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/raid1/www/Hosts/bankrupt/TCRLA_Public/241015.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, October 15, 2024, Vol. 25, No. 207 Headlines B A H A M A S FTX GROUP: Ellison to Give Up 'Substantially All Of Her Assets' FTX GROUP: FTX Trading Wins Confirmation of its Bankruptcy Plan FTX TRADING: Eversheds & Morris Update Ad Hoc Committee Members B R A Z I L STATE OF PARANA: Fitch Affirms 'BB' LongTerm IDRs, Outlook Stable D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: ASONAHORES Calls For Analysis in Tax Reform DOMINICAN REPUBLIC: Expects Tax Reform to Take Effect in Jan. 2025 E L S A L V A D O R EL SALVADOR: S&P Affirms 'B-/B' Sovereign Credit Ratings M E X I C O DISTRIBUIDORA MI HONDURAS: Starts Subchapter V Bankruptcy Process P A N A M A ENA NORTE: Moody's Affirms Ba1 Rating on Secured Notes, Outlook Neg GLOBAL BANK: Fitch Alters Outlook on 'BB' LongTerm IDR to Stable P U E R T O R I C O BL & MORE: Seeks to Hire Landrau Rivera & Assoc. as Legal Counsel - - - - - ============= B A H A M A S ============= FTX GROUP: Ellison to Give Up 'Substantially All Of Her Assets' --------------------------------------------------------------- Aislinn Keely at law360.com reports that former FTX insider Caroline Ellison agreed to give up "substantially all of her assets" and cooperate with the FTX bankruptcy estate in a deal to resolve the claims against her in an adversary proceeding that sought to recover hundreds of millions of dollars from the collapsed crypto exchange's former leadership. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9, 2022, struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. SBF agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 billion in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. FTX GROUP: FTX Trading Wins Confirmation of its Bankruptcy Plan --------------------------------------------------------------- Hilary Russ at law360.com reports that FTX Trading Ltd. won confirmation of its bankruptcy plan that clears a path for it to start repaying as much as $16.5 billion to creditors, including former customers who had cryptocurrency at the exchange when it unraveled in 2022 under the weight of founder Sam Bankman-Fried's fraud. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9, 2022, struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. SBF agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 billion in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. FTX TRADING: Eversheds & Morris Update Ad Hoc Committee Members --------------------------------------------------------------- Eversheds Sutherland (US) LLP and Morris, Nichols, Arsht & Tunnell LLP, counsel to the Ad Hoc Committee of Non-US Customers of FTX.com (the "Ad Hoc Committee") comprising international customers, filed a verified ninth supplemental statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure in the Chapter 11 cases of FTX Trading Ltd. and affiliates. Pursuant to Bankruptcy Rule 2019(d), this Ninth Supplemental Statement supplements the information provided in the Eighth Supplemental Statement. Since the date of the Eighth Supplemental Statement, certain changes have been made with respect to the composition of the Ad Hoc Committee and the disclosable economic interests that the Members represent. The revised names, addresses, and disclosable economic interests of the Members are: 1. Adam Rabie * $150,950.00 2. Azamat Akylov * $11,373,198.56 3. B2C Alternative Equity Ltd C/O Corporation Service Company 251 Little Falls Drive, Wilmington, DE 19808 * $85,000,000.00 4. Blooming Triumph International Limited 13F 162 Queens Road Central, Hong Kong * $35,860,157.00 5. Blue Basin Ventures LLC 3172 N Rainbow Blvd #26642, Las Vegas, NV 89108 * $1,243,523.00 6. Boway Holdings, LLC; Oaktree Opportunities Fund XI Holdings (Cayman) LP; Opps CY Holdings, LLC; Oaktree Value Opportunities Fund Holdings, L.P.; Oaktree Phoenix Investment Fund, L.P. 1301 6th Ave, 34th Floor, NY, NY 10019 * $403,128,643.45 7. Canyon Capital Advisors LLC, on behalf of its managed funds and accounts 2728 N. Harwood Street, 2nd Floor, Dallas, TX 75201 * $606,717,477.00 8. Ceratosaurus Investors, LLC One Maritime Plaza, Suite 2100, San Francisco, CA 94111 * $828,020,360.00 9. Chien-Chih Chen * $200,000.00 10. Crimson International Investment c/o Al-Hamad Legal Group 4812 Addax Tower, Al Reem Island, Abu Dhabi UAE * $6,091,963.14 11. Cyber Wealth Limited 28/F, S22, 22 Heung Yip Road, Wong Chuck Hand, Hong Kong * 8,007,706.36 12. Daniel Gupta * $420,000.00 13. Diameter Capital Partners LP 55 Hudson Yards, Suite 29B, New York, NY 10001 * $397,109,562.00 14. Dietmar Poppe * $281,807.90 15. Dmitry Kozlov * $252,185.00 16. dParadigm Fund SPC DE Cayman Ltd, Landmark Sqaure, Westbay Road, PO Box 775, Grand Cayman KY1-9 * $575,599.93 17. Falcon Hybrid SPC - RE7 Liquidity Fund SP 3-212 Governors Square 23 Lime Tree Bay Ave PO Box 30746 SMB Grand Cayman KY1-1203 Cayman Islands * $1,269,016.63 18. FC Cayman A, L.L.C. c/o Maples Corporate Services Limited PO Box 309 Ugland House Grand Cayman, KY1-1104 Cayman Islands * $593,194,190.96 19. Fire Bouvardia, L.L.C. 190 Elgin Avenue, George Town Cayman DY1-9008 * $446,971,149.00 20. Fingolfin GmbH c/o 3T.LAW FAO Dr. Henning Frase Oberlaender Ufer 154a Koeln, Germany 50968 * $5,700,000.00 21. Georgios Piliouras * $116,635.23 22. Grand Teton Systems Inc. 1509 Bent Ave. Cheyenne, WY 82001 * $26,507,057.86 23. Grzegorz Swiatek * $540,260.00 24. Hudson Bay Master Fund Ltd. 28 Havemeyer Place, 2nd Floor, Greenwich, CT 06830 * $377,586,459.00 25. Iris Partners Iris Partners Corp. Suites 5 & 6 Horsfords Business Centre Long Point Road Charlestown St Kitts & Nevis * $804,000.00 26. Ismael Lemhadri * $150,000.00 27. James Goodenough * $5,670.00 28. Jian Chen * $1,200,000.00 29. John Ruskin * $350,000.00 30. Jonathon Hughes * $22,063.00 31. Kbit Global Limited Craigmuir Chambers #71 Road Town Tortola VG1110 British Virgin Islands * $25,021,826.00 32. Kirk Steele * $2,500,000.00 33. Koalalgo Research CO SERVICES CAYMAN LIMITED P. O. Box 10008 Willow House Cricket Square Grand Cayman KY1-1001 Cayman Islands * $3,700,000.00 34. Koroush Ak Ltd. 1-2 Craven Road, London, UK W5 2UA * $409,953.87 35. Lemma Technologies Inc. Via Espana, Delta Bank Building, 6th Floor, Suite 604D, Panama City PA-8 Panama * $165,000,000.00 36. Marc-Antoine Julliard * $140,000.00 37. Marc St. John Wolff Amey * $637,000.00 38. Michael Anderson * $1,600,000.00 39. Michael Currie * $40,000.00 40. Mikita Kudzelka * $27,000.00 41. Mohammad Alsabah * $275,000.00 42. Nai Him Leslie Tam * 8,214,895.72 43. Nexxus Holdings Operations LLC 800 Miramonte Drive, Suite 380 Santa Barbara CA 93109 * $124,905,130.38 44. NKB Finance Ltd. Griva Digeni 13, 6030 Larnaca, Cyprus * $216.52 45. Olympus Peak Trade Claims Opportunities Fund I Non- ECI MasterLP 177 West Putnam Ave Suite 2622- S1 Greenwich, CT 06831 * $21,554,519.00 46. Orange Phoenix LLC c/o The Corporation Trust Center 1209 Orange Street, Wilmington DE 19801 * $4,695,822.68 47. Patrick Martin * $500,000.00 48. Patrick Wohlschlegel * $57,973.85 49. Paxtibi LLP 221 W. 9th Street Wilmington, DE 19801 * $1,840,117.00 50. Phoenix Digital c/o The Corporation Trust Center 1209 Orange Street, Wilmington DE 19801 * $4,186,421.00 51. Phoenix TF, LLC 418 Broadway, Ste R, Albany, NY 12207 * $653,996.22 52. Podtree Ltd. 26, Kanachrine Place,Ullapool, Highland, Scotland * $19,581.26 53. PRIMO Holding GmbH Urbanstrasse 4, D-70839 Gerlingen, Germany * $853,674.48 54. Raul Jain * $42,000.00 55. Robert Himmelbauer * $107,013.57 56. Rodney Clough * $504,000.00 57. Samuel Mandel * $59,600.00 58. Sheval Alijevski * $146,000.00 59. Sidar Sahin * $50,974,281.00 60. Silver Point Capital, LP 2 Greenwich Plaza, Greenwich, CT 06830 * $635,522,689.00 61. Svalbard Holdings Limited c/o Attestor Limited, 7 Seymour Street, W1H 7JW London * $1,018,691,815.00 62. Tellurian Exoalpha Digital Assets Systematic Fund 89 Nexus Way, Camana Bay Grand Cayman, Cayman Islands KY1- * $1,062,047.90 63. Vicomte Holding LLC as manager of Arceau 507 II LLC, Arceau 507 LLC, Arceau X LLC, Oroboros FTX I LLC 4 Lakeside Drive, Chobham Lakes, GU24 8BD, Surrey, UK * $29,062,378.28 64. William Johanna Petrus Christina Arts * $3,000,000.00 65. Yu Ting * $64,434.00 About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 million in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10 showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. =========== B R A Z I L =========== STATE OF PARANA: Fitch Affirms 'BB' LongTerm IDRs, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed the Brazilian State of Parana's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'. The Rating Outlook is Stable. Additionally, Fitch has affirmed Parana's Short-Term Foreign and Local Currency IDRs at 'B' and National Long- and Short-Term Ratings at 'AAA(bra)' and 'F1+(bra), respectively. The Rating Outlook for the National Ratings is Stable. Parana's Standalone Credit Profile (SCP) has been raised to 'bbb' from 'bbb-'. Parana's IDRs are capped by Brazil's 'BB'/Stable sovereign IDR. Per Fitch's criteria, Brazilian Local and Regional Governments (LRGs) do not qualify for a rating that is higher than the sovereign's due to the regulatory framework. The federal government has strong influence over local governments, such as by setting a salary floor for teachers, pre-clearance to enter into foreign credit operations and interference with subnational tax policy. Parana's SCP was raised to 'bbb' from 'bbb-' due to sound operating performance and strong liquidity. The state has obtained savings by renegotiating some of its liabilities with private counterparts and the federal government, and by anticipating amortization payments. KEY RATING DRIVERS Risk Profile: 'Weaker' Fitch assesses Parana's risk profile as 'Weaker' due to a combination of three 'Midrange' (revenue robustness, expenditure sustainability and liabilities and liquidity flexibility) and three 'Weaker' (revenues and expenditure adjustability, and liabilities and liquidity robustness) key risk factors. The assessment also includes an implied 'bb' operating environment score, reflecting Fitch's view of the country's economic environment, financial market development, bankruptcy regime, credit information policies and supervision mechanisms. Fitch's 'Weaker' assessment indicates a high risk that the issuer's ability to cover debt service with the operating balance will weaken unexpectedly over the scenario horizon (2024-2028) due to lower revenue, higher expenditure, or an unexpected rise in liabilities or debt-service requirement. Revenue Robustness: 'Midrange' Fitch evaluates this factor as 'Midrange' due to the state's fiscal autonomy and low dependence on federal transfers. The Brazilian tax collection framework transfers a large share of responsibility to collect taxes to states and municipalities. Constitutional transfers exist as a way to compensate poorer entities. Fitch considers a high dependence on transfers a weak feature for Brazilian LRGs. The primary metric for revenue robustness is the transfers ratio (transfers to operating revenues). Fitch classifies LRGs reporting a ratio above or equal to 40% as 'Weaker', while others with a ratio below 40% are 'Midrange'. Parana reports substantial fiscal autonomy, which drives this 'midrange' factor. Transfers represented 24.9% of operating revenues for the average of the 2019-2023 period. Historically, revenue growth performed above GDP growth. For the 2019-2023 period, CAGR was 3.5% in real terms for operating revenues, compared to an average annual GDP growth of 1.5%. Revenue Adjustability: 'Weaker' Fitch evaluates this factor as 'Weaker' due to the state's reliance on a small number of tax payers and the history of federal intervention to state's tax policy. Fitch considers Brazilian states and municipalities to have low capacity to increase revenue during a downturn. Tax tariffs are close to the constitutional national ceiling, and a small number of taxpayers contribute a large share of tax collection, making additional taxation unaffordable. This leads to the 'Weaker' factor. Brazil also has a history of federal intervention in subnational taxation. In July, 2022, the National Congress set a ceiling on the ICMS tariff over fuels and electricity, causing revenue losses across states and municipalities, which were only partially reversed later. The most relevant tax, the ICMS, has a concentrated taxpayer base. In 2023, the 10 largest taxpayers comprised 26.6% of total ICMS tax collection in Parana, down from 31% in the previous annual review due to the ICMS limit on fuels and electricity. Parana adjusted the basic ICMS tariff from 18% to 19% in 2023 and then to 19.5% in April 2024, which helped recover tax collection. However, the history of federal intervention and reliance on a small number of sectors still weighs on the 'Weaker' assessment. Expenditure Sustainability: 'Midrange' Fitch evaluates this factor as 'Midrange' due to robust and stable operating margins in the last years. Responsibilities for states are moderately countercyclical because they handle healthcare, education and law enforcement. Expenditure grows with revenues due to earmarked revenues. States and municipalities must allocate a share of revenues to health and education, causing procyclical behavior in good times; high revenue growth leads to increased spending. However, the significant weight of personal expenditures and salary rigidity means downturns do not see similar drops in expenditures despite lower revenues. Parana reports moderate control over expenditure growth, with sound margins. Operating margins averaged 16.6% in the 2019-2023 period. The state is current on its payroll bill and has no significant delays for the payment of suppliers. Operating expenditure CAGR was 1.9% in real terms between 2018-2023, which was largely within the state's operating revenues performance with a CAGR of 3.5% in the same period. Expenditure Adjustability: 'Weaker' Fitch evaluates this factor as 'Weaker' due to budget rigidity and the limited ability to lower expenditures. Brazilian local governments have a rigid cost structure, leading to a 'Weaker' assessment. The Brazilian constitution limits the ability to reduce expenditures, especially for the payroll and pensions Consequently, when revenues drop unexpectedly, operating expenditure do not automatically decrease. In 2023, personal expenditures for the State of Parana accounted for 65.8% of total spending. Due to salary rigidity and limited control over human resources or pensions, this category has little flexibility for adjustments. Other operating expenditures made up 34.2% of total spending in 2023 and have some flexibility, but constitutional mandates on health and education still limit adjustments. Capex represented 5.8% of total expenditures in 2023 and averaged 7.4% between 2019 and 2023. Historically, Brazilian LRGs have often cut investments during challenging economic periods. Liabilities & Liquidity Robustness: 'Weaker' Fitch assess this factor as 'Weaker' due to the underdeveloped credit market and the presence of off-balance sheet risks related to pensions and judicial liabilities. Access to new loans is restricted as Brazilian LRGs are not allowed to access the market through bond issuances. Lenders consist mainly of public commercial and development banks and multilateral organizations. Often, loans are guaranteed by the federal government, especially for foreign currency loans. Therefore, the federal government has strict control over new lending to LRGs. Brazil has a moderate national framework for debt and liquidity management, with prudential borrowing limits and loan type restrictions. Under the Fiscal Responsibility Law (LRF) of 2000, LRGs must comply with indebtedness limits. States' consolidated net debt cannot exceed 2x (200%) of net current revenue. Parana reported a negative debt ratio of 4.6% as of December 2023. According to Resolution 43 of 2001 of the Federal Senate, guarantees are limited to 22% of net current revenue. In 2023, Parana's guarantees to government-related entities amounted to 0.67% of net current revenues. As of December 2023, external debt totaled BRL3.6 billion, making up 17.3% of direct debt. Most external debt is owed to multilateral organizations and comes with a federal government guarantee. Debt owed directly to the federal government accounted for 57.8% of direct debt in December 2023. Intergovernmental debt offers more favorable terms, such as debt service relief during economic distress, as seen in 2020 and early 2021. Parana settled a liability dispute with a private creditor originated from the privatization of the state bank in the 90s, originally amounting to BRL 4.5 billion. The final amount was BRL1.7 billion. This settlement led to a smoother debt service profile. Previously, Parana considered a bullet payment to a private creditor in 2029, risking the BRL4.5 billion claim being enrolled in judicial orders. The dispute settlement refinanced the debt into a gradual amortizing profile, avoiding the risk of judicialization. Moderate off-balance sheet risk exits due to the pension system. This system burdens most Brazilian LRGs, especially states, given their responsibilities for education and public security. Pension payments form a significant share of operating expenditures. Another major contingent liability involves judicial claims, known as "precatorios." The National Congress mandates that subnational governments have to fully pay for these liabilities until 2029. The Pension Reform of 2019 strengthened the medium- and long-term sustainability of Parana's pension system. The financial fund expenditure (BRL 7.9 billion in 2023), which originates from a pay-as-you-go system, should increase over the next five years, stabilize at BRL 9.9 billion in 2030, and enter a descending trend, reaching BRL 5.2 billion in 2050 and extinguishing by 2070. The capitalization pension fund will gradually replace the financial fund. As of 2023, it had accumulated assets under management in the amount of BRL 10.7 billion and pays benefits of BRL 3.9 billion annually. Overall, the pension burden should increase to BRL 14.1 billion by 2030, and gradually decrease to BRL 10.5 billion in 2050 and BRL 5.7 billion by 2070. Liabilities & Liquidity Flexibility: 'Midrange' Fitch evaluates this factor as 'Midrange' due to adequate cash in the last three-years. A framework exists for providing emergency liquidity support from the federal government via the granting of extended maturity over the prevalent federal debt portion. Fitch assesses the entity's available liquidity to differentiate between 'Weaker' and 'Midrange' for liabilities and liquidity flexibility. The Brazilian National Treasury analyzes the liquidity rate for LRGs to assess which entities qualify for federal government guarantees (Capacidade de Pagamento or CAPAG), which is measured by the LRGs' short-term financial obligation to net cash. The federal government's threshold to rate this ratio 'A' is 100%. Fitch has set a threshold of 100% for the average of the last three years (2021-2023 year-end) and for the last year-end results available (December 2023), which would result in a 'Midrange' assessment for this factor. Parana reported a three-year average liquidity ratio of 9.5%. As of December 2023, the metric reached 7.8%, corroborating with the 'Midrange' assessment. Financial Profile: 'aaa category' Parana's Financial Profile is assessed at 'aaa'. Fitch's rating case forward-looking scenario indicates that the payback ratio (net adjusted debt to operating balance), the primary metric of the debt sustainability assessment, will reach an average of 1.5x for the 2026-2028 period, which is aligned with a 'aaa' assessment. The actual debt service coverage ratio (ADSCR), the secondary metric, is projected at an average of 2.6x for 2026-2028, aligned with a 'aa' assessment. Fiscal debt burden is projected at 12.5% for the same period. Debt metrics improved somewhat from the previous annual review on the back of a reduction of adjusted debt. The projected payback ratio lowered to an average of 1.5x in 2026-2028 from 2.8x in 2025-2027 as per the previous annual review. Parana has settled a liability dispute with a private creditor originated from the privatization of the state bank back in the 90s, which amounted to BRL 4.5 billion. The final amount was settled at BRL1.7 billion and the state anticipated the amortization schedule with extraordinary revenues in 2023. Moreover, the settlement led to a smoother debt service profile, strengthening coverage metrics. Derivation Summary Parana's SCP of 'bbb' results from the combination of a 'Weaker' risk profile and 'aaa' debt sustainability assessment. The SCP factors in the state´s comparison with national and international peers. Parana's IDRs of 'BB'/Outlook Stable are not affected by asymmetric risks or extraordinary support, but are capped by the sovereign rating. Key Assumptions Risk Profile: 'Weaker' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Midrange' Expenditure Adjustability: 'Weaker' Liabilities and Liquidity Robustness: 'Weaker' Liabilities and Liquidity Flexibility: 'Midrange' Financial Profile: 'aaa' Asymmetric Risk: 'N/A' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Rating Cap (LT IDR): 'BB' Rating Cap (LT LC IDR) 'BB' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's rating case is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on 2019-2023 figures and 2024-2028 projected ratios. The key assumptions for the scenario include. Quantitative Assumptions - Issuer Specific Yoy 5.3% increase in operating revenue on average in 2024-2028, which results of a combination of growth assumptions for taxes (linked to inflation plus spread), transfers (linked to nominal GDP), and other operating revenues (linked to inflation). The rating case includes a 100 bps annual negative shock to taxes and transfers. Yoy 5.9% increase in tax revenue on average in 2024-2028, which results from a projected 11.5% nominal growth in 2024 following the adjustment to the ICMS basic tariff, and projected growth of inflation plus spread for 2025-2028. Yoy 7.0% increase in operating expenditure on average in 2024-2028, which reflects an expectation for OPEX growth of 13.5% in 2024, and inflation plus spread for 2025-2028. The rating case includes a 50 bps negative shock to OPEX growth. Net capital balance of - BRL7,933million on average in 2024-2028; CAPEX is projected to sustain historical values in real terms and to absorb excess cash generation through the projection horizon. Long-term debt considers new loan disbursements as projected by the government minus amortization of non-intergovernmental debt. Cost of debt: 5.7% on average in 2024-2028, which reflects government projections for debt service payments. For the rating case, Fitch applies a 50 bps shock to apparent cost of debt. Quantitative assumptions - Sovereign Related Figures as per Fitch's sovereign actual for [2023] and forecast for [2024-2026], respectively (no weights and changes since the last review are included as none of these assumptions was material to the rating action). Liquidity and Debt Structure Net adjusted debt considers BRL20.6 billion of direct debt and unrestricted cash of BRL15.8 billion as of December 2023. Fitch estimates that close to 35.7% of debt is guaranteed by the federal government and 57.8% consist of intergovernmental debt with the federal government. Guaranteed debt includes BRL3.6 billion of foreign debt contracts with multilateral organizations. Issuer Profile Fitch classifies Parana as a Type B LRG. Type B LRGs are required to cover debt service from cash flow. The state is an important exporter of soy, poultry and coffee and has a solid industrial sector with car plants, pulp and paper, and shale oil, among others. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A negative rating action on Brazil's IDR would lead to a negative rating action on Parana given that its ratings are currently capped by the sovereign; - Parana's IDRs would be downgraded if its payback ratio is projected above 5x and its actual debt service coverage ratio is projected below 2x. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A positive rating action on Brazil's IDR would lead to a positive rating action on Parana given that its ratings are currently capped by the sovereign. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Public Ratings with Credit Linkage to other ratings The State of Parana ratings are capped by the Brazilian sovereign. Entity/Debt Rating Prior ----------- ------ ----- Parana, State of LT IDR BB Affirmed BB ST IDR B Affirmed B LC LT IDR BB Affirmed BB LC ST IDR B Affirmed B Natl LT AAA(bra)Affirmed AAA(bra) Natl ST F1+(bra)Affirmed F1+(bra) =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: ASONAHORES Calls For Analysis in Tax Reform --------------------------------------------------------------- Dominican Today reports that the Association of Hotels and Tourism of the Dominican Republic (ASONAHORES) has urged the Dominican Republic government to conduct a thorough cost-benefit analysis of the current tax structures as part of the proposed Tax Reform. While acknowledging the need for a comprehensive fiscal pact to improve tax efficiency and public spending transparency, ASONAHORES emphasized the importance of protecting productive sectors that drive economic growth and job creation, according to Dominican Today. David Llibre, president of ASONAHORES, highlighted that sectors like tourism contribute significantly more to the economy than what the state loses in tax exemptions, the report notes. He stressed that any changes in the fiscal framework should support these industries’ continued growth, the report relays. ASONAHORES reported that from 2019 to 2023, the tourism sector experienced an annual growth rate of 23% and a 6% increase in tourist arrivals, the report says. However, hotel industry expansion has not matched this pace, making it a key area for review in the reform process, the report notes. The association reiterated that tourism forms the backbone of the country’s economy, creating extensive productive chains that benefit agriculture, industry, and services, the report discloses. ASONAHORES urged the government to ensure that fiscal reforms promote competitiveness and growth while addressing unfair competition and preserving the stability of sectors that attract both foreign and local investment, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCR-LA reported in April 2019 that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic was raised to 'BB' in December 2022 with stable outlook. Moody's credit rating for Dominican Republic was last set at Ba3 in August 2023 with the outlook changed to positive. Fitch, in December 2023, affirmed the Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' and revised the outlook to positive. DOMINICAN REPUBLIC: Expects Tax Reform to Take Effect in Jan. 2025 ------------------------------------------------------------------ Dominican Today reports that the Dominican government anticipates that its Fiscal Modernization Project, presented at the National Palace, will take effect starting January 1, 2025, according to Finance Minister Jose (Jochi) Vicente. The reform, which has been in development for over five years, aims to increase tax revenues by 1.5% of GDP. Minister Vicente emphasized that the additional funds will positively impact public services and citizens’ quality of life, using improved garbage collection—key to reducing diseases like dengue - as an example, according to Dominican Today reports. He noted that higher tax revenues would support better public infrastructure and social services, the report notes. The proposal, expected to be submitted to Congress on October 8, not only seeks to boost tax collection but also addresses tax evasion, which Vicente characterized as a crime that hinders the delivery of essential public services, the report relays. The final implementation timeline will depend on the legislative process, the report notes. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCR-LA reported in April 2019 that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic was raised to 'BB' in December 2022 with stable outlook. Moody's credit rating for Dominican Republic was last set at Ba3 in August 2023 with the outlook changed to positive. Fitch, in December 2023, affirmed the Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' and revised the outlook to positive. ===================== E L S A L V A D O R ===================== EL SALVADOR: S&P Affirms 'B-/B' Sovereign Credit Ratings -------------------------------------------------------- S&P Global Ratings affirmed its 'B-' long-term and 'B' short-term foreign and local currency sovereign credit ratings on El Salvador. The outlook on the long-term ratings remains stable. Our transfer and convertibility assessment remains 'AAA'. Outlook The stable outlook balances El Salvador's still fragile fiscal position with its reduced financing needs, given its very active debt management policy. Downside scenario S&P said, "We could lower the ratings in the next six to 12 months if we see a weakening in the government's ability to undertake and implement fiscal adjustment measures to stabilize its debt burden. We could also downgrade El Salvador if its funding sources become more limited or if there are signs that it's becoming less willing to service its debt." Upside scenario S&P could raise the ratings in the next six to 12 months if the government is able to implement comprehensive reforms to consistently narrow its fiscal deficits and continue to reduce its financing needs, leading to a faster-than-expected stabilization of its debt level. Stronger-than-expected growth could also facilitate fiscal consolidation and result in an upgrade. Rationale S&P said, "Our affirmation follows the government's announcement on Oct. 4 of a debt repurchase offer to partially buy back its sovereign bonds due between 2027 to 2052. We consider this transaction as an opportunistic liability management operation, rather than a distressed exchange, notwithstanding the 'B-' long-term rating. In our opinion, El Salvador could have met its debt obligations in the foreseeable future without this transaction." The invitation for offers to tender for cash consists of eight bonds and the macro variable interest only step-up bond, with a total outstanding value of $6.2 billion. The principal amounts outstanding for each bond and purchase prices, all of them slightly above-market prices, are the following: -- $633.0 million due 2027 (98.00 cents on the dollar); -- $529.5 million due 2029 (100 cents on the dollar); -- $1.0 billion due 2030 (101.55 cents on the dollar); -- $286.5 million due 2034 (87.50 cents on the dollar); -- $1.0 billion due 2035 (89.85 cents on the dollar); -- $653.5 million due 2041 (85.95 cents on the dollar); -- $1.1 billion due 2050 (80.50 cents on the dollar); and -- $1.0 billion due 2052 (97.70 cents on the dollar). The government plans to finance the repurchase with the support of JPMorgan Chase Bank N.A. El Salvador's government has ensured that that investors who do not accept the offer will maintain the right to receive the full payment amount at each bond's maturity date. According to the announcement, the government reserves the right, in its sole discretion, to accept only a portion of the notes tendered and prorate them. In addition, the current tender offer aims to promote certain conservation and sustainability efforts in El Salvador. The recently announced tender offer is another step in the broad debt reprofiling process that began in 2022, with two external debt repurchases in late 2022, a pension debt exchange in the first half of 2023, a short-term debt refinancing strategy started in October 2023, and another external debt repurchase in April 2024. Despite the fiscal relief coming from these measures, the country's public finances remain fragile, reflecting long-term structural vulnerabilities. The rating on El Salvador incorporates its institutional weaknesses, as indicated by difficulties in predicting policy responses amid poor checks and balances, modest per capita GDP at $5,350, and moderate GDP growth prospects due to persistently low investment and productivity. In addition, the sovereign has a high debt burden, about 77% of GDP (including debt owed to pension funds). It also lacks monetary flexibility because of full dollarization. S&P will analyze the rating implications of any potential future debt buyback or exchange on a case-by-case basis, considering the respective terms and conditions, as well as the prevailing macroeconomic context and interim policy developments. =========== M E X I C O =========== DISTRIBUIDORA MI HONDURAS: Starts Subchapter V Bankruptcy Process ----------------------------------------------------------------- Distribuidora Mi Honduras LLC filed for chapter 11 protection in the District of Maryland. The Debtor is a Maryland limited liability company which operates an import business whereby they import specialty non-perishable foods, cosmetics, and cleaning supplies from Mexico and Central America since 2016, currency has 8 employees, and has a monthly revenue of approximately $150,000 and estimated increase to $450,000 to $500,000 within the next six months. Prepetition, the Debtor entered into loan agreements with various lenders which have a security interest in the Debtor's cash and cash equivalents via UCC-1 Financing Statements filed with the State of Marylandas reflected in the Debtor's Chapter 11 Petition. The Debtor's primary asset is its import business, and the money derived from the same. As of the Petition Date, Debtor has earned revenue from operating its business in the amount of approximately $1,000,000 for the current year. The Debtor generates monthly revenues of over $100,000 per month. The Debtor plans to continue operation of its business throughout the Chapter 11, Subchapter V, case and propose a Plan of Reorganization which provides for the continuation of the Debtor's business. The Debtor says it is only through a Plan that unsecured creditors will see a recovery on account of their claims, because through a Plan, and as a going concern, Debtor's business will maintain its top and highest value. According to court documents, the Debtor reports between $1 million and $10 million in debt owed to 1 and 49 creditors. The petition states funds will be available to unsecured creditors. About Distribuidora Mi Honduras Distribuidora Mi Honduras LLC, doing business as DMH LLC, import sspecialty non-perishable foods, cosmetics, and cleaning supplies from Mexico and Central America. Distribuidora Mi Honduras sought relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case No. 24-18364) on Oct. 4, 2024. In the petition filed by Omar Rubinstein, as managing member, the Debtor estimated assets between $500,000 and $1 million and liabilities between $1 million and $10 million. The Debtor is represented by: David Erwin Cahn, Esq. Law Office of David Cahn, LLC 4451 Georgia Pacific Blvd., Suite A Frederick, MD 21704 =========== P A N A M A =========== ENA NORTE: Moody's Affirms Ba1 Rating on Secured Notes, Outlook Neg ------------------------------------------------------------------- Moody's Ratings affirmed the Ba1 rating assigned to ENA Norte Trust's Senior Secured Notes due 2028, and its Baseline Credit Assessment (BCA) at ba2. Outlook changed to negative from stable. RATINGS RATIONALE ENA Norte's BCA of ba2 reflects the company's strong fundamentals and its position as a key transport asset in a strong service area in Panama City. However, these benefits are compensated by the absence of tariff increases, which could be adjusted annually for inflation but have remained flat due to political pressures from the Government of Panama (government), and a longer-than-expected traffic recovery to pre-pandemic levels. The assigned BCA also reflects Moody's expectation that the principal payments under the cash sweep mechanism will not be enough to fully cover the debt at maturity, but Moody's expect the remaining amount to not be significant and to be paid by the sponsor or refinanced before maturity. The outlook change to negative from stable highlights an increased remaining debt balance at maturity compared to previous projections. Moody's base case now anticipates a $25 million shortfall at maturity in April 2028, as opposed to the $16 million previously expected. The higher expectation of debt balance at maturity is primarily the result of traffic underperformance in the last quarter of 2023 due to protest in Panama. Additionally the negative outlook reflects the lack of a clear path to face the expected outstanding debt at maturity. The issuer has requested a concession extension (which ends in 2029) for an additional 30 years, which if granted could reduce the exposure to refinancing risks. However the terms and conditions remain uncertain at this point. The affirmed Ba1 rating of ENA Norte reflects the application of Moody's joint default analysis (JDA) framework for GRIs, which takes into account: i) a BCA of ba2 as a measure of ENA Norte's standalone creditworthiness, ii) the Baa3 rating of the Government of Panama as support provider, as well as iii) Moody's estimates of a moderate implied government support in the case of financial distress and iv) a very high default dependence between ENA Norte and the Panamanian government. While ENA operates the toll roads, the assets are wholly owned by the Government of Panama and have a strong linkage with the economic developments of the sovereign. Traffic performance is correlated with the performance of the Panamanian economy. While the concession establishes that tariffs can be increased by inflation every year, the ultimate approver is the government and it has not happened for several years. Then the revenue growth is only dependent on traffic performance. RATINGS OUTLOOK ENA Norte negative outlook reflects the increasing debt outstanding at maturity, and the growing refinancing risks within the existing concession terms. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the negative outlook, a rating upgrade is unlike at this time. The outlook could stabilize if Moody's have more visibility on the refinancing strategy or an extension of the concession with attractive terms and condition. ENA Norte's rating will have upward pressure if debt service coverage ratio (DSCR) remains above 1.2x on a projected and sustained basis because of stronger traffic performance, tariff increases or cost control. Downward pressure on ENA Norte's rating would generate from an increase in refinancing risk driven by a prolonged delay in the concession extension or material increase in the expected outstanding debt balance at maturity. COMPANY PROFILE ENA was established to acquire and manage companies with concessions from Panama for toll road and highway projects. In October 2012, ENA acquired the Corredor Norte system, spanning 33 kilometers in northern Panama City, through a wholly owned subsidiary. ENA Norte Trust was created as a special-purpose financing vehicle for this transaction. Corredor Norte, a 33-km toll road in northern Panama City, complements the Corredor Sur highway and consists of three segments tolled since 1998, 1999, and 2009. It is important to Panama City's economy, serving as an essential transport artery. ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS Moody's assess ENA Norte exposure to environmental risks as neutral-to-low (E-2 issuer profile score) as it relates to water management, waste and pollution and natural capital risks given ENA's understanding on how to manage these risks after more than 15 years of operating toll roads. Exposure to physical climate risks is also neutral-to-low as heavy rains only modestly reduce traffic when they occur seasonally and have not caused material physical damage to date. Mitigating factors include insurance policies, regulations that allow the recovery of unforeseen costs or losses, and state intervention. Moody's also recognize that these toll roads are unique and resilient asset, providing an essential and critical service in Panama City. Moody's overall assessment of social risk exposure for ENA Norte and is highly negative (S-4 issuer profile score), reflecting highly negative risks associated to customer relations. Despite the concession agreement allows both to increase tariffs by inflation every year, government concerns over affordability issues have resulted in a lack of tariff increases for more than 15 years. The scores also consider neutral-to-low risks for demographic and societal trends, human capital, health & safety, and responsible production. ENA Norte governance risk is highly negative (G-4 issuer profile score) given the increasing refinancing risk deriving from their exposure to public policy decisions that have led to a lack of tariff increases. The methodologies used in these ratings were Publicly Managed Toll Roads and Parking Facilities published in May 2023. GLOBAL BANK: Fitch Alters Outlook on 'BB' LongTerm IDR to Stable ---------------------------------------------------------------- Fitch Ratings has affirmed Global Bank Corporation's (GBC) Long-Term (LT) Issuer Default Rating (IDR) at 'BB'. Fitch has also affirmed the bank's Viability Rating (VR) at 'bb', Short-Term (ST) IDR at 'B' and the Government Support Rating (GSR) of 'No Support' (ns). In addition, Fitch has affirmed the bank's Long- and Short-Term National Ratings at 'AA(pan)' and 'F1+(pan)', respectively. The Rating Outlook for the LT IDR and LT National Rating has been revised to Stable from Negative. Fitch has also affirmed GBC's international debt rating at 'BB', and LT senior unsecured debt rating and ST senior unsecured debt rating at 'AA(pan)' and 'F1+(pan)', respectively. The Outlook revision to Stable on GBC's LT IDR and LT National Rating reflects a controlled asset quality performance as well as an improvement in capitalization metrics in the last fiscal year, which Fitch expects will continue over the ratings horizon as the operating environment's (OE) stable banking business conditions allow for a resilient financial performance by GBC. Key Rating Drivers Operating Environment: Fitch revised the OE score for Panama's banking system to Stable from Negative and affirmed it at 'bb+'. Despite the economic slowdown and high interest rate environment, the banking system's credit growth, asset quality and profitability metrics are performing better than expected. In addition, GDP growth will likely reach around 4.0% in 2025 (following the recent upward revision of 2.8% GDP growth for 2024), suggesting that pressures in business conditions for banks will be lower than they were in 2024. Ratings Driven by VR: GBC's IDRs and National Ratings are driven by its 'bb' VR which is above the implied level of 'bb-'. GBC's VR is influenced by Fitch's assessment of the Panamanian OE, currently at 'bb+' with a stable trend. GBC's VR is highly influenced by the bank's consistent business profile. Good Business Profile: GBC's score is at 'bb', above the implied level of 'b'. The bank's sustained market position offset its lower Total Operating Income (TOI) when compared to its local peers. The four-year (FY21-FY24) average TOI was USD233 million, and in FY24 it showed a contraction of -4.1% compared to FY23. Moreover, GBC has a recognized franchise as it is the fourth largest bank in Panama by local loans (market share: 9.5%) and the fifth in terms of internal deposits (7.5%) as of June 2024. It also has top participation in some credit segments, including agriculture, commercial and residential mortgages. Asset Quality Improving: GBC's core metric, stage 3 loans to gross loans, reversed its increasing trend in fiscal year 2024. It stood at 3.9% as of June 2024 (average 2021-2024: 4.1%), while the 90+ days past due loans accounted for 3.0% of gross loans (average 2021-2024: 3.2%). The reserve coverage for the stage 3 loans and 90+ days past-due loans reached 87.7% and 113.7%, respectively. Fitch expects GBC's asset quality will face challenges over the rating horizon as long as the restructured loans do not perform in a way that could result in metrics not commensurate with its current score. Top debtors' concentration increased, although it remained moderate, as the top 20 borrowers represented 1.8x the Common Equity Tier 1 (CET1) as of June 2024 (June 2023: 1.6x). Profitability Still Facing Challenges: GBC's profitability was relatively stable in FY24 due to pressures on the net interest margin (NIM) and operational efficiency. As of June 2024, GBC's core profitability metric, operating profit over risk-weighted assets (RWA), was still below 1% (0.9%; average 2021-2024: 0.7%). Over the ratings horizon, Fitch expects that the bank's profitability will see more favorable prospects as the NIM might benefit from a downward interest rate scenario amid a highly competitive sector, and results from the digitalization process enhance the efficiency. Capitalization Ratios Reversed Declining Trend: GBC's score is at 'bb-', above the implied level of 'b'. Fitch believes that the bank's capital features provide additional loss absorption capacity. GBC's CET1 capital ratio (CET1 over RWA) increased to 9.0% as of June 2024 (June 2023: 8.5%). At the same time, Fitch considers both the bank's countercyclical buffer (dynamic reserve) and the perpetual bond (convertible instrument with a high trigger of Tier 1 of 6.5%), which also provide loss absorption capacity, allowing the capitalization metric to increase to the regulatory CAR of 13.7%. Diversified Funding Profile; Stable Deposit Base: GBC has been characterized by an ample access and dependence on different non-deposit financing sources throughout the years, and under a relatively stable deposit base. The core ratio, loans to deposits, increased in fiscal year 2024, and stood at a high level of124.3% as of June 2024 (June 2023: 121.1%). The 20 largest depositors accounted for a moderate 13.9% of the deposit base, decreasing from the last review (June 2023: 16.5%). Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A decline in the core profitability ratio, operating profit to RWA, consistently below 0.5%, along with a sustained and material deterioration in the bank's asset quality, which impacts the CET1 to RWA ratio, including countercyclical buffer, to less than 10% could downgrade the bank's IDRs, VR and national ratings; - GBC's IDR and VR could be downgraded if there is a downward revision on Fitch's assessment of the OE which undermines its credit profile. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - GBC's IDRs, VR and national ratings could be upgraded if profitability stands above 1.5% consistently, which allows the CET1 to RWA ratio to be steadily above 15%, including countercyclical buffer, while maintaining asset quality under control; - GBC's IDR and VR could be upgraded by an upward revision of Fitch's assessment of the OE. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Debt: The rating of the senior unsecured global debt is at the same level as GBC's 'BB' LT IDR, as the likelihood of default of the notes is the same as that of the bank. The National LT and ST senior unsecured debt ratings are at the same level as GBC's 'AA(pan)' National LT and 'F1+(pan)' National ST ratings, respectively, as the likelihood of default of this debt is the same as that of the bank. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - The bank's long-term senior unsecured debt rating, national long-term senior unsecured debt rating and national short-term senior unsecured debt rating would mirror any downgrade of GBC's Long-Term IDR, national long-term rating and national short-term rating, respectively. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - The bank's LT senior unsecured debt rating and National LT senior unsecured debt rating would mirror any potential upgrade on GBC's LT IDR and National LT rating, respectively. The bank's National ST senior unsecured debt rating is at the highest level of the national rating scale and, therefore, does not have upside potential. GSR: The GSR of 'ns' reflects that external support, while possible, cannot be relied upon given Fitch's view of Panama's limited ability to support the banking system and domestic-systemically important banks, primarily due to its large size and the lack of a lender of last resort. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - There is no downside potential for GSR because this is the lowest level on the respective scale. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - As Panama is a dollarized country with no lender of last resort, an upgrade in GSR is unlikely. VR ADJUSTMENTS The bank's 'bb' VR has been assigned above the 'bb-' implied VR due to the following adjustment reason: Business Profile (positive). The 'bb+' Operating Environment Score has been assigned below the 'bbb' implied score due to the following adjustment reason: Sovereign Rating (negative). The 'bb' Business Profile Score has been assigned above the 'b' category implied score due to the following adjustment reason: Market Position (positive). The 'bb-' Capitalization and Leverage Score has been assigned above the 'b' category implied score due to the following adjustment reason: Core Capital Calculation (positive). ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Global Bank Corporation LT IDR BB Affirmed BB ST IDR B Affirmed B Natl LT AA(pan) Affirmed AA(pan) Natl ST F1+(pan)Affirmed F1+(pan) Viability bb Affirmed bb Government Support ns Affirmed ns senior unsecured LT BB Affirmed BB senior unsecured Natl LT AA(pan) Affirmed AA(pan) senior unsecured Natl ST F1+(pan)Affirmed F1+(pan) ===================== P U E R T O R I C O ===================== BL & MORE: Seeks to Hire Landrau Rivera & Assoc. as Legal Counsel ----------------------------------------------------------------- BL & More, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ the law offices of Landrau Rivera & Assoc. as its legal counsel. The firm will render these services: (a) advise the Debtor with respect to its duties, powers and responsibilities; (b) advise the Debtor in connection with a determination whether a reorganization is feasible and, if not, aid it in the orderly liquidation of its assets; (c) assist the Debtor with respect to negotiations with creditors for the purpose of proposing a viable plan of reorganization; (d) prepare on behalf of the Debtor necessary legal papers or documents; (e) appear before the Bankruptcy Court, or any court in which the Debtor asserts a claim interest or defense directly or indirectly related to this bankruptcy case; (f) perform such other legal services for the Debtor as may be required in these proceedings or in connection with the operation of/and involvement with its business; and (g) employ other professional services as necessary to complete the Debtor's financial reorganization with Chapter 11 of the Bankruptcy Code. The hourly rates of the firm's counsel and staff are as follows: Noemi Landrau Rivera, Attorney $250 Josue Landrau Rivera, Attorney $175 Legal and Financial Assistants $75 In addition, the firm will seek reimbursement for expenses incurred. The firm also received a $15,000 retainer from the Debtor. Ms. Rivera disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Noemi Landrau Rivera, Esq. Landrau Rivera & Assoc. P.O. Box 270219 San Juan, PR 00928 Telephone: (787) 774-0224 Facsimile: (787) 919-7713 Email: nlandrau@landraulaw.com About BL & More BL & More, Inc. sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.P.R. Case No. 24-04130) on Sept. 27, 2024, listing under $1 million in both assets and liabilities. Noemi Landrau Rivera, Esq., at Landrau Rivera & Assoc. serves as the Debtor's counsel. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2024. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. 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