne Robinson, said the
central bank will use the next few weeks to conduct a full
assessment of damage associated with Hurricane Beryl before taking
a position on any adjustments to monetary policy.
Hurricane Beryl impacted Jamaica, leaving at least two dead and
much of the island without electricity. Residents have also
reported torn off roofs, downed trees, and impassible roadways due
to flood waters, according to Jamaica Observer.
"Of course, as you can appreciate, the storm is of major concern to
us, but we are not yet able to take a position. We know that
several areas, particularly in the west, were badly affected, but
we have to do a proper assessment first, and thereafter we will be
able to take a position or provide a statement," Robinson told the
Jamaica Observer.
The assessment would be critical for the BOJ, with it signalling
just that it could be ready to start cutting interest rates that
have been held at 7 per cent for the last three years to help
combat runaway inflation that reached 11.8 per cent in April 2022
but has since retreated to the midpoint of its 4 per cent to 6 per
cent target range for the last three months, the report notes.
Destruction or damage caused to farms due to hurricanes in the past
has led to price spikes for agricultural commodities as shortages
emerge, the report relays. BOJ, with a keen eye on the impact that
weather events could have on its fight to keep inflation low, said
after its June 26 and 27 meeting that "the potential for
worse-than-anticipated weather conditions" was amongst reasons
cited for keeping its policy rate steady, at least until its August
meeting, the report relays.
How Beryl will impact its decision is left to the assessment of the
damage in coming days, the report notes.
"We have to meet with the government ministries and agencies to get
a proper assessment of the level of damage, but we are concerned .
. . " Robinson told BusinessWeek, the report discloses.
Central banks generally need to carefully assess the economic
impact of hurricanes since such natural disasters can impact the
economy in several ways, the most significant being economic
disruption based on the level of damage to infrastructure,
businesses, homes, and agriculture. Such disruption can lead to a
decrease in economic activity, affecting gross domestic product
growth, the report relays.
Based on the damage, central banks may need to adjust their
monetary policy to support economic recovery, which means lowering
interest rates to stimulate spending and investment the report
notes.
On the other hand, the BOJ may need to increase or hold rates
steady for a longer period, as the destruction of goods and
disruption of supply chains can lead to shortages and price
increases for certain items, causing inflationary pressures the
report discloses.
Further, any increase in government spending for disaster relief
and reconstruction efforts following a hurricane can influence the
central bank's decisions on interest rates and other monetary tools
to balance inflation and support economic stability the report
relays. Major hurricanes can also lead to financial instability if
banks and other financial institutions face significant losses due
to property damage and non-performing loans the report says. The
BOJ may need to provide liquidity support to ensure the stability
of the financial system the report discloses.
The economic impact of hurricanes can also affect a country's
exchange rate by influencing trade balances and investor confidence
the report relays. Ultimately, central banks may need to intervene
in the foreign exchange market or adjust interest rates to
stabilise the currency 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.
JAMAICA: Financially Protected in Case of Hurricane Damage
----------------------------------------------------------
RJR News reports that Finance Minister Dr. Nigel Clarke says
Jamaica has financial safeguards in place, in the event of
significant damage from Hurricane Beryl.
In a media release, Dr. Clarke said the Jamaican economy is
fiscally and economically resilient to withstand natural disaster
occurrences, according to RJR News.
He said the country has a credit contingent claim with the
Inter-American Development Bank, the report notes. It also has
reinsurance arrangements with the Caribbean Catastrophe Reinsurance
Facility and has just completed the placement of a catastrophe
bond, the report relays.
"Each of these instruments differs in the severity of natural
disaster that would trigger their release. In a worst-case
scenario the credit contingent claim with IDB would deliver in
excess of $45 billion. In a worst-case scenario, our catastrophe
bond would deliver $23 billion. But those are for worst-case
scenario Category 4, Category 5 direct hit of hurricanes," he
added.
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.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: Poultry Sector Beset by Institutional Problems
-----------------------------------------------------------------
Trinidad and Tobago Newsday reports that chicken is such a staple
of the Trinidad and Tobago diet that it's not surprising that
problems with production would be a front-burner issue for
stakeholders and government.
Chicken production is one area in which Trinidad and Tobago has
consistently come close to agricultural self-sufficiency, with
local production contributing three-quarters of the consumption of
one million chickens each week, according to Trinidad and Tobago
Newsday.
Despite that, the business is frequently rocked by institutional
problems, the report notes.
Poultry farmers are being described by Sudesh Ramkissoon, president
of the Broiler Growers Association, as "trapped," caught between
the debts incurred in creating and running their farms and the slow
return on their investment with contracted farmers chafing under a
90-day payment regimen, the report relates.
Mr Ramkissoon believes second and third-generation farmers see no
future in the field, particularly in the face of moves by chicken
processors to create their own competing farms, the report
discloses.
Running a chicken farm demands no chicken-feed operation.
Traditional pens are estimated to run between $300,000 and
$400,000, while modern tunnel-ventilated pens cost up to $2
million, the report says.
In some ways, the local chicken industry is a victim of its own
success. Locally raised birds are preferred for even the simplest
meals, and every cook seems to have developed a sense for an
acceptable quality of chicken meat that keeps the industry on its
toes, the report relays.
For even small-scale farmers, that means using quality feeds and
having access to running water, because truck-borne supplies are
inadequate for raising chickens to meet factory and market demands,
the report notes.
If the industry is drifting to factory farms and consolidation of
the industry, it would be sensible to think through the
consequences of those changes beyond economies of scale, the report
discloses.
And big producers are big. Arawak and Company, for instance, has
been in the business for more than 25 years and produces more than
19 million birds for consumption annually, while employing more
than 12,000 people, the report relays.
In 2022, Nutrimix opened a hatchery that cost the company $60
million to increase the efficiency of bringing hundreds of
thousands of eggs to chicks for their contract farmers,
But should factory farms be encouraged to grow even larger than
they are today?
Despite the Agriculture Minister's assertion in May that local
chickens enjoy "VIP treatment," the reality is that factory farming
keeps animals destined for slaughter in unnatural conditions that
can increase the risk of infection. Factory chickens live for just
six weeks, a fraction of their natural lifespan, the report
discloses.
Pitting small poultry farmers against the industrial rearing of
chickens will always lead to staggering imbalances that weigh
heavily against the bottom line of mom-and-pop entrepreneurs and
stifle opportunities for niche farming such as free-range chicken
production, the report notes.
These are not easy problems to solve, but new models of agriculture
must be explored to improve the viability of small and medium-sized
farming operations, the report relays.
Raising Trinidad and Tobago's favorite protein source shouldn't
only be the work of conglomerate-scale producers, the report adds.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
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* * * End of Transmission * * *