/raid1/www/Hosts/bankrupt/TCRLA_Public/241203.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Tuesday, December 3, 2024, Vol. 25, No. 242
Headlines
A R G E N T I N A
GENNEIA SA: Fitch Affirms then Withdraws 'CCC' LT IDR
B A H A M A S
BAHAMAS: IDB OKs US$100M Loan to Upgrade Potable Water Supply
B E R M U D A
ASPEN INSURANCE: Moody's Rates Series F Prefer. Shares 'Ba1(hyb)'
B R A Z I L
BRAZIL: Inflation Rate in November Exceeded Forecasts
C O S T A R I C A
AUTOPISTAS DEL SOL: Fitch Affirms B+ LongTerm Rating, Outlook Pos.
D O M I N I C A N R E P U B L I C
REFINERIA DOMINICANA: Fitch Assigns 'BB-' IDR, Outlook Positive
E L S A L V A D O R
EL SALVADOR: Moody's Hikes LT Issuer & Sr. Unsec. Ratings to B3
M E X I C O
TOTAL PLAY: Moody's Upgrades CFR to B3, Alters Outlook to Stable
P U E R T O R I C O
LA ZAMORANA COCKTAIL: Hires Gandia-Fabian Law Office as Counsel
- - - - -
=================
A R G E N T I N A
=================
GENNEIA SA: Fitch Affirms then Withdraws 'CCC' LT IDR
-----------------------------------------------------
Fitch Ratings has affirmed and withdrawn Genneia S.A.'s 'CCC'
Long-Term Foreign and Local Currency Issuer Default Ratings. In
addition, Fitch has affirmed and withdrawn Genneia's senior secured
notes due 2027 at 'CCC+' and 'RR3' Recovery Rating.
Fitch has affirmed and withdrawn the ratings for commercial reasons
as Genneia has chosen to stop participating in the rating process.
Therefore, Fitch will no longer have sufficient information to
maintain Genneia's ratings, and will no longer provide ratings or
analytical coverage for Genneia.
Key Rating Drivers
The ratings have been withdrawn, key rating drivers no longer
apply.
Derivation Summary
Not applicable as the ratings have been withdrawn.
Key Assumptions
Not applicable as the ratings have been withdrawn.
Recovery Analysis
Not applicable as the ratings have been withdrawn.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Not applicable as the ratings have been withdrawn.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Not applicable as the ratings have been withdrawn.
Liquidity and Debt Structure
Not applicable as the ratings have been withdrawn.
Issuer Profile
Genneia S.A. is an Argentine power company, primarily engaged in
the generation of electrical power from both renewable (wind and
solar) and conventional (thermal) sources and is the leading wind
power generation company in Argentina in terms of installed
capacity.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Genneia S.A. LT IDR CCC Affirmed CCC
LT IDR WD Withdrawn
LC LT IDR CCC Affirmed CCC
LC LT IDR WD Withdrawn
senior secured LT CCC+ Affirmed RR3 CCC+
senior secured LT WD Withdrawn
=============
B A H A M A S
=============
BAHAMAS: IDB OKs US$100M Loan to Upgrade Potable Water Supply
-------------------------------------------------------------
The Inter-American Development Bank (IDB) approved a Conditional
Credit Line for Investment Projects (CCLIP) of US$100 million and a
first individual loan of US$50 million under this credit line to
upgrade potable water supply and sanitation services in the
Bahamas.
The program approved by the IDB's Board of Executive Directors aims
to improve potable water services coverage in the Family Islands
and New Providence, and sanitation services reliability in New
Providence. In addition, it will improve the operational and
financial performance of the Water and Sewerage Corporation (WSC),
its governance and that of the water and sanitation sector.
The first individual loan will directly benefit 65,000 households
(235,000 people), 48,103 in New Providence and 16,897 in the Family
Islands, with improved provision of drinking water services, while
10,493 households in New Providence will benefit from improved
access to reliable sewerage collection services.
In addition, 573 households (1,530 people) in the Family Islands
and 645 households (2,400 people) in New Providence will benefit
from the expansion of potable water supply coverage.
Moreover, the entire Bahamian population will benefit indirectly
from the strengthening of the sector's policy-making capacity and
regulatory framework, WSC improved governance and operational
efficiency, and greater resilience in access to drinking water
through improvements in the efficiency of its use.
The main problem facing the Water and Sewerage Corporation is to
achieve operational, financial and environmental sustainability in
the provision of water and sanitation services. The most important
determinants of this situation are low operational and financial
performance, high levels of non-revenue water, and weak sector
governance.
To address these challenges, the program will finance actions to
reduce non-revenue water in the Family Islands, including setting
up District Metered Areas and Pressure Management Areas, seepage
and pressure management, the procurement of 65,000 ultrasonic smart
meters to install new and replace existing mechanical meters, and
advance to effectively implement WSC´s digital infrastructure.
It will also support an increasing coverage of piped, potable water
to unserved
communities in New Providence and the Family Islands, including
considerations for resilience to climate change and natural
hazards, as well as urgent investments in the sewerage system in
New Providence.
Additionally, among other activities the program will finance the
institutional strengthening of Utilities Regulation and Competition
Authority (URCA), WSC and the Department of Environmental Planning
and Protection (DEPP), and activities to improve WSC corporate
governance and develop a national policy for Water and Sanitation
Sector.
The first individual loan of US$50 million under the CCLIP has a
repayment term of 25 years, a grace period of seven years, and an
interest rate based on SOFR.
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings, on Sept. 25, 2024, affirmed its 'B+' long-term
foreign and local currency sovereign credit ratings on the
Commonwealth of The Bahamas. The outlook remains stable. S&P also
affirmed its 'B' short-term sovereign credit ratings.
=============
B E R M U D A
=============
ASPEN INSURANCE: Moody's Rates Series F Prefer. Shares 'Ba1(hyb)'
-----------------------------------------------------------------
Moody's Ratings has assigned a Ba1(hyb) rating to the Perpetual
Non-Cumulative Preference Shares (Series F Preference Shares) to be
issued by Aspen Insurance Holdings Limited (Aspen or the Group) of
up to $230 million.
RATINGS RATIONALE
The Ba1(hyb) rating assigned to Aspen's Series F Preference Shares
is four notches below the A3 insurance financial strength rating on
the group's main insurance operating entities – Aspen Bermuda
Limited (A3, stable) and Aspen Insurance UK Limited (A3, stable).
This reflects Moody's standard notching practice for such
instruments, namely: (1) the structural and contractual
subordination of the preferences shares; (2) the optional dividend
skip mechanism; and (3) the non-cumulative nature of dividends, in
case of deferral. The Series F preferences shares rank pari passu
with the group's existing 5.95% fixed-to-floating Perpetual
Non-cumulative preference shares issued in 2013 (Series C
Preference Shares).
According to the terms and conditions of the securities, Aspen may
substitute or vary the terms of the notes under certain
circumstances. However, Moody's believe that the terms cannot be
changed in a way that is materially adverse to the investor.
The Series F Preference Shares, which are intended to constitute
Tier 2 capital in accordance with the group insurance regulatory
requirements of the Bermuda Monetary Authority (BMA), will receive
some equity credit in financial leverage calculated on a Moody's
basis, based on the securities' subordination, optional deferral,
non-cumulative nature of dividends and lack of a stated maturity.
While the Preference Shares have no stated maturity, the group has
the option to redeem or repurchase the securities if it has
sufficient funds in order to meet its Enhanced Capital Requirement,
and the redemption/repurchase is approved by the BMA.
Moody's expect the group will use the net proceeds from the
offering to redeem some or all of Aspen's outstanding Series C
Preference Shares. As such, the new issuance will be broadly
neutral to the group's financial leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The following factors could lead to upward pressure on Aspen's
ratings: (1) growth in the group's market position whilst
maintaining reported combined ratio in the mid-90's range; (2)
cross cycle return on capital of 5% or more; (3) regulatory capital
coverage ratios consistently above 200%, supported by economic
earnings; and (4) financial leverage sustainably below 25%.
Conversely, the following factors could put downward pressure on
Aspen's ratings: (1) a material loss of business or market position
in the group's core lines; (2) weakening of current year loss
ratios or meaningful prior year reserve deterioration, reflected in
reported combined ratios consistently above 100%; (3) regulatory
capital coverage ratios consistently below 160%; and/or (4)
adjusted financial leverage consistently above 30%.
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Reinsurers
published in April 2024.
===========
B R A Z I L
===========
BRAZIL: Inflation Rate in November Exceeded Forecasts
-----------------------------------------------------
Rio Times Online reports that Brazil's economy faces a challenging
period as inflation rates climb higher than expected. The National
Broad Consumer Price Index 15 (IPCA-15) rose by 0.62% in November,
surpassing market projections. This increase marks a significant
acceleration from October's 0.54% rise, according to Rio Times
Online.
According to the report, the Brazilian Institute of Geography and
Statistics (IBGE) released these figures, revealing a concerning
trend in the country's economic landscape. The cumulative inflation
for the year now stands at 4.35%, with a 12-month accumulation of
4.77%, it adds.
These numbers have breached the upper limit of Brazil's inflation
target, the report notes. The central bank aims for 3% with a 1.5
percentage point tolerance range. This development may prompt a
reassessment of monetary policies, the report says.
Eight out of nine product and service groups surveyed showed price
increases, the report discloses. Only the education sector
experienced a slight decrease of 0.01%, the report relays. Food
and beverages led the surge with a 1.34% rise, contributing 0.29
percentage points to the overall index, the report says.
The food and beverage sector saw significant price hikes in
household staples, the report discloses. Soybean oil prices jumped
by 8.38%, while tomatoes increased by 8.15%, the report says. Meat
prices also saw a substantial 7.54% rise. These increases offset
decreases in items like onions and eggs, the report relays.
Personal expenses and transportation followed closely behind, the
report notes. They showed increases of 0.83% and 0.82%
respectively. The rise in personal expenses was largely due to a
4.97% increase in cigarette prices, following a hike in specific
tax rates, the report discloses.
Transportation costs were primarily driven by a 22.56% surge in
airfare prices, the report notes. This single item contributed
0.14 percentage points to the overall index, the report relays.
Urban bus fares also saw a 1.34% increase, adding to transportation
costs, the report says.
Energy prices, a key component of housing costs, showed a modest
0.13% increase, the report discloses. This represents a
significant deceleration from October's 5.29% rise, the report
says. The implementation of the yellow tariff flag in November
played a role in this slowdown, the report notes.
These figures paint a picture of broad-based inflationary pressures
in Brazil's economy, the report relays. They highlight the
challenges faced by policymakers in maintaining price stability.
The coming months will be crucial in determining the trajectory of
Brazil's economic recovery, the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
Moody's credit rating for Brazil was last set at Ba2 with positive
outlook as of May 2024. S&P Global Ratings raised on Dec. 19,
2023, its long-term global scale ratings on Brazil to 'BB' from
'BB-'. Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable
Outlook. DBRS' credit rating for Brazil was last reported at BB
with stable outlook at July 2023.
===================
C O S T A R I C A
===================
AUTOPISTAS DEL SOL: Fitch Affirms B+ LongTerm Rating, Outlook Pos.
------------------------------------------------------------------
Fitch Ratings has affirmed Autopistas del Sol, S.A.'s (AdS)
Long-term International rating at 'B+' and its Long-term National
Scale Rating on its local notes at 'A+(cri)'. The Rating Outlook is
Positive. The international and local notes are supported by cash
flow generation from Costa Rica's Ruta 27 toll road (Ruta 27).
RATING RATIONALE
The Positive Outlook reflects financial metrics that could support
a higher rating if the positive traffic and revenue trend through
September 2024 continues and the traffic impact of improvement
works for the main competing road, Ruta Uno, does not materialize
ahead of Fitch's expectations.
AdS's ratings reflect Ruta 27's traffic and revenue profile, which
is supported by an adequate toll adjustment mechanism and serves a
strong primary market in Costa Rica. Mostly used by commuters, the
project may face significant competition in the medium term once
Ruta Uno is improved, especially if its tariffs are set
significantly lower than Ruta 27's.
Toll rates are adjusted quarterly to the exchange rate (CRC/USD)
and annually to reflect changes in the U.S. Consumer Price Index
(CPI). Additional adjustments are applied whenever CPI or the
exchange rates vary more than 5% in absolute terms. The ratings
also reflect a fully amortizing senior debt structure with a fixed
interest rate and a net present value (NPV) cash trap mechanism
that mitigates early termination risk of the concession before debt
is fully repaid.
Fitch's cases incorporate the potential negative impact on Ruta 27
traffic volumes from the improvements to Ruta Uno. Fitch believes
traffic could decrease as early as 2027.
Fitch's rating case projects an average debt service coverage ratio
(DSCR) of 1.2x between 2025 and 2030. Metrics for most of the
projected years are strong for the rating category, according to
Fitch's applicable criteria for projects with 'Midrange'
assessments for volume and price risks. Minor shortfalls in cash
flow available for debt service (CFADS) may occur after the
improvements to Ruta Uno are fully operational, but Fitch expects
they will be fully covered by the structure's available liquidity.
In this scenario, AdS would only receive payments from the minimum
revenue guarantee (MRG) in 2030, the final year of the debt, which
is estimated to account for 13% of that years' revenues.
KEY RATING DRIVERS
Revenue Risk - Volume - Midrange
Mostly Commuter with Growing Heavy Traffic [Revenue Risk - Volume:
Midrange]:
The asset is a toll-road that serves a strong primary market. It
plays an important role in the country's transportation system by
linking San Jose (Costa Rica's capital city) and the surrounding
metropolitan area with the Pacific Coast. The road is used by
commuters on workdays and by San Jose residents traveling to the
beaches on the weekends.
Ruta 27 could face significant competition once major improvements
to the existing and congested Ruta Uno are made. The concession
agreement provides an MRG that compensates the issuer if revenue is
below certain thresholds, somewhat alleviating this risk.
Revenue Risk - Price - Midrange
Adequate Rate Adjustment Mechanism [Revenue Risk - Price:
Midrange]: Toll rates are adjusted quarterly to reflect changes in
the Costa Rican Colon (CRC) to USD exchange rate and annually to
reflect changes in the U.S. CPI. Tolls may be adjusted prior to the
next adjustment date if the U.S. CPI or the CRC/USD exchange rate
varies (+/-) by more than 5%. No tariff adjustments are applied
according to Costa Rican inflation; however, this exposure is
limited to the costs denominated in CRC which account for 20% of
total expenses. Historically, tariffs have been updated
appropriately.
Infrastructure Dev. & Renewal - Midrange
Suitable Capital Improvement Program [Infrastructure Development &
Renewal: Midrange]: The road is operated by an experienced global
company with a higher-than-average expense profile due to its
geographical attributes. The majority of the investments required
by the concession have been made, including a new viaduct that has
been fully operational since October 2023.
The concession requires lane expansions when congestion exceeds 70%
of the ideal saturation flow, which triggers the need for further
investments. However, the project would only require the
concessionaire to perform these investments to the extent they do
not represent a breach in the DSCRs assumed by the issuer in the
financing documents.
Debt Structure - 1 - Midrange
Structural Protections Against Shortened Concession [Debt
Structure: Midrange]: Debt is senior secured, pari passu,
fixed-rate, and fully amortizing. The debt is denominated in USD,
but no significant exchange rate risk exists due to the tariff
adjustment provisions set forth in the concession and because
CRC-denominated toll revenues will be converted to USD daily. Some
exposure to Costa Rican inflation is still present because tariffs
are only adjusted based on U.S. inflation.
The structure includes an NPV cash trap mechanism to prepay debt if
revenue outperforms the base case revenue indicated in the issuer's
financial model, which mitigates the risk of the concession
maturing before the debt is fully repaid. Typical project finance
features include a six-month debt service reserve account (DSRA), a
six-month backward and forward-looking 1.20x distribution trigger
and limitations on investments and additional debt.
Financial Profile
Under Fitch's base case, the project yields a minimum and average
DSCR of 1.3x (2029) and 1.4x, respectively. Under Fitch's rating
case, minimum and average DSCR are 0.8x (2028) and 1.2x,
respectively. It assumes payments under the MRG will be triggered
on the final year of the international notes (2030), for around 13%
of that year's revenues.
Metrics for most of the projected years are strong for the rating,
according to Fitch's applicable criteria. While some minor
shortfalls may occur after the Ruta Uno improvements are completed,
these are likely to be fully covered by the structure's available
liquidity.
PEER GROUP
Comparable projects in the region include the TransJamaican Highway
(TJH; BB/Positive) in Jamaica. AdS and TJH are both strong
commuting assets within their respective country's capital cities.
However, AdS has lower metrics (average DSCR of 1.2x versus 2.4x of
TJH under Fitch's rating cases), and TJH does not depend on traffic
growth to repay its rated debt. TJH is rated above the Jamaican
sovereign (BB-/Positive) and is constrained by Jamaica's 'BB'
Country Ceiling.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Traffic performance materially below 44,129 vehicles in 2025 or
actual DSCRs consistently around 1.1x;
- Traffic loss that occurs due to the execution of the improvement
works on Ruta Uno, which could have a negative impact on AdS'
traffic beyond Fitch's rating case expectation of a decrease of
15.0% in 2027 and 23.5% in 2029.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Traffic expressed as Weighted Annual Average Daily Traffic
(WAADT) around 46,000 in 2025, which could lead to an average DSCR
above 1.2x in Fitch's rating case projections.
- Expectation that the improvements to Ruta Uno will not be
executed by 2027 or will not negatively affect AdS's traffic.
SECURITY
The issuer's obligations under the notes are secured by a first
priority interest in toll collection rights under the concession
agreement and the shareholders' interest in the issuer.
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
----------- ------ -----
Autopistas del
Sol, S.A.
Autopistas del
Sol, S.A./Project
Revenues - First
Lien/1 LT LT B+ Affirmed B+
Autopistas del
Sol, S.A./Project
Revenues - Second
Lien/2 Natl LT Natl LT A+(cri) Affirmed A+(cri)
===================================
D O M I N I C A N R E P U B L I C
===================================
REFINERIA DOMINICANA: Fitch Assigns 'BB-' IDR, Outlook Positive
---------------------------------------------------------------
Fitch Ratings has assigned Refineria Dominicana de Petroleo S.A.'s
(Refidomsa) Long-Term Foreign Currency and Local Currency Issuer
Default Ratings (IDRs) at 'BB-'. The Rating Outlook is Positive.
Refidomsa's ratings are equalized with the Dominican Republic's
'BB-'/Positive sovereign rating per Fitch's Government Related
Entities Criteria. The company's 100% ownership by the Dominican
Republic government and its strategic importance as the only
refinery in the country and the main local fuel supplier support
the strength of the linkage.
Refidomsa's ratings considers a Standalone Credit Profile (SCP) of
'b' reflecting company's limited scale, lack of integration and
cash flow volatility associated with government control over fuel
prices that could prevent the timely pass-through of product price
variations to its customers and competitive pressures in the
sector. The ratings foresee the successful execution of its
investment plan, which is anticipated to enhance efficiency,
alongside with moderate leverage ratios of 2.0x.
The Positive Outlook is also tied to the Dominican Republic's
sovereign rating.
Key Rating Drivers
Government-Related Entity: According to Fitch's Government Related
Entity (GRE) criteria, the company's rating is equalized to that of
its parent based on a GRE assessment score of 30. This score
considers the significant incentive and responsibility of the
Dominican government to support Refidomsa in times of distress,
given the company's strategic importance as the sole refinery and
primary local fuel supplier, with a market share of approximately
50%. Consequently, any disruption in its operations could have
substantial social and economic repercussions. Refidomsa faces
regulatory risks associated with government pricing policies for
its commercialized products.
Stand Alone Credit Profiles: Absent implicit and explicit Dominican
government support, Fitch assesses Refidomsa's credit profile on a
standalone basis as commensurate with the 'b' rating category. The
rating reflects its status as a single-site, small-sized operation
with a nameplate capacity of 34,000 barrels per day (bpd), limited
asset quality, and concentrated geographic location. Additionally,
Refidomsa is exposed to regulatory risks from government pricing
policies. Delays in price adjustments based on the Import Parity
Pricing formula could pressure its margins and working capital,
with any discrepancies leading to accounts receivable from the
government.
Stable Operating Metrics: For 2024, EBITDA is estimated to be
approximately DOP 3,999 million, favored by higher-than-expected
crude oil prices. Given its exposure to the inherent volatility of
international crude oil and fuel prices, the ratings reflect the
cyclical nature of Refidomsa's business. In 2023, the company's
EBITDA was DOP 3,845 million, favored by terminal margin stability
and a decrease in discounts.
Conservative Leverage: Refidomsa is undertaking an investment plan
aimed at increasing its storage capacity and modernizing its
facilities, primarily financed through long-term debt. FCF is
projected to be negative until 2025, turning neutral to positive by
2026, driven by EBITDA growth and an average annual operating cash
flow (OCF) of DOP2,259 million. The company maintains a
conservative debt profile, with total debt of DOP3,750 million as
of 2023 and a leverage ratio of 1x EBITDA. Leverage is expected to
rise to approximately 2x in 2024, with a flexible, long-term debt
maturity structure.
Derivation Summary
Refidomsa's operational scale is small, being a single-site
operation, and it operates in a market subject to competitive
pressures. Refidomsa's ratings reflect its strategic importance as
the sole fuel refinery in the country and one of the primary
suppliers of liquid fuels. The linkage to the Dominican sovereign
rating is in line with the linkage present for most national oil
and gas companies in the region, including Petroleos del Peru S.A.
(Petroperu; CCC+) and Petroleos Mexicanos (PEMEX; B+/Stable).
Refidomsa is not the sole provider of refined fuels in the
Dominican Republic. In 2023, the company had a 51% market share.
Refidomsa's SCP of 'b' is comparable with Refinaria de Mataripe
S.A. (REFMAT; B+/Stable). REFMAT has a nameplate capacity of
302,000 barrels per day (bpd), while Refidomsa has a smaller
capacity of 34,000 barrels per day. REFMAT's location in
northeastern Brazil provides a competitive advantage in the
country. Refidomsa's expected average gross leverage, defined as
total debt/EBITDA, is expected to be around 2.0x, which is lower
than the 2.8x expected for REFMAT.
Key Assumptions
- West Texas Intermediate (WTI) oil price of $75 in 2024, $65 in
2025, $60 in 2026, and $60 in 2027;
- Capex intensity at 3% in 2024 and 1% thereafter;
- No dividend distribution is projected within the forecast
horizon;
- Major overhaul is projected in 2025;
- No disruptions in the ability to import oil or its derivatives
are considered.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Weakening of the relationship with the Dominican Republic or a
deterioration in the credit profile of the controlling
shareholder;
- Significant weakening of market share under 30%;
- Operational disruptions resulting in a deterioration of liquidity
and leverage;
- Sustained increase in leverage, measured as debt-to-EBITDA
exceeding 2.0x.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Strengthening of the controlling shareholder's credit profile.
Liquidity and Debt Structure
Strong Liquidity: Refidomsa's healthy liquidity position is
supported by its available cash balance and long-term debt maturity
profile. As of September of 2024, the company had USD91 million in
cash with short-term obligations of USD6 million. At YE 2023 the
company had USD573 million in available credit lines with USD154
million drawn, providing liquidity support if needed.
Issuer Profile
Refineria Dominicana de Petroleo S.A. is the only oil refinery in
Dominican Republic and an important fuel import terminal. Its
revenues are derived from oil refining and the importation of
petroleum products for subsequent distribution in the Dominican
market.
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
Refineria Dominicana de Petroleo S.A. has an ESG Relevance Score of
'4' for GHG Emissions & Air Quality due to the nature of the
refining business and the emissions associated to it, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Refineria Dominicana de Petroleo 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 rating[s] 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
----------- ------
Refineria Dominicana
de Petroleo S.A. LT IDR BB- New Rating
LC LT IDR BB- New Rating
=====================
E L S A L V A D O R
=====================
EL SALVADOR: Moody's Hikes LT Issuer & Sr. Unsec. Ratings to B3
---------------------------------------------------------------
Moody's Ratings has upgraded the Government of El Salvador's
long-term foreign currency issuer and senior unsecured ratings to
B3 from Caa1. The outlook remains stable.
The upgrade of the ratings to B3 reflects Moody's view that the
sovereign's credit profile has benefited from recent liability
management operations that have significantly reduced external
amortizations leading to a material decrease in repayment risk and
alleviating near and medium-term liquidity pressures. Moreover,
Moody's expect fiscal consolidation measures taken by the
authorities to support debt sustainability further strengthening
the overall credit profile.
The B3 rating reflects El Salvador's moderate economic strength
with enhanced growth and investment prospects as a result of the
structural improvement in the security situation, and strong
improvement in government liquidity that has made the sovereign
less susceptible to event risks. This is balanced by weak debt
affordability that constrains fiscal strength and challenges to
institutions and governance strength, although the government is
building a track record of more consistent economic policymaking by
appointing technocrats to economic institutions that have supported
a strong improvement in investor sentiment.
The stable outlook balances positive developments that include a
reduction in yearly financing needs, ability to access to
international capital markets, and improved investment and growth
prospects, against continued credit challenges resulting from low
debt affordability and limited fiscal space.
Concurrently, El Salvador's foreign-currency ceiling was raised to
B1 from B2, maintaining a two-notch gap between the sovereign
rating and the foreign-currency ceiling to reflect weak policy
effectiveness, moderate capital account openness, and the
government's relatively large share in the country's total external
debt. Moody's do not assign a local currency country ceiling for El
Salvador because the country is fully dollarized.
A List of Affected Credit Ratings is available at
https://urlcurt.com/u?l=zVPRPS
RATINGS RATIONALE
RATIONALE FOR THE UPGRADE TO B3
LIABILITY MANAGEMENT OPERATIONS HAVE SIGNIFICANTLY REDUCED EXTERNAL
AMORTIZATIONS
Near-term repayment risk has materially decreased and external
maturities will remain low through the end of 2029. On October 16,
the government bought back a portion of its 2027, 2029, 2034, 2035,
2041, 2050 and 2052 global bonds, expending $922 million to
repurchase $1.03 billion in par value bonds and achieving a savings
of $109 million. The government offered investors cash for the
tendered securities at repurchase prices that were slightly above
the prevailing market price at the time of the initial offer on
October 4. It raised the funds via a loan from a global bank. The
authorities estimate the total lifetime savings at more than $352
million based on the immediate notional debt savings and reductions
in debt service costs and has announced that $350 million of these
savings will be applied to the Rio Lempa Conservation and
Restoration Program (one of El Salvador's main rivers) over the
next 20 years.
The government announced a new liability management operation on
November 12 that closed on November 18 (with final settlement on
November 25). The latest operation was financed by the issuance of
a $1 billion global bond, with $243 million of the proceeds going
to repurchase outstanding bonds and the other remainder for general
budgetary purposes. The sovereign's proven market access and the
low yields on its repurchased bonds supported Moody's decision not
to view either of the buybacks as a distressed exchange, in
addition to Moody's view that the transactions were akin to a
liability management operation given that, without them, the
government would likely have fulfilled its near-term financial
commitments.
The latest operations have reinforced favorable market sentiment as
bond prices throughout the yield curve have nearly converged with
par value and with sovereign bond spreads reporting a sharp
reduction moving to around 500 basis points, a level consistent
with sufficient funding capacity to keep liquidity risks in check.
Moreover, as a result of the buyback transactions, external bond
amortizations through 2029 are very low and manageable. On the
January 2025 bond, there is just under $100 million (0.3% of GDP)
in outstanding principal from the original $800 million and the
authorities have already set aside sufficient funds to redeem at
maturity. No external bonds are maturing in 2026, and the latest
operation reduced the outstanding principal on the January 2027
bonds to approximately $150 million, while approximately $300
million will come due in 2028 related to the amortizing 2030 bond.
The liability management operations had a neutral effect on debt
affordability, but this is because the authorities' debt management
strategy had the intended goal of reducing repayment risk. In this
respect, liability management transactions proved effective in
smoothing debt amortizations and lengthening the maturity profile,
enhancing sovereign creditworthiness.
NEW FISCAL FRAMEWORK WILL SUPPORT DEBT SUSTAINABILITY
The 2025 budget outlines an ambitious fiscal consolidation strategy
based on austerity measures that will help support debt
sustainability. The budget was designed based on a golden rule such
that all current spending will be covered by current revenues and
only 75% of investment expenditures will be financed with debt.
Additionally, the budget's austerity measures aim to cut the public
wage bill and target a more substantial reduction in goods and
services purchases. A portion of the expected savings from cutting
current expenditures will be used to boost investment spending that
will benefit economic activity.
The non-financial public sector (NFPS) deficit narrowed to 2.3% of
GDP in 2023, its lowest level since 2007, down from 2.6% in 2022
and 5.5% in 2021, continuing the declining trend since 2020.
Moody's forecast that the NFPS fiscal deficit will remain broadly
unchanged at around 2.3% of GDP in 2024, although some recent
frontloading of public investment projects through the end of the
year could lead to a marginally wider NFPS deficit of around 2.6%.
Moody's estimate that the consolidation measures will narrow the
fiscal imbalance to 1.1% of GDP in 2025, slightly above the
authorities' 0.9% target.
Complementing the liability management operations on external debt
and the reprofiling of domestic maturities that began in the second
half of 2023, a narrower fiscal deficit in 2025 will help to bring
down the sovereign's financing needs to 7.5% of GDP, markedly lower
than the 12.9% average figure in 2022-24. Lower borrowing
requirements represent a structural change that will alleviate
liquidity pressures, as Moody's expect financing needs to remain
below 8% of GDP in 2026 and future years.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook balances positive developments that include a
more favorable debt profile, a reduction in yearly financing needs,
proven access to international capital markets that help diversify
borrowing sources, increased transparency on the fiscal trajectory,
and improved investment and growth prospects as a result of reduced
violence and crime, against continued credit challenges that weigh
on El Salvador's credit profile that include limited fiscal space
and low debt affordability.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
El Salvador's ESG Credit Impact Score (CIS-4) reflects the
country's governance challenges that weigh on creditworthiness,
elevated social risks that have also constrained economic
performance and the country's moderate exposure to environmental
risks.
El Salvador's exposure to environmental risks (E-3 issuer profile
score) reflects exposure to physical climate, water management and
limited natural capital risks. El Salvador's geography is dominated
by a region known as the Dry Corridor, characterized by heavy
precipitation events that lead to flooding and landslides and
occasional droughts. The steady rise in the frequency and severity
of droughts and other climate-related shocks poses a threat to the
country's agriculture sector, which employs 16% of the country's
workforce. Extreme weather events can influence El Salvador's key
credit metrics, such as GDP growth volatility, household incomes
and agricultural export earnings. Limited natural capital amplifies
these risks and the effects of physical climate shocks, although
these risks are partly mitigated by the economy's low level of
reliance and dependence on extractive industries and natural
capital.
Exposure to social risks (S-4 issuer profile score) reflects
challenges from a lack of adequate housing in the country. Low
availability of adequate housing reflects the high levels of
informality in the economy and is also a vestige of the elevated
levels of violence the country experienced. Violence levels have
declined markedly in recent years. El Salvador's homicide rate has
decreased substantially, going from one of the highest in the
Western Hemisphere to one of the lowest. In the past, violence had
been a key driver behind the significant emigration of its
residents to the US. While remittances from El Salvadorans living
abroad support more than 25% of economic activity, which boosts
consumption, the country's investment levels, productivity and
long-term growth potential have been negatively affected by the
high level of violence that is subsiding. As citizens begin feeling
more secure, their priorities will shift toward demanding more
basic services including housing, health and education.
El Salvador's governance risks (G-5 issuer profile score) reflect
its weak but improving government effectiveness, rule of law and
control of corruption, but more importantly, its recent track
record of default owing to a distressed exchange in 2022. In prior
years, various government measures that led to institutional
changes increased the level of political uncertainty, undermining
the quality of policymaking and decreasing the level of policy
predictability as the government prioritized political
considerations that negatively affected investor sentiment, but the
government is building a track record of more consistent economic
policymaking by appointing technocrats to economic institutions
that have supported a strong improvement in investor sentiment.
GDP per capita (PPP basis, US$): 12,547 (2023) (also known as Per
Capita Income)
Real GDP growth (% change): 3.5% (2023) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 1.2% (2023)
Gen. Gov. Financial Balance/GDP: -2.3% (2023) (also known as Fiscal
Balance)
Current Account Balance/GDP: -1.4% (2023) (also known as External
Balance)
External debt/GDP: 64.8% (2023)
Economic resiliency: b1
Default history: At least one default event (on bonds and/or loans)
has been recorded since 1983.
On November 21, 2024, a rating committee was called to discuss the
rating of the El Salvador, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have materially increased. The
issuer's institutions and governance strength, have materially
decreased. The issuer's fiscal or financial strength, including its
debt profile, has not materially changed. The issuer has become
less susceptible to event risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
WHAT COULD MOVE THE RATINGS UP
Increased availability of funding at more affordable rates would
support improved debt affordability and could lead to an upgrade.
Additionally, a medium-term fiscal framework and financing plan
that increases policy predictability, could support a higher
rating.
An IMF program that supports a credible medium-term fiscal anchor
and allows the authorities to build a track record of policy
predictability, while providing affordable financing, could result
in an upgrade.
WHAT COULD MOVE THE RATINGS DOWN
A deterioration of debt affordability or re-emergence of liquidity
pressures denoting difficulties in accessing markets at favorable
terms would strain the government's financial standing leading to a
material weakening of the sovereign credit profile.
The principal methodology used in these ratings was Sovereigns
published in November 2022.
The weighting of all rating factors is described in the methodology
used in this credit rating action, if applicable.
===========
M E X I C O
===========
TOTAL PLAY: Moody's Upgrades CFR to B3, Alters Outlook to Stable
----------------------------------------------------------------
Moody's Ratings upgraded Total Play Telecomunicaciones, S.A.P.I. de
C.V. and Subsidiaries' (Total Play) Corporate Family Rating and its
Backed Senior Secured Global Notes due 2028 to B3 from Caa1. At the
same time, Moody's also upgraded the company's Backed Senior
Unsecured Global Notes due 2025 and its Backed Senior Unsecured
Global Notes due 2028 to Caa1 from Caa2. The outlook was changed to
stable from negative.
RATINGS RATIONALE
The rating action considers the company's improved liquidity
position following the bond exchange and liability management
transactions in recent months. In the last twelve months, the
company has been able to tap both local and international capital
markets to refinance a total of MXN14,893 million (-$780 million).
During 2024, the company generated positive Moody's adjusted free
cash flow (FCF) of MXN4,684 million ($246 million) YTD as of
September 2024 on capex normalization, following its aggressive
footprint expansion and on improved working capital management.
Going forward, the company has adequate liquidity sources to meet
its funding needs through 2026. As of September 2024, liquidity
sources amount MXN9,386 million ($494 million), that include cash
of MXN3,507 million, restricted cash of MXN2,379 million and
MXN3,500 million related to the issuance of local notes in October
and November of 2024. Additional sources include the roll over
nature of the company's revolving credit facilities (RCFs), which
maturities amount MXN7,300 million through 2026.
The payment of the company's secured debt will be reserved in the
company's restricted cash line at least 3 months in advance. This
build up will be accounted in the working capital line and for this
reason, Moody's assume that going forward the working capital
changes would be neutral to slightly negative, on average.
Total Play's debt is secured by about 49% of the company's LTM
revenues (equivalent to 61% of the total subscriber base), with a
trust legally assigned to manage the debt service as part of the
waterfall. As part of this structure, the company has a cash
reserve, which is fully and legally committed to secured debt
repayment. As of September 2024, this reserve had MXN2,379 million
and Moody's expect to gradually increase in the coming years in
line with the maturity of the secured debt.
Moody's believe that the increasing percentage in the assigned
subscribers to trust would reduce Total Play's flexibility to
undertake additional secured debt. Nonetheless, the company owns
around MXN60,000 million (book value) in fixed assets that mainly
comprises the fiber optic network and which is fully unencumbered.
Total Play's B3 CFR considers the company's relatively small size
when compared to other global rated peers; with 18.36% market share
in broadband and 8.92% in Pay TV, in Mexico as of March 2024 and
December 2023 respectively. The rating also incorporates the
company's geographic concentration in only one market and Moody's
expectation of slightly positive FCF (Moody's adjustments include
leases payments to capex) through 2026. The rating also considers
the company's track record of high tolerance to refinancing risk.
Total Play's B3 CFR reflects the company's high-quality network,
which is the only 100% fiber-to-the-home (FTTH) infrastructure in
Mexico; history of successful organic growth; and low churn of 1.5%
as of September 2024. The B3 rating also factors in the company´s
track record of growth, experienced management team and
Moody's-adjusted leverage of 3.5x and EBITDA margin of 35.2% for
the 12 months that ended September 2024.
Currently, around 73% of Total Play's debt is secured by about 49%
of the company's total revenue, with a trust formally assigned to
manage the debt service with different regulated and non-regulated
financial institutions. The senior unsecured notes represent the
bulk of total unsecured debt and close to 23% of total debt, and
benefit from the residual cash flow in the waterfall after the
repayment of the secured debt. The Caa1 rating on the company's
senior unsecured notes, one notch below the secured debt, reflects
the effective subordination to Total Play's secured debt.
The stable outlook reflects Moody's view that Total Play will
sustain its adequate liquidity, generating positive FCF and
extending its maturities at least twelve months in advance; it also
reflects Moody's view that the company will maintain its
competitive position and strong operating and financial metrics.
The upgrade also reflects governance considerations as key drivers
of the rating action including improved liquidity management and
adequate credit metrics, which is reflected now in the company's
Financial Strategy and Risk Management assessment that was changed
to 4 from 5, and the overall exposure to governance risks (Issuer
Profile Score or "IPS") to G-4 from G-5 and Total Play's Credit
Impact Score to CIS-4, from CIS-5. The ESG Credit Impact Score is
CIS-4, revised from CIS-5, since ESG considerations are a
constraint for the rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Total Play builds a track record
of sustained adequate liquidity including positive FCF generation.
Quantitatively, an upgrade would also require the maintenance of
leverage below 4x and (EBITDA - CAPEX) / Interest Expense above
1x.
Total Play's ratings could be downgraded if there's lower than
expected profitability or organic growth. Leverage above 5x or any
liquidity deterioration due to lower than expected FCF, or if the
company is unable to rollover its short term debt, leading to
increasing refinancing risk would also lead to a downgrade.
The principal methodology used in these ratings was
Telecommunications Service Providers published in November 2023.
Headquartered in Mexico, Total Play Telecomunicaciones, S.A.P.I. de
C.V. and Subsidiaries (Total Play) offers fixed-telephone, pay-TV
and broadband internet services to residential customers, and
managed IT services for business customers and government entities.
As of September 30, 2024, the company offered these services
through its fully owned fiber optic network, which covers 17.6
million homes passed with 29% penetration and 5.1 million
subscribers generating revenue of MXN44,028 million (about $2.2
billion).
=====================
P U E R T O R I C O
=====================
LA ZAMORANA COCKTAIL: Hires Gandia-Fabian Law Office as Counsel
---------------------------------------------------------------
La Zamorana Cocktail Lounge, Corp., d/b/a La Bodega Vasca d/b/a La
Zamorana Coctel Lounge, Corp., seeks approval from the U.S.
Bankruptcy Court for the District of Puerto Rico to employ
Gandia-Fabian Law Office as its legal counsel.
The Debtor requires an attorney to:
a. give legal advice regarding its duties, powers and
responsibilities in its Chapter 11 case under the laws of the
United States and Puerto Rico where it conducts its operations or
business, or is involved in litigation;
b. advise the Debtor to determine whether a reorganization is
feasible and, if not, help the Debtor in the orderly liquidation
of
its assets;
c. assist in negotiations with creditors for the purpose of
arranging the orderly liquidation of assets or for proposing a
viable plan of reorganization;
d. prepare legal papers;
e. appear before the bankruptcy court or any court in which the
Debtor asserts a claim interest or defense directly or indirectly
related to this bankruptcy case; and
f. perform other necessary legal services for the Debtor.
The firm will be paid at these rates:
Mary Ann Gandia-Fabian $300 per hour
Senior Attorney $300 per hour
Junior Attorney $250 per hour
Accounting Analyst $125 per hour
In addition, the firm will be reimbursed for out-of-pocket
expenses
incurred.
The firm received a retainer from the Debtor in the amount of
$10,000.
Mary Ann Gandia-Fabian, Esq., a partner at Gandia-Fabian Law
Office, disclosed in a court filing that her firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Mary Ann Gandia-Fabian, Esq.
Gandia-Fabian Law Office
P.O. Box 270251
San Juan, PR 00928
Tel: (787) 390-7111
Fax: (787) 729-2203
Email: gandialaw@gmail.com
About La Zamorana Cocktail Lounge, Corp.
La Zamorana Cocktail Lounge, Corp. d/b/a La Bodega Vasca d/b/a La
Zamorana Coctel Lounge, Corp., filed a Chapter 11 bankruptcy
petition (Bankr. D.P.R. Case No. 24-04892) on Nov. 13, 2024.
*********
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 * * *