/raid1/www/Hosts/bankrupt/TCRLA_Public/250130.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
Thursday, January 30, 2025, Vol. 26, No. 22
Headlines
A R G E N T I N A
YPF SA: Fitch Affirms 'CCC' LongTerm Foreign & Local Currency IDRs
B R A Z I L
BRAZIL: Azul-Gol Airline Merger Could Be a 'Necessary Evil'
BRAZIL: Inflation Slowdown Falls Short Ahead of Key Rate Hike
GOL LINHAS: In Talks With Global Airlines as Part of Bankr. Exit
C O L O M B I A
AVIANCA GROUP: Moody's Alters Outlook on 'B2' CFR to Positive
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Secures US$6,750MM in Investments at FITUR 2025
J A M A I C A
JAMAICA: BOJ Accepts 49 Bids for 28-Day Certificate of Deposit
JAMAICA: Finance Minister Cuts Capital Budget to $56 Billion
M E X I C O
GRUPO ELEKTRA: Fitch Affirms & Then Withdraws 'BB-' LongTerm IDRs
P U E R T O R I C O
NEOLPHARMA INC: Seeks Bankruptcy Protection in Puerto Rico
- - - - -
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A R G E N T I N A
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YPF SA: Fitch Affirms 'CCC' LongTerm Foreign & Local Currency IDRs
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Fitch Ratings has affirmed YPF S.A.'s Long-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) at 'CCC'. Additionally,
Fitch has affirmed YPF's outstanding senior unsecured notes at
'CCC' with Recovery Rating of 'RR4'. The company's Standalone
Credit Profile (SCP) remains 'b', and its ratings are aligned with
Fitch's "Government Related Entities Criteria," reflecting
government ownership and strategic importance.
Key Rating Drivers
Links to Sovereign: YPF is closely linked to Argentina given the
government's ownership and interventions. Argentina controls 51% of
YPF and has provincial officials on its board. The government
influences YPF's strategy and decisions as the majority
shareholder, historically interfering in the oil and gas sector,
particularly in YPF's refined products pricing policy. YPF's SCP is
in the 'b' category, reflecting its production cost, limited
diversification, reserves, and financial structure.
Key Producer in Volatile Operating Environment: YPF is Argentina's
market leader, with over 57% market share for gasoline and diesel.
Its dominant participation along the value chain of fuels, strong
branding and robust acreage under license for the production of
crude oil and gas, support the company's potential for value
creation in a more liberalized sector. YPF's robust business model
supports potential benefits as Argentina strengthens its position
as a net exporter of hydrocarbons and the weak economy begins to
stabilize.
Stable Production and High-Cost Profile: Fitch's rating case
assumes production will average 600,000 boed over the rating
horizon. Fitch estimates YPF's 2023 half-cycle costs at
USD36.87/boe and full-cycle costs at USD57.34/boe, due to a lifting
cost of USD15.40/boe on average (USD4.10/boe for the core hub- oil
production). This is higher than peers, but expected to decrease in
2024 and 2025 as unconventional production triggers cost
efficiencies. Full-cycle break-even prices were below average
realization prices for oil and gas, supporting positive cash flow.
Financial Metrics Strengthen: Fitch estimates YPF's total
debt/EBITDA at 1.5x in 2024, down from 1.8x in 2023 (in USD,
adjusted for the sharp devaluation in December 2023), and predicts
it will decrease to below 1.0x on average over the rated horizon.
The company reported 1P reserves of 1,072 million boe (mmboe) in
2023, translating to total debt/1P reserves of USD7.64/boed in 2023
and an estimated USD6.84/boe for 2024. YPF's leverage profile has
been stable but is challenged by a limited pool and high cost of
capital due to Argentina's macroeconomic environment and capital
controls.
Derivation Summary
YPF's linkage to the sovereign is similar to other Latin American
national oil company peers like PEMEX, Petrobras, Ecopetrol, ENAP,
and Petroperu, due to their strategic importance and the
significant implications of a default.
YPF's closest upstream business peers are PEMEX, Petrobras, and
Ecopetrol. In 2023, YPF's production averaged 514,000 boed with a
reserve life of 5.7 years, comparable to Ecopetrol's 737,000 boed
and 7.0 years, but less than Petrobras' 2.8 million boed and 10.9
years, and PEMEX's 2.7 million boed and 7.7 years.
YPF's capital structure is adequate, with a gross leverage ratio of
1.8x in 2023 and total debt/1P of USD7.6/boe, compared to
Ecopetrol's 1.8x and USD14.3/boe, Petrobras' 0.6x and USD2.6/boe,
and PEMEX's 6.7x and USD14.2/boe. Unlike ENAP, Petrobras, PEMEX,
and Petroperu, YPF isn't the sole refined fuels provider in
Argentina, with a 56% market share in 2023. YPF, like Petrobras and
PEMEX, is an integrated energy company, offering more financial
flexibility, while ENAP is primarily a refiner.
YPF has historically operated autonomously with periodic control
over fuel prices and crude, implementing import-parity pricing and
price controls similar to PEMEX and Petrobras. Compared to
downstream-focused ENAP and Petroperu, YPF's leverage in 2023 was
6.0x (1.8x in USD), ENAP's was 2.7x, and Petroperu's was negative
6.4x due to operational issues. ENAP's higher leverage is balanced
by its strategic importance to Chile, aligning its rating with the
sovereign
Key Assumptions
- Average gross production of 600,000boe from 2024-2027;
- Realized oil price of USD69/bbl in 2024 and an average of
USD56.33/bbl thereafter;
- Natural gas prices rise to USD3.75/MMBTU in 2024 and are
maintained at that level through the rating horizon;
- Average annual capex of roughly USD5 billion per year from 2024
to 2027;
- Downstream sales volume follows Real GDP forecasts and YPF is a
net purchaser of crude;
- Effective tax rate of 35%;
- Fitch ARS/USD forecasts for year average and end of period during
2023-2026;
- No dividend payments over the rate horizon;
- Rollover of short-term maturities.
Recovery Analysis
- The recovery analysis assumes YPF would be liquidated in
bankruptcy rather than reorganized as a going concern;
- Fitch assumed a 10% administrative claim.
Liquidation Approach
- The liquidation estimate reflects Fitch's view of the value of
balance sheet assets that can be realized in sale or liquidation
processes conducted during a bankruptcy or insolvency proceeding
and distributed to creditors;
- Inventory advance rate of 50%;
- USD10/bbl reflects the typical valuation of recent
reorganizations in the oil and gas industry.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Argentina's sovereign rating is 'CCC', the lowest level allowed
under Fitch's sovereign criteria; therefore, a downgrade of YPF's
Foreign and Local Currency IDRs would reflect Fitch's belief that a
default is probable or that a default or default-like process has
begun for the company or the sovereign debt, reflecting a 'CC' or
'C'.
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The Foreign Currency IDR is linked to Argentina's sovereign
rating, and an upgrade can only occur with an upgrade of
Argentina's sovereign rating.
Liquidity and Debt Structure
Liquidity Vulnerable to Capital Controls: YPF reported USD877
million in cash and cash equivalents in 3Q24. The company faces
significant refinancing risk, heightened by capital controls, with
USD925 million in debt maturing in 2025, as USD757 million were
refinanced in January 2025, followed by USD1,849 million in 2026
and USD1,281 million in 2027. Fitch expects YPF will continue to
roll over short-term bank and trade financing debt over the rated
horizon.
Issuer Profile
YPF, S.A is the largest fully integrated energy company in
Argentina. It operates in three segments: Upstream, Downstream and
Gas and Power. Since 2012, the Argentine government has controlled
YPF through its 51% majority stake.
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
YPF S.A. has an ESG Relevance Score of '4' for GHG Emissions & Air
Quality due to due to the growing importance of the continued
development and execution of the company's energy-transition
strategy. This has a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.
YPF S.A. has a Governance Structure score of '4', 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
----------- ------ -------- -----
YPF S.A. LT IDR CCC Affirmed CCC
LC LT IDR CCC Affirmed CCC
senior unsecured LT CCC Affirmed RR4 CCC
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B R A Z I L
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BRAZIL: Azul-Gol Airline Merger Could Be a 'Necessary Evil'
-----------------------------------------------------------
globalinsolvency.com reports that a plan to merge two of Brazil's
top airlines to create a dominant carrier will likely win
regulatory approval as a government push for a financially healthy
sector outweighs concern about restricted competition, experts and
lawyers told Reuters.
A floated combination of Gol and Azul formalized with a memorandum
of understanding, would give the new firm overwhelming control over
the country's domestic market, according to globalinsolvency.com.
But both have faced financial turbulence since the pandemic, along
with Brazil's current No. 1 carrier, LATAM Airlines' local unit,
the report notes.
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.
In October 2024, Moody's Ratings upgraded the Government of
Brazil's long-term issuer and senior unsecured bond ratings to Ba1
from Ba2, the senior unsecured shelf rating to (P)Ba1 from (P)Ba2;
and maintained the positive outlook. 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.
BRAZIL: Inflation Slowdown Falls Short Ahead of Key Rate Hike
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globalinsolvency.com, citing Bloomberg News, reports that Brazil's
annual inflation slowed less than expected in early January despite
a drop in energy costs, highlighting the challenges facing
policymakers as they prepare to raise the interest rate again.
Official data released showed consumer prices rose 4.5% from a year
earlier, according to globalinsolvency.com. On the month, they
increased 0.11%, the report notes. The central bank has pledged to
deliver its second straight interest rate hike of 100 basis points
next week - which would lift the benchmark Selic to 13.25% - as
policymakers maneuver to control inflation, the report relays.
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.
In October 2024, Moody's Ratings upgraded the Government of
Brazil's long-term issuer and senior unsecured bond ratings to Ba1
from Ba2, the senior unsecured shelf rating to (P)Ba1 from (P)Ba2;
and maintained the positive outlook. 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.
GOL LINHAS: In Talks With Global Airlines as Part of Bankr. Exit
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globalinsolvency.com, citing Reuters, reports that global airlines
are in talks with Gol Linhas to invest in the Brazilian airline,
which is undergoing Chapter 11 bankruptcy proceedings in the U.S.,
local newspaper Valor Economico reported.
The report mentions that U.S.-based companies United Airlines and
American Airlines, as well as European firms Air France-KLM,
International Airlines Group and Lufthansa Group among the groups
in talks with Gol.
About Gol Linhas
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and cargo;
and maintenance services for aircraft and components in Brazil and
internationally. The company offers Smiles, a frequent-flyerprogram
to approximately 20.5 million members, allowing clients to
accumulate and redeem miles. It operates a fleet of 146 Boeing 737
aircraft with 674 daily flights. The company was founded in 2000
and is headquartered in Sao Paulo, Brazil.
GOL Linhas Aereas Inteligentes S.A. and its affiliates and its
subsidiaries voluntarily filed for Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 24-10118) on Jan. 25, 2024.
GOL Linhas estimated $1 billion to $10 billion in assets as of the
bankruptcy filing.
The Debtors tapped Milbank LLP as counsel, Seabury Securities LLC
as restructuring advisor, financial advisor and investment banker,
Alixpartners, LLP, as financial advisor, and HUGHES Hubbard & Reed
LLP as aviation related counsel. Kroll Restructuring Administration
LLC is the claims agent.
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C O L O M B I A
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AVIANCA GROUP: Moody's Alters Outlook on 'B2' CFR to Positive
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Moody's Ratings affirmed the B2 ratings of Avianca Group
International Limited ("Avianca") and LifeMiles Ltd.'s corporate
family ratings, senior secured notes and senior secured 1st lien
bank credit facility ratings and changed the rating outlook to
positive from stable. In addition, Moody's assigned a B2 rating to
Avianca MidCo 2 PLC proposed backed senior secured global notes for
up to $1 billion due 2028 and assigned a positive outlook.
RATINGS RATIONALE
The affirmation of the B2 ratings and change in outlook to positive
follows the company's refinance plan that includes an exchange
offer for its tranche A-1 senior secured notes due 2028, a new
issue of senior secured global notes with proceeds used to repay
$584 million under the tranche A-2 of the senior secured notes also
due 2028 and LifeMiles $365 million senior secured 1st lien term
loan. The transaction expected to be completed by mid-February will
be largely debt neutral but will streamline Avianca's capital
structure and will improve its financial flexibility as it intends
to eliminate certain restrictive covenants, amend certain events of
default and release the liens on certain assets constituting
collateral securing the existing notes, subject to meeting a
minimum asset coverage ratio.
Given positive operating performance since 2021 and the benefit of
a first priority lien on the assets of the LifeMiles, collateral
coverage of rated debt will improve significantly. Newly performed
appraisals estimate the collateral value at $6.3 billion, well
above the $3.0 billion at emergence. On a liquidation scenario its
value could be lower given its reliance on assets that are more
difficult to value, such as intangibles and LifeMiles' ties with
the airline. However, liquidation risk is lower given the positive
operating performance of Avianca since emergence.
The positive outlook reflects Moody's view that the increased
financial flexibility will support Avianca's business strategy
allowing for significant improvements to its credit profile through
2026. Avianca's business strategy is focused on strategic fleet and
route expansions through which the company aims to capture growing
passenger demand, optimize operational efficiency, and drive
revenue growth. The airline plans to expand its point-to-point
network by adding new direct routes from key Colombian cities, as
well as increasing connectivity across Central America. The
positive outlook also entails Moody's consideration that the
company will maintain adequate financial policies as it removes
post-bankruptcy exit financing provisions that have acted as a
guidepost since bankruptcy emergence and that liquidity will remain
strong with internal sources and cash generation comfortably
covering cash requirements through 2026 and to maintain cash
balances close to historical levels.
Avianca's B2 CFR, and Senior Secured Notes ratings continue to
reflect its leading position in the Latin American passenger
airline industry and favorable cost structure. Conversely, the
ratings reflect increasing competition that could pressure air
fares downward, the inherent volatility of the airline industry and
macroeconomic risks in its core markets in the Government of
Colombia (Baa2 negative), Central America, including Government of
Costa Rica (Ba3 positive), Government of El Salvador (B3 stable)
and Government of Guatemala (Ba1 stable).
The B2 CFR on LifeMiles and its senior secured term loans reflects
its diversified and sticky base of commercial partners, growth in
co-branded credit cards, and strong market position in the
territories in which it operates. Despite structural considerations
between Avianca Group International Limited and LifeMiles, there is
no rating notching given Lifemiles close to 20% contribution to
Avianca's EBITDA and total debt.
Avianca's liquidity is strong. As of September 30, 2024, cash and
short term investments amounted $1.1 billion. Moody's expect
adjusted cash from operations at above $1 billion annually and free
cash flow to remain positive through 2026. Avianca's liquidity also
benefits from a comfortable maturity profile with the bulk of its
debt maturing in 2028.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of Avianca's rating would stem from sustained increase
in passenger demand that allow the company to sustain revenue
growth and improve credit metrics as planned. Quantitatively an
upgrade would require adjusted leverage (measured by total debt /
EBITDA) below 4.0x and interest coverage (measured by (FFO +
interest expense) / interest expense) closer to 3.5x, all on a
sustained basis. The maintenance of an adequate liquidity profile
would also be required for an upgrade.
The rating could be downgraded if credit metrics' recovery falls
behind Moody's expectations, with adjusted leverage remaining above
5.0x and interest coverage (FFO plus interest/interest) remaining
below 2.0x on a sustained basis. A deterioration in the company's
liquidity profile or additional shocks to demand or profitability
that lead to cash burn could also result in a downgrade of the
rating.
The principal methodology used in these ratings was Passenger
Airlines published in August 2024.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Secures US$6,750MM in Investments at FITUR 2025
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Dominican Today reports that Tourism Minister David Collado hailed
the Dominican Republic's participation in FITUR 2025 as a
resounding success, with investments totaling US$6,750
million-nearly doubling last year's US$3,500 million.
During his traditional post-event breakfast, Collado detailed the
impact of these investments on the country, according to Dominican
Today. Banco Popular Dominicano secured US$2,500 million in
agreements, Banreservas finalized deals worth US$2,000 million, and
Banco BHD also achieved US$2,000 million, the report notes.
Proamerica, in its first participation, contributed an additional
US$250 million, the report relays.
These investments will result in 7,400 new hotel rooms, 713,000
additional tourists, 47,800 jobs, and US$477 million in foreign
exchange earnings, the report discloses.
Collado also announced agreements with major airlines, including
Iberia, Air Europa, Aeromexico, and Air Transat, adding 500,000 new
seats in the European market for 2025, the report says.
The minister emphasized that improving air connectivity remains the
tourism cabinet's primary goal for the year, underscoring the
Dominican Republic's successful positioning as a global tourism
leader, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCR-LA reported in April 2019 that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic was raised
to 'BB' in December 2022 with stable outlook. Moody's credit
rating for Dominican Republic was last set at Ba3 in August 2023
with the outlook changed to positive. Fitch, in December 2023,
affirmed the Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the outlook to positive.
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J A M A I C A
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JAMAICA: BOJ Accepts 49 Bids for 28-Day Certificate of Deposit
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RJR News reports that the Bank of Jamaica says 274 bids valued at
$32 billion were submitted for the $6.5 billion it offered for a
28-day certificate of deposit.
The CDs were offered at a rate of 6.5% per annum, according to RJR
News.
The central bank wants to mop-up excess liquidity in the financial
systen in order to ease the pressure on the Jamaican dollar, the
report notes.
The BOJ also stressed that it accepted only 49 bids valued at $6.5
billion, the report relays.
The average yield for the successful bids was 5.94% per annum; the
lowest bid was for $353 million at 5% per annum, the report
discloses.
Meanwhile, the highest bid was for $500 million at 9% per annum and
the highest bid which got full allocation was for $2.56 billion at
6% per annum, 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.
JAMAICA: Finance Minister Cuts Capital Budget to $56 Billion
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RJR News reports that faced with a revenue shortfall of $7.29
billion during the period April to November of this fiscal year,
Jamaica Finance Minister Fayval Williams slashed the country's
capital budget by $19 billion, from $75 billion to $56 billion.
This means that the capital budget will now fall to 4 per cent of
the budget, down from 5.43 per cent, and 1.47 per cent of GDP, down
from 2.5 per cent, according to RJR News.
The minister was presenting the third supplementary estimates in
Parliament, the report notes.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea. Jamaica
is an upper-middle income country with an economy heavily dependent
on tourism. Other major sectors of the Jamaican economy include
agriculture, mining, manufacturing, petroleum refining, financial
and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. In September 2023, S&P
Global Ratings raised its long-term foreign and local currency
sovereign credit ratings on Jamaica to 'BB-' from 'B+', and
affirmed its short-term foreign and local currency sovereign credit
ratings at 'B', with a stable outlook. In September 2024, S&P
affirmed 'BB-/B' sovereign ratings on Jamaica and revised outlook
to positive. In March 2022, Fitch Ratings affirmed Jamaica's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'.
The Rating Outlook is Stable.
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M E X I C O
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GRUPO ELEKTRA: Fitch Affirms & Then Withdraws 'BB-' LongTerm IDRs
-----------------------------------------------------------------
Fitch Ratings has affirmed Grupo Elektra, S.A.B. de C.V.'s
Long-Term Local-Currency (LC) and Foreign-Currency (FC) Issuer
Default Ratings (IDRs) at 'BB-' and its National Long-Term and
Short-Term Ratings at 'A(mex)' and 'F1(mex)', respectively. Fitch
has also affirmed Nueva Elektra del Milenio, S.A. de C.V.'s (NEM)
Long-Term LC and FC IDRs at 'BB-'. The Rating Outlooks for Elektra
and NEM are Stable. Fitch has subsequently withdrawn all Elektra
and NEM's ratings.
Elektra's ratings reflect its market position as one of Mexico's
main department store chains with a focus on the middle to low
income population, its ability to quickly adapt to adverse economic
cycles and its linkage with Banco Azteca S.A. (BAZ). NEM's ratings
are equalized to Elektra's, reflecting their strong
parent-subsidiary relationship based on its strategic importance to
the group. The ratings affirmation excludes potential tax-related
payments from the company to the Mexican Tax Authority, due to the
uncertainty surrounding the amount and timing of such payments.
Fitch is withdrawing the ratings as Elektra has chosen to stop
participating in the rating process. Therefore, Fitch will no
longer have sufficient information to maintain the ratings.
Accordingly, Fitch will no longer provide ratings or analytical
coverage for Elektra and NEM.
Key Rating Drivers
Key rating drivers do not apply as the ratings have been
withdrawn.
Key rating drivers do not apply as the ratings have been
withdrawn.
Derivation Summary
Elektra's ratings reflect the company's profile as a department
store business focused in the mid- to low income segment of the
population in Mexico and some countries in Central America. The
ratings also reflect weaker governance relevance scores compared to
other peers. Elektra's stores scale is larger than Grupo Unicomer
Corp. (BB-/Stable), and it has one of the largest credit portfolios
held by a retailer in the region. The company is less
geographically diversified than Unicomer; however, Mexico and the
U.S. are the countries that generate most of Elektra's cash and
have lower country risk than most of Unicomer's countries of
operations.
Compared with other non-food retailers in the region such as Grupo
Sanborns and Unicomer, Elektra is around 1.5x-2.5x the scale in
retail-only absolute sales, reflecting the ample market the company
is focusing. The company's retail-only EBITDAR margins have been
higher than the median of regional non-food retailers rated by
Fitch of around 11%.
Key Assumptions
Key assumptions are not applicable as the ratings have been
withdrawn
RATING SENSITIVITIES
The rating sensitivities are not applicable as the ratings have
been withdrawn.
Liquidity and Debt Structure
Elektra's cash for the retail division was MXN12 billion, as of
September 2024, and short-term debt was MXN9.1 billion, mainly
composed by local issuances. In addition, the retail division
presented MXN3.9 billion of short-term marketable securities. Fitch
considers the retail division's cash and marketable securities as
readily available cash as there are no constraints on its
disposition.
Issuer Profile
Grupo Elektra is one of the largest specialty retailing, consumer
finance and banking services companies in Mexico in terms of number
of stores, branches and revenues. It also operates in the U.S.,
Guatemala, Honduras and Panama.
Summary of Financial Adjustments
When assessing Elektra, Fitch uses the balance-sheet-reported lease
liability as the capitalized lease value when computing lease
equivalent debt.
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
Grupo Elektra, S. A. B. de C. V. has an ESG Relevance Score of '5'
for Governance Structure due to ownership concentration and the
company's related-parties' disparate treatment toward different
stakeholders, which has a negative impact on the credit profile,
and is highly relevant to the rating, resulting in an implicitly
lower rating.
Grupo Elektra, S. A. B. de C. V. has an ESG Relevance Score of '4'
for Group Structure due to the complexity of the group structure,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
Grupo Elektra, S. A. B. de C. V. has an ESG Relevance Score of '4'
for Financial Transparency due to the level of detail and
transparency of financial disclosure, 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 Prior
----------- ------ -----
Nueva Elektra del
Milenio, S.A. de C.V. LT IDR BB- Affirmed BB-
LT IDR WD Withdrawn
LC LT IDR BB- Affirmed BB-
LC LT IDR WD Withdrawn
Grupo Elektra,
S. A. B. de C. V. LT IDR BB- Affirmed BB-
LT IDR WD Withdrawn
LC LT IDR BB- Affirmed BB-
LC LT IDR WD Withdrawn
Natl LT A(mex) Affirmed A(mex)
Natl LT WD(mex)Withdrawn
Natl ST F1(mex)Affirmed F1(mex)
Natl ST WD(mex)Withdrawn
=====================
P U E R T O R I C O
=====================
NEOLPHARMA INC: Seeks Bankruptcy Protection in Puerto Rico
----------------------------------------------------------
On January 22, 2025, Neolpharma Inc. filed Chapter 11 protection in
the U.S. Bankruptcy Court for the District of Puerto Rico.
According to court filing, the Debtor reports $21,068,886 in
debt owed to 100 and 199 creditors. The petition states funds will
be available to unsecured creditors.
About Neolpharma Inc.
Neolpharma Inc. is a privately-held company that specializes in
the
manufacturing of pharmaceutical products.
Neolpharma Inc. sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.P.R. Case No.: 25-00188) on January 22,
2025. In its petition, the Debtor reports total assets of
$29,049,165 and total liabilities of $21,068,886.
The Debtor is represented by:
Carmen D. Conde Torres, Esq.
C. CONDE & ASSOC.
254 San Jose Street, 5th Floor
San Juan, PR 00901-1523
Tel: 787-729-2900
Fax: 787-729-2203
E-mail: condecarmen@condelaw.com
*********
S U B S C R I P T I O N I N F O R M A T I O N
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