/raid1/www/Hosts/bankrupt/TCRLA_Public/240906.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
Friday, September 6, 2024, Vol. 25, No. 180
Headlines
A R G E N T I N A
ARGENTINA: Lost 142,000 Jobs Since Last October
B A R B A D O S
PORTLAND (BARBADOS): Falls Short on Final USD8MM Note Payment
B R A Z I L
AMERICANAS SA: Pays BTG Pactual for Majority of Its Debt
AZUL SA: Shares Slump as Airline Looks at Options to Rework Debt
GOL LINHAS: Abra Nears $1.3 Billion Loan Deal With Castlelake
PETROBRAS: Eyes Argentina Deals to Boost Energy Imports
PETROBRAS: Moody's Rates New Senior Unsecured Notes 'Ba1'
PETROBRAS: S&P Rates Proposed Senior Unsecured Notes 'BB'
REDE D'OR SAO LUIZ: S&P Upgrades ICR to 'BB+', Outlook Stable
C A Y M A N I S L A N D S
YUZHOU GROUP: Chapter 15 Case Summary
YUZHOU GROUP: Scheme Meetings Scheduled for Sept. 12
YUZHOU GROUP: Seeks Debt Restructuring Recognition in US
J A M A I C A
JAMAICA: IMF Completes 3rd Reviews of PLL
JAMAICA: To Receive US$253 Million Disbursement from IMF
P E R U
TERMINALES PORTUARIOS: S&P Affirms 'BB+' ICR, Outlook Now Stable
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Lost 142,000 Jobs Since Last October
-----------------------------------------------
Buenos Aires Times reports between the seven months from October
2023 to May 2024, Argentina faced the loss of 142,000 formal jobs.
This phenomenon shows the gravity of the recession, but also the
disparity in the economic recovery among the different provinces of
the country.
According to a report by consultancy Econviews based on data from
the SIPA Argentine Integrated Social Security System, the private
sector was most affected, with the loss of 132,000 jobs, the report
relays.
Within this sector, construction heads the list of activities most
harmed, with a reduction of 73,000 formal jobs: "Construction,
which is historically pro-cyclical, has been especially hit by the
recession, which was made worse by the halting of public works",
highlighted the report, which underlines a 31.4-percent fall,
overtaken only by the 2001-2002 crisis and the pandemic, according
to Buenos Aires Times.
The manufacturing industry was also severely hit with the loss of
25,000 jobs in the same period, the report notes. Factors such as
the foreign exchange appreciation, fall in consumption and the
modifications of the PAIS tax have all contributed to a gloomy
outlook for this sector, where the import of finished supplies and
goods competes directly with local production, the report relays.
Despite the widespread crisis, some sectors managed to create
employment, the report says. The agricultural sector has generated
11,000 new wage-earners since October 2023, the report discloses.
Mining and oil also show growth, though its involvement in total
employment remains limited, the report notes. Ever since 2021,
when restrictions for the pandemic started to ease, these sectors
have increased by 12 percent in terms of employment, driven by key
investments, the report relays.
The dynamic of employment varies considerably among provinces, the
report notes. Buenos Aires Times discloses that the ones who have
lost most formal jobs over the last six months were:
Formosa: -11.4 percent
Tierra del Fuego: -10.9 percent
La Rioja: -9.1 percent
Santa Cruz: -7.8 percent
Buenos Aires: -2.5 percent
Santa Fe: -2.5 percent
Cordoba: -1.7 percent
CABA: -0.8 percent
Mendoza: -0.3 percent
By contrast, such provinces as Neuquen and Salta recorded a slight
growth in the number of jobs, at 0.2 percent and 1.6 percent
respectively, the report says. In addition, they have experienced
a 25.8-percent and 10.4-percent increase in employment over the
last five years respectively, thanks to investment in the oil, gas
and mining sectors, the report relays.
They expect this situation to be repeated with the implementation
of the RIGI Big Investment Regime in provinces of the rest of the
country to attract investment and encourage internal consumption,
which are factors that will define the pace and scale of recovery
of employment over the next few years, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of
South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on 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.
===============
B A R B A D O S
===============
PORTLAND (BARBADOS): Falls Short on Final USD8MM Note Payment
-------------------------------------------------------------
guardian.co.tt reports that a company controlled by Michael
Lee-Chin, who is the chairman of NCB Financial Group, has failed to
make the final payment of an US$8 million plus interest on a
two-year note, which was due August 30, sources close to the issue
told Guardian Media.
The sources said Lee-Chin-controlled Portland (Barbados) Ltd wire
transferred US$2 million to Republic Bank's Wealth Management
division, which serves as the trustee of the note, and proposed a
new repayment schedule, which would extend the final payment to the
week ending September 20, 2024, according to guardian.co.tt.
The report notes that Portland Barbados proposed to pay the
balances of funds in the following tranches in September:
* US$2 million during the week starting on September 2;
* US2 million during the week starting September 9; and
* US$2 million, plus accumulated interest, during the week
starting September 16.
Republic Bank is reported to have requested that the noteholders
provide written confirmation (by reply e-mail) that they agree to
the extension of the final payment to the week ending September 20,
2024, the sources said, the report relays.
They said that as with previous delays in payment, interest would
be charged at the default rate of 12.25 per cent per annum, the
report notes.
The sources also said Mr Lee-Chin offered to meet with the
noteholders, the report discloses.
Lee-Chin wrote to the trustee on August 13, requesting a 15-day
extension, from August 15 to 30, to make the final payment of US$8
million, which was due on August 15, the report says.
The sources said Lee-Chin told the trustee that the request for the
15-day extension was necessary because the funding arrangement to
make the payment of US$8 million plus interest had been delayed
until the end of August, the report relays.
The August 15 payment was part of an agreement put in place by the
noteholders, the trustee and Lee-Chin on May 9, following the
Jamaican-born businessman failing to make the previous final bullet
payment on the note on April 30, 2024, the report discloses.
That agreement, which was signed by Lee-Chin, required Portland
(Barbados) to make a first payment of US$8 million plus interest to
the trustee on or before May 29; the trustee was due to receive the
second payment of US$4 million on or before June 15 with the final
payment of US$8 million plus interest due to the trustee on or
before August 15, the report notes.
Portland (Barbados) was late in making the first two payments.
The May 9 agreement also states that the interest on the note
started at 8.25 per cent, the report notes. But because Lee-Chin
missed the April 30,2024 bullet payment, the interest rate on the
three-part arrangement was increased to 10.25 per cent, which was
the interest rate specified in the supplemental trust deed of 8.25
per cent plus the default rate of 2 per cent, the report says.
"However, should the company default on any of its payment
obligations as specified in this agreement, the company will pay
noteholders interest at the rate of 12.25 per cent per annum, being
the default rate of 2 per cent, plus the current rate of 10.25 per
cent," according to the May 9 agreement, the report adds.
===========
B R A Z I L
===========
AMERICANAS SA: Pays BTG Pactual for Majority of Its Debt
--------------------------------------------------------
Raphael Almeida Dos Santos of Bloomberg Law reports that Banco BTG
Pactual has been paid for most of Americanas's debt. BTG CFO
Renato Cohn said in a conference call with analysts that BTG has
already received most of Americanas's debt.
BTG CEO Roberto Sallouti said he expects for BTG to see its share
of retail business growing in the coming quarters. If the market
evolves, BTG will once again have a 15% share in Latin American
countries, Sallouti said.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in Rio
de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25, 2023. White &
Case LLP, led by John K. Cunningham, is the U.S. counsel.
AZUL SA: Shares Slump as Airline Looks at Options to Rework Debt
----------------------------------------------------------------
Bloomberg News reports that Azul SA shares slumped to a record low
as the Brazilian airline is weighing options from an equity
offering to a U.S. chapter 11 filing to address approaching debt
obligations.
The troubled carrier is also actively working to get a merger with
Gol Linhas Aereas Inteligentes SA over the line to convince
creditors that a new combined entity would have lower debt levels
and better growth prospects, according to the report.
But that approach is seen as less attractive given Azul's imminent
cash needs and weak financial results, the report notes.
As reported in the Troubled Company Reporter-Latin America on July
22, 2024, Fitch Ratings has affirmed Azul S.A.'s (Azul) Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B-'
and its Long-Term National Scale rating at 'BB(bra)'. Fitch has
also affirmed Azul Investments LLP's unsecured bonds at
'CCC+'/'RR5', as well as Azul Secured Finance LLP's senior secured
notes at 'B-'/'RR4'. The Rating Outlook of Azul's IDRs has been
revised to Negative from Stable. Fitch has assigned a Negative
Outlook to Azul's Long-Term National Scale Rating.
GOL LINHAS: Abra Nears $1.3 Billion Loan Deal With Castlelake
-------------------------------------------------------------
Bloomberg News reports that the largest shareholder of ailing
Brazilian airline Gol Linhas Aereas Inteligentes SA is nearing a
deal to raise $1.3 billion of funds from investment firm Castlelake
LP to stave off the risk of defaulting on its bonds.
Abra Group Ltd., which also owns Colombian airline Avianca Holdings
SA, outlined Castlelake's proposal to its investors, according to
the report.
Under the plan, the investment firm would refinance Abra's secured
bonds due 2028, which could default after Gol raised a bankruptcy
loan as part of its chapter 11 procedure in the U.S, the report
notes.
As reported in the Troubled Company Reporter-Latin America on Aug.
13, 2024, Fitch Ratings has affirmed GOL Linhas Aereas Inteligentes
S.A.'s (GOL) and its subsidiary GOL Linhas Aereas S.A.'s Long-Term
Foreign Currency (FC) and Local Currency (LC) Issuer Default
Ratings (IDRs) at 'D', its Long-Term National Scale Rating at
'D(bra)'. Fitch has also affirmed the rating of the senior
unsecured global notes issued by Gol Finance Inc. at 'C'/'RR5' and
subsequently withdrawn the ratings for all three issuers. The
ratings affirmation reflects the fact that GOL continues to undergo
the Chapter 11 process.
The ratings have been withdrawn for commercial reasons.
PETROBRAS: Eyes Argentina Deals to Boost Energy Imports
-------------------------------------------------------
Buenos Aires Times reports that Brazil's state-controlled oil
producer Petroleo Brasileiro SA is hunting for shale gas deals in
Argentina as part of a bigger plan to increase supplies of the fuel
to spur industrial growth, according to people familiar with the
strategy.
Assets in which Petrobras is looking to acquire a stake include
those of Tecpetrol SA, a unit of billionaire Paolo Rocca's Techint
Group, said the people who asked not to be identified because the
matter is confidential, according to Buenos Aires Times .
Petrobras said in a response to questions that it's looking to
generate value and restore oil and natural gas reserves through
opportunities in Brazil as well as abroad, which it outlined in its
five-year strategic plan, the report notes. Tecpetrol declined to
comment.
Petrobras is looking to expand internationally, with a particular
focus on oil and gas projects in Latin America and off Africa's
Atlantic coast, instead of limiting itself to deepwater fields in
Brazil, the report relays. The strategy is a source of controversy
within a government that also vows to prioritise its environmental
agenda, including attempts to foster a green transition of Brazil's
economy, the report discloses.
Other major gas producers in Argentina's heralded Vaca Muerta shale
patch are state-run YPF SA, TotalEnergies SE, Pampa Energia SA, and
Pan American Energy Group, which is 50 percent owned by BP Plc, the
report says.
Petrobras divested its Argentina assets several years ago but kept
a 34 percent stake in the Rio Neuquen shale gas field, a venture
with YPF and Pampa, the report notes.
New momentum in Vaca Muerta means Argentina could export gas to
Brazil as soon as next year, the report relays. But instead of
just importing the fuel, Petrobras would like to be involved on the
production end, the people said, the report discloses.
Argentine engineers are working to reverse the flow of a major
pipeline, with the idea that Vaca Muerta drillers can use it to
send surplus fuel to Sao Paulo via Bolivia, the report relays.
Bolivia traditionally pipes gas to both its neighbours, but its
output is now in severe decline, the report says.
In August, Argentina pre-authorised Tecpetrol and TotalEnergies to
export gas to Brazil, according to the province of Neuquen, which
holds the largest share of Argentine shale reserves, the report
notes.
Government officials and industry executives are toying with the
idea of also extending another pipeline network to be able to send
gas directly into southern Brazil, avoiding a circuitous route
through Bolivia, the report says.
Expansion
Petrobras' production is set to peak around 2030 unless it makes
major discoveries or acquisitions. Vaca Muerta, which is often
compared to the Permian Basin in the United States, could help, the
report relates.
The shale formation has seen a series of false dawns over the past
decade because of Argentina's tough business climate, the report
relays. But pipeline buildouts and deregulation under President
Javier Milei are driving drilling investments and export plans,
with production in the Neuquen Basin reaching seasonal highs of the
equivalent of more than one million barrels a day, the report
discloses.
Brazil's gas ambitions even surpass political rivalry, the report
notes. President Luiz Inacio Lula da Silva has traded barbs with
Milei all year as diplomatic ties sour between South America's two
largest economies, the report relates. But in June, Lula met
Neuquen Governor Rolando Figueroa during an investment conference
in Rio de Janeiro. Lula also met this month with Petrobras Chief
Executive Officer Magda Chambriard to discuss how to grow supplies
and reduce prices, while Mines and Energy Minister Alexandre
Silveira strongly proposes using gas to boost Brazil's industry and
manufacturing sectors, the report says.
But importing Argentine gas may undermine Brazil's ambitions to
become a global leader in the energy transition as the fuel could
displace renewables, the report discloses.
If South America's largest economy turns to its gas-fired plants
for power, it could be a setback for one of the cleanest
electricity grids in the world: About 90 percent of Brazil's grid
currently runs on renewable energy sources including hydro, wind
and solar. Gas also competes with green hydrogen - where Brazil
seeks to be a major producer - as a feedstock for making
fertilisers, the report adds.
About Petrobras
Petroleo Brasileiro S.A. or Petrobras (in English,
BrazilianPetroleum Corporation - Petrobras) is a semi-public
Brazilianmultinational corporation in the petroleum industry
headquarteredin Rio de Janeiro, Brazil. Petrobras control
significant oil andenergy assets in 16 countries in Africa, the
Americas, Europe andAsia. But, Brazil represents majority of its
production.
The Brazilian government directly owns 54% of Petrobras'
commonshares with voting rights, while the Brazilian Development
Bankand Brazil's Sovereign Wealth Fund (Fundo Soberano) each
control5%, bringing the State's direct and indirect ownership to
64%.
A corruption scandal was uncovered in 2014 that involvedPetrobras.
The scandal related to money laundering that involved
Petrobrasexecutives. The executives were alleged to get received
kickbacksfrom overpriced contracts, to the tune of about $3
billion in total. Over a thousand warrants were issued against
politiciansand businessmen in relation to the scandal. In 2016,
MarceloOdebrecht, CEO of Odebrecht, was sentenced to 19 years in
prisonafter being convicted of paying more than $30 million in
bribes toPetrobras executives. In January 2018, Petrobras agreed to
pay $2.95 billion to settle aU.S. class action corruption
lawsuit. In September 2018,Petrobras agreed to pay $853.2 million
to settle with Brazilian and U.S. authorities.
As reported in the Troubled Company Reporter-Latin America on June
7, 2024, Moody's Ratings affirmed the Ba1 corporate family rating
of Petrobras. At the same time, Moody's affirmed Petrobras' ba1
baseline credit assessment (BCA) and the Ba1 rating of the backed
unsecured debt issuances of Petrobras Global Finance B.V. and
Petrobras International Finance Company. Moody's also affirmed the
(P)Ba2 subordinate shelf ratings of Petrobras and Petrobras
International Finance Company, the (P)Ba1 senior unsecured shelf
ratings of Petrobras and Petrobras International Finance Company,
the (P)B1 Pref. Shelf rating for Petrobras, and the (P)Ba1 and
(P)Baa3 senior secured shelf ratings under Petrobras and Petrobras
International Finance Company respectively. The outlook for all
issuers is maintained stable.
In January 2024, S&P Global Ratings assigned a new management &
governance (M&G) assessment of moderately negative to Petrobras. At
the same time, S&P affirmed its issuer credit ratings on Petrobras
at 'BB' on the global scale and 'brAAA' on the Brazilian national
scale. S&P also affirmed its issue-level ratings on the company,
and removed all its ratings from under criteria observation (UCO).
In July 2022, Fitch Ratings affirmed Petrobras' BB- Long-Term
Issuer Default Rating. In addition, Fitch has revised the
RatingOutlook to Stable from Negative following a similar revision
toBrazil's Sovereign Rating Outlook. Also in July 2022,
Egan-JonesRatings Company upgraded the foreign currency and local
currencysenior unsecured ratings on debt issued by Petrobras to BB+
fromBB.
PETROBRAS: Moody's Rates New Senior Unsecured Notes 'Ba1'
---------------------------------------------------------
Moody's Ratings has assigned a Ba1 rating to the proposed backed
senior unsecured notes due 2035 to be issued by Petrobras Global
Finance B.V. and fully and unconditionally guaranteed by Petroleo
Brasileiro S.A. - PETROBRAS (Petrobras, Ba1 stable). Petrobras'
existing ratings including its Ba1 corporate family rating remain
unchanged. The outlook is stable.
The proposed issuance is part of Petrobras's liability management
strategy and proceeds will be used to fund a tender offer for
Petrobras outstanding notes due in 2030, 2031, 2043, 2049, 2050 and
2051 and for general corporate purposes, thus not affecting the
company's debt protection metrics.
The rating of the proposed notes assumes that the final transaction
documents will not be materially different from draft legal
documentation reviewed by us to date and assume that these
agreements are legally valid, binding and enforceable.
RATINGS RATIONALE
Petrobras' Ba1 corporate family rating (CFR) and ba1 Baseline
Credit Assessment (BCA), a measure of a company's standalone credit
risk without government support, reflect the company's strong
credit metrics for its rating category, and its positive track
record of operational and financial improvement. The rating also
reflects Moody's expectation that Petrobras' operating and
financial discipline will continue to support cash generation,
which will help sustain its current capital structure. Conversely,
Petrobras' rating is constrained by the company's exposure to
potential policy shifts and risk of government influence in the
company's business decisions.
Petrobras' Ba1 rating is one notch above the Government of Brazil's
(Brazil, Ba2 positive) rating based on the company's considerably
stronger fundamental credit profile than that of the sovereign, and
its ability to withstand adverse economic and business conditions,
as observed during the coronavirus pandemic in 2020. There is a low
likelihood that the company will default as a result of sovereign
credit distress given Petrobras' solid financial metrics and
capital structure; its low reliance on domestic funding sources;
its limited exposure to foreign-currency risk; and the fact that
around 30% of its sales are related to exports.
Policy shifts can pose higher credit risk for Petrobras if the
government starts to use the national oil company to cover fiscal
deficits, control fuel prices and inflation. Petrobras' corporate
governance standards provides it with some protection from
government interference and so far, the current administration's
changes to its executive team, boardroom and financial and
investment strategies have not materially changed its credit
quality. There would be negative credit implications if the quality
of Petrobras' corporate governance declines, increasing its
vulnerability to policy shifts. A change in Petrobras' current
business strategy or capital allocation that weakens its credit
metrics or financial strength would also be credit negative.
The company's execution of its asset sale program, liability
management and its business strategy over the past several years
have allowed it to reduce debt levels significantly and to improve
its credit metrics, which leaves Petrobras at a very comfortable
level to withstand volatility at this point. Petrobras' strong
credit metrics and liquidity support its rating, with leverage
declining to 1.5x in the twelve months ended June 2024 from 4x in
2017 and a very good liquidity profile. At the end of June 2024,
Petrobras had $12.1 billion in cash and short-term investments and
a sizable committed revolving credit facilities in an aggregate
amount of $7.9 billion. Moody's expect the company's cash
generation of around $35 billion in 2024 to be more than enough to
cover its annual debt maturities of around $2.1 billion plus annual
capital spending of about $19 billion through the period, allowing
it to maintain reported debt below $65 billion.
The proposed transaction is part of Petrobras' liability management
strategy and proceeds will be used to fund a tender offer for
Petrobras' notes due in in 2030, 2031, 2043, 2049, 2050 and 2051
and for general corporate purposes, thus improving liquidity while
lengthening the company's debt amortization schedule further.
Moody's continue to assume moderate default dependence between
Petrobras and the government.
RATING OUTLOOK
The stable outlook on Petrobras' ratings reflects Moody's view that
its credit profile will remain mostly unchanged over the next 12-18
months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
An upgrade of Petrobras' Ba1 rating is unlikely over the next 12-18
months because Moody's expect the company's credit metrics to
remain relatively stable and it is unlikely that the company would
be rated more than one notch above the sovereign. However, the
ratings could be upgraded if credit metrics are at least stable and
there is evidence of significant lower exposure to adverse
government influence. An upgrade of Petrobras' rating would also
require an upgrade of Brazil's sovereign rating.
Petrobras' ratings could be downgraded if its operating performance
deteriorates or there are external factors that increase liquidity
risk or debt leverage from the current levels on a sustained basis;
if the quality of the company's corporate governance declines,
increasing its vulnerability to adverse government interference; or
if Brazil's sovereign rating is downgraded.
The methodologies used in this rating were Integrated Oil and Gas
published in September 2022.
COMPANY PROFILE
Petrobras is an integrated energy company, with total assets of
$190 billion and annual revenue of $99.9 billion in the twelve
months ended June 2024. Petrobras dominates Brazil's oil and
natural gas production, and refining and fuel marketing sectors.
The company also holds a stake in petrochemicals and power plant
business segments. The Brazilian government directly and indirectly
owns about 36.6% of Petrobras' outstanding capital stock and 50.3%
of its voting shares.
PETROBRAS: S&P Rates Proposed Senior Unsecured Notes 'BB'
---------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue rating to Petrobras
Global Finance B.V.'s proposed senior unsecured notes due 2035.
Petrobras Global Finance (PGF) is a wholly owned finance
subsidiary
of Brazilian oil and gas company Petroleo Brasileiro S.A.
(Petrobras; BB/Stable/--), and Petrobras will unconditionally and
irrevocably guarantee the notes.
The company will use the new notes' proceeds for general corporate
purposes and liability management, including the purchase of
tender
offers. S&P said, "We rate PGF's senior unsecured debt at the same
level as our issuer credit rating on Petrobras, based on the
guarantee of this debt and because the latter has limited secured
debt collateralized by real assets. Even if the senior unsecured
debt ranked behind the subsidiaries' debt in the capital
structure,
we believe the risk of subordination would be mitigated by a
priority debt ratio far below 50% and the significant earnings
generated at the parent level."
S&P said, "We continue to forecast solid cash flow for Petrobras.
S&P Global Ratings' price deck assumption for Brent is $80 per
barrel through the next few years, and we expect PGF's fuel prices
will remain mostly in line with international prices. We also
expect limited risks to the company's credit metrics, given
Petrobras' commitment to keep gross financial debt below $65
billion, which should keep leverage below 2.0x even with higher
capital expenditure."
REDE D'OR SAO LUIZ: S&P Upgrades ICR to 'BB+', Outlook Stable
-------------------------------------------------------------
S&P Global Ratings raised its long-term issuer credit and
issue-level ratings on Rede D'Or Sao Luiz S.A. (Rede D'Or) and its
debt to 'BB+' from 'BB' and affirmed our Brazil national scale
rating at 'brAAA'.
The stable outlook reflects S&P's expectation of strong liquidity
in the coming years, while operating and credit metrics continue to
improve.
Rede D'Or is continuing to improve its hospital operations'
performance while, successfully integrating and enhancing its Sul
America operations.
S&P continues to analyze the hospital operations and the insurance
business separately but believe Rede D'Or's incorporation of Sul
America strengthens the company's strategy and widens its business
diversification. Notably, the combined operations provide synergies
given they are complementary in nature and geographically. Rede
D'Or is working on several initiatives to improve Sul America's
pricing strategy, cost structure, working capital needs, and fraud
prevention, among other areas, which should strengthen its overall
profitability in the coming quarters. The company's loss ratio
already decreased to 83.6% at June 30, 2024, compared with 86.3% in
the same period last year.
The company is the clear leader in hospital operations with a 4.4%
market share in the private health care market. Rede D'Or has
11,905 beds, followed by Hapvida Participacoes e Investimentos S.A.
(not rated) with 7,814 and Diagnósticos da America S.A. (not
rated) with 3,408. Rede D'Or currently has 73 hospitals across 12
states and the federal district. In our view, this provides strong
bargaining power with customers and suppliers, which reflects
healthy average price increases, high occupancy rates, and
above-average profitability.
The hospital operations' occupancy rate during second-quarter 2024
was a record 84.4%, compared with 83% in the same quarter last
year, showing the number of patients continues to increase.
Furthermore, average prices reached R$10,412, 5.1% higher year over
year. In 2024 we expect hospital net revenue to increase about 8%
year over year and the EBITDA margin to reach 26%, above the
industry average of 15%-25%. With that, we expect the company to
continue deleveraging to reach adjusted net debt to EBITDA of 2.6x
by year-end 2024 compared with 3.1x in 2023, and FOCF to turn
positive. In our adjusted debt metric, we include operating leases,
acquisitions payables, and the net position of derivatives.
The company reported R$17.6 billion of cash and cash equivalents,
already excluding technical reserves of R$17.9 billion related to
the insurance business, which would be enough to pay the next five
years of debt maturities. The company's weighted-average maturity
is currently about five years and its average debt cost is basic
interest rate plus 1.1%.
Of the R$800 million sale price agreed with MDS Corretora e
Administradora de Seguros S.A. (not rated), Rede D'Or will be paid
65% at closing and 35% in three annual installments from the
closing date.
The establishment of Atlantica D'Or reduces capital expenditure
(capex) and underpins the group's partnership with (BB/Stable/B;
brAAA/Stable/brA-1+).
Rede D'Or announced a joint venture (JV) with Atlantica Hospitals
(owned by Banco Bradesco) to create Atlantica D'Or. The JV, 50.01%
owned by Rede D'Or and 49.99% by Bradesco, will include Macae D'Or,
Hospital Sao Luiz Alphaville, Hospital Sao Luiz Guarulhos, and
hospitals under development in Taubate and Ribeirao Preto. The
construction cost is about R$1.16 billion, and once completed the
three hospitals will have about 620 beds. We believe the JV will
reduce Rede D'Or's capex and reinforce its partnership with
Bradesco, one of the company's main clients and among the largest
health insurers in the country. Simultaneously, it further improves
Rede D'Or's liquidity position, given it should receive 50% of the
capex already spent on these projects from Bradesco.
===========================
C A Y M A N I S L A N D S
===========================
YUZHOU GROUP: Chapter 15 Case Summary
-------------------------------------
Chapter 15 Debtor: Yuzhou Group Holdings Company Limited
Cricket Square Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Business Description: Founded in 1994, Yuzhou is a
conglomerate group integrating
diversified businesses including real
estate development, commercial
investment and operations, and hotel
operations.
Foreign Proceeding: In the Matter of Yuzhou Group Holdings
Company Limited (Case Number HCMP
1068/2024) currently pending before the
High Court of the Hong Kong Special
Administrative Region Court of First
Instance
Chapter 15 Petition Date: August 22, 2024
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 24-11441
Judge: Hon. Lisa G Beckerman
Foreign Representative: Kwok Ying Lan
5801-02, 58/F, 99 Queen's Road Central
Hong Kong Central
Hong Kong
Foreign
Representative's
Counsel: Christopher J. Hunker, Esq.
LINKLATERS LLP
1290 Avenue of the Americas
New York NY 10104
Tel: (212) 903-9267
Email: christopher.hunker@linklaters.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of the Chapter 15 petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/MECOM6A/Yuzhou_Group_Holdings_Company__nysbke-24-11441__0001.0.pdf?mcid=tGE4TAMA
YUZHOU GROUP: Scheme Meetings Scheduled for Sept. 12
----------------------------------------------------
The Grand Court of the Cayman Islands (the "Cayman Court"), by an
order made on Aug. 2, 2024, has directed that (i) a single meeting
of Scheme Creditors (Class A); and (ii) a single meeting of Scheme
Creditors (Class B) (respectively defined as "Scheme Creditors
(Class A)" and "Scheme Creditors (Class B)", shall, in each case,
be convened for the purpose of considering and, if thought fit,
approving the proposed scheme of arrangement between the Company
and the Scheme Creditors (the "Cayman Scheme").
The Court of First Instance of the High Court of the Hong Kong
Special Administrative Region (the "HK Court"), by an order made
on
Aug. 16, 2024, has directed that (i) a single meeting of Scheme
Creditors (Class A); and (ii) a single meeting of Scheme Creditors
(Class B), shall, in each case, be convened for the purpose of
considering and, if thought fit, approving the proposed scheme of
arrangement between the Company and the Scheme Creditors (together
with the Cayman Scheme, the "Schemes").
The scheme meeting for Scheme Creditors (Class A) in respect of
both the Cayman Scheme and the HK Scheme will be convened as one
meeting at 8:00 p.m. Hong Kong time on Sept. 12, 2024, the
equivalent time being 7:00 a.m. Cayman Islands time on Sept. 12,
2024.
The Scheme Meeting for Scheme Creditors (Class B) in respect of
both the Cayman Scheme and the HK Scheme will be convened as one
meeting at 9:00 p.m. Hong Kong time on Sept. 12, 2024, the
equivalent time being 8:00 a.m. Cayman Islands time on Sept. 12,
2024 (collectively, the "Scheme Meetings").
The Scheme Meetings will be held at the offices of Linklaters at
11th Floor, Alexandra House, Chater Road, in Hong Kong, with a
live
video conference linked to the offices of Harney Westwood &
Riegels
at 3rd Floor, Harbour Place, 103 South Church Street, Grand
Cayman,
PO Box 10240, KY1-1002 in Cayman Islands. The Scheme Meetings are
subject to any adjournment as may be appropriate (in which case
any
changes in arrangements relating to the Scheme Meetings shall be
communicated to the Scheme Creditors in advance of the Scheme
Meetings).
About Yuzhou Group
Based in Hong Kong, Yuzhou Group Holdings Company Limited is a
property developer that focuses on residential housing in the
Yangtze River Delta and the West Strait Economic Zone. Established
in Xiamen in the mid-1990s, Yuzhou is one of the city's largest
developers.
Yuzhou Group Holdings filed a chapter 15 petition (Case No.
1:24-bk-11441) on Aug. 22, 2024, in the Southern District of New
York, which makes it the most recent company outside the United
States to ask the U.S. Bankruptcy Court for assistance
implementing
its cross-border restructuring scheme. The case has been assigned
to Judge Beckerman.
YUZHOU GROUP: Seeks Debt Restructuring Recognition in US
--------------------------------------------------------
South China Morning Post reports that Yuzhou Group Holdings filed
for Chapter 15 bankruptcy on Aug. 22 in New York, a move by the
defaulted property developer to seek US court recognition for its
offshore debt restructuring and ward off litigation.
The Post says the Shenzhen-based builder, which failed to pay
US$2.9 billion of dollar notes with interest as of the end of
2023,
is undergoing restructuring in Hong Kong and the Cayman Islands.
Its board was advised to "seek recognition by this court of the
Hong Kong proceeding as a foreign main proceeding for the debtor",
according to a company filing with the court, the Post relays.
Without US court recognition, "it may be possible that creditors
of
such indebtedness will commence proceedings in New York against
the
company even after the schemes are sanctioned", it said.
Yuzhou joins a growing list Chinese developers, including Sunac
China Holdings and China Aoyuan Group to use the Chapter 15
bankruptcy system to deal with offshore creditors or handle
cross-border assets, the Post notes.
A Chapter 15 recognition proceeding is a legal step for the US
court to formally recognise the effectiveness of the restructuring
in foreign jurisdictions, according to an insight note by law firm
Sidley Austin last year.
Companies do not necessarily need material US assets to seek such
recognition, and often the only liabilities of Chapter 15 debtors
are US-law governed bonds, the note said, in explaining the
differences with the better-known Chapter 11 filings.
Yuzhou received court orders in both Hong Kong and Cayman Islands
in August to hold votes on its offshore debt overhaul plan, the
Post discloses citing a filing to the Hong Kong exchange on Aug.
21. The so-called scheme meetings are set for September 12, when
creditors will vote for the company's plan, usually seen one of
the
last steps to get a restructuring procedure completed.
According to the company, it had total interest-bearing
liabilities
of about US$6.8 billion in the offshore market and CNY12.31
billion
(US$1.7 billion) in the onshore market as of December 31, 2022,
the
Post discloses.
In August 2023, Yuzhou offered three options to its creditors, the
Post recalls. Those opting for the first option would exchange
existing notes for new notes with a short-term maturity, while
those choosing the second option would receive medium-term notes,
newly issued ordinary shares of the company and long-term notes.
The third option would involve swapping the notes for long-term
notes that bear zero interest but with no haircut to the
outstanding principal amount of the existing notes.
"The company believes that the successful implementation of its
offshore debt restructuring would allow it to right-size its
balance sheet and restore its capital structure to a healthy and
sustainable level such that the group's business would be able to
continue as a going concern and thrive moving forward," it said at
the time.
About Yuzhou Group
Based in Hong Kong, Yuzhou Group Holdings Company Limited is a
property developer that focuses on residential housing in the
Yangtze River Delta and the West Strait Economic Zone. Established
in Xiamen in the mid-1990s, Yuzhou is one of the city's largest
developers.
Yuzhou Group Holdings filed a chapter 15 petition (Case No.
1:24-bk-11441) on Aug. 22, 2024, in the Southern District of New
York, which makes it the most recent company outside the United
States to ask the U.S. Bankruptcy Court for assistance
implementing
its cross-border restructuring scheme. The case has been assigned
to Judge Beckerman.
=============
J A M A I C A
=============
JAMAICA: IMF Completes 3rd Reviews of PLL
-----------------------------------------
The Executive Board of the International Monetary Fund (IMF)
completed the third reviews of the Precautionary and Liquidity Line
(PLL) and the Resilience and Sustainability Facility (RSF)
arrangement on a lapse-of-time basis. The PLL and the RSF were
approved in March 2023, with access of SDR 727.51 million and SDR
574.35 million respectively. The completion of third reviews makes
available the remaining SDR191.45 million (about US$258 million)
under the RSF and SDR 727.51 million (about US$980 million) under
the PLL. The authorities continue to treat the PLL as
precautionary.
The response to recent shocks has strengthened the credibility of
Jamaica's fiscal and monetary policy frameworks. In FY 2023/24,
Jamaica's economy is estimated to have grown at about 2 percent
with tourism above pre-pandemic levels and a continued recovery in
mining. Unemployment has fallen and the economy is in a strong
cyclical position. Inflation has returned to the Bank of Jamaica's
target band and the external position has strengthened with a
current account surplus, rising FDI, and ample international
reserves-which at end-March 2024 reached about US$5.2 billion, the
highest level in Jamaica's history.
Going forward, GDP growth is expected to converge to potential and
inflation to return to the mid-point of the target band. The
external position is expected to remain strong. Guided by the
authorities' Medium-Term Fiscal Framework (MTFF), public debt is
expected to fall below 60 percent of GDP by FY2027/28. Risks to the
outlook are arising from potential global economic and financial
shocks and natural disasters, which are mitigated by strong policy
frameworks, the authorities' excellent track record managing
shocks, and their commitment to reforms. The impact of Hurricane
Beryl raises downside risks to growth and upside risks to inflation
in the near term.
The PLL has supported the authorities' efforts to enhance financial
supervision, the crisis resolution and AML/CFT frameworks, and data
adequacy. Program performance has remained strong, and Jamaica
continues to meet the PLL qualification criteria. All structural
benchmarks were met and the BOJ overperformed on the indicative
target on net international reserves. The indicative target on the
fiscal balance-with a smaller than expected surplus-was marginally
missed with a negligible impact on the debt consolidation plan. The
authorities have made progress with the action plan to improve
data, including on the fiscal and external sectors.
The RSF has supported Jamaica's ambitious agenda to make the
economy more resilient to climate change, including reforms to
accelerate the transition to renewables, increase resilience to
climate change, enhance the climate focus in policy frameworks,
strengthen the management of climate risks by financial
institutions, and create an enabling environment for green
financial instruments. All RSF reform measures were met, comprising
the analysis of climate-related fiscal risks, incentives for
renewable energy, reporting requirements of climate risks for
financial institutions, and a framework for green-bond issuance.
These efforts have the potential to catalyze climate financing
going forward.
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: To Receive US$253 Million Disbursement from IMF
--------------------------------------------------------
RJR News reports that Jamaica is set to receive US$253 million from
the International Monetary Fund.
This comes after the third review under the country's Precautionary
and Liquidity Line (PLL) and the Resilience and Sustainability
Facility (RSF), according to RJR News.
The IMF says the completion of the third reviews makes available
the remaining US$253 million for immediate disbursement to Jamaica
under the Resilience and Sustainability Facility (RSF), the report
notes.
The fund released a statement looking at the third review of the
RSF and the Precautionary and Liquidity Line, the report relays.
The IMF says the RSF has supported Jamaica's ambitious agenda to
make the economy more resilient to climate change, including
reforms to accelerate the transition to renewables, increase
resilience to climate change and enhance the climate focus in
policy frameworks, the report discloses.
It says all RSF reform measures were met, comprising the analysis
of climate-related fiscal risks, incentives for renewable energy,
reporting requirements of climate risks for financial institutions,
and a framework for green-bond issuance, the report notes.
The IMF also says US$964 million under the PPL is still available,
and the authorities continue to treat it as precautionary, the
report says.
It says the PLL has supported Jamaica's efforts to enhance
financial supervision, crisis resolution and AML/CFT frameworks and
the program performance has remained strong, the report relays.
The IMF says Jamaica continues to meet the PLL qualification
criteria, the report notes.
In the review of both facilities, the IMF says Jamaica's response
to recent shocks has strengthened the credibility of the country's
fiscal and monetary policy framework, the report relays.
It also credits Jamaica for its sustained economic growth in the
last financial year which ended March, and lower unemployment, the
report discloses.
The fund notes that inflation has returned to the Bank of Jamaica's
target range of 4 to 6 per cent, the report says.
The fund says going forward, Gross Domestic Product growth is
expected to continue, and inflation should return to the middle of
the target band, the report notes.
It notes, however, Hurricane Beryl's threat to medium term price
stability, the report relays.
But, there are risks to the outlook arising from potential global
economic and financial shocks, along with natural disasters, the
report discloses.
The IMF says some of these risks may be tempered by Jamaica's
strong policy frameworks, along with "the authorities' track record
for managing shocks, the report says.
Guided by the government's Medium-Term Fiscal Framework, the IMF
says public debt is expected to fall below 60 per cent of GDP, by
financial year 2027/28, the report relays.
The PLL and the RSF were approved in March 2023, and provide a
combined US$1.73 billion in support, 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.
=======
P E R U
=======
TERMINALES PORTUARIOS: S&P Affirms 'BB+' ICR, Outlook Now Stable
----------------------------------------------------------------
S&P Global revised its rating outlook on Peruvian port operator
Terminales Portuarios Euroandinos Paita S.A. to stable from
positive and affirmed its 'BB+' rating.
The stable outlook reflects S&P's assumption that the weather
events of 2023-2024 in northern Peru will not repeat in the next 12
months, which, combined with supportive demand for agricultural and
fishing exports, should allow the project's container volumes to
start recovering, resulting in debt service coverage ratios of
2.0x-2.1x in December 2024 and 2.5x-2.6x in December 2025.
In September 2009, the project won a 30-year concession contract to
operate, maintain, and develop the port of Paita, located in the
Piura region of northwestern Peru. In 2023, the project handled
more than 318,000 20-foot-equivalent units , mainly for exports,
which represented almost 75% of the port's operations. The main
exported products were squid, grapes, avocados, mangoes, bananas,
coffee beans, and blueberries.
Paita is the second-largest container port in Peru, after Callao
(not rated), which is more than 1,000 kilometers south of Paita and
handles about 90% of Peru's seaborne containers. Paita is a joint
venture between Tertir - Terminais de Portugal S.A. (not rated) and
DP World Logistics S.R.L. (not rated).
Key strengths
-- Main port of northern Peru, with the ability to handle
containers, solid bulk, and liquids, and strategically located at
the end of the IIRSA Norte (not rated) toll road that connects the
port with most of its area of influence (Piura, Lambayeque,
Cajamarca, Amazonas, and San Martin).
-- Robust credit metrics, with minimum and median debt service
coverage ratios (DSCRs) close to 2.0x and 3.9x, respectively.
Key risks
-- Exposure to the volatility of commodity and container trade
volumes, which means a decrease in traffic could hurt the project's
revenue.
-- Climate phenomena beyond Paita's control, such as El Nino,
could also depress volumes handled at the port.
-- Considerably smaller scale and lack of contracted capacity in
comparison with global peers, which S&P believes makes it more
vulnerable in a severe market downturn.
Such climate events have become more frequent and severe, and S&P
expects this trend will continue, affecting the project's volumes
and cash flow available for debt service. Paita reported a 34% drop
in container traffic between mid-2023 and mid-2024, mainly due to
stronger-than-expected effects from El Nino. This climate
phenomenon is caused by unusually warm temperatures in the Pacific
Ocean that bring heavier rainfalls and floods to northern Peru,
affecting fishing and agricultural production.
S&P said, "We now expect a 5% decrease in container traffic in
2024, with the worse performance in the first half of the year
compensated by favorable weather conditions in the second half
(already evidenced in the 19% increase in July). Even though we
continue to assume an El Nino cycle every five years in our
base-case scenario, we now apply a 10% reduction in annual
container volumes, in line with last year's traffic drop and higher
than the previous assumption of 5.5%. As a result, we forecast
minimum and median DSCRs of 2.05x (in December 2024) and 3.89x,
respectively. Despite our view of the project's higher operational
risk, these credit metrics remain consistent with the rating."
*********
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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