/raid1/www/Hosts/bankrupt/TCRLA_Public/240827.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, August 27, 2024, Vol. 25, No. 172
Headlines
A R G E N T I N A
ARGENTINA: Economy Contracted in June as Recession Grinds On
B R A Z I L
BRAZIL: Economy Expands 2% in Lula's Second Year
C H I L E
LATAM AIRLINES: S&P Upgrades ICR to 'BB-', Outlook Positive
C O L O M B I A
GRAN TIERRA: Fitch Puts 'B' LongTerm IDR on Watch Positive
H A I T I
HAITI: CDB OKs US$5M Grant to Improve Access to Electricity
J A M A I C A
JAMAICA: BOJ Projects Stable Inflation Over Short to Medium Term
JAMAICA: Leaders Welcome BOJ's Decision to Cut Interest Rates
S U R I N A M E
SURINAME: Reaches Deal with IMF to Access SDR46.7 Million
V I R G I N I S L A N D S
HECTOR DAO: Files for Chapter 15 Bankruptcy in U.S.
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A R G E N T I N A
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ARGENTINA: Economy Contracted in June as Recession Grinds On
------------------------------------------------------------
Patrick Gillespie at Bloomberg News reports that Argentina's
economy unexpectedly contracted in June, shrinking for the fourth
time in six months as a deep recession weighs down early signs of
recovery.
The report says economic activity dropped 0.3 percent in June from
May, compared with analysts' expectations for 0.4 percent growth.
From a year ago, activity fell 3.9 percent, according to government
data published Wednesday, Aug. 21, relates the report. Almost all
sectors in Argentina's economy posted annual declines except for
farming, fishing and mining, Bloomberg News adds.
According to Bloomberg News, Argentina's economy is showing
incipient signs of recovery from recession, a turnaround that would
be key for President Javier Milei's bid to build momentum before
next year's midterm elections, Bloomberg News discloses. Wage
growth has edged above inflation for three straight prints on a
monthly basis through June. Consumer spending and the construction
sector both posted gains in recent months, Bloomberg News says.
Those gains, however, are far overshadowed by the towering losses
Argentina's economy suffered in the months prior as it entered
recession with inflation currently over 263 percent, Bloomberg News
relates. Wages, retail sales and blue-collar industries are all
still down so far this year. Economists surveyed by Argentina's
Central Bank estimate gross domestic product will contract 3.7
percent in 2024, adds the report.
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 Aug. 8, 2024, affirmed its 'CCC/C' foreign
and local currency sovereign credit ratings on Argentina. S&P also
affirmed its 'raB+' national scale rating on the country. The
outlook on the long-term ratings remains stable. S&P's 'CCC'
transfer and convertibility assessment for Argentina remains
unchanged.
S&P said the stable outlook on the long-term ratings balances the
risks posed by pronounced economic imbalances and other
uncertainties with recent progress in making fiscal adjustments,
reducing inflation, and undertaking structural reforms to address
long-standing microeconomic weaknesses that have contributed to
poor economic performance for many years.s 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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BRAZIL: Economy Expands 2% in Lula's Second Year
------------------------------------------------
Richard Mann at Rio Times Online reports that during President
Lula's second year, Brazil's economy expanded by over 2%, a rate
that would maybe please developed nations but fell short of
domestic expectations.
The government aims for nearly 3% GDP growth in 2024, according to
Rio Times Online. However, financial forecasts predict a
conservative 2.23% increase, the report notes.
The latest Focus survey provides this forecast. In 2023, Brazil's
GDP growth reached 2.9%. Robust private consumption and favorable
exports drove this growth, the report relays.
Employment and Industrial Production
According to Rio Times Online, unemployment in Brazil fell to 6.9%
in the June quarter. This marks the lowest rate since 2014, the
report recalls. A record 101.8 million people found employment, the
report notes.
The industrial production index showed positive trends, the report
says. It increased from 48.7 points in June to 54.3 in July. This
indicates a rebound in industrial activity, the report discloses.
Inflation and Monetary Policy
Inflation remains a concern for Brazil, notes the report.
Projections suggest it will rise above 4.2% by year-end. The
Central Bank's benchmark interest rate remains elevated, the report
relays.
Interest rates are projected at 10.5% by the end of 2024, possibly
dropping to 10% by 2025, with further cuts to 9% in later years,
the report discloses.
High interest rates challenge business expansion and job growth,
the report relays. President Lula opposes high interest rates,
despite the Central Bank's decisions to maintain them.
Recent discussions suggest there might even be a need to raise them
further, the report relays.
Public Finances and Fiscal Management
Rio Times Online relates that Brazil's fiscal health faces
scrutiny. A general government primary deficit reached 2.3% of GDP
in 2023. This increased from a surplus of 1.2% in 2022, the report
relays.
As public debt nears the 80% of GDP threshold, robust fiscal
management is essential for stability, notes the report.
Structural challenges include a complex tax system and low savings,
the report discloses. Limited global market integration also poses
challenges.
Political Dynamics and Economic Strategy
The report relates that political dynamics heavily influence
Brazil's monetary policy. Gabriel Galipolo's potential nomination
as Central Bank president illustrates this. He has ties with
Finance Minister Fernando Haddad. This underscores political
underpinnings in economic strategies, the report discloses.
According to Rio Times Online, effective Central Bank management is
vital for inflation control. Sound fiscal management remains a key
responsibility for President Lula.
Brazil's Role in the BRICS and Global Alliances
Brazil strategically involves itself in the BRICS alliance. This
includes Russia, India, China, and South Africa.
Diversifying global alliances remains a strategic move, the report
discloses. Economic growth within BRICS largely comes from China
and India. Brazil maintains close ties with China, its largest
trading partner.
The New Development Bank provides financial assistance to Brazil,
the report notes. This supports various development projects.
Conclusion
Brazil's economic landscape under President Lula shows moderate
growth, the report relates. Unemployment declines, yet inflation
challenges persist, the report says.
Moreover, the government focuses on fiscal management and strategic
alliances, the report discloses. These will shape Brazil's
economic future.
Structural challenges exist, but opportunities for growth remain,
the report relates. Reforms and strategic partnerships enhance
productivity and sustainability, 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.
As reported in the TCR-LA on May 6, 2024, Moody's Ratings affirmed
the Government of Brazil's long-term issuer and senior
unsecured bond ratings at Ba2, senior unsecured shelf rating at
(P)Ba2 and changed the outlook to positive from stable. Moody's
assesses thatBrazil's real GDP growth prospects are more robust
than in the pre-pandemic years, supported by the implementation of
structural reforms over multiple administrations, as well as the
presence of institutional guardrails that reduce uncertainty
around future policy direction. The outlook change to positive is
underpinned by Moody's assessment that more robust growth combined
with continued, albeit gradual, progress towards fiscal
consolidation, may allow Brazil's debt burden to stabilize.
However, there are risks to the government's execution of
continued fiscal consolidation.
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-TermForeign-Currency Issuer Default Rating (IDR) at 'BB' with
a StableOutlook. 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.
DBRS Inc., on August 15, 2023, upgraded Brazil's Long-TermForeign
and Local Currency - Issuer Ratings to BB from BB (low).At the same
time, DBRS Morningstar confirmed Brazil'sShort-term Foreign and
Local Currency - Issuer Ratings at R-4.The trend on all ratings is
Stable (March 2018).
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C H I L E
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LATAM AIRLINES: S&P Upgrades ICR to 'BB-', Outlook Positive
-----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Latam
Airlines Group S.A. to 'BB-' from 'B+'.
S&P said, "At the same time, we raised our issue-level rating on
the company's secured debt to 'BB+' from 'BB'. We continue to
assign the '1' recovery rating (rounded estimate: 95%) on the
notes.
"The positive outlook reflects our expectation that the company
should be able to maintain relatively stable profitability, with
EBITDA margins above 20% and funds from operations (FFO) to debt of
well above 30% over the next couple of years.
"Passenger travel demand remains healthy, which--coupled with
rational supply--has kept yields high and underpins Latam's
earnings and cash flow. We expect yields will drop in the next two
years from record levels in 2023 but remain healthy and support
top-line growth.
"Despite subdued economic growth, we expect passenger travel demand
to continue to grow in the still underserved region of Latin
America. Furthermore, supply will likely remain constrained amid
delays in aircraft manufacturer deliveries, the exit of competitors
in some markets, and because some of Latam's competitors are still
focused on enhancing cash flow generation or improving their
capital structures.
"Furthermore, we expect the company will generate $600 million-$700
million of free operating cash flow (FOCF) in 2024 and close to
$1.0 billion in 2025.
"As a result, we estimate the company's net FFO to debt will be
close to 40% and its S&P Global Ratings-adjusted net debt to EBITDA
will be 1.7x-2.0x in 2024 and 2025. These measures are stronger
than our previous forecasts and consistent with improved credit
quality.
"We expect Latam will receive about 15 aircraft in 2024 and over 25
in 2025 to grow and renew part of its fleet with more efficient
aircraft. Latam has lease contracts to receive both narrow and
widebody planes in the next two years but with a greater focus on
narrowbody for domestic and intra-region business.
"We expect these deliveries to boost the company's capacity by
about 25% between year-end 2023 and year-end 2025. On the other
hand, the larger fleet and increased maintenance needs will
gradually increase lease payments and capex. However, we envision
healthy operational performance, so we continue to expect positive
free operating cash flow in the next two years."
During chapter 11 proceedings, Latam cut its debt balance by about
35%. This left the company with improved credit metrics now that
the business has fully recovered to pre-pandemic levels.
Latam's net adjusted debt (including operating leases) stood at
about $5.3 billion as of June 2024, down from $9.5 billion in
December 2020. S&P said, "We expect the company to largely
refinance its post-emergence capital structure in 2024 and 2025
with better conditions and lower costs through 2025. Specifically,
we expect the company to refinance its term loan B and five-year
notes by the end of the year. Additionally, we believe the company
could gradually pay down some debt using its free cash flow."
On July 15, Latam amended its revolving credit facilities (RCFs),
extending their maturities to 2029 and increasing the total amount
of both facilities to $1.55 billion from $1.1 billion. S&P believes
this provides some cushion against unexpected liquidity events and
adds to an already strengthened cash position and our expectation
of sound free cash flow in the next two years.
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C O L O M B I A
===============
GRAN TIERRA: Fitch Puts 'B' LongTerm IDR on Watch Positive
----------------------------------------------------------
Fitch Ratings has placed the following ratings for Gran Tierra
Energy Inc. (GTE) and Gran Tierra Energy International Holdings Ltd
(GTE International) on Rating Watch Positive (RWP):
Gran Tierra Energy Inc.:
- Long-Term Foreign and Local Currency Issuer Default Ratings
(IDRs) 'B';
- USD300 million senior unsecured notes due 2027 'B'/'RR4';
- USD588 million senior secured notes due 2029 'B'/'RR4'.
Gran Tierra Energy International Holdings Ltd:
- Long-Term Foreign and Local Currency (IDRs) 'B';
- USD300 million senior unsecured notes due 2025 'B'/'RR4';
The RWP reflects GTE's potentially greater scale and asset
diversification and stronger financial metrics, should the pending
acquisition of 100% of the shares of i3 Energy North Sea and i3
Energy Canada Ltd. be approved by shareholders and stakeholders.
The transaction would more than double GTE's 1P reserves on a pro
forma basis. Fitch estimates production would increase towards
60,000 barrels of equivalent per day (boe/d) by 2026, in line with
a 'B+' rating.
Fitch will resolve the RWP after the conclusion of the transaction,
which may take more than six months.
Key Rating Drivers
Higher Scale: If the acquisition succeeds, GTE's PDP reserves will
increase to 91 mmboe and 1P reserves to 183 mmboe on a pro forma
basis, doubling the company's scale. The reserve life indices (RLI)
will reach 6.9 and 14.8 years, respectively. Daily production is
expected to be close to 60,000 boe/d based on Fitch's estimates for
2025. Fitch expects leverage, on a boe basis, to be at or below
$8/boe for total debt to PDP and $4/boe for total debt to 1P, the
lowest metrics among peers in the 'B' category.
Improved Diversification: The proposed acquisition adds 19,000
boe/d of pro forma production in Canada, enhancing GTE's geographic
footprint and cash flow profile by operating in an investment-grade
environment. The transaction also diversifies GTE's commodity mix,
with natural gas comprising around 20% of production on a pro forma
basis, thereby reducing GTE's 100% dependency on oil.
Key Assumptions
Fitch's Key Assumptions Within the Rating Case for the Issuer
- GTE fully acquiring i3 Energy North Sea and i3 Energy Canada Ltd.
by means of a combination of new debt, equity and cash on hand.
Recovery Analysis
The recovery analysis assumes that GTE would be a going concern
(GC) in bankruptcy and that it would be reorganized rather than
liquidated.
GC Approach:
- A 10% administrative claim.
- The GC EBITDA is estimated at USD370 million. The GC EBITDA
estimate, excluding the acquisition, reflects Fitch's view of a
sustainable, post-reorganization EBITDA level upon which Fitch
bases the valuation of GTE.
- EV multiple of 4.0x.
With these assumptions, Fitch's waterfall generated recovery
computation (WGRC) for the senior secured notes is in the 'RR1'
band and the senior unsecured notes are in the 'RR2' band. However,
according to Fitch's Country-Specific Treatment of Recovery Ratings
Criteria, the Recovery Rating for corporate issuers in Colombia is
capped at 'RR4'.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Ratings will be upgraded after the completion of the merger.
Independent of the Transaction:
- Net production maintained at 45,000boed or more, while
maintaining a 1P reserve life of seven years or greater;
- Maintenance of a conservative financial profile with gross
leverage of 2.5x or below and total debt/1P reserves of USD8/bbl or
below.
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Sustainable production size declines to below 30,000boed;
- 1P reserve life declines to below seven years on a sustained
basis;
- A significant deterioration of credit metrics to total
debt/EBITDA of 3.5x or more;
- A persistently weak oil and gas pricing environment that impairs
the longer-term value of its reserve base;
- Sustained deterioration in liquidity and operating profile,
particularly in conjunction with more aggressive dividend
distributions than previously anticipated.
Liquidity and Debt Structure
Adequate Liquidity: The potential acquisition involves a
combination of debt, equity and cash on hand. Fitch expects the
company to issue around USD80 million in additional debt, keeping
total gross debt at or below USD750 million.
GTE reported USD115 million in cash and equivalents as of 2Q24 and
USD25 million of debt maturing in the short term. In 2Q24, the
company issued an additional USD100 million offering for the 2029
senior secured notes and paid USD36.4 million outstanding balance
of the credit facility, which was subsequently terminated. The
rating case assumes GTE's FCF will be positive between 2024 and
2027.
Issuer Profile
Gran Tierra is an independent energy company with an average oil
production of approximately 32,000boed onshore in Colombia. GTE's
blocks are located in the Middle Magdalena, Llanos and Putumayo
basins. The company had 90MMboe of 1P reserve and 7.6-year reserve
life as of FY23.
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
Gran Tierra Energy Inc. has an ESG Relevance Score of '4' for GHG
Emissions & Air Quality due to the growing importance of policies
designed to limit the greenhouse gas (GHG) emissions from the
production of oil and gas and potentially lessening demand, which
has a negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Gran Tierra Energy International Holdings Ltd. has an ESG Relevance
Score of '4' for GHG Emissions & Air Quality due to the growing
importance of policies designed to limit the greenhouse gas (GHG)
emissions from the production of oil and gas and potentially
lessening demand, 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
----------- ------ -------- -----
Gran Tierra
Energy Inc. LT IDR B Rating Watch On B
LC LT IDR B Rating Watch On B
senior unsecured LT B Rating Watch On RR4 B
senior secured LT B Rating Watch On RR4 B
Gran Tierra Energy
International
Holdings Ltd. LT IDR B Rating Watch On B
LC LT IDR B Rating Watch On B
senior unsecured LT B Rating Watch On RR4 B
=========
H A I T I
=========
HAITI: CDB OKs US$5M Grant to Improve Access to Electricity
-----------------------------------------------------------
RJR News reports that the Caribbean Development Bank has approved a
US$5 million grant to fund a transformative initiative aimed at
improving access to electricity for several rural communities in
Haiti, where residents currently rely on candles, kerosene, dry
wood, and charcoal for lighting and cooking.
The CDB First Power Haiti Project is a key component of the Haitian
Programme of Access to Solar Energy for Rural Communities,
according to RJR News.
It involves the operationalisation of previously constructed energy
mini-grids designed to function independently of the main grid, the
report relays.
Currently, only 40% of Haiti's 10.7 million inhabitants have access
to electricity, with just 10% of the rural population having
reliable energy sources, the report discloses.
CDB's investment accounts for 43% of the total project cost of USD
11.73 million, with the remaining USD 6.73 million provided by the
Haitian government, the report adds.
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J A M A I C A
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JAMAICA: BOJ Projects Stable Inflation Over Short to Medium Term
----------------------------------------------------------------
RJR News reports that The Bank of Jamaica is projecting that
inflation will remain stable over the short to medium term.
Central Bank Governor Richard Byles says the average percentage
rise in the cost of goods and services is more consistently falling
within its 4 to 6 per cent target, according to RJR News.
"While there will be an uptick in headline inflation over the next
three to five months, August-December, caused by the impact of
Hurricane Beryl, this uptick we consider to be temporary. The
Committee also noted that economic conditions are generally
supportive of low, stable, and predictable inflation in the
future," he reported, relates RJR News.
As at July, annual inflation was 5.1 per cent, the report relays.
"This out-turn was even below the bank's most recent forecast and
represents a fifth consecutive month in which inflation fell within
the bank's target range. One measure of core inflation that
excludes prices of agricultural food products and fuel prices from
the CPI was 4.5% at July 2024, representing a progressive lowering
of underlying inflation since the start of 2024," Mr. Byles
acknowledged, the report discloses.
He was speaking at the central bank's Quarterly Monetary Policy
Press Briefing. It was held in Montego Bay, St. James for the first
time since at least 2017, adds the report.
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: Leaders Welcome BOJ's Decision to Cut Interest Rates
-------------------------------------------------------------
RJR News reports that business leaders have welcomed the Bank of
Jamaica's decision to lower interest rates but say it is merely a
first step toward the change needed.
Metry Seaga, President of the Private Sector Organisation of
Jamaica (PSOJ), says the central bank will need to go further for
Jamaicans to feel the impact in their pockets, according to RJR
News.
"We are happy that the policy rate has come down as we had
suggested it should. The movement is small and we're hoping that
this will be a trend and a movement for the future, for the
immediate future, that we can look forward to. We are not
particularly happy with the size of the movement but it's a start,"
he admitted, the report notes.
Meanwhile, Sydney Thwaites, President of the Jamaica Manufacturers
and Exporters Association (JMEA), has said his members have been
reeling from the high interest rate environment, the report
relays.
"It makes the credit markets exceptionally tight so lending is
slowed and when they do lend, interest rates are high, so that's
the impact. So it's huge on companies that don't have the war
chest of cash, so it really separates our larger companies from our
medium size and smaller companies and makes that gap in between the
two of them larger, which is a problem because our economy is
really going to grow on the backs of our small and medium size
businesses," noted Mr. Thwaites, the report discloses.
The private sector has been urging the BOJ to reduce interest
rates, in a bid to make borrowing cheaper and encourage more
investments, the report adds.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. The upgrade of Jamaica's
rating to B1 reflects the government's sustained commitment to
fiscal consolidation and debt reduction. The positive outlook
reflects Moody's assessment that a continuation of the favorable
fiscal trajectory will further increase Jamaica's credit
resilience.
S&P Global Ratings raised on September 13, 2023, its long-term
foreign and local currency sovereign credit ratings on Jamaica to
'BB-' from 'B+', and affirmed its short-term foreign and local
currency sovereign credit ratings at 'B'. The stable outlook
reflects S&P's expectation that the government will remain
committed to prudent fiscal policies and reducing debt, as well as
supportive economic policies including a flexible exchange rate
regime and effective monetary policy.
In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
===============
S U R I N A M E
===============
SURINAME: Reaches Deal with IMF to Access SDR46.7 Million
---------------------------------------------------------
An International Monetary Fund (IMF) team led by Ms. Anastasia
Guscina conducted a mission with the Surinamese authorities during
July 29-August 8 to discuss policies to complete the seventh review
of the 36-month Extended Fund Facility approved by the IMF
Executive Board on December 22, 2021.
At the conclusion of the mission, Ms. Guscina issued the following
statement:
"The IMF team reached a staff-level agreement with the authorities
on the seventh review of Suriname's economic reform program that is
supported by the EFF arrangement. All quantitative targets for the
seventh review were met except the primary balance target. The
authorities are taking corrective actions to meet the end-year
primary balance target. Structural reforms are progressing with a
stronger impetus. This staff-level agreement is subject to approval
by the IMF's Executive Board, contingent on the fulfillment of all
relevant Fund policies. Upon completion of this review, Suriname
will have access to SDR 46.7 million (about USD 62.5 million),
bringing total program disbursements to date to SDR 337.1 million
(about USD 451.2 million).
"The authorities' commitment to maintain prudent macroeconomic
policies and difficult reforms are showing results in terms of
macroeconomic stability and investor confidence. Economic growth is
projected to reach 3 percent year, inflation is on a steady
downward trend, donor support is increasing, investor confidence is
returning, and international reserves are increasing. The
authorities face important near-term risks, including capacity
constraints and policy implementation challenges reflecting the
increasingly difficult socio-political environment. Over the medium
to long term, there is potential for growth to accelerate owing to
the development of large new oil fields. The final investment
decision is expected by the end of the year with production
scheduled to begin in 2028.
"The authorities remain committed to achieving the 2024 fiscal
target. Fiscal performance in the first half of the year was weak
reflecting underperformance of non-tax revenues and overspending on
electricity subsidies due to the low water level of the hydro dam
and the electricity company not remitting to the budget resources
from the recent tariff increases. To correct the fiscal
underperformance, the electricity company will return the resources
from the tariff increases to the state budget and will now remit
directly to the state budget each month resources arising from the
increases in electricity tariffs to help finance the social
program. The authorities are also implementing more stringent
measures to strengthen revenue collection, including through
improved compliance by imposing penalties and interest for late
filing and payment of taxes. It is important to speedily remove
unregistered civil servants from the public payroll to create
fiscal space for salary increases for those civil servants who are
working hard.
"Protecting the poor and vulnerable remains a priority. The
government met the indicative target on social spending for both
end-March and end-June 2024. Stronger efforts are needed to address
the challenges in the execution of the social beneficiary program
to ensure the benefits reach the intended beneficiaries, including
in the country's interior regions. The recently completed strategic
plan to enhance the effectiveness of social protection with the
support of development partners is expected to guide further
reforms in this area.
"Excellent progress has been made with debt restructuring.
Negotiations with the Paris Club (PC) for the second phase of debt
treatment are scheduled for end-September and discussions with the
remaining small group of private external creditors are ongoing.
Suriname's spreads have fallen to historical lows marking
significant uptick in investor confidence. Domestic debts to the
central bank and commercial banks have been restructured and all
outstanding domestic debt arrears except disputed ones have been
cleared. The authorities are strengthening commitment controls to
prevent accumulation of supplier arrears.
"The implementation of a restrictive monetary policy stance has
been instrumental in reducing inflation. However, the limited
activity in the interbank market is leading some banks to maintain
large precautionary buffers which hampers the transmission of
monetary policy to short term interest rates. It is important for
the central bank of Suriname (CBvS) to continue monitoring monetary
developments and to continue diligently implementing open market
operations to maintain the reserve money path consistent with the
program targets. The CBvS remains committed to a flexible,
market-determined exchange rate and is working to improve the
functioning of the foreign exchange market, including through the
launching of an electronic foreign exchange trading platform.
"Vulnerabilities in the banking system are being addressed by the
central bank. Timely completion of recapitalization plans of banks
with capital shortages and prudent monitoring of capital adequacy,
liquidity and asset quality of banks are essential to preserve
stability in the banking sector. The CBvS also needs to increase
its monitoring of non-bank financial institutions, particularly
with respect to their interconnectedness with the banking system.
"The authorities need to persevere with their ambitious structural
reform agenda to strengthen institutions and governance. The
authorities have constituted the executive council and the
executive board of the CBvS to help strengthen its governance. The
CBvS is continuing to make progress in clearing the backlog of
financial statements and regularizing the audit cycle. The Ministry
of Finance and Planning and the CBvS are close to finalizing a plan
to recapitalize the central bank. It is also important to push
ahead with the broader governance reforms in anti- money
laundering/combating the financing of terrorism (AML/CFT),
anti-corruption, and public sector procurement.
"The mission would like to thank the authorities for a
collaborative and fruitful dialogue. A wide-ranging set of meetings
was held with the President and Vice President of the Republic of
Suriname, the Minister of Finance and Planning, the Minister of
Justice and Police, the Minister of Internal Affairs, the Minister
of Natural Resources, the Central Bank Governor, the leadership of
the National Assembly, other senior government officials,
representatives of the private sector, and development partners."
===========================
V I R G I N I S L A N D S
===========================
HECTOR DAO: Files for Chapter 15 Bankruptcy in U.S.
---------------------------------------------------
Nizan Geslevich Packin, writing for Bloomberg Law, reports that
last July 15, US Bankruptcy Judge Michael Kaplan granted
recognition to a BVI receivership -- a historic moment as Hector
DAO became the first DAO recognized as a debtor under US bankruptcy
law.
This ruling set a significant precedent by acknowledging that DAOs,
despite their decentralized and autonomous structures, could be
treated as debtors in a cross-border insolvency context, notes the
report.
As previously reported by the Troubles Company Reporter, HectorDAO,
a decentralized autonomous organization, filed for Chapter 15
bankruptcy in the United States following a series of market
collapses and hacks that drained the community of funds.
According to the June 17, 2024 filing from Interpath Advisory, a
court-appointed firm specializing in bankruptcy stewardship and
reorganization, HectorDAO's current financial condition is mainly
due to three factors: the collapse of the Terra network in May
2022, the collapse of the Multichain protocol, and a hack impacting
the Hector treasury.
Mr. Drury and Mr. Pretlove both of Interpath (BVI) Limited, PO Box
4571, LM Business Centre, Fish Lock Road, Road Town, Tortola,
British Virgin Islands, VG1110 were appointed by the Virgin Islands
High Court (Commercial Division), Eastern Caribbean Supreme Court
as joint and several receivers (the Receivers) over all of the
assets held by or on behalf of Hector DAO, including the assets
held within wallet 0xdCad10a8E82fe4e90Cb69B1757C2d612745CD1C9 (the
Treasury Assets).
In the June 17 filing, Interpath Advisory noted that it was still
investigating whether the January 16, 2024 hack, which resulted in
$2.7 million in funds being drained from HectorDAO, was an inside
job committed by former managers of the DAO's treasury.
HectorDAO's troubled history
The decentralized community's troubles began in 2022 with the
collapse of Terra's ecosystem, which inflicted a hefty $16.4
million loss on HectorDAO's treasury assets. Despite the setback,
members of HectorDAO continued normal operations for over a year,
until July 17, 2023.
On July 15, 2023, the HectorDAO community members faced a choice:
migrate the decentralized organization to a different blockchain
and rebrand the project or liquidate all assets and shutter the
organization. Two days later, 83% of DAO members voted to liquidate
the DAO as per the HIP-42 vote.
About Hector DAO
Hector DAO is a decentralized autonomous organization.
Hector DAO sought relief under Chapter 15 of the U.S. Bankruptcy
Code (Bankr. D. N.J. Case No. 24-16067) on June 17, 2024.
Honorable Bankruptcy Judge Michael B. Kaplan oversees the case.
Foreign Representatives: James Drury and Paul Pretlove, as
the Appointed Receivers of Hector
DAO LM Business Centre, Fish Lock
Road 4571
Road Town, Tortola
British Virgin Islands
Foreign
Representatives'
Counsel: Daniel M. Stolz, Esq.
Donald W. Clarke, Esq.
GENOVA BURNS LLC
110 Allen Rd., Suite 304
Basking Ridge NJ 07920
Tel: (973) 230-2095
E-mail: dstolz@genovaburns.com
dclarke@genovaburns.com
- and -
David J. Molton, Esq.
Gerard T. Cicero, Esq.
BROWN RUDNICK LLP
Seven Times Square
New York, NY 10036
Tel: (212) 209-4800
Fax: (212) 209-4801
E-mail: dmolton@brownrudnick.com
gcicero@brownrudnick.com
- and -
Stephen D. Palley, Esq.
601 Thirteenth Street NW Suite 600
Washington, D.C. 20005
Tel: (202) 536-1766
Fax: (617) 289-0766
E-mail: spalley@brownrudnick.com
- and -
Michael W. Reining, Esq.
One Financial Center
Boston, MA 02111
Tel: (617) 856-8200
Fax: (617) 856-8201
E-mail: mreining@brownrudnick.com
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
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