/raid1/www/Hosts/bankrupt/TCRLA_Public/241106.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, November 6, 2024, Vol. 25, No. 223
Headlines
B E R M U D A
NABORS INDUSTRIES: BlackRock Holds 13.7% Equity Stake
B R A Z I L
COSAN SA: Moody's Affirms 'Ba2' CFR, Outlook Remains Negative
E C U A D O R
BANCO BOLIVARIANO: Fitch Affirms 'CCC+/C' Issuer Default Ratings
BANCO GUAYAQUIL: Fitch Affirms 'CCC+/C' Issuer Default Ratings
BANCO PICHINCHA: Fitch Affirms 'CCC+' LongTerm IDR
BANCO PROCREDIT: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
PRODUBANCO: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable
J A M A I C A
[*] JAMAICA: Remittance Inflows Continue to Tumble
[*] JAMAICA: Reports Fiscal Deficit of $57 Bil. for April to August
P U E R T O R I C O
CONVENTION CENTER: Files for Chapter 11 Bankruptcy
FULL HOUSE DEVELOPMENT: Meeting of Creditors on Nov. 18
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B E R M U D A
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NABORS INDUSTRIES: BlackRock Holds 13.7% Equity Stake
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BlackRock, Inc. disclosed in Schedule 13G Report filed with the
U.S. Securities and Exchange Commission that as of September 30,
2024, it beneficially owned 1,465,884 shares of Nabors Industries
Ltd.'s common stock, representing 13.7% of the shares outstanding.
A full-text copy of BlackRock's SEC Report is available at:
https://tinyurl.com/3a9nymk2
About Nabors
Bermuda-based Nabors Industries Ltd. (NYSE: NBR) owns and operates
land-based drilling rig fleets and provides offshore platform rigs
in the United States and several international markets. Nabors also
provides directional drilling services, tubular services,
performance software, and innovative technologies for its own rig
fleet and those of third parties.
Nabors Industries reported a net loss of $11.8 million for the year
ended December 31, 2023, a net loss of $307.22 million in 2022, a
net loss $543.69 million in 2021, a net loss of $762.85 million in
2020, a net loss of $680.51 million in 2019, a net loss of $612.73
million in 2018, and a net loss of $540.63 million in 2017. As of
March 31, 2024, the Company had $4.64 billion in total assets,
$3.37 billion in total liabilities, and $522.82 million in total
stockholders' equity.
* * *
In August 2024, Fitch Ratings has assigned a 'CCC'/'RR6′ rating
to Nabors Industries, Inc.'s proposed senior guaranteed notes (PGN)
due 2031. Nabors plans to utilize the proceeds from these notes to
refinance the 7.25% PGN due 2026 held at Nabors Industries, Ltd.
(Bermuda) and for general corporate purposes. The proposed notes
will rank pari passu with Bermuda's existing PGN due 2026 and PGN
due 2028.
Nabors' existing 'B-' Long-Term Issuer Default Rating and Stable
Outlook reflect the softening U.S. drilling environment since the
beginning of 2023, alongside a steadily growing international
segment. Fitch's credit profile assessment is supported by the
expectation that free cash flow (FCF) will be directed toward gross
debt reduction, as well as the company's proactive management of
its maturity profile and its adequate liquidity.
However, these positive factors are partially offset by the
company's large note maturities starting in 2027, which Fitch
anticipates will likely require partial refinancing through capital
markets. Additionally, potential declines in rig activity and day
rates could negatively impact cash flow and restrict FCF and
near-term gross debt reduction. The company's complex capital
structure, combined with the current high-interest rate
environment, could also limit refinancing options and increase
interest expenses.
In March 2024, S&P Global Ratings revised its outlook to stable
from positive and affirmed its 'B-' issuer credit rating on Nabors
Industries Ltd. At the same time, S&P affirmed its 'B-' issue-level
rating on the company's senior priority guaranteed notes, with a
recovery rating of '3,' and a 'CCC' issue-level rating on the
company's priority guaranteed notes, with a recovery rating of '6.'
The stable outlook reflects S&P's expectation for the company's
operating performance, industry fundamentals, near-term debt
maturity profile, and credit metrics to remain appropriate for the
'B-' issuer credit rating. The outlook revision reflects S&P's
expectation of reduced free cash flow generation and lower than
anticipated debt reduction.
In July 2024, S&P Global Ratings assigned its 'CCC' issue-level
rating and '6′ recovery rating to Nabors Industries Ltd.'s
proposed $550 million senior guaranteed notes due 2031. The
company's subsidiary, Nabors Industries Inc., will issue the notes.
The '6′ recovery rating indicates S&P's expectation of negligible
(0%-10%; rounded estimate: 0%) recovery of principal by creditors
in the event of a payment default.
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B R A Z I L
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COSAN SA: Moody's Affirms 'Ba2' CFR, Outlook Remains Negative
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Moody's Ratings has affirmed Cosan S.A. Ba2 Corporate Family Rating
and the backed senior unsecured Ba2 ratings of Cosan Luxembourg
S.A. and Cosan Overseas Limited. Outlook remains negative.
RATINGS RATIONALE
The negative outlook reflects the high leverage at the holding
level and execution risks involved as Cosan executes on its plan to
continue reinforcing its liquidity and capital structure.
Refinancing risk has been reduced considerably with no debt
amortizations due in the next 2 years, including liability
management announced in July 2024, which supports the affirmation
of the rating. Interest coverage is expected to remain tight with
the carve out of dividends from Raízen S.A. (Baa3 stable) and
Compass Gás e Energia S.A. to cover redeemable preferred shares
agreements linked to the acquisition of Vale S.A. (Baa2 positive)
shares. Moody's expects Cosan to divest from certain assets and its
participation in certain subsidiaries to reduce debt balance at the
holding level and maintain an adequate liquidity.
Cosan S.A.'s Ba2 corporate family rating (CFR) reflects its
diversified portfolio of businesses, including the entire
sugar-ethanol chain; fuel distribution, including convenience
stores, natural gas, lubricants, logistics operations and metals &
mining; and its good liquidity profile. The holding company's
diversified sources of dividends mitigates volatility with cash
flow streams from the agricultural sugar-ethanol activities, fuel
distribution, gas distribution, and mining. Railway operator Rumo
S.A. (Ba2 Stable) and other investments can improve diversification
to Cosan as they grow more robust in their ability to provide
consistent and reliable dividends.
Cosan's ratings are constrained by the acquisitive growth history
of the company and its subsidiaries, high debt balance and tight
interest coverage at the holding level, with metrics outside the
range commensurate with the rating.
The negative outlook reflects the high leverage at the holding
level and execution risks involved as Cosan executes on its plan to
continue reinforcing its liquidity and capital structure. Moody's
also expect the company to sustaining an adequate interest coverage
above 1.0x (Net Dividends Received/Interest Expense and Dividends
Paid)
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure could develop if the parent company maintains a
strong standalone financial profile with lower leverage and good
liquidity. A greater diversification of investees and segments
could benefit the rating. Quantitatively Cosan needs to reduce the
debt balance at the holding level, which Moody's expect the company
to achieve via divestments, while maintaining an adequate interest
coverage.
A downgrade could result from the company's inability to reduce the
debt at the holding level during the next 12 months that results in
a sustained weak interest coverage. Weakening liquidity, including
broad declines in equity valuations or tightening credit conditions
such that asset sales or capital market access becomes unattractive
or inaccessible could also build negative pressure to the rating.
Weakening of credit quality or operating performance of any of
Cosan's key subsidiaries, such that the upstream of dividends is
affected, could also result in a downgrade.
The principal methodology used in these ratings was Investment
Holding Companies and Conglomerates published in April 2023.
Headquartered in São Paulo, Cosan S.A. is a holding company with a
shared control of Raizen S.A. (sugar-ethanol; fuel distribution,
including convenience stores), via a joint-venture with Shell PLC
(Aa2 stable); controlling stake in Compass Gás e Energia S.A.
(natural gas), Rumo S.A. (railways and logistics), Moove Lubricants
Holdings (lubricants), Radar Gestão de Investimentos S.A. (land
management), a minority stake of 4.14% Vale S.A. (mining), among
other investments.
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E C U A D O R
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BANCO BOLIVARIANO: Fitch Affirms 'CCC+/C' Issuer Default Ratings
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Fitch Ratings has affirmed Banco Bolivariano C.A.'s Long-Term
Issuer Default Rating (IDR) and Short-Term IDR at 'CCC+' and 'C',
respectively. Fitch has also affirmed the bank's Viability Rating
(VR) at 'ccc+'. Fitch typically does not assign Rating Outlooks to
issuers rated 'CCC+' or below. Fitch has also affirmed
Bolivariano's Government Support Rating at 'ns'.
Key Rating Drivers
Operating Environment Caps Ratings: Bolivariano's IDRs are driven
by the bank's intrinsic creditworthiness, as reflected in the
'ccc+' VR. The ratings are capped by the bank's operating
environment (OE) score of 'ccc+', because Ecuador's sovereign
rating and broader OE considerations highly influence the bank's
credit profile. The heightened sovereign political, fiscal, and
financing risks, along with the potential for renewed social
unrest, could lead to an increase in non-performing loans. This, in
turn, would limit Bolivariano's profitability and internal
capital-generation capacity.
Consistent Business Profile: Bolivariano's business profile is
underpinned by its consistent business model. The model is focused
on lower-risk segments (commercial loans accounted for 69.4% of
total loans as of 3Q24), which allows the bank to weather credit
cycles. Longstanding customer relationships also allow Bolivariano
to generate consistent total operating income despite its moderate
market position in Ecuador. As of 3Q24, Bolivariano was sixth in
terms of assets (7.9%), loans (7.7%) and deposits (7.7%)
Strong Risk Profile: Fitch believes Bolivariano's risks are
adequately handled, supported by a low risk appetite compared to
peers and appropriate risk management. Despite high borrower and
geographic concentration, the bank's focus on lower-risk borrowers
and segments, together with sound underwriting standards, has
resulted in adequate and stable financial metrics.
Good Asset Quality: Fitch expects Bolivariano's asset quality
ratios to remain adequate due to its conservative business model
and risk appetite. Fitch also does not expect 30-days past due
loans (PDLs) to increase above 2%. However, high credit
concentrations pressure this asset quality assessment. As of 2Q24,
the top 20 borrowers accounted for 2.2x the bank's equity.
As of 3Q24, the 30-days PDL ratio increased to 1.6%, above the
average of the last four years of 1.1%. This reflects the unwinding
of regulatory flexibility that classified loans as PDLs after 60
days, instead of 15 to 30 days. The increased PDL is still low
compared to the Ecuadorian financial system average of 3.8%. Fitch
expects the bank's asset quality metrics to deteriorate slightly in
2024, driven by the still challenging operating environment,
primarily driven by political uncertainty. This could affect
economic and credit growth and decrease customer payment capacity,
particularly for retail clients.
Stable Profitability Ratios: Bolivariano's profitability is
consistent and supported by effective management of the net
interest margin (NIM) and good loan portfolio quality. As of 3Q24,
the operating income-to-RWAs ratio slightly decrease to 1.7%
(December 2023: 1.8%). However, this was still higher than the 1.5%
average for the past four years and compares favorably with its
peers. Fitch expects Bolivariano's profitability to come under
slight pressure by YE24 due to persistent high funding costs and an
increase in technological transformation expenses, as well as the
payment of the temporary contribution over 2023's net income. The
payment was mandated by a law established to help fight internal
armed conflict and the country's social and economic crisis.
Adequate Capitalization Levels: Bolivariano's capitalization is
adequate given the bank's business model. It has remained stable
due to internal capital generation and a historical earnings
retention rate of approximately 70%. As of 3Q24, the Fitch core
capital (FCC)-to-RWAs ratio was 10.9%, reflecting stability through
economic cycles (four-year average: 10.6%). The bank's
capitalization ratios have benefited from a new regulation that
reduced the weighting for some asset types. For YE24, Fitch expects
a slight improvement in Bolivariano's capital metrics due to the
bank's internal capital generation, conservative risk appetite and
moderate growth prospects.
Stable Funding and Ample Liquidity: Bolivariano's funding structure
is adequate and stable; the loans-to-customer deposit ratio of
94.4% as of 3Q24 remains sound. About 41.2% of the bank's liquid
assets (excluding fondo de liquidez) are invested abroad and so are
more liquid than domestically issued instruments. The bank also has
access to the debt capital markets and wholesale funding. In line
with its business profile, Bolivariano exhibits high deposit
concentration, with the 20 largest depositors accounting 19.4% of
total deposits as of 3Q2024. The bank mitigates this risk through
an adequate level of liquid assets; cash and securities account for
41.7% of total customer deposits. The bank maintains credit lines
with local and foreign financial institutions to complement its
liquidity. As of 3Q24, it had USD208.7 million in available credit
lines.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The IDRs are sensitive to changes in the sovereign rating or to
further deterioration of the local operating environment;
- The IDRs and VR could be downgraded if there is significant
deterioration in the bank's business and financial profiles,
although downside potential is somewhat limited given the low VR
level imposed by the sovereign constraint.
- The GSR has no downgrade potential, as it is at the lowest
possible level.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Bolivariano's rating upside potential is limited. In the long
term, an upgrade would require improved prospects for the operating
environment and a meaningful and sustained improvement in the
bank's core profitability and capital ratios.
- The Government of Ecuador's propensity or ability to provide
timely support to Bolivariano is not likely to change given the
sovereign's low sub-investment-grade IDR. As such, the GSR has no
upgrade potential.
GOVERNMENT SUPPORT RATING
The GSR of 'ns' reflects that despite Bolivariano's moderate market
share and local franchise, Fitch believes that there is no
reasonable assumption of support being forthcoming from the
sovereign. This is due to Ecuador's limited financial flexibility
and the lack of a lender of last resort.
VR ADJUSTMENTS
The VR has been assigned below the implied VR due to the following
adjustment reason: Operating Environment/Sovereign Rating
Constraint (negative).
The Operating Environment score has been assigned below the implied
score due to the following adjustment reason: Sovereign Rating
(negative).
Sources of Information
- Banco Bolivariano's webpage and audited financial statements;
- Superintendencia de Bancos del Ecuador.
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
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Banco Bolivariano C.A. LT IDR CCC+ Affirmed CCC+
ST IDR C Affirmed C
Viability ccc+ Affirmed ccc+
Government Support ns Affirmed ns
BANCO GUAYAQUIL: Fitch Affirms 'CCC+/C' Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed Banco Guayaquil S.A. (BG) Long-Term
Issuer Default Rating (IDR) at 'CCC+', Short-Term IDR at 'C' and
Viability Rating (VR) at 'ccc+'. Fitch has also affirmed the
Government Support Rating (GSR) at 'ns'.
Key Rating Drivers
IDRs AND VR
Operating Environment with High Influence: BG's VR underpins its
IDR. However, the ratings are capped by Fitch's assessment of the
operating environment (OE) score of 'ccc+'. Ecuador's sovereign
rating and broader OE considerations highly influence the bank's
VR. The heightened sovereign political, fiscal, and financing
risks, as well as the potential for renewed social unrest could
negatively result in rising non-performing loans (NPL), and limit
the bank's profitability and internal capital-generation capacity.
Good Business Model: BG is the third largest bank in Ecuador, with
a market share of 12.4% by assets as of 3Q24. BG's loan portfolio
is fairly diversified, with commercial loans accounting for 54.5%
of total loans, 41.0% consumer and 5.0% mortgages. The bank's
business model has been stable through time; it has a long track
record of earnings stability, which have proven to be resilient
amid the economic cycles. However, BG's total operating income
level is almost three times lower than the market leader.
Asset Quality Metrics Include Room for Deterioration: As of 3Q24,
BG's regulatory impaired loan ratio, which is more conservative
than the 90-day delinquency measure, stood at 2.5%, remaining
stable compared to YE23 (2.7%). However, it is above its four-year
average (2020-2023) of 1.8%, primarily driven by the expiration of
regulatory flexibility to delay the recognition of deteriorated
loans at the beginning of 2023. Reserve coverage remains sound at
130.2% and enhances the bank's loss absorption capacity.
Historically, the bank has evidenced adequate asset quality ratios,
reflecting a conservative risk appetite.
Fitch does not rule out additional pressures on asset quality
metrics, driven by a challenging OE, weakened investment prospects,
low economic growth, and the potential for renewed social unrest.
For 2024, Fitch expects the NPL ratio to remain similar to what was
evidenced as of 3Q24, while for 2025 it expects a slight recovery,
driven by higher economic growth compared to 2024.
Lower Profitability Levels: As of 3Q24, the operating profit to
risk-weighted assets (RWA) ratio decrease to 1.8% from 2.5% as of
YE23 (YE22: 2.3%), driven by a lower Net Interest Income (NIM)
primarily due to higher interest expenses. Net income also
evidenced a decline due to a higher tax burden. Fitch expects
profitability levels to remain pressured for the remainder of 2024,
with a slight recovery in 2025 driven by higher credit demand due
to increased economic growth and lower funding costs.
Adequate Capitalization Ratios: BG's Fitch Core Capital (FCC) ratio
stood at 12.1%, remaining in adequate levels but below the
evidenced as of YE23 of 12.8% due to lower profitability.
Regulatory capital ratio of 13.8% as of 3Q24 is well above the
regulatory minimum of 9.0% and is mainly composed by Tier I capital
(approximately 80% of regulatory capital). The bank has the policy
to maintain a maximum pay-out ratio of 55%, in order to improve
internal capital generation. Fitch doesn't expect material
deterioration on capitalization levels of Ecuadorian banks, since
growth is expected to be moderate.
Ample Funding and Liquidity Levels: BG's liquidity position is
conservative. Loans-to-deposits ratio remained sound at 96.8% as of
3Q24, remaining stable from 94.8% at YE23. Historically, customer
deposits have covered most of the bank's funding needs (82.1% as of
3Q24). The bank maintains good access to capital debt markets and
wholesale funding. It benefits from high quality available funds
that represented 37.5% of short-term deposits as of 3Q24, which is
considered adequate by Fitch. In order to complement its liquidity
levels, the bank maintains credit lines with local and foreign
financial institutions.
GOVERNMENT SUPPORT RATING
The GSR of 'ns' reflects that despite BG's important market share
and local franchise, Fitch believes that there is no reasonable
assumption of support being forthcoming from the sovereign due to
Ecuador's limited financial flexibility and the lack of a lender of
last resort.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
IDRs and VR:
- The IDRs are sensitive to changes in the sovereign rating or to
further deterioration within the local OE;
- The IDRs and VR could be downgraded if there is significant
deterioration in the banks' intrinsic credit profile, although
downside potential due to intrinsic financial deterioration is
somewhat limited, given the low VR level imposed by the sovereign
constraint.
GSR:
- The GSR has no downgrade potential, as it is at the lowest
possible level.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
IDRs and VR:
- BG's upside potential is limited. In the long term, a rating
upgrade would require improved prospects for the OE and a
meaningful and sustained improvement in the bank's core
profitability, along with improvement in the bank's credit quality
and capitalization.
GSR:
- Ecuador's propensity or ability to provide timely support to BG
is not likely to change given the sovereign's low
sub-investment-grade IDR. As such, the GSR has no upgrade
potential.
VR ADJUSTMENTS
The VR of 'ccc+' has been assigned below the 'b' implied VR due to
the following adjustment reason: OE (negative).
Fitch has assigned an OE score of 'ccc+' that is below the 'b'
category implied score due to the following adjustment reason:
Sovereign Rating (negative).
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
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Banco Guayaquil, S.A. LT IDR CCC+ Affirmed CCC+
ST IDR C Affirmed C
Viability ccc+ Affirmed ccc+
Government Support ns Affirmed ns
BANCO PICHINCHA: Fitch Affirms 'CCC+' LongTerm IDR
--------------------------------------------------
Fitch Ratings has affirmed Banco Pichincha C.A. y Subsidiarias'
Long-Term Issuer Default Rating (IDR) at 'CCC+' and Viability
Rating (VR) at 'ccc+'. Fitch does not assign Outlooks to ratings in
the 'CCC+' categories or below.
Key Rating Drivers
Operating Environment with High Influence: Pichincha's VR drives
its IDR, but ratings are capped by Fitch's 'ccc+' Operating
Environment (OE) score for Ecuador. The OE significantly influences
the bank's VR, with weak GDP growth, a security crisis, and
potential social unrest posing challenges, particularly in loan
deterioration and profitability. About 30% of Pichincha's loans are
in other jurisdictions like Peru, Spain, and Colombia, which
positively influences the OE assessment. However , Ecuador's weak
OE holds greater weight, explaining the 'ccc+' score.
Adequate Asset Quality: Pichincha's regulatory NPL ratio continues
to slightly deteriorate but remains adequate. Asset quality
benefits from sound reserve coverage and low borrower
concentrations. As of June 2024, the stricter regulatory NPL ratio
stood at 4.1%, higher than local peers. The 90+ days past due loans
ratio is adequate but declining due to a challenging operating
environment, particularly in retail loans. Fitch project these
ratios will remain in line with the rating assessment in 2024,
though downside credit risks persist due Ecuador's economic
uncertainty.
Weakened Profitability: Pichincha's profitability has declined due
to persistently high funding costs and increased loan impairment
charges. In 6M24, the annualized operating profit to risk-weighted
assets (RWA) ratio fell to 0.2% from 0.8% in 2023, slightly
underestimated due to some loan recoveries as non-operating item.
Increased interest rates have compressed the net interest income
margin (NIM), but Fitch expects NIM pressure to ease as market
rates decline.
However, loan impairment charges pose a downside risk to profits
due to possible increased delinquency and the bank's conservative
loan provision policy. Additionally, the bank's metrics are
impacted by non-recurrent operating costs from government-led
mandatory contributions.
Robust Loan Loss Absorption Capacity: Fitch revised Pichincha's
capitalization and leverage score to 'b'/Stable from 'b-'/Stable
due to core metric improvement and strong loan loss absorption
capacity provided by ample reserve coverage. As of June 2024, this
was 225% over regulatory NPLs. Fitch anticipates the bank will
sustain similar levels of coverage in the future. As of June 2024,
the bank's FCC to RWA ratio remained stable at 11.4%. Fitch expects
the FCC ratio to remain stable, driven by moderate credit growth
and a gradual improvement in internal capital generation.
Sound Liquidity: Pichincha's funding and liquidity profile benefit
from its strong franchise in Ecuador. As the country's leading
bank, it maintains a large and diversified stable retail deposit
base. As of June 2024, Pichincha's loan-to-deposit ratio was 86.9%.
Most of the bank's deposits come from Ecuador; however, 30% of
deposits come from other markets in which the bank operates, mainly
Spain and Peru. The bank has a sound liquidity position, with
available liquid assets accounting for 28.6% of the bank's total
customer deposits.
Government Support Rating: The bank's GSR of 'ns' reflects that
despite Pichincha's significant market share and local franchise,
Fitch believes there is no reasonable assumption of support
forthcoming from the sovereign due to Ecuador's limited financial
flexibility and the lack of a lender of last resort.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
IDRs and VR
- The IDRs are sensitive to negative changes in the sovereign
rating or further deterioration within the local OE;
- IDRs and VR could be downgraded if there is material and
persistent deterioration of the bank's business and financial
profile, although this is unlikely at the current very low rating
levels.
GSR
- Pichincha's GSR has no downgrade potential as it is at the lowest
possible level.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
IDRs and VR
- Pichincha's upside potential is limited. In the long term, a
rating upgrade would require improved prospects for the OE and a
meaningful and sustained improvement in the bank's core
profitability, along with sustained good asset quality and capital
metrics.
GSR
- Ecuador's propensity or ability to provide timely support to
Pichincha is not likely to change, given the sovereign's low
sub-investment-grade IDR. As such, the GSR has no upgrade
potential.
VR ADJUSTMENTS
Pichincha's VR of 'ccc+' has been assigned below the 'b' implied VR
due to the following adjustment reason: Operating Environment
(Negative).
Fitch has assigned an Operating Environment score of 'ccc+' that is
below the 'b' category implied score due to the following
adjustment reasons: Sovereign Rating (Negative).
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 Pichincha
C.A. y Subsidiarias LT IDR CCC+ Affirmed CCC+
ST IDR C Affirmed C
Viability ccc+ Affirmed ccc+
Government Support ns Affirmed ns
BANCO PROCREDIT: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Banco ProCredit S.A. (PCEC) Long-Term
(LT) Issuer Default Rating (IDR) and its Short-Term (ST) IDR (IDR)
at 'B'; LT IDR Outlook is Stable. Fitch has also affirmed the
bank's Viability Rating (VR) at 'ccc+'.
Key Rating Drivers
Shareholder Support Rating: PCEC's IDRs are driven by Fitch's
assessment of the potential support it would receive from its
parent, ProCredit Holding AG & Co. KGaA's (PCH; BBB/Stable), if
required. The 'b-' Shareholder Support Rating (SSR) reflects
Fitch's view of parent support as robust but constrained by
Ecuador's transfer and convertibility risks captured by the Country
Ceiling rating of 'B'.
Fitch's assessment of support considers the strong synergies PCEC
has with ProCredit Group through its operation. The ProCredit group
is an international group of development-oriented commercial banks
with a focus on Eastern Europe. Ecuador is the group's only
remaining operation in Latin America.
PCH's ability to provide timely support contemplates PCEC's
relative size of approximately 6% of consolidated assets; Fitch
believes any required support would likely be manageable relative
to the ability of parent to provide it. The propensity and
commitment of PCH to provide support is reflected in the high level
of operational and managerial integration and the reputational
implications of subsidiary default. In addition, Fitch considers
the presence of related funding and guarantees during different
economic cycles in the support assessment.
VR
Operating Environment with High Influence: PCEC's SSR underpins its
IDR. However, the Viability Rating (VR) is capped by Fitch's
assessment of the operating environment (OE) score of 'ccc+'.
Ecuador's sovereign rating and broader OE considerations highly
influence the bank's VR. The heightened sovereign political,
fiscal, and financing risks, as well as the potential for renewed
social unrest could negatively result in rising non-performing
loans (NPL), and limit the bank's profitability and internal
capital-generation capacity.
Deteriorated Asset Quality: As of September 2024 (3Q24), PCEC's
NPLs ratio deteriorated to 4.9% from 3.7% at YE 2023 (YE23) and
2.3% at YE22. The decay on PCEC'S core asset quality ratio was
strongly explained by OE risks which have exerted continuous
pressure in asset quality, and including the compression resulting
from the conclusion of regulatory forbearance at YE22, this derived
in the negative tendency on the bank's regulatory NPL ratio since
2023, with approximately 100bp explained by the local regulatory
changes. Amid economic downside risks, Fitch expects NPL ratio to
remain pressured. Nonetheless, the agency expects asset quality to
continue commensurate with the bank's rating category over the
medium term.
Operating Losses: PCEC continues to capture still insufficient
pre-impairment profits to absorb loan impairment charges as a
result of a lower interest margin and increased funding costs;
added to said impact, during 2024 the profitability of Ecuadorian
banks was systemically influenced by a temporary contribution
increase imposed by the government to address the armed conflict.
This was reflected in an operating losses-to-risk-weighted assets
(RWA) ratio of -2.3% at 3Q24. Fitch does not expect further
deterioration and does not even rule out a slight improvement given
an expectation of credit cost reduction.
Pressured Capitalization; Parent Supported: As of 3Q24, PCEC's
Fitch Core Capital (FCC)-to-RWA ratio continued to deteriorate,
reaching a 9.4%, comparing unfavorably to the entity's four-year
average of 11.8% mainly due to compressed internal profit
generation. Fitch expects the entity's capitalization metrics to
remain cushioned by PCH's propensity to provide support.
Stable and Adequate Liquidity: Fitch believes PCEC maintains a
stable funding structure and adequate liquidity. As of 3Q24, PCEC's
loans-to-deposits ratio was 96.9%, reflecting the bank's reliance
on external funding sources, which are primarily related to the
bank. This enhances Fitch's view of support. Fitch does not rule
out further funding diversification in line with retail deposits,
consistent growth and regulatory limits on parent funding.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
IDR/VR
- PCEC's IDRs could be downgraded if the Country Ceiling is
downgraded or if PCH's propensity or ability to support is
materially weakened.
- The VR could be downgraded in the event of a sharp deterioration
of the asset quality and consequently on its profitability metrics
that would significantly reduce capital metrics.
SSR
- PCEC's SSR could be downgraded if PCH's propensity or ability to
support materially weakens.
XGS
- PCEC's Long-Term IDR ex-government support (xgs) could be
downgraded if PCH's ability or propensity to provide support
weakens, as assessed by Fitch. The former could stem from an
increase in country risks as assessed by Fitch.
- Short-Term IDR (xgs) are primarily sensitive to changes in
Long-Term IDR (xgs) ratings and could be downgraded if the latter
is downgraded and the new Long-Term ratings map to lower Short-Term
ratings in accordance with Fitch's criteria.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
IDR/VR
- PCEC's IDR could be upgraded in the event of an upgrade of
Ecuador's Country Ceiling.
- The VR has limited upside potential considering the still
challenging OE.
- An upgrade of PCEC's VR would also require sustainable
improvements of its profitability ratios.
SSR
- PCEC's SSR could be upgraded in the event of an upgrade of
Ecuador's Country Ceiling.
XGS
- An upgrade of PCEC's Long-Term IDR (xgs), which is constrained by
Ecuador's transfer and convertibility risks, would require an
upgrade of Ecuador's Country Ceiling, provided Fitch's view on the
parent bank's ability and propensity to provide support remains
otherwise unchanged.
- The Short-Term IDR (xgs) ratings is primarily sensitive to a
change in the Long-Term IDR (xgs) could be upgraded if the latter
is upgraded and the new Long-Term rating map to higher Short-Term
ratings in accordance with Fitch's criteria.
VR ADJUSTMENTS
Fitch has assigned a VR score of 'ccc+' that is below the 'b'
category implied score due to the following adjustment reason:
OE/Sovereign Rating Constraint (negative).
Sources of Information
- PCEC;
- Superintendencia de Bancos de Ecuador.
Public Ratings with Credit Linkage to other ratings
PCEC's SSR is driven by PCH's IDR.
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 ProCredit
S.A. LT IDR B Affirmed B
ST IDR B Affirmed B
Viability ccc+ Affirmed ccc+
LT IDR (xgs) B(xgs)Affirmed B(xgs)
Shareholder Support b Affirmed b
ST IDR (xgs) B(xgs)Affirmed B(xgs)
PRODUBANCO: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Banco de la Produccion S.A. Produbanco y
Subsidiarias's Long-Term Issuer Default Rating (DR) at 'B-'/Outlook
Stable and Short-Term IDR at 'B'. Fitch has also affirmed the
bank's Viability Rating (VR) at 'ccc+'.
Key Rating Drivers
Supported IDRs: Produbanco's Shareholder Support Rating (SSR)
drives its Long-Term IDR. Additionally, the bank's IDRs are driven
by Fitch's assessment of the propensity and ability of potential
support it would receive from its parent, Promerica Financial
Corporation (PFC; B+/Stable), if needed. The 'b-' SSR reflects
Fitch's view of strong parent support. Produbanco has consistently
played a key and integral strategic role for PFC, providing core
products and services for the group over the years.
PFC's ability to provide timely support considers Produbanco's
size, representing approximately 35% of consolidated assets. Fitch
believes any required support would be significant relative to the
parent's ability to provide it. PFC's propensity and commitment to
support Produbanco is evident in the significant operational and
managerial integration, as well as substantial reputational
implications of subsidiary default.
VR
Operating Environment with High Influence: Produbanco's SSR
underpins its IDR. However, the Viability Rating (VR) is capped by
Fitch's assessment of the operating environment (OE) score of
'ccc+'. Ecuador's sovereign rating and broader OE considerations
highly influence the bank's VR. The heightened sovereign political,
fiscal, and financing risks, as well as the potential for renewed
social unrest could negatively result in rising non-performing
loans (NPL), and limit the bank's profitability and internal
capital-generation capacity.
Pressured Asset Quality: Produbanco's historically sound asset
quality, driven by its focus on large corporations and controlled
risk policy, faces pressure from ongoing economic risks. The end of
regulatory forbearance at YE 2022 increased the NPL ratio to 3.8%
at YE 2023 from 2.8% at YE22. Fitch expects the NPL ratio to remain
pressured due to economic risks but anticipates asset quality will
stay in line with the bank's rating category over the medium term.
Profitability Deterioration: Produbanco's profitability metrics
remained weaker than those of its closest peers. The bank's
profitability has been negatively impacted by a lower net interest
margin (NIM) and higher credit costs. Additionally, in 2024
Ecuadorian banks, including Produbanco, faced a temporary
government-imposed contribution increase to address armed conflict,
which amounted to approximately 25% of Produbanco's pre-tax
profit.
This decline is reflected in the operating profit to risk-weighted
assets (RWA) ratio, which dropped to 0.1% at 3Q24 from 0.8% at YE
2023. Despite this deterioration, Fitch estimates stability in
Produbanco's profitability and does not rule out a slight
improvement due to a stronger NIM and the absence of circumstantial
expenses.
Low Capitalization: Produbanco's Fitch Core Capital (FCC) to RWA
ratio has remained slightly above Fitch's downside sensitivity of
9% since 2018, reaching 9.5% at 3Q24, indicating limited capacity
to absorb unexpected losses. This aligns with the bank's parent
strategy of efficient capital use, maintaining stable core
capitalization metrics. The capital adequacy ratio under local
regulation, benefiting from subordinated debt, was 13.3% at 3Q24.
Produbanco's capital and leverage score also reflect adequate loan
loss reserve coverage (3Q24: 127%). Fitch expects capitalization to
remain in line with its rating category, supported by steady
internal capital generation and a more conservative dividend
strategy.
Good Deposit Base and Adequate Liquidity: The bank relies on
deposits for funding and maintains adequate liquidity levels, which
Fitch expects to continue. Customer deposits account for 87% of the
loan book, while financial and subordinated debt obligations,
mainly from multilateral agencies, make up the remaining 13%. At
3Q24, the loan-to-deposits ratio worsened slightly to 94.7% from
93.1% at YE23 due to the higher pace of credit expansion compared
to the growth of deposits.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
IDR/VR
- Produbanco's IDRs could be downgraded if PFC's propensity or
ability to support materially weakens or if regulatory controls
undermine potential support;
- The VR would be downgraded if the FCC-to-RWA ratio is sustained
below 9% without a credible plan to strengthen and restore
capitalization metrics, along with a deterioration in its
profitability performance.
SSR
- Produbanco' SSR could be downgraded if PFC's propensity or
ability to support materially weakens or any likelihood of
regulatory controls that could undermine possible support.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
IDR/VR
- Produbanco's IDR could be upgraded in the event of an upgrade of
PFC's Long-Term IDR. The VR has limited upside potential
considering the still challenging operating environment;
- Upside potential is limited. However, in the long term, a VR
upgrade would require improved prospects for the operating
environment and a meaningful and sustained improvement of capital
metrics and core profitability, combined with improvements in the
bank's asset quality.
SSR
- Produbanco's SSR has limited upgrade potential over the rating
horizon, given its size and relevance relative to PFC.
VR ADJUSTMENTS
Fitch has assigned a VR score of 'ccc+' that is below the 'b'
implied VR due to the following adjustment reason: Operating
Environment/Sovereign Rating Constraint (negative).
Sources of Information
- Produbanco
- Superintendencia de Bancos de Ecuador
Public Ratings with Credit Linkage to other ratings
Produbanco's SSR is driven by PFC's IDR.
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 de la Produccion
S.A. Produbanco y
Subsidiarias LT IDR B- Affirmed B-
ST IDR B Affirmed B
Viability ccc+ Affirmed ccc+
Shareholder Support b- Affirmed b-
=============
J A M A I C A
=============
[*] JAMAICA: Remittance Inflows Continue to Tumble
--------------------------------------------------
Radio Jamaica News reports that data from the Bank of Jamaica (BOJ)
show that remittance inflows have been declining from the peak of
24 per cent of gross domestic product (GDP) reached in 2021 during
the COVID-19 pandemic to 20.2 per cent in 2022 and 17 per cent of
GDP in 2023.
According to Radio Jamaica, these flows also fell from 166% of
tourist expenditure in 2021 to 78.1% in 2023.
The BOJ is also reporting that remittance flows tumbled from 236.2%
of export earnings in 2021 to 169.3% in 2023 as well as from 1,091%
of Foreign Direct Investment flows in 2021 to 895.1% in 2023, Radio
Jamaica discloses.
In the meantime, there are concerns US presidential candidate
Donald Trump's policies related to immigration and mass
deportations could lead to a further slowdown in remittance flows
to Jamaica, Radio Jamaica relates.
Data from the BOJ indicates that for the period January to August
this year, of every US$100 flowing into Jamaica, $67.90 came from
the United States, Radio Jamaica notes.
This is down from the $68.40 recorded during the similar period
last year, Radio Jamaica states.
Meanwhile, when compared with the country's other major sources of
remittance inflows, $11.30 per US$100 came from Canada, $10.80 from
the UK and $6 from the Cayman Islands, according to Radio Jamaica.
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.
[*] JAMAICA: Reports Fiscal Deficit of $57 Bil. for April to August
-------------------------------------------------------------------
Radio Jamaica News reports that data released by the Jamaican
Ministry of Finance indicate that the fiscal deficit for the period
April to August this year was $57 billion, or 1.7 per cent of GDP.
The fiscal deficit indicates the difference between what the
government collects in revenue and what it spends.
According to Radio Jamaica, the data also indicate that the primary
surplus or the amount of money accumulated and available to pay
down the debt was $17.43 billion for the period.
This is more than the $6.8 billion that had been projected, Radio
Jamaica notes.
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.
=====================
P U E R T O R I C O
=====================
CONVENTION CENTER: Files for Chapter 11 Bankruptcy
--------------------------------------------------
Convention Center Parking Inc. filed Chapter 11 protection in the
District of Puerto Rico. According to court filing, the Debtor
reports $45,229,691 in debt owed to 1 and 49 creditors. The
petition states funds will not be available to unsecured
creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
November 18, 2024 at 1:30 p.m. via Telephonic Conference
Information for AUST/Trial Attys.
About Convention Center Parking
Convention Center Parking Inc. is engaged in activities related to
real estate.
Convention Center Parking Inc. sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.P.R. Case No.
24-04516) on October 21, 2024. In the petition filed by David
Santiago Martinez, as president, the Debtor reports estimated
assets amounting to $1 million and estimated liabilities of
$45,229,691.
The Honorable Bankruptcy Judge Maria De Los Angeles Gonzalez
handles the case.
The Debtor is represented by:
Alexis Fuentes-Hernandez, Esq.
FUENTES LAW OFFICES, LLC
P.O. Box 9022726
San Juan, PR 00902-2726
Tel: (787) 722-5215
E-mail: fuenteslaw@icloud.com
FULL HOUSE DEVELOPMENT: Meeting of Creditors on Nov. 18
-------------------------------------------------------
Full House Development Inc. filed Chapter 11 protection in the
District of Puerto Rico. According to court filing, the Debtor
reports $45,229,691 in debt owed to 1 and 49 creditors. The
petition states funds will be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Nov. 18, 2024 at 11:00 a.m. in Room Telephonically.
About Full House Development
Full House Development Inc. is a small local business that
specialises in window restorations, bathroom and kitchen
renovations.
Full House Development sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.P.R. Case No. 24-04515) on Oct. 21, 2024.
In the petition filed by David Santiago Martinez, as president, the
Debtor reports total assets of $700,000 and total liabilities of
$45,229,691.
The Honorable Bankruptcy Judge Edward A. Godoy handles the case.
The Debtor is represented by:
Alexis Fuentes-Hernandez, Esq.
FUENTES LAW OFFICES, LLC
P.O. Box 9022726
San Juan, PR 00902-2726
Tel: (787) 722-5215
E-mail: fuenteslaw@icloud.com
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Chapman, Editors.
Copyright 2024. All rights reserved. ISSN 1529-2746.
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