/raid1/www/Hosts/bankrupt/TCRLA_Public/241022.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 22, 2024, Vol. 25, No. 212
Headlines
A R G E N T I N A
AEROLINEAS ARGENTINAS: Could Be Handed Over to Employees if Unsold
ARGENTINA: Milei Gets Vote of Confidence in Wave of Debt Sales
ARGENTINA: Rejected by UK Supreme Court in US$1.5BB Bond Case
FTX GROUP: Creditor Returns Are Impressive, But Not For Everyone
GENERACION MEDITERRANEA: Moody's Rates New $400MM Sec. Notes 'Caa3'
B R A Z I L
BANCO BTG PACTUAL: Fitch Rates USD500MM Unsec. Notes 'BB'
BRAZIL: Central Bank Chief Urges Stablecoins Regularization in 2025
J A M A I C A
[*] JAMAICA: Fewer Jamaican Households Receiving Remittances
M E X I C O
BANCO DEL BAJIO: Fitch Affirms BB+/B LongTerm IDRs, Outlook Stable
GRUPO AXO: Fitch Alters Outlook on 'BB' LongTerm IDRs to Positive
P U E R T O R I C O
HVP FOODS: Seeks 30-Day Extension of Plan Filing Deadline
S U R I N A M E
SURINAME: IDB OKs $30MM to Improving Planning and Management
- - - - -
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A R G E N T I N A
=================
AEROLINEAS ARGENTINAS: Could Be Handed Over to Employees if Unsold
------------------------------------------------------------------
Buenos Aires Times reports that President Javier Milei says there
are several potential buyers of flagship carrier Aerolineas
Argentinas, reiterating his desire to privatise the state airline.
Despite that, Milei insisted he was open to the idea of turning it
over to Aerolineas' employees if no deal could be agreed, the
report notes.
The problem, according to the President, is that the workers "don't
want it," the report notes.
Milei recalled he had submitted a "privatisation programme" to
Congress with the aim of significantly reducing Argentina's number
of state-owned companies, the report discloses.
Milei confirmed that Aerolineas Argentinas had been removed from
the list in order to smoothen negotiations, but that privatisation
remained the end goal, the report says.
In the meantime, he added, staffing numbers had been slashed at the
flagship carrier, the report notes. About 1,500 people were
affected.
About Aerolineas Argentinas
Headquartered in the Torre Bouchard, located in San Nicolas, Buenos
Aires, Aerolineas Argentinas, formerly Aerolineas Argentinas S.A.,
is Argentina's largest domestic and international airline. It is
the national airline and carries around 70% of Argentina's domestic
traffic and 40% of international flights from Ministro Pistarini
International Airport, which is located in Ezeiza, Buenos Aires.
Aerolineas Argentinas is currently owned in its majority by the
Argentine government, which seized the airline from Spanish tourism
company Grupo Marsans in 2009.
In June 2001, the airline filed for protection from creditors and
went into administration. In 2002, a Buenos Aires judge accepted
its debt restructuring agreement with creditors.
ARGENTINA: Milei Gets Vote of Confidence in Wave of Debt Sales
--------------------------------------------------------------
Buenos Aires Times reports that Argentina's largest companies are
rushing to issue dollar debt as yields tumble, a tentative sign
that President Javier Milei's shock therapy is starting to restore
investor confidence in the economy.
Banco de Galicia y Buenos Aires SAU, the country's biggest private
lender, sold US$325 million of bonds due 2028 abroad at a 7.875
percent yield this month, while YPF Luz, the power unit of
state-owned driller YPF SA, issued US$420 million of eight-year
notes yielding 8.2 percent, according to Buenos Aires Times.
State-owned Banco de la Nacion said it's planning a return to
international capital markets for the first time in some 30 years,
the report notes.
The sales are the latest of a series of deals that have raised just
over YS$4 billion in hard-currency debt this year, the most since
2017, according to data compiled by Bloomberg. While the prospect
of monetary easing in the United States has boosted demand for
high-yield bonds, Milei's determination to balance the budget,
reverse the flight of dollars out of the country and stamp out
inflation have played a large role in the comeback, investors say,
the report discloses.
Galicia, which raised the cash to pay for its purchase of HSBC's
Argentina branch, received offers quadruple the amount sought,
according to people with knowledge of the matter, who asked not to
be identified because the transaction was private, the report
notes.
As demand rises, Vista Energy, S.A.B. de C.V. said it would issue
up to US$150 million in notes the week of October 7, while Grupo
Albanesi plans to refinance its dollar debt that falls due over the
next three years, the report relays.
Mounting optimism over the state of the Argentine economy has
pushed the spread between its sovereign debt and their US pars to
1108 basis points according to a JPMorgan index, the lowest since
September 2020, the report recalls.
Meanwhile, the yield on about 80 percent of Argentine corporate
international bonds with at least US$100 million outstanding has
fallen below 10 percent, the report notes. In August 2023, only 27
percent of the bonds were yielding single digits, according to
Francisco Schumacher, a corporate strategist with BancTrust & Co,
the report relays.
The drop in yields has opened the path for the City of Buenos
Aires, one of the country's issuers with the best profile, to sell
as much as US$600 million in dollar debt between November and
March, the report discloses.
Limits
For now, the issuance wave has been largely limited to companies
that have easier access to dollars, while those that have revenue
in pesos have remained on the sidelines, the report notes. Banco
Galicia is the exception as it begins to resume large-scale lending
in the local market after years of just buying government debt, the
report says.
Edenor, a power distributor with revenue in pesos, attempted to tap
money managers for a US$400 million, seven-year dollar bond last
month, the report discloses. The deal failed to materialise as the
firm sought a yield under 10 percent, while investors demanded
11.125 percent, according to people with knowledge of the matter.
The utility is currently reassessing when to go back to the market,
one of the people said, the report relays.
An Edenor spokesperson declined to comment. The company said that
it would attempt to swap its senior unsecured notes due 2025 for
ones due in 2030, the report notes.
Still, money managers are confident the flurry of deals could
continue, the report says.
"If President Milei's economic adjustment program continues to be
successful, we expect the Argentine corporate space will continue
to broaden in range and depth," Allianz's Robey said, 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.
In March 2022, the International Monetary Fund (IMF) approved a new
30-month arrangement under an Extended Fund Facility for Argentina
in the amount of SDR 31.914 billion (equivalent to US$44 billion,
or 1000 percent of quota). The IMF Executive Board's decision
allowed the authories an immediate disbursement of an equivalent of
US$9.65 billion in March 2022.
Argentina's IMF-supported program seeks to improve public finances
and start to reduce persistent high inflation through a
multi-pronged strategy, involving a gradual elimination of monetary
financing of the fiscal deficit and enhancements in the monetary
policy framework.
In June 2024, the IMF Board completed an eighth review of the
Extended Arrangement under the Extended Fund Facility for
Argentina. The IMF Board's decision enabled a disbursement of
around US$800 million to support the authorities' efforts to
entrench the disinflation process, rebuild fiscal and external
buffers, and underpin the recovery.
S&P, in March 2024, raised its local currency sovereign credit
ratings on Argentina to 'CCC/C' from 'SD/SD' and its national scale
rating to 'raB+' from 'SD'. S&P also raised its long-term foreign
currency sovereign credit rating to 'CCC' from 'CCC-' and affirmed
its 'C' short-term foreign currency rating. The S&P ratings have
been affirmed as of August 2024. 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 that it would likely consider to be distressed.
In June 2023, Fitch ratings also upgraded 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-'.
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 2023. The new 'CC' rating signals a
default event of some sort appears probable in the coming years.
The affirmation of the LC IDR at 'CCC-' follows the peso debt swap
in June that Fitch did not deem to be a "distressed debt exchange"
(DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
ARGENTINA: Rejected by UK Supreme Court in US$1.5BB Bond Case
-------------------------------------------------------------
Buenos Aires Times reports that Argentina lost a bid at the UK
Supreme Court to hear its appeal on a ruling that would force the
South American nation to pay US$1.5 billion in damages to holders
of the country's growth-linked bonds.
In an order signed, the UK's top court refused to hear the appeal
over the payments to hedge funds including Palladian Partners LP,
according to Buenos Aires Times. The holders of those notes
argued the losses were a result of a change by a previous Argentine
government in how it calculated gross domestic product, the report
notes.
The court's decision puts pressure on the country's buffer of
foreign currency reserves, money that Argentina needs for bond
payments and to eventually lift capital controls, the report
relays. Lawyers for Argentina argued in May that it would struggle
to service some of its debt if it had to pay damages stemming from
the GDP-linked bonds, the report notes.
UK courts established Argentina now has 45 days to pay the GDP
bondholders, the report says. The Milei administration would be
subject to enforcement action if it misses that deadline and it
would also lose US$334 million the government already paid earlier
this year to UK authorities, the report discloses.
"During the course of this case, Argentina has repeatedly said to
the court that if a final decision is made in favor of the warrant
holders that the money to pay its creditors will need to be found,"
said Aidan O'Rourke, Partner at Quinn Emanuel acting for the hedge
funds, the report relays. "That time has now come," he added.
President Javier Milei's administration needs to make some US$9.45
billion in hard-currency bond payments in 2025, according to data
compiled by Bloomberg. While there's consensus among Wall Street
analysts about the country's willingness to pay, funding sources
are still tight, the report notes.
Milei's finance secretary, Pablo Quirno, said that monetary
authorities were working on a repurchase loan agreement, or repo,
to secure some cash ahead of its next debt payment in January, the
report relays.
Lawyers for Argentina declined to comment. A spokesperson for the
Milei administration didn't immediately respond to requests for
comment.
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.
In March 2022, the International Monetary Fund (IMF) approved a new
30-month arrangement under an Extended Fund Facility for Argentina
in the amount of SDR 31.914 billion (equivalent to US$44 billion,
or 1000 percent of quota). The IMF Executive Board's decision
allowed the authories an immediate disbursement of an equivalent of
US$9.65 billion in March 2022.
Argentina's IMF-supported program seeks to improve public finances
and start to reduce persistent high inflation through a
multi-pronged strategy, involving a gradual elimination of monetary
financing of the fiscal deficit and enhancements in the monetary
policy framework.
In June 2024, the IMF Board completed an eighth review of the
Extended Arrangement under the Extended Fund Facility for
Argentina. The IMF Board's decision enabled a disbursement of
around US$800 million to support the authorities' efforts to
entrench the disinflation process, rebuild fiscal and external
buffers, and underpin the recovery.
S&P, in March 2024, raised its local currency sovereign credit
ratings on Argentina to 'CCC/C' from 'SD/SD' and its national scale
rating to 'raB+' from 'SD'. S&P also raised its long-term foreign
currency sovereign credit rating to 'CCC' from 'CCC-' and affirmed
its 'C' short-term foreign currency rating. The S&P ratings have
been affirmed as of August 2024. 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 that it would likely consider to be distressed.
In June 2023, Fitch ratings also upgraded 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-'.
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 2023. The new 'CC' rating signals a
default event of some sort appears probable in the coming years.
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.
FTX GROUP: Creditor Returns Are Impressive, But Not For Everyone
----------------------------------------------------------------
Ben Zigterman at law360.com reports that the fact that former
customers of defunct cryptocurrency exchange FTX will recover their
full claims, plus interest, does not mean they are happy about it,
showing that even the best-case outcome in an impossibly
complicated bankruptcy can still leave creditors feeling bruised.
About FTX
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.
GENERACION MEDITERRANEA: Moody's Rates New $400MM Sec. Notes 'Caa3'
-------------------------------------------------------------------
Moody's Ratings assigned a Caa3 rating to Generacion Mediterranea
S.A. (Gemsa)'s up to $400 million backed senior secured exchange
notes offering. The outlook is stable.
On October 9, the company announced an exchange offer over most of
its international debt outstanding, amounting to $361 million of
principal with maturities between 2024 and 2027. The exchange is
expected to close on November 7 and follows the company's previous
exchange on its local issued notes. The current exchange proposal
contemplates the issuance of up to $400 million 11% senior secured
notes due 2031, payable in 12 consecutive installments according to
a defined amortization schedule and a final payment of 22% at the
notes final maturity in November 2031.
RATINGS RATIONALE
The assigned Caa3 rating factors in the expectation of improved
cash generation in 2025, as all of the company's expansions are
fully operational. These expansion projects will allow the company
to almost double its current EBITDA and improve cash generation
accordingly. The credit profile further incorporates the improved
asset positioning and extended contractual life resulting from
these investments. Gemsa has already secured the financing to
complete these projects and, while it entailed higher debt and
interest costs, the higher cash flows from the expansions will
allow for a gradual debt reduction and improvement in credit
metrics over the upcoming years. The ratings base case incorporates
Moody's expectation that Gemsa's leverage will decline to below 6
times debt to EBITDA in 2025 (from over 9 times as of June 2024).
While the company has been able to extend the profile of its local
issued notes through the first exchange and even if it is able to
successfully exchange its international debt, its liquidity
position will remain tight because despite improved internal cash
generation. Morevoer, the company will still need to continue
refinancing its upcoming debt maturities of no less than $100
million per year in 2025-26.
Gemsa continues to benefit from fixed-capacity payments from its
portfolio of assets that are mostly contracted under long-term
power purchase agreements (PPAs). Nevertheless, Gemsa's exposure to
Cammesa as its main off-taker will continue to constrain its credit
profile. Given that power prices remain subsidized, Cammesa
continues to be dependent on the Government of Argentina
(Government, Ca stable) transfers to make payments to power
generators under its PPA's. While in recent months Cammesa's
contractual payments to power generators have normalized, it is not
infrequent that payments are well delayed, which adds more pressure
to the Gemsa's weak liquidity position.
RATING OUTLOOK
The stable rating outlook reflects Moody's expectation that Gemsa
will be able to complete its expansion without significant delays
or cost overruns while maintaining high availability of its
operational fleet. The stable outlook also incorporates the
company's continued ability to roll-over its debt maturities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given the company's exposure to Cammessa, coupled with weak
liquidity and high leverage, a rating upgrade is unlikely. An
upgrade would require an upgrade of the sovereign rating, along
with improved liquidity and lower leverage, such that debt/EBITDA
remains lower than 4x and cash flow from operations pre-working
capital/debt is consistently above 15%.
Moody's could downgrade the rating if the company's expansion
suffers a significant delay or cost overruns, leading to higher
leverage for longer than expected, specifically, debt/EBITDA
remaining above 6x on a sustained basis.
Generacion Mediterranea S.A. (Gemsa) is an operating-holding
company that owns and operates 1,766 megawatts (MW) + 92 MW under
construction of thermal power capacity, on its own and through its
subsidiaries.
In July 2024, Gemsa's board approved the merger with AESA, a
company from the same economic group and subject to joint control.
Once Gemsa absorbs AESA, the latter will be dissolved without
liquidation. The merge is expected to be completed by January 2025.
AESA has 170 MW of installed capacity and an estimated annual
EBITDA of $ 40 million.
The principal methodology used in this rating was Unregulated
Utilities and Unregulated Power Companies published in December
2023.
===========
B R A Z I L
===========
BANCO BTG PACTUAL: Fitch Rates USD500MM Unsec. Notes 'BB'
---------------------------------------------------------
Fitch Ratings has assigned a 'BB' final Long-Term rating to Banco
BTG Pactual S.A.'s (BTG Pactual) USD500 million senior unsecured
notes. The notes were issued through its Cayman Islands Branch and
are due 2030.
The final rating is in line with the expected rating that Fitch
assigned to the proposed debt on Oct. 16, 2024.
Key Rating Drivers
The rating on the notes corresponds to BTG Pactual's Long-Term
Foreign Currency Issuer Default Rating (IDR; BB/Stable) and is
equal in rank to its other senior unsecured debt, as a default on
the notes would be considered a default by the bank. BTG Pactual's
ratings are driven by its standalone creditworthiness, as measured
by its 'bb' Viability Rating (VR).
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The rating of the notes could be downgraded in the event of a
downgrade of BTG Pactual's VR and IDR.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The rating of the notes could be upgraded in the event of an
upgrade of BTG Pactual's VR and IDR.
For further information on BTG's rating rationale and
sensitivities, please refer to "Fitch Takes Actions on 12 Brazilian
Banks Following Sovereign Upgrade" dated Aug. 2, 2023.
Date of Relevant Committee
August 1, 2023
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Banco BTG Pactual S.A.
senior unsecured LT BB New Rating BB(EXP)
BRAZIL: Central Bank Chief Urges Stablecoins Regularization in 2025
-------------------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Brazil's central
bank chief Roberto Campos Neto said that stablecoins and asset
tokenization should be regulated in the country next year, as he
delivered remarks in a video recorded for market intelligence firm
Uqbar.
Stablecoins are pegged to real-world assets, such as the U.S.
dollar, and therefore fluctuate much less than other crypto assets
like bitcoin, according to globalinsolvency.com.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
Moody's credit rating for Brazil was last set at Ba2 with positive
outlook as of May 2024. S&P Global Ratings raised on Dec. 19,
2023, its long-term global scale ratings on Brazil to 'BB' from
'BB-'. Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable
Outlook. DBRS' credit rating for Brazil was last reported at BB
with stable outlook at July 2023.
=============
J A M A I C A
=============
[*] JAMAICA: Fewer Jamaican Households Receiving Remittances
------------------------------------------------------------
Don Anderson at RJR News reports that fewer Jamaican households are
receiving remittances.
This is according to the findings of the third quarter Business and
Consumer Confidence Survey, conducted by Market Research Services,
RJR News notes.
Executive Chairman Don Anderson says 27 per cent of households are
receiving remittances, compared with a high of 36 per cent 13 years
ago, according to RJR News.
Mr. Anderson says the dip in remittances has implications for
people trying to make ends meet, the report relays.
"It goes towards their daily household income, daily household
expenditure, and they find that they have very little to save,
because they use this money basically to take care of their food
and their school fees and that kind of thing. So in addition to
the fact that they don't have a great degree of optimism about jobs
coming on stream, they are also less cushioned by the remittances
that are coming in. And therefore it reflects on the challenges
that consumers say they currently have meeting their household
expenses," Mr. Anderson explained, the report says.
The survey data is consistent with information released by the BoJ
which shows that remittances accounted for only 17.4 per cent of
GDP last year, compared with 24 per cent in 2021, 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. In September 2023, S&P
Global Ratings raised 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', with a stable outlook. In September 2024, S&P
affirmed 'BB-/B' sovereign ratings on Jamaica and revised outlook
to positive. In March 2022, Fitch Ratings affirmed Jamaica's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'.
The Rating Outlook is Stable.
===========
M E X I C O
===========
BANCO DEL BAJIO: Fitch Affirms BB+/B LongTerm IDRs, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Banco del Bajio S.A. Institucion de
Banca Multiple's (BanBajio) Viability Rating (VR) at 'bb+' and its
Long- and Short-Term Foreign and Local Currency Issuer Default
Ratings (IDRs) at 'BB+' and 'B', respectively. Fitch has
additionally affirmed BanBajio's Government Support Rating (GSR) at
'b+'.
Fitch has also affirmed BanBajio's and Financiera Bajio, S.A. de
C.V. Sofom E.R.'s (FIBA) Long- and Short-Term National scale
ratings at 'AA(mex)' and 'F1+(mex)', respectively. The Rating
Outlook on the Long-Term ratings is Stable.
Key Rating Drivers
Consistent Intrinsic Creditworthiness: Banco del Bajio S.A.
Institucion de Banca Multiple (BanBajio)'s IDRs and National
Ratings are driven by its intrinsic good creditworthiness, which is
captured in its 'bb+' VR. BanBajio's ratings reflect its recognized
regional market position and specialization in the agribusiness
segment. Although it has a less diverse business model than higher
rated local banks, its stronger-than-industry-average asset quality
has resulted in more stable earnings generation than most peers.
The ratings also consider the bank's record of conservative loan
underwriting, prudent capital management and stable deposit base.
Stable Business Profile: BanBajio's well-established regional
market position is supported by its strong and enduring customer
relationships, and recognized specialization in agribusiness (12%
of its loan portfolio related to primary sector activities) and the
SME segment. This has enabled the bank to defend its strong
franchise against increasing competition in the Bajio Region, one
of the most economically dynamic areas in the country.
As of the first half of 2024 (1H24), total operating income (TOI)
reached USD711.7 million and grew 8.3% yoy in local currency,
sustaining the positive trend from 2020, with an average of
USD942.6 million from 2020 to 2023. In Fitch's opinion, BanBajio's
recognized market position balances its lower diversification and
market share in loans and deposits compared to the largest local
peers.
Controlled Asset Quality: BanBajio's asset quality metrics remain
controlled. The stage 3 loan to gross loan ratio modestly
deteriorated to 1.5% as of 1H24 (2023: 1.4%) as the full impact of
higher interest rates and the appreciation of the Mexican peso were
felt by some borrowers, especially those involved in export and
agribusiness activities.
However, Fitch expects this deterioration to be manageable, and the
core metric will continue to compare favorably with domestic peers.
Therefore, the agency has maintained the asset-quality score at
'bb+' with a stable trend, reflecting the bank's prudent
underwriting standards, good guarantees, and established long-term
relationships with commercial customers.
Solid Earnings After Peak Normalization: Fitch expects BanBajio's
operating profit to risk-weighted assets (RWA) ratio to continue
normalizing over the medium term from a peak of 7.1% in 1H23, which
was driven by a high net interest margin (NIM). The ratio moderated
to 6.3% in 1H24, but Fitch considers the bank's core metric will
remain solid over the medium term, averaging a ratio close to 5%.
This expectation has led Fitch to revise the earnings and
profitability trend assessment to 'positive' from 'stable'. The
agency believes that BanBajio will be able to leverage the easing
interest rate environment to rein in funding costs and increase
lending activities, which should support net interest income.
Additionally, the bank continues to diversify its revenue streams,
such as those from foreign exchange trading and transaction fees,
which will support the bank's earnings.
Good Capital Buffers: BanBajio's capitalization has remained stable
although below to those reported by some local peers and largest
banks but consistent with the 'bb' score. At 1H24 the bank's common
equity Tier 1 (CET1) ratio declined to 14.2% from 16.3% at YE 2023
after dividend payments that amounted MXN6,609 million. Fitch
expects the ratio to return to the range of 15%-16% in 2024 and
2025, underpinned by strong earnings and moderate business growth
that should offset material dividends pay-outs.
Stable Funding and Liquidity Buffers: BanBajio largely funds its
loan book with stable customer deposits. Although its retail
deposit franchise is weaker than that of its peers, the bank
continues to gradually increase low-cost deposits and balance its
reliance on those that are price-sensitive deposits. This strategy
has also had a positive impact on the loan-to-deposit ratio, which
improved to 100.8% at 1H24 (2023: 103%), closing the gap with
domestic peers. Stable liquidity is evidenced by its regulatory
liquidity ratios, which remain above requirements.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
BanBajio's IDRs, VR and National Ratings could be downgraded due to
a material deterioration of its financial performance that leads to
a sustained decline in a CET1 to RWA ratio below 14% and operating
profit to RWAs ratio below 2%.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
BanBajio's IDRs, VR and National Ratings could be upgraded if the
operating environment and its credit profile both improve.
Specifically, if the bank's TOI significantly increase and close
the gap compared to higher rated peers in conjunction to improve
its CET1 to RWA ratio above 20% while maintain a healthy financial
profile.
Government Support Rating (GSR): BanBajio's GSR of 'b+' is three
notches below domestic systemically important banks' GSRs (bb+) to
reflects Fitch's opinion that a default of the bank would not
result in significant contagion risks for the rest of the system
due to its less systemic importance than its peers. Therefore,
Fitch views the probability of sovereign support in case of need as
moderate. The bank has a mid-size franchise and moderate market
share of core customer deposits. As of 1H24, BanBajio's deposits
were around 3.2% of the Mexican banking system, and about 27%
corresponded to individual deposits.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- BanBajio's GSR could be downgraded if Fitch believes that the
government's propensity to support the bank has declined due a
material loss in the market share of customer deposits.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- An upgrade of BanBajio's GSR is limited and could only occur over
time with a material gain in the bank's systemic importance.
SUBSIDIARIES & AFFILIATES: KEY RATING DRIVERS
Key Rating Drivers
Core Subsidiary for BanBajio: FIBA's national ratings of 'AA(mex)'/
Stable and 'F1+(mex)' reflect the same creditworthiness as
BanBajio's ratings. In its assessment of shareholder support, Fitch
considers FIBA to function as a business unit that complements the
financial group's product offering through various forms of
factoring and financial leasing. Any support required by the
subsidiary would come from the bank and would not represent a
significant financial burden given the modest size of FIBA's
operations.
SUBSIDIARIES AND AFFILIATES: RATING SENSITIVITIES
FIBA's national ratings would mirror any movement on BanBajio's
ratings. A change in the entity's strategic importance to the bank
could negatively affect FIBA's ratings.
Summary of Financial Adjustments
Fitch classified pre-paid expenses and other deferred assets as
intangibles and deducted them from total equity due to their low
loss absorption capacity.
Sources of Information
Financial figures are in accordance to the Comision Nacional
Bancaria y de Valores criteria. Figures for 2022, 2023 and 2024
include accounting changes in the process to converge to
International Financial Reporting Standards. Prior years did not
include these changes and Fitch believes they are not directly
comparable
Public Ratings with Credit Linkage to other ratings
FIBA's ratings and Outlook are aligned with those of BanBajio as it
is considered a core entity within the bank's business strategy.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Banco del Bajio, S.A. LT IDR BB+ Affirmed BB+
ST IDR B Affirmed B
LC LT IDR BB+ Affirmed BB+
LC ST IDR B Affirmed B
Natl LT AA(mex) Affirmed AA(mex)
Natl ST F1+(mex)Affirmed F1+(mex)
Viability bb+ Affirmed bb+
Gov't. Support b+ Affirmed b+
Financiera Bajio,
S.A. de C.V.,
SOFOM, E.R. Natl LT AA(mex) Affirmed AA(mex)
Natl ST F1+(mex)Affirmed F1+(mex)
GRUPO AXO: Fitch Alters Outlook on 'BB' LongTerm IDRs to Positive
-----------------------------------------------------------------
Fitch Ratings has affirmed Grupo AXO, S.A.P.I. de C.V.'s (AXO)
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
at 'BB' and National Long-Term Rating at 'A+(mex)'. The Rating
Outlook has been revised to Positive from Stable.
AXO's Positive Outlook reflects the strengthening of its business
profile bolstered by a larger scale and further diversification of
its operations. Fitch anticipates that these factors will benefit
the company's financial profile through higher operating cash flow
and improving adjusted leverage over the rating horizon. The
Positive Outlook can be favorably resolved in the next 12 months-24
months if AXO is able to materialize financial consolidation and to
adequately execute the ramp up of Ulta Beauty and the new Joint
Venture (JV) with TJX Companies, Inc.
AXO's ratings are supported by its position as one of Mexico's main
apparel retail operators, driven by a diversified portfolio of
well-known brands and store formats focused on different segments
of the population. The ratings also consider the company's
long-term relationships with suppliers and real estate developers,
as well as its operating track record and market understanding.
Key Rating Drivers
Focused Strategy Supports Operating Trajectory: AXO's initiatives
to support growth have allowed it to reach double-digit revenue
growth over the past 10 years, with revenues increased by 10x
during that period. EBITDAR margins have been steady at around 20%
and are expected to remain at those levels. Cash flow from
operations (CFFO) is expected to be above MXN1.5 billion by YE
2024, which together with a portion of cash in hand will cover the
capex requirements and dividend distributions for the year. The
company's FCF is expected to be positive in 2025 and going
forward.
Balanced Diversification: AXO commercializes different product
categories and operates various store formats to service different
socioeconomic segments, which strengthens its business profile and
mitigates risks associated to a specific brand, product category
and store format. The company divides its product portfolio into
three business segments: lifestyle, off-price (which includes the
digital platform) and athletics. According to Fitch's estimations,
the lifestyle segment is expected to account nearly 60% of 2024
consolidated revenues, off-price around 20% and athletics the
remaining portion.
Strong Brand Portfolio: AXO is one of the main apparel retailers,
accessories and personal care products in Mexico, Chile, Peru and
Uruguay, operating around 45 brands. It has the exclusive rights to
commercialize internationally recognized brands products in these
countries. Its ample portfolio of brands has allowed it to achieve
economies of scale in logistics, and has given it a competitive
advantage with shopping malls developers compared to peers. The
company has been diversifying its revenues in terms of brands and
product categories. During the LTM ended June 30, 2024, none of the
brands in its portfolio represented more than 11% of consolidated
revenues.
Leverage Metrics to Strengthen: AXO's EBITDAR leverage is expected
to be below 4.0x by the end of 2024. Fitch projects AXO's EBITDAR
leverage to trend towards 3.5x going forward mainly on EBITDAR
strengthening in the absence of major investments or debt funded
acquisitions. Fitch believes additional debt is a possibility if
AXO explores any relevant acquisition. AXO's funding sources also
include internal cash flow generation and potential equity
increases.
Acquisitions Have Been Neutral to Financial Profile: AXO's ratings
incorporate its growth strategy through acquisitions funded with a
combination of debt and equity contributions. The company's
portfolio has evolved via acquisitions and strategic partnerships,
which have strengthened the business and diversified operating cash
flows by getting access to markets with significant growth
potential. Fitch expects future transactions will continue to be in
line with AXO's core strategy and views integration risk manageable
due to AXO's record of successful transactions.
Derivation Summary
AXO is one of the most important apparel retailers in Mexico with a
diversified portfolio of recognized brands and store formats; AXO
has lower scale and is less geographically diversified than peers,
such as Capri Holdings Ltd. (BBB-/Rating Watch Negative) and Levi
Strauss & Co. (BB+/Stable). However, the company's revenues are
more diversified in terms of brands, product categories and store
formats than these peers.
Similar to Capri, AXO has made acquisitions to grow, seeking to
reduce its reliance on a few brands and diversify into additional
product categories and store formats. AXO's EBITDAR leverage is
expected to trend towards 3.5x by 2024-2025, while for Levi Strauss
Fitch expects it to be maintained below 3.5x. Capri is currently on
Rating Watch Negative due to Fitch's expectations of EBITDAR
leverage to be in the low-4x by FY25 and to trend to the low 3x
range over the next 12 months to 24 months.
Key Assumptions
- Revenue growth of 7% for 2024 and 11.3% on average per year
during 2025 to 2026;
- EBITDAR margin around 20% during 2024 to 2026;
- CFFO above MXN1.5 billion per year during 2024 to 2026;
- Capex of MXN1.8 billion per year in average for 2024 to 2026;
- Dividend payments of MXN1.8 billion in 2024 and MXN155 million
per year in average from 2025 to 2026;
- FCF positive starting 2025;
- Due to the company's track record and strategy, a hypothetical
acquisition in 2026.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Adequate execution of the new beauty business segment and of the
new strategy for the physical off-price segment;
- Consistently positive FCF;
- Total adjusted debt/EBITDAR close to 3.5x on a sustained basis;
- A strong liquidity profile.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Adjusted leverage consistently higher than 4.5x;
- A significant decline in market share;
- M&A funded entirely with debt and not performing as expected;
- Sustained negative FCF that is not partially or fully compensated
with equity contributions;
- Weakened liquidity and financial flexibility.
Liquidity and Debt Structure
Comfortable Liquidity Profile: AXO had available cash of MXN2.8
billion and short-term debt of MXN0.9 billion at June 30, 2024. In
July 2024, the company refinanced its senior notes and local bonds
with banking facilities and debt maturities extended through 2029.
Issuer Profile
Grupo AXO is the largest multi brand fashion retailer & wholesaler
in Mexico, with presence in three business segments: full price,
off price (includes digital), and sneakers and athletics. In 2023,
the company expanded its presence in South America with the
acquisition of Komax.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Grupo AXO, S.A.P.I.
de C.V. LT IDR BB Affirmed BB
LC LT IDR BB Affirmed BB
Natl LT A+(mex) Affirmed A+(mex)
=====================
P U E R T O R I C O
=====================
HVP FOODS: Seeks 30-Day Extension of Plan Filing Deadline
---------------------------------------------------------
HVP Foods Corp. asked the U.S. Bankruptcy Court for the District of
Puerto Rico to extend its period to file a plan and disclosure
statement for 30 days.
The Court previously granted the Debtor an extension of time to
file Disclosure Statement and Plan on July 31, 2024.
The Debtor claims that it is still actively pursuing settlement
agreements with various of the creditors in the present case.
The Debtor explains that it is in the final stage of negotiations,
reason why the company is requesting additional 30 days to present
a confirmable plan and disclosure statement.
HVP Foods Corp. is represented by:
Juan Carlos Bigas Valedon, Esq.
Juan C. Bigas Law Office
515 Ferrocarril
Urb. Santa Maria
Ponce, PR 00717
Phone: (787) 259-1000
Email: cortequiebra@yahoo.com
citas@preguntalegalpr.com
About HVP Foods, Corp.
HVP Foods Corp. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-00878)
on March 5, 2024, listing $100,001 to $500,000 in assets and
$500,001 to $1 million in liabilities.
Juan Carlos Bigas Valedon, Esq., at Juan C Bigas Law Office, is the
Debtor's counsel.
===============
S U R I N A M E
===============
SURINAME: IDB OKs $30MM to Improving Planning and Management
------------------------------------------------------------
The Inter-American Development Bank (IDB) has approved a US$30
million project to help Suriname build up its institutional
capacity to manage land use. This seven-year operation will
strengthen the country's frameworks and tools for spatial and
environmental planning and boost the operational capabilities of
the Ministry of Spatial Planning and Environment and the National
Environmental Authority.
In Suriname, changes in land use are driven by economic growth,
demographic pressures, and unplanned urban expansion, among other
factors. The country's population has tripled from 1950 to 2022,
posing a threat to its valuable natural resources and ecosystems
that are critical for economic development and climate change
mitigation as they rely heavily on natural capital.
The IDB's Board of Executive Directors has approved the operation,
which includes initiatives such as the creation of a Green
Development Vision Framework and a National Spatial Planning
Strategy, the implementation of an environmental information
system, and a Geospatial Intelligence Center. The project will also
set up a monitoring mechanism for climate transparency.
Additionally, the loan will fund the construction of two
bioclimatic buildings to house the Ministry of Spatial Planning and
Environment and the National Environmental Authority.
The project also incorporates gender and diversity inclusion
aspects, providing training on nondiscriminatory practices and
ensuring that people with disabilities have no difficulties in
accessing the new facilities and digital systems.
This operation is aligned with Suriname's international commitments
in its Multi-Annual Development Plan 2022–2026, expanding the
country's capacity to achieve sustainable and climate-resilient
development.
The IDB loan has a 22.5-year repayment term and an eight-year grace
period.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
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