/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/241127.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 27, 2024, Vol. 25, No. 238 Headlines A R G E N T I N A ARGENTINA: Adopts Key Policies with IDB Support YPF SA: Fitch Hikes IDRs & Bond Ratings to 'CCC' YPF SA: To Seek $2BB in Financing for Oil Pipeline in Q2 2025 B E R M U D A ASPEN INSURANCE: S&P Rates Perpetual Preferred Share Issuance 'BB+' C O L O M B I A COLOMBIA: Gets $138.5M IDB Loan for Just Energy Transition Project PACIFICO TRES: Fitch Affirms 'BB+' Rating on USD Notes C O S T A R I C A COOPERATIVA NACIONAL: Fitch Assigns 'BB-' LT IDR, Outlook Stable J A M A I C A JAMAICA: Forex Market Gets USD40MM Transfusion from BOJ - - - - - ================= A R G E N T I N A ================= ARGENTINA: Adopts Key Policies with IDB Support ----------------------------------------------- The Inter-American Development Bank (IDB) Executive Board approved four operations to support Argentina's strategy to promote fiscal sustainability and lay the groundwork for sustainable and equitable growth. The loans will assist the country in key measures to strengthen public finances, energy sector sustainability, and child development. Additionally, the IDB will support the City of Buenos Aires in improving access to public health services. These operations contribute to the IDB's multidimensional strategy in Argentina to support the government's efforts to achieve fiscal stability, ensure the protection of the most vulnerable populations, and ensure the path of growth. Comprehensive Early Childhood Development The program will benefit pregnant women and children up to 4 years old by improving the efficiency of transfer programs and increasing access to quality early childhood development services. The project will shorten the verification and payment periods for compliance with health co-responsibilities under the Universal Child Benefit. Additionally, beneficiaries of the Universal Pregnancy Benefit will be able to access the program without filing paperwork. The project will also benefit close to 130,000 children attending Early Childhood Development Centers in vulnerable areas and 110,000 families participating in support programs to strengthen parenting practices. This is a $700 million loan. Transition to a Sustainable Electric Sector This loan will benefit at least 2.5 million low-income residential electricity consumers in the Metropolitan Area of Buenos Aires and will focus on ensuring that these households maintain access to affordable electric service while strengthening institutional capacity to implement a more sustainable, fair, and progressive subsidy system. This is a $700 million loan. Digital Agenda for the Buenos Aires Health System More than one million users of the public health system will benefit from this loan, which will finance the modernization of diagnostic equipment and the implementation of a more efficient hospital management system. As a result, the City of Buenos Aires will have timelier, integrated, and quality health information, reducing average waiting times for results, providing evidence for more accurate medical diagnoses, and facilitating inter-jurisdictional exchange. This loan will allow for acquiring and installing three CT scanners, two mammography machines, one MRI machine, 35 X-ray machines, three serology centrifuges, and four angiography machines. This is a $85 million loan. Fiscal Policy Strengthening Program This project will support reforms to improve the efficiency of the tax system and the quality of public spending to foster fiscal sustainability. The financing will assist the Argentine government in reducing revenue from distortionary taxes and improving the targeting of subsidies for essential services, promoting more efficient and sustainable consumption. This loan will benefit citizens by supporting policies that enable a path to fiscal stability and inflation reduction, thereby maintaining the purchasing power of wages. The Argentine government will benefit from rapidly disbursed resources to meet reserve accumulation needs and efficiently manage public debt. This is a $650 million loan. 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 authorities 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. On Nov. 15, 2024, Fitch Ratings has upgraded Argentina's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CC', and its Long-Term Local-Currency IDR to 'CCC' from 'CCC-'. Argentina's upgrade to 'CCC' from 'CC' reflects developments that have improved Fitch's confidence in the authorities' ability to make upcoming foreign-currency bond payments without seeking relief of some sort. 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. 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. YPF SA: Fitch Hikes IDRs & Bond Ratings to 'CCC' ------------------------------------------------- Fitch Ratings has upgraded the Foreign Currency (FC), Local Currency (LC) Issuer Default Ratings (IDR) and senior notes of seven Argentinian corporate issuers. Today's actions follow Fitch's recent upgrade of Argentina's sovereign FC and LC IDR rating to 'CCC' from 'CC'. Key Rating Drivers Fitch upgraded the FC and LC IDRs for AES Argentina Generacion S.A., Generacion Mediterranea S.A. (GEMSA), Genneia S.A., and MSU Energy S.A. to 'CCC' from 'CCC-' in line with the sovereign, because each company's revenues are highly exposed to the government. These electricity utilities are exposed to CAMMESA, which depends on financial support from the Argentine government in the form of subsidies. Fitch upgraded the bond ratings of GEMSA, MSU Energy and Genneia to 'CCC+', one notch above their FC IDR, which reflects a Recovery Rating of 'RR3' from 'CCC'/'RR3'. Fitch upgraded the FC and LC IDRs for Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR) to 'CCC+' from 'CCC'. The company is exposed to the country's economic issues, but does not receive direct subsidies from the central government. EDENOR acts as the collector for the electric sector. Fitch upgraded the company's bonds to 'B-', one notch above its FC IDR, which reflects a Recovery Rating of 'RR3' from 'CCC+'/RR3'. Fitch upgraded Agua y Saneamientos Argentinos S.A.'s (AySA) IDRs and bond ratings to 'CCC' from 'CCC-'. The bond has an 'RR4' recovery rating. The company relies on capital injections from the government to support its loss-making operations, capex and debt obligations in the short-to-mid-term. AySA provides important water/wastewater utility services for the most economically important region in Argentina, which underpins Fitch's expectations for continued government support. Fitch upgraded YPF S.A.'s IDR and bond ratings to 'CCC' from 'CCC-', in line with the sovereign, which its ratings are linked to. The bond has an 'RR4' recovery rating. The linkage reflects ownership structure, government oversight, history of support, and significance of the company in executing government policy role. Argentina controls the company through its 51% stake, and provincial government officials serve on the company's board of director. According to Fitch's assessment of the Government Related Entities criteria, incentives to support and contagion risks are high, leading to the equalization of the ratings. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Please refer to each issuer's most recent Rating Action Commentary at www.fitchratings.com for developments that could result in a positive rating action. Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Please refer to each issuer's most recent Rating Action Commentary at www.fitchratings.com for developments that could result in a negative rating action. Criteria Variation Argentina is assigned to Group D in Fitch's 'Country Groups for Country-Specific Treatment of Recovery Ratings - October 2023 criteria, where the assigned Recovery Ratings are capped at 'RR4'. Fitch believes the recovery prospects for these issuers are higher than the expected recovery of 31%-50% for the 'RR4' band. This is based on Fitch's bespoke recovery analysis as well as precedents of debt exchange offerings driven by capital control restriction put into place by the Argentine Central Bank. The calculated recovery was higher than the expected recovery of 51%-70% for the 'RR3' band, but Fitch capped the Recovery Ratings at 'RR3' to reflect a less predictable range of outcomes. A Recovery Rating of 'RR3' supports a one-notch uplift for the instrument rating from the issuer's FC IDR. 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 Agua y Saneamientos Argentinos S.A. has an ESG Relevance Score of '4' for Governance Structure due to its nature as a majority government-owned entity and the inherent governance risk that arises with a dominant state shareholder, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. YPF S.A. has an ESG Relevance Score of '4' for GHG Emissions & Air Quality due to the growing importance of the continued development and execution of the company's energy-transition strategy, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. YPF S.A. has an ESG Relevance Score of '4' for Governance Structure due to its nature as a majority government-owned entity and the inherent governance risk that arises with a dominant state shareholder, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Generacion Mediterranea S.A. LT IDR CCC Upgrade CCC- LC LT IDR CCC Upgrade CCC- senior unsecured LT CCC+ Upgrade RR3 CCC senior secured LT CCC+ Upgrade RR3 CCC Genneia S.A. LT IDR CCC Upgrade CCC- LC LT IDR CCC Upgrade CCC- senior secured LT CCC+ Upgrade RR3 CCC Central Termica Roca S.A. senior unsecured LT CCC+ Upgrade RR3 CCC senior secured LT CCC+ Upgrade RR3 CCC Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR) LT IDR CCC+ Upgrade CCC LC LT IDR CCC+ Upgrade CCC senior unsecured LT B- Upgrade RR3 CCC+ MSU Energy S.A. LT IDR CCC Upgrade CCC- LC LT IDR CCC Upgrade CCC- senior secured LT CCC+ Upgrade RR3 CCC Agua y Saneamientos Argentinos S.A. LT IDR CCC Upgrade CCC- LC LT IDR CCC Upgrade CCC- senior unsecured LT CCC Upgrade RR4 CCC- YPF S.A. LT IDR CCC Upgrade CCC- LC LT IDR CCC Upgrade CCC- senior unsecured LT CCC Upgrade RR4 CCC- AES Argentina Generacion S.A. LT IDR CCC Upgrade CCC- LC LT IDR CCC Upgrade CCC- YPF SA: To Seek $2BB in Financing for Oil Pipeline in Q2 2025 ------------------------------------------------------------- Eliana Raszewski at Reuters reports that Argentina's state-run oil company YPF SA, will seek $2 billion in financing in the second quarter of 2025 to complete its Vaca Muerta Sur project, a company source said. The project is being carried out by Vaca Muerta Oil Sur (VMOS), which is controlled by YPF, and aims to transport an additional 390,000 barrels per day from the Vaca Muerta formation to a coastal export terminal in Rio Negro province, according to Reuters. The source said that the company is seeking $1.5 billion from foreign investors and $500 million locally and hoping to add Pampa Energy, Vista, Shell, Chevron, and Pan American Energy, as partners, the report notes. "This pipeline will allow more than double the oil evacuation capacity out of Vaca Muerta," YPF CEO Horacio Marin said at a press conference in Buenos Aires, the report discloses. "The VMOS project will make Argentina one of the main exporters in the region." The company is seeking financing for 70% of the project, which will total around $3 billion, the source said, the report relays. The remainder will be financed with equity from the companies that acquire capacity on the pipeline, adds the report. About YPF SA YPF S.A. is a vertically integrated, majority state-owned Argentine energy company, engaged in oil and gas exploration and production, and the transportation, refining, and marketing of gas and petroleum products. Founded in 1922, YPF was an oil company established as a state enterprise. YPF was later privatized under president Carlos Menem and was bought by the Spanish firm Repsol in 1999, and the resulting merged company was call Repsol YPF. In 2012, about 51% of the firm was renationalized and this was initiated by President Cristina Fernandez Kirchner. The government of Argentina agreed to pay $5 billion compensation to Repsol. As reported in the Troubled Company Reporter-Latin America on Sept. 3, 2024, S&P Global Ratings assigned its 'CCC' issue-level rating to YPF S.A.'s (CCC/Stable/--) proposed senior unsecured notes due 2031. YPF will use the proceeds to tender up to $500 million of its outstanding 8.5% senior unsecured notes due July 2025 and its 6.95% July 2027 notes, and for other general corporate purposes. With this transaction, the company would start refinancing its 2025 maturities that total $1.9 billion. ============= B E R M U D A ============= ASPEN INSURANCE: S&P Rates Perpetual Preferred Share Issuance 'BB+' ------------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue rating to the proposed perpetual preferred share issuance of Aspen Insurance Holdings Ltd. (Aspen; BBB/Stable/--). The issuance of up to $230 million will pay a fixed rate of 7% and is callable after five years. We expect to classify the issuance as having intermediate equity content, according to our criteria. The ratings are subject to confirmation of the final terms and conditions of the issue. The ratings reflect our standard notching for subordinated debt issues, which in this instance is two notches below the long-term rating on the issuer. This includes: -- One notch to reflect the notes' subordination to the company's senior obligations; and -- One notch to reflect the payment risk created by the notes' mandatory and optional coupon cancellation features. S&P said, "One notch is sufficient to reflect the payment risk on these notes, in our view, because their mandatory coupon deferral trigger refers to the solvency capital requirement coverage of the group, as reflected in the enhanced capital requirement of Aspen Group, which was 264% on Dec. 31, 2023. We have analyzed and rated the proposed preference share issuance with the understanding that the issues are structured to be eligible for regulatory solvency purposes. "We understand that Aspen will use the proceeds toward the redemption of the $275 million aggregate principal amount outstanding of their perpetual noncumulative preference shares. We expect Aspen's financial leverage will remain elevated at 45%-50% and fixed-charge coverage ratio will be 3x-4x in 2024-2026. "We expect to classify the notes as having intermediate equity content under our hybrid capital criteria, subject to our review of the final terms, because the instrument is perpetual and we expect it to be available to absorb losses. Although the issuer can call the notes after five years, it is required to replace the instrument with another of equal or higher capital quality. In classifying the equity content, we incorporate our expectation that Aspen will not be discouraged from deferring payment of dividends by the requirement to appoint two additional members to the board if it defers payment of dividends for any six periods." S&P includes hybrid securities in total adjusted capital, the measure on which we base our consolidated risk-based capital analysis of insurance and reinsurance companies, subject to: -- S&P's tolerance limits; -- The notes being considered eligible for regulatory solvency treatment; and -- The aggregate amount of included hybrid capital not exceeding the total amount eligible for regulatory solvency treatment. S&P's classification of the issue as having intermediate equity content may change if the Bermuda Monetary Authority's group solvency requirements preclude the issue from being eligible as regulatory capital. =============== C O L O M B I A =============== COLOMBIA: Gets $138.5M IDB Loan for Just Energy Transition Project ------------------------------------------------------------------ The Inter-American Development Bank (IDB) has approved a $138.5 million investment program to speed up Colombia's just energy transition, along with a $3.6 million technical cooperation grant from IDB CLIMA, which hinges on meeting performance indicators linked to nature and climate. An additional $1.4 million grant for structuring projects has also been approved. The loan, which has been approved by the IDB Board of Executive Directors, includes the first operation of the IDB CLIMA pilot program. This results-based initiative rewards countries that achieve targets related to protecting nature and combating climate change. The program will directly benefit the end users of the electricity infrastructure, including industries, businesses, stores and homes. The Colombian population will also indirectly benefit from its positive environmental and economic impacts, particularly reduced pollution and increased local income. The "IDB CLIMA: Energy Transition Support Program" for Colombia aligns with Amazonia Forever, the IDB's program to provide comprehensive support for sustainable development in the Amazon. The project in Colombia will accelerate financing for just energy transition projects and strengthen the tools and capabilities of the Colombia’s Financiera de Desarrollo Nacional (FDN) development bank so it can access thematic green capital markets. This project will boost financing for non-conventional renewable energy projects in the National Interconnected System, as well as in Non-Interconnected Areas. This includes scaling up technologies to enable these energy sources to come online, and support to achieve the sector’s specific goals for decarbonizing the economy. To this end, the program will finance interventions that support just energy transition projects; that strengthen the technical capacities of the FDN to identify, design, and manage a portfolio of climate projects; and that improve FDN’s climate monitoring, reporting, and verification capacities. The $1.4 million technical cooperation grant will fund actions such as structuring projects that could be financed by the loan’s resources. It will support the process of strengthening policies and plans for mainstreaming gender and diversity at the FDN and among its borrowers and preventing gender violence in energy projects. The $138.5 million loan consists of a $72 million tranche from the IDB’s ordinary capital, with a 24.5-year repayment term, 6-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR), along with the IDB Clima grant described above. As reported in the Troubled Company Reporter on Aug. 7, 2024, Fitch Ratings has affirmed Colombia's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB+' with a Stable Rating Outlook. PACIFICO TRES: Fitch Affirms 'BB+' Rating on USD Notes ------------------------------------------------------ Fitch Ratings has affirmed the following ratings of Fideicomiso P.A. Pacifico Tres (Pacifico Tres): - USD260.4 million USD bonds at 'BB+'; Outlook Stable; - COP397,000 million UVR bonds at 'BB+'/Outlook Stable; - COP300,000 million UVR loan at 'BB+'/Outlook Stable; In addition, Fitch has placed the following national scale ratings on Rating Watch Positive: - COP397,000 million UVR bonds 'AA+(col)'; - COP300,000 million UVR loan 'AA+(col)'; - COP450,000 million COP loan A 'AA+(col)'; - COP150,000 million COP loan B 'AA+(col)'; RATING RATIONALE The Rating Watch Positive on the national scale ratings reflects that the credit quality of the notes will be consistent with a higher rating once the issuer obtains a waiver to extend the deadline to deliver the operating and maintenance (O&M) support and the new shareholder provides the guarantee. This is possible now that Functional Unit (UF) 5 has been completed. The financing documents require shareholders to fund the O&M support shortly after completing construction. Due to the ongoing acquisition of the asset, the issuer has requested a waiver to extend the deadline until June 2025. Fitch believes the project's cash flows and the existing 12-month O&M reserve provide enough liquidity to cover operational expenses if needed. Fitch considers the O&M support positive but not necessary to meet operational obligations. Fitch will monitor the waiver process to determine whether the transaction covenant is met, but this process could take more than six months to be completed. The ratings are based on Pacifico Tres' low revenue risk due to traffic top-ups and grantor payments, a strong debt structure with several prefunded reserve accounts, distribution tests, a cash sweep mechanism and robust liquidity mechanisms. Under Fitch's rating case, Pacifico Tres has a loan life coverage ratio (LLCR) of 1.5x. This is strong for the rating category according to applicable criteria and revenue profile, but it is limited by the credit quality of Agencia Nacional de Infraestructura (ANI). Fitch views ANI as a credit-linked entity to the Government of Colombia (BB+/Stable). KEY RATING DRIVERS Revenue Risk - Volume - Midrange Low Exposure to Volume Risk: The project's revenues mainly consist of ANI's contributions and toll revenues streaming from toll collection and top-up traffic payments. Traffic revenues are not subject to demand or price risk, even if traffic volumes are severely below expectations or expected price increases are not implemented. ANI will periodically compensate the concessionaire if toll collections are below the amounts established in the concession contract. ANI payment obligations under the concession agreement are consistent with its credit quality as the grantor. Sources of revenue are subject to infrastructure availability, service levels and quality standards, based on the fulfillment of indicators provided in the concession agreement. There are clearly defined, unambiguous, back-to-back penalty deduction mechanisms in the concession agreement with robust cure periods. Deductions are legally capped at 10%. Additionally, fines imposed on the concessionaire, as well as penalty clauses in case of early termination of the agreement, are limited by contract. Revenue Risk - Price - Midrange Inflation Adjusted Tolls: Tariffs are adjusted annually by the inflation rate at the beginning of the year. However, in January 2023 the Colombian government froze toll rates as part of its anti-inflationary policies. Since then, partial inflation catch-ups have been applied. Toll rates are moderate, and if the net present value of toll collections received by the 8th, 13th, 18th and last year of the concession is below guaranteed values, the ANI has the obligation to cover any shortfalls, after deductions. Infrastructure Dev. & Renewal - Midrange Adequate Maintenance Plan: The project depends on a moderately developed capital and maintenance plan to be implemented directly by the concessionaire. The plan will be largely funded from project cash flows. The concession agreement does not include hand-back requirements, but the concessionaire is required to operate and maintain the road according to the pre-established standards at all times. The structure includes a dynamic 12-months forward-looking O&M reserve account for routine and periodic maintenance expenditures. The independent engineer (IE) believes the concessionaire has the experience and the ability to operate the project successfully. The IE also determined that the O&M plan, organizational structure and budget appear reasonable and in line with similar Colombian projects. The concessionaire has a liquid support instrument equivalent to the maximum amount of O&M expenses forecast for six months. This instrument must be issued by a financial entity with a minimum credit rating of 'BBB-' or 'AA+(col)'. Debt Structure - 1 - Stronger Robust Debt Structure: The debt is fully amortizing, senior secured, comprising USD-, UVR- and COP-denominated financings. USD-denominated debt, which is matched with USD-linked currency revenues settled in COP (49% of future budget allocations [Vigencias Futuras] are USD-linked), has also been issued at a fixed rate. Furthermore, the transaction includes a short-term hedging mechanism provided by eligible counterparties to cover foreign exchange risk exposure fully. UVR- and COP-denominated debt is indexed to inflation and is not exposed to basis risk. Structural features include multiple reserve accounts and a cash sweep mechanism. Robust liquidity mechanisms are in place to mitigate liquidity/budgetary risk, construction delays, and reduced cash flow generation due to low traffic performance. The transaction has a fully-committed revolving subordinated SMF, equal to 15% of outstanding senior debt, in which eligible lenders have committed to disburse funds to the project company when necessary. Additional liquidity includes 12-months principal and interest prefunded onshore and offshore debt service reserve accounts (DSRA). Financial Profile Fitch's rating case minimum LLCR is 1.5x, which is strong for the rating category according to Fitch's applicable criteria and compared with similarly rated transactions, particularly in light of the project's low exposure to volume risk, but limited to the counterparty risk credit view of ANI's obligation. The debt service coverage ratio (DSCR) profile will drop below 1.0x within several years. However, Fitch expects cash flow available for debt service shortfall in those years to be covered with funds from the debt service reserve account or additional liquidity sources, if needed. PEER GROUP Pacifico Tres is comparable to Fideicomiso P.A. Costera (Costera), rated 'BB+'/Stable and 'AAA(col)'/Stable. Costera is Pacifico Tres' closest peer, as both concessions are part of the 4G toll road program and share volume, price, infrastructure and development/renewal, and debt structure risk attributes. Pacifico Tres has a slightly lower minimum LLCR at 1.5x, compared to Costera at 1.6x. The international ratings of both projects are constrained by the credit quality of ANI's obligations. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Failure by the concessionaire to obtain a waiver and/or provide the O&M Support that triggers a negative credit event; - Deterioration in Fitch's view regarding the credit quality of ANI's grantor obligations. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - National scale ratings could be upgraded if the requested waiver to extend the deadline of the O&M Support is approved and the guarantee is effectively constituted before the extended deadline; - For the international scale ratings, an improvement in Fitch's view regarding the credit quality of ANI's grantor obligations. SECURITY The secured parties benefit from a first-priority security interest in, control over, and lien on all of the issuer rights in the indenture trustee accounts and the funds, financial assets and other properties deposited and to be deposited in such accounts. Senior lenders share common collateral on a pari passu basis in relation to all current and future debt of the project company. All proceeds from the collateral will be paid to the intercreditor agent, who, in turn, will distribute the monies to the secured parties. None of the parties will have the right to take independent enforcement in respect to the common collateral. 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 ----------- ------ ----- Fideicomiso P.A. Pacifico Tres Fideicomiso P.A. Pacifico Tres/ Project Revenues - First Lien/1 LT LT BB+ Affirmed BB+ Fideicomiso P.A. Pacifico Tres/ Project Revenues - First Lien/1 Natl LT Natl LT AA+(col)Rating Watch On AA+(col) =================== C O S T A R I C A =================== COOPERATIVA NACIONAL: Fitch Assigns 'BB-' LT IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has assigned Costa Rican-based Cooperativa Nacional de Educadores, R.L.'s (Coopenae, R.L.) Long- and Short-Term Foreign and Local Currency Issuer Default Ratings (IDR) at 'BB-' and 'B', respectively. Fitch has also assigned Coopenae's Viability Rating (VR) at 'bb-' and Government Support Rating (GSR) at 'ns'. The Rating Outlook for the Long-Term IDRs is Stable. Key Rating Drivers Consolidated Cooperative in Costa Rica: Coopenae's IDRs are driven by its 'bb-' VR, equal to its implied VR. Coopenae's VR takes into consideration the Costa Rica operating environment (OE), currently at 'bb' with a stable trend that has allowed Coopenae to generate a consistent total operating income (TOI) level over the economic cycle. At 2Q24, Coopenae's TOI increased 23.4% y-o-y and the average of 2020 to 2023 was USD82 million. Fitch's assessment of Coopenae's business profile, which assigned score is 'b' and aligned with the score implied in the 'b' category and considers its relevant franchise in the local cooperative system, with market shares of around 23%, 21%, and 23% in total assets, loans, and deposits, respectively, as of June 2024, which allows the cooperative to generate a stable income even under adverse market conditions for the Costa Rican cooperatives sector. Coopeamistad Transaction Neutral to Ratings: On Sept. 18, 2024, the Costa Rican supervisor approved the acquisition of a share of Cooperativa de Ahorro y Crédito La Amistad R.L.'s (Coopeamistad) total assets by Coopenae. Simultaneously, Coopenae would absorb a share of Coopeamistad's funding. As of June 2024, Coopeamistad's total assets, gross loans and total liabilities amounted around 2.9%, 3.6% and 2.8% of Coopenae's, respectively. The deal was closed on October 2024. Fitch considers that, given the size and features of this transaction, as well as Coopenae's credit strengths, Coopenae's business, risk and financial profiles will not be materially affected. Consequently, the agency considers that Coopenae's assigned ratings are still commensurate with its credit assessment over the rating horizon. Reasonable Risk Profile: In Fitch's opinion, Coopenae's assigned factor score of 'bb-' reflects a risk management framework profile which is in accordance with the size and nature of its operations, and influenced by the important concentration in the consumer segment, which accounted for over 70% of its loan portfolio. Following a credit growth rate of 4.2% in FY23, Coopenae showed a slight credit contraction of -0.3% (non-annualized) in 1H24 due to new capital regulations in the consumer credit sector, but the Coopeamistad transaction will expand the balance sheet in FY24. The entity is not materially exposed to foreign exchange risk, and the interest rate risk is manageable. Good Asset Quality: Coopenae's asset quality remains under control. As of June 2024, its core metric, non-performing loans (NPL) to gross loans, stood at 2.2% (December 2023: 2.0%), the highest of all the periods analyzed, which supports the asset quality score of 'bb'. While the NPLs' reserves' coverage remained ample, close to 189% (205%), the lowest level of those periods. Fitch expects this asset quality will perform relatively steady given, among other considerations, to its low share of restructured loans (less than 1.0% of gross loans), and as long as the projected local economic slow-down does not disrupt the debtors' payment capacity. Profitability Improving: Coopenae's factor score of 'b+' is commensurate with the score implied which is in the 'b' category. Its profitability reversed its downward trend during 1H24 due to reversal in the decreasing trend of the net interest margin and a controlled operating efficiency. As of June 2024, Coopenae's core profitability metric, operating profit over risk-weighted assets (RWA), stood at 1.5% (average 2020-2023: 1.1%). Fitch projects that this profitability will improve in FY24 under a base-case scenario of a proactive management of the net interest margin in a highly competitive environment, build-up of loan impairment charges as well as a controlled operational efficiency. Solid Capital Metrics: Fitch considers Coopenae's capitalization as a strong financial factor, which is reflected in its 'bb' score. As of June 2024, the entity's Fitch Core Capital (FCC) to RWA ratio was 19.3% (average 2020 to 2023: 20.2%) providing with a cushion against unexpected losses as well as with room to support business expansion. Fitch projects that this metric will improve under the projected business expansion along with a better internal capital generation. This capitalization is also supported by the continuous contributions from the cooperative's members as well as an increasing incorporation of new members. Funding Profile Based on Deposits: Coopenae's assigned factor score of 'bb-' is in line with the score implied by the funding and liquidity core ratio, which is in the 'bb' category. The cooperative's loans to customer deposits ratio remained relatively stable in the first half of 2024, standing at 99.3% (average 2020 to 2023: 102.2%). Although the deposits experienced a slight contraction during 1H24 (-0.4%), its funding profile is increasingly based on the customer deposit base (about 83% of total funding as of June 2024). As a result of events in the non-banking financial system, deposits will continue to face pressure; however, Fitch considers that liquidity management is adequate to face potential withdrawals. Liquid assets (cash and available-for-sale securities) represented about 30% of its total deposits as of June 2024. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade in Coopenae's IDRs and VR could result from a sustained deterioration in asset quality, coupled with a consistent lower operational profit to RWA continuously below 0.5%. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Coopenae's IDRs and VR could be upgraded if there is an enhancement of its TOI generation, allowing Coopenae to achieve higher profitability, reflected in an operating profit to RWA indicator consistently above 2.0%, along with a controlled asset quality. GSR: The GSR of 'ns' reflects that external support cannot be relied upon, given that Coopenae is not systematically important. Its share of total assets accounted close to 4% of the financial system, considered low. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - There is no downside potential for GSR because this is the lowest level in the respective scale. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - As Coopenae is not a systematically important financial entity, an upgrade in GSR is unlikely. VR ADJUSTMENTS The OE score of 'bb' has been assigned below the implied score of 'bbb' due to the following adjustment: Sovereign Rating (negative). Summary of Financial Adjustments Pre-paid expenses and deferred charges were reclassified as intangible and deducted from total equity to reflect its low losses absorption capacity. 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 ----------- ------ Cooperativa Nacional de Educadores, R.L. (Coopenae, R.L.) LT IDR BB- New Rating ST IDR B New Rating LC LT IDR BB- New Rating LC ST IDR B New Rating Viability bb- New Rating Government Support ns New Rating ============= J A M A I C A ============= JAMAICA: Forex Market Gets USD40MM Transfusion from BOJ ------------------------------------------------------- RJR News reports that the Bank of Jamaica intervened in the foreign exchange market with US$40 million after the local currency fell to $159.77 to one US dollar at the end of trading on Tuesday, Nov. 19. Some 42 bids amounting to US$59.15 million were received for the US$40 million made available by the BOJ, but only 24 bids were accepted, according to RJR News. The highest bid price was US$5.5 million at J$159.23 to US$1, while the lowest was for US$2.5 million at J$157.09 to US$1, the report notes. Jamaica Money Market Brokers, National Commercial Bank; Bank of Nova Scotia Jamaica and JMMB Securities snapped up US$23.65 million or 65.88% of the BOJ's intervention funds, the report relays. All bids were settled at an exchange rate of over J$159 to US$1 despite heavy central bank intervention since the start of this year, particularly since July, 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. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2024. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *