/raid1/www/Hosts/bankrupt/TCRLA_Public/210527.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, May 27, 2021, Vol. 22, No. 100

                           Headlines



B R A Z I L

AVIANCA: To Resume Flights Between Brazil and Colombia in July
JBS SA: Discloses Large Expansion of Poultry Production in Brazil


D O M I N I C A N   R E P U B L I C

DOMINICAN REPUBLIC: International Situation Drives Hike in Prices


G U A T E M A L A

BANCO AGROMERCANTIL: Fitch Affirms 'BB' LT Foreign Currency IDR
BANCO DE DESARROLLO: Fitch Alters Outlook on 'BB-' IDRs to Stable
BANCO G&T: Fitch Alters Outlook on 'BB-' LT IDRs to Stable
BANCO INDUSTRIAL: Fitch Alters Outlook on 'BB-/B' IDRs to Stable
BANTRAB: Fitch Affirms 'BB-' LT IDRs & Alters Outlook to Stable



M E X I C O

GRUPO AXO: Moody's Assigns Ba2 CFR, Outlook Stable
MEXICO: U.S. Prepares to Cut Air Safety Rating, Sources Say
VERACRUZ STATE: Moody's Alters Outlook on B1 Rating to Positive


U R U G U A Y

URUGUAY: Entered Crisis With Macroeconomic Imbalances, IMF Says

                           - - - - -


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B R A Z I L
===========

AVIANCA: To Resume Flights Between Brazil and Colombia in July
--------------------------------------------------------------
Rio Times Online reports that Avianca announced that after the
authorization of the Colombian government, it will resume
operations on the Sao Paulo-Bogota-Sao Paulo and Rio de
Janeiro-Bogota-Rio de Janeiro routes as of July 2.  According to
the company, passengers who already had Avianca tickets can rebook
their flights, the report notes.

The flights will be operated on Airbus 320 neo aircraft, with a
capacity for 150 passengers, and travelers from Brazil will access
the connection center in Bogota to more than 24 destinations in
Colombia and more than 20 international destinations, according to
Rio Times Online.

                         About Avianca

Avianca -- https://aviancaholdings.com/ -- is the commercial brand
for the collection of passenger airlines and cargo airlines under
the umbrella company Avianca Holdings S.A.  Avianca has been flying
uninterrupted for 100 years.  With a fleet of 158 aircraft, Avianca
serves 76 destinations in 27 countries within the Americas and
Europe.

Avianca Holdings S.A. and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. N.Y. Lead Case No.
20-11133) on May 10, 2020. At the time of the filing, Debtors
disclosed $7,273,900,000 in assets and $7,268,700,000 in
liabilities.  

Judge Martin Glenn oversees the cases.

The Debtors tapped Milbank LLP as general bankruptcy counsel;
Urdaneta, Velez, Pearl & Abdallah Abogados and Gomez-Pinzon
Abogados S.A.S. as restructuring counsel; Smith Gambrell and
Russell, LLP as aviation counsel; Seabury Securities LLC as
financial restructuring advisor and investment banker; FTI
Consulting, Inc. as financial restructuring advisor; and Kurtzman
Carson Consultants LLC as claims and noticing agent.

The U.S. Trustee for Region 2 appointed a committee of unsecured
creditors in Debtors' bankruptcy cases on May 22, 2020.


JBS SA: Discloses Large Expansion of Poultry Production in Brazil
-----------------------------------------------------------------
Ryan McCarthy at meatpoultry.com reports that JBS SA said in a
statement that it would be investing 1.85 billion reals (US$351.4
million) into its poultry business in the Brazilian state of
Parana.

The meat processor plans to make the investment over the next five
years. JBS said it wants to increase the capacity of its existing
Rolandia plant by 25% and build a new processed foods plant in the
state, according to meatpoultry.com.

The announcement also explained that JBS expects to create around
2,600 new jobs with the financing, the report notes.

Currently the meat processor has 3,700 workers in Rolandia with
partnerships with 390 integrated producers, the report relays.
When the expansion is completed, 150 more producers will be
integrated, the report discloses.  JBS already has operations in 14
municipalities in Parana, including production units, distribution
centers, incubators and feed plants, the report adds.

As reported in Troubled Company Reporter on April 12, 2021, Moody's
Investors Service upgraded JBS S.A.'s corporate family rating to
Ba1 from Ba2 and the senior unsecured ratings of its wholly-owned
subsidiaries JBS USA Lux S.A. and JBS Investments II GmbH to Ba1
from Ba2. The rating of the secured term loan under JBS USA Lux
S.A. was upgraded to Baa3 from Ba1. The outlook for all ratings is
stable.




===================================
D O M I N I C A N   R E P U B L I C
===================================

DOMINICAN REPUBLIC: International Situation Drives Hike in Prices
-----------------------------------------------------------------
Dominican Today reports that the Dominican Republic Minister of
Agriculture, Limber Cruz, said that the rise in prices in the
country is because during the pandemic, some ships were not leaving
and there are still "problems" with commodities, such as corn, oil,
and soybeans, raw materials necessary to produce chicken, eggs and
other products.

"All that in the international market, has risen in an
extraordinary way," Cruz said during a press conference, where he
clarified that despite this context, the Government has intervened
in the price and production of chicken, bananas, potatoes, and
other foods of the basic food basket in the Dominican Republic,
according to Dominican Today.

Cruz cited as an example that a few months ago, bananas were at
RD$40 and are now at RD$10, the report notes.

The Agriculture Minister spoke after signing an agreement with
eight associations and a federation of producers to pledge (store)
thousands of quintals of potatoes produced in the Constanza Valley,
the report relays.

"About 50,000 quintals of potatoes are already distributed in three
cold chambers, thus achieving optimal conservation until the time
of distribution, so that the marketing of the fresh product reaches
the consumer at affordable prices," said Cruz, the report
discloses.

According to the Minister of Agriculture, this measure is aimed at
dozens of producers of the demarcation, who were asking for help to
avoid the loss of the current harvest, the report notes.

"With this signature that we are carrying out today, we guarantee
the stability of the producer, the good prices for the consumer and
we also continue to support the production of this item," said the
Minister of Agriculture, the report adds.

                         Agricultural Term

Pledging consists of safeguarding merchandise in bonded warehouses
in a controlled environment, the cost of which is mainly covered by
the Government. According to the Ministry of Agriculture, the
objective is to keep the product in storage to be released when the
market allows it to avoid losses to producers and maintain a fair
price for consumers.

                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.

The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related 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.

Fitch Ratings on Jan. 18, 2021, assigned a 'BB-' rating to
Dominican Republic's USD1.5 billion 5.3% notes due Jan. 21, 2041.
Concurrently, the Dominican Republic reopened its 2030 4.5% notes
for an additional USD1.0 billion, which Fitch rates 'BB-', raising
the total outstanding amount of the 2030 notes to USD2.0 billion.

Standard & Poor's, on December 4, 2020, affirmed its 'BB-'
long-term foreign and local currency sovereign credit ratings on
the Dominican Republic. The outlook remains negative. S&P also
affirmed its 'B' short-term sovereign credit ratings. The negative
outlook reflects S&P's view that it could lower the ratings on the
Dominican Republic over the next six to 18 months, given the severe
impact of the COVID-19 pandemic on the sovereign's already
vulnerable fiscal and external profiles, as well as the potential
for a weaker-than-expected economic recovery.

Moody's credit rating for Dominican Republic was last set at Ba3
with stable outlook (July 2017). Fitch's credit rating for
Dominican Republic was last reported at BB- with negative outlook
(May 8, 2020).




=================
G U A T E M A L A
=================

BANCO AGROMERCANTIL: Fitch Affirms 'BB' LT Foreign Currency IDR
---------------------------------------------------------------
Fitch Ratings has affirmed Banco Agromercantil de Guatemala, S.A.'s
(BAM) Long-Term Foreign Currency (FC) Issuer Default Rating (IDR)
at 'BB'/Outlook Stable and Long-Term Local Currency IDR (LC IDR) at
'BB+'/Outlook Negative. Fitch has also affirmed the Short-Term FC
and LC IDRs at 'B'. In addition, Fitch affirmed the Long- and
Short-Term National Ratings of BAM, Financiera Agromercantil, S.A.
(Finam) and Mercom Bank Ltd. (Mercom) at 'AAA(gtm)' and 'F1+(gtm)',
respectively. The Rating Outlook for all National Long-Term ratings
is Stable.

KEY RATING DRIVERS

BAM - IDRs AND NATIONAL RATINGS

BAM's IDRs and National Ratings are based on the potential support
it would receive from its shareholder Bancolombia, S.A. ifs
required. Bancolombia (BBB-/Negative) is Colombia's largest bank,
with an important presence in Central America. The Stable Outlook
for BAM's FC IDR, which is at the same level as Guatemala's country
ceiling of 'BB', is driven by support from a higher rated parent.

The LC IDR shows the maximum uplift of two notches above the
sovereign rating, which in Fitch's opinion reflects the parent's
solid commitment to its subsidiary; the Negative Outlook reflects
its parent's Negative Outlook. BAM's National Ratings are at the
highest level of the scale given the relative strength of
Bancolombia in relation to other issuers rated in Guatemala.

Fitch's assessment of Bancolombia's propensity to provide support
is highly influenced by the significant reputational risk that
BAM's potential default would represent for its parent, affecting
its franchise. A key factor of moderate importance underpinning the
parents' propensity for support is BAM's important role in
Bancolombia's diversification in the Central American region. Fitch
will closely monitor the ability of the parent to support its
subsidiaries.

VIABILITY RATING (VR)

BAM's VR is highly influenced by the operating environment (OE) in
Guatemala and by the bank's good company profile. Guatemala's OE
score was revised to Stable from Negative. In Fitch's view the
downside risks from the impact of the pandemic on banks'
performance have decreased and are less than initially expected.

Although uncertainty surrounding the pandemic persist, Guatemala's
expected GDP recovery in 2021 (3.9%) favors BAM's prospects,
expecting a stabilization in portfolio quality and recovery of
profitability of BAM, in Fitch's opinion. As the fifth largest bank
by assets and loans with a market share of 8.1% and 11.3%,
respectively as of December 2020, BAM has a good competitive
position that has gradually strengthened in the Guatemalan banking
system.

At the end of 2020, the bank's profitability it exhibited a
relevant deterioration to 0.1% from 1.4% in 2019 (operating profit
to risk weighted assets [RWA]). This has been influenced by higher
loan impairment charges (2019: 53.2% of pre-impairment profit;
2020: 95.0%), and its lower credit growth. However, the bank took
different measures, in order to obtain savings. For 2021 Fitch,
expects lower loans losses allowances, with less affectation in
final profits.

Fitch considers that BAM's asset quality is stable and similar to
system average. As of December 2020, the delinquency ratio (90 days
past due) registered 2.0% (industry: 1.8%), compared to 2.3% in
2019. In March 2021 delinquency ratio increased to 2.5% but Fitch
considers this normal to environment and under control. No further
deterioration is expected during 2021 due to the better prospects
for business dynamism following the pandemic. Likewise, loan loss
allowance coverage increased to 169.7% (2019: 109.6%) preventing to
potential credit losses during 2021.

In Fitch's view, BAM's capitalization is the weakest factor in its
financial profile, comparing negatively with the market, but it is
benefited by potential Bancolombia's support, if needed. At the end
of 2020, the Fitch Core Capital (FCC) to RWA ratio was 9.9% (2019:
10.1%) favored by lower credit growth. Fitch expects BAM's capital
position to remain at reasonable levels, anticipating that, in an
adverse event, Bancolombia would provide support to BAM if
required.

BAM's funding structure is appropriate, which provides the bank
with financial flexibility, also benefiting from Bancolombia's
support and its recognized franchise. Customer deposits are one of
the most important and stable sources of financing, which accounted
for 84.7% in 2020 (system: 88.9%). The funding is also sustained on
the consistency of its deposits, with a renewal rate around 80%.

SUPPORT RATING (SR)

BAM's SR of '3' reflects the Bancolombia's moderate ability and
propensity to support to BAM, if necessary. This rating is mostly
influenced by the current level of the country ceiling.

FINAM and MERCOM - NATIONAL RATINGS

Finam and Mercom's National Ratings are driven by the potential
assistance from their shareholder, Bancolombia, if needed. Their
National Ratings are at the highest level of the scale, which
reflects the relative strength of their owner, with respect to
other rated issuers in Guatemala.

Fitch considers with high importance in its evaluation, that
Bancolombia's ability and willingness to support its Guatemalan
subsidiaries is influenced by the huge reputational risk that the
institutions' default could constitute to its parent, damaging its
franchise. Fitch also factors with moderate importance, the
entities' role in the group in Guatemala, which includes operations
in complementary market segments that boost BAM's business model.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative
rating action/downgrade:

BAM - IDR, VR and SR;

-- A downgrade on Bancolombia's IDRs would lead to a similar
    action on BAM's LC IDR;

-- BAM's SR and IDRs are sensitive to a downgrade of the
    sovereign rating and country ceiling;

-- BAM's VR could be downgraded in a scenario of a material
    deterioration in the local operating environment that reduce
    its operating profit to RWA metric below 1% and/or the FCC
    ratio consistently remains below 9%.

BAM, FINANCIERA AGROMERCANTIL and MERCOM - NATIONAL RATINGS

-- The National Ratings could be downgraded if Fitch's assessment
    of Bancolombia's ability or willingness to support its
    subsidiaries is modified.

Factors that could, individually or collectively, lead to positive
rating action/upgrade:

BAM - IDR, VR and SR

-- The IDRs of BAM have limited upside potential given the
    current sovereign rating, country ceiling and stable operating
    environment;

-- BAM's IDR, VR and SR could be upgraded in the event of an
    upgrade of Guatemala's sovereign rating and improvement of the
    operating environment, or in the assessment of the
    Bancolombia's propensity or ability to provide support to its
    subsidiary;

-- LC IDR Outlook will be revised to Stable if its parent's
    Outlook is revised to Stable.

BAM, FINANCIERA AGROMERCANTIL and MERCOM - NATIONAL RATINGS

-- The National Ratings are at the highest level of the National
    Rating scale and therefore have no upside potential.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.

SUMMARY OF FINANCIAL ADJUSTMENTS

BAM: Prepaid expenses, software and other deferred assets were
reclassified as other intangible assets and were deducted from
total equity to obtain the FCC since the agency considers these to
have low capacity to absorb losses.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

BAM, Mercom and Financiera Agromercantil's ratings are based on the
potential support they would receive from their shareholder
Bancolombia, S.A. should it be required. Bancolombia is rated
'BBB-'/Outlook Negative.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This 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.


BANCO DE DESARROLLO: Fitch Alters Outlook on 'BB-' IDRs to Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed Banco de Desarrollo Rural, S.A.'s
(Banrural) Foreign and Local Currency Long-Term Issuer Default
Ratings (IDR) at 'BB-', Short-Term IDR at 'B' and Viability Rating
(VR) at 'bb-'. The Rating Outlook on the Long-Term IDR was revised
to Stable from Negative. Fitch has also affirmed the Long-Term
National Ratings of Banrural and Financiera Rural S.A. (Finrural)
at 'AA(gtm)' and the Short-Term National Ratings 'F1+(gtm)'. The
Rating Outlooks on the Long-Term National Ratings for Banrural and
Finrural were also revised to Stable from Negative.

The Outlook revision of Banrural and Finrural's Long-Term Ratings
to Stable is mainly driven by the Outlook revision to Stable from
Negative of Guatemala's operating environment. In Fitch's view the
downside risks from the impact of the pandemic on bank's
performance have decreased and are less than initially expected.
Although uncertainty surrounding the pandemic persists, Guatemala's
GDP is expected to recover 3.9% in 2021 and pressures on asset
quality and profitability have declined.

KEY RATING DRIVERS

IDR, VR AND NATIONAL RATINGS

Banrural's ratings are highly influenced by the operating
environment, which is expected to be more benign following a
relatively mild contraction of 1.5% in 2020. Downside risks
associated with the pandemic and a slow vaccination rollout in
Guatemala could be mitigated by a track record of milder lockdowns
measures relative to other Latin-American economies. Banrural's
ratings are also highly influenced by its company profile, notably
its position as a systematically important bank with a strong
franchise and leading position in consumer loans, SMEs,
microlending and an ample deposit base favored by its geographical
coverage.

Fitch expects NPLs to stabilize and remain around 4.5% relative to
the 4.3% reached as of March 2021. While further increases in
delinquency levels related to the pandemic are possible, the impact
should be manageable given the levels of loans under relief
measures that were reported to be under impairment conditions by YE
2020. Loan Loss Allowances (LLA) increased to 160% of NPLs and 6.9%
of gross loans.

Fitch expects performance in 2021 to remain adequate as both the
net interest margin and non-interest revenues benefit from
increased economic activity, which should also reduce further loan
impairment (LICs) requirements. As of March 2021, operating profits
to risk weighted assets (RWA) stood at 3.2% (December 2020: 2.6%)
with net income increasing 8.4% yoy as of December 2020 and 22%
during 1Q2021. As of December 2020, LICs accounted for 54.6% of
pre-impaired profits, providing additional capacity to absorb
losses (pre-impairment profits accounted for 6.2% of gross loans).

Capitalization is considered to be good and stable with a Fitch
Core Capital (FCC) consistently above 16% (March 2021: 16.4;
December 2020-2017 average: 16.7%). Capitalization is relatively
less vulnerable to asset quality deterioration given the lower
concentration to large debtor (20 largest debtors: 0.8x FCC) as
well as adequate reserve coverage levels.

The loan/deposit ratio remained low (51.1%), reflecting high levels
of liquidity on the balance sheet as deposit grew 16.3% in 2020.
The 20 largest depositors account for 19% of total deposits with a
good track record of stability. Liquid assets and securities
available for sale represented 50.3% of customer deposits as of
March 2021.

SUPPORT RATING AND SUPPORT RATING FLOOR

The bank's Support Rating (SR) of '4' reflects Fitch's opinion
about the limited probability of extraordinary support from the
state. The Support Rating Floor (SRF) is one notch below the
sovereign rating at 'B+', which indicates the minimum level to
which the entity's Long-Term IDR could fall if the agency does not
change its view on potential sovereign support.

NATIONAL RATINGS

Finrural's national ratings are driven by the support it would
receive from Banrural, if required. In the agency's view, Finrural
is highly integrated to Banrural and a default of Finrural would
constitute an important reputational risk for the bank. Finrural
provides services to Banrural as managing trustees while its
relative size is considered to be immaterial relative to the
ability of Banrural to provide support.

RATING SENSITIVITIES

Factor that could, individually or collectively, lead to negative
rating action/downgrade:

-- VR, IDR and National Ratings could be downgraded by the
    deterioration of Banrural's financial profile caused by a
    significant decline of its operating profit to Risk Weighted
    Assets (RWA) consistently below 2% and/or a decline in
    capitalization (Fitch Core Capital [FCC]/RWA close to 12%).
    Ratings are also sensitive to a downgrade of the sovereign
    rating.

Factor that could, individually or collectively, lead to positive
rating action/upgrade:

-- There is limited upside potential given that the VR and IDR
    are at the sovereign level. The VR and IDR could be upgraded
    in the event of an upgrade of Guatemala´s sovereign rating
and
    improvement of the operating environment. National Ratings
    could be upgraded from a reduction of NPLs below peer levels
    while maintaining profitability and capitalization levels.

SUPPORT RATING

Banrural's SR and SRF are sensitive to changes in the sovereign
rating as well as its capacity and/or propensity to provide
support.

FINANCIERA RURAL NATIONAL RATINGS

Changes in Finrural's ratings would mirror movements in Banrural's
ratings as well as changes in its capacity and/or propensity to
provide support.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.

SUMMARY OF FINANCIAL ADJUSTMENTS

Banrural: Prepaid expenses and other deferred assets were
reclassified as intangible assets and were deducted from equity
since the agency considers these to have low capacity to absorb
losses. Equity interests in insurance companies are also deducted
from equity.

ESG CONSIDERATIONS

Fitch has revised Banrural's ESG Relevance Score (ESG.RS) for Human
Rights, Community Relations, Access & Affordability to '4[+]' from
'3' to reflect a moderately positive impact on the bank's franchise
arising from its focus on the provision of services for underbanked
and underserved communities in Guatemala. Banrural's lending is
heavily weighted towards the retail sector, SMEs and microfinance
sectors, which together represented around 68% of total end-2020
loans, and the bank holds leading positions in microfinance lending
(69% market share at end-March 2021), SME finance (38%) and
consumer credit (26%). The bank's focus on community finance is a
strong differentiating factor which supports its franchise.

Banrural's ESG.RS for Exposure to Environmental Impacts is '3'
which deviates from the default score of '2' assigned to banks
globally. Banrural has a strong rural branch presence, which,
combined with its focus on community lending including some
exposure to agriculture (6% of gross loans), could have a negative,
albeit low, impact on the bank's credit profile in the case of
extreme weather conditions. Unless otherwise disclosed in this
section, the highest level of ESG credit relevance is a score of
'3'. This 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.


BANCO G&T: Fitch Alters Outlook on 'BB-' LT IDRs to Stable
----------------------------------------------------------
Fitch Ratings has affirmed Banco G&T Continental S.A.'s (G&TC)
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
at 'BB-' and Viability Rating (VR) at 'bb-'. Fitch has also
affirmed the National Scale ratings of the bank and its
subsidiaries. The Rating Outlooks of G&TC's Long-Term IDRs and
National Long-Term ratings have been revised to Stable from
Negative.

The Outlook revision of G&TC and its subsidiaries parallels Fitch's
revised assessment to Stable from Negative of the operating
environment (OE) faced by Guatemalan banks. Fitch believes the
downside risks from the impact of the pandemic on banks'
performance have decreased and are less than initially expected.
Although uncertainty surrounding the pandemic persists, Fitch
expects G&TC's performance will be stable over the ratings horizon
based on Guatemala's projected GDP recovery in 2021 (3.9%) and the
bank's credit control initiatives and improvements in its financial
profile.

KEY RATING DRIVERS

G&TC's IDRs and National ratings are driven by its intrinsic
profile, as reflected in its VR. The bank's VR is at the level of
the sovereign and is highly influenced by the stabilized OE in
Guatemala, which was less affected during the pandemic than
expected. Fitch believes the moderate economic recovery
expectations for 2021 would support credit and deposits growth and
would continue to highly influence the local bank's business
prospects. G&TC's VR is also highly influenced by its sound company
profile, notably its strong franchise in the Guatemalan financial
market along with its corporate-oriented business, although still
moderate compared with higher-rated regional peers. The significant
concentrations in G&TC's portfolio driven by its business model
could be partially offset by its resilient financial performance
over the short to medium term.

G&TC's asset quality exhibited improvements during 2020, mainly
supported on the prudential credit control initiatives applied
during the year and the country's less affected OE compared to the
rest of Central America. G&TC's profitability remains relatively
similar to pre-pandemic levels as the economic disruption did not
materially impact Guatemalan economic activity. As of December
2020, its loans overdue above 90 days had diminished to 1.6%, which
compares below pre-pandemic metrics (2016-2019 average: 2.1%) and
is relatively in line with those of its similarly rated local
peers. Its loan loss allowances also increased to 264.8%, mainly
due to prudent provisions for potential loan losses. Its operating
profits represented 1.6% of its risk weighted assets (RWA), a
metric that remains commensurate to its corporate-orientated
business. Fitch considers G&TC's asset quality and profitability
could be influenced by a relatively more dynamic loan book and by
the expected improvements in debtors' payment ability from the
estimated economic reactivation for 2021.

G&TC's equity position improved in 2020 given earnings the entity
had been retaining in recent years, in order to strengthen its
equity, including profits from last year. As of December 2020, its
FCC ratio reached 15.9% (2016-2019 average: 12.4%), which is above
some peers at same rating level and indicates an improved ability
to absorb unexpected losses.

G&TC's funding profile is underpinned by its strong deposits base,
which also increased during the pandemic supported by its
well-positioned business, although this effect was also observed at
the banking system level. As of December 2020, its loan to deposit
ratio was 55.2%, which maintains the improving trend observed in
recent periods (2016-2019: average: 65.5%). Fitch believes G&TC's
funding profile will continue to benefit from its good deposit
franchise and appropriate liquidity (liquid assets represented
close to 71% of deposits as of December 2020). This would support
moderate asset growth expectations over the short to medium term.

G&TC's Support Rating (SR) of '4' reflects Fitch's opinion about
the limited probability of extraordinary support that the bank will
receive from the sovereign, if needed. Fitch's assessment of
support is based on the sovereign ability to provide support, as
reflected in its rating and the small relative size of the banking
system. The SR also reflects the bank's deposit-based funding
structure and its systemic importance in Guatemala. As of December
2020, the bank's market share in deposits was around 14%.

The Support Rating Floor (SRF) of 'B+' is one notch below the
sovereign rating of Guatemala and according to Fitch's criteria,
indicates the minimum level to which the entity's Long-Term IDR
could fall as long as Fitch's assessment of the sovereign support
factors does not change.

G&T Conticredit S.A. (Conticredit), Financiera G&T Continental,
S.A. (Fin G&TC) and GTC Bank Inc.'s (GTC) national ratings in
Guatemala and GTC's Panamanian National Ratings are based on
Fitch's opinion of G&TC's ability and propensity to support its
subsidiaries, if needed. Fitch's opinion of the support is based on
the relevant role these subsidiaries have on its parent's strategy
and the significant reputational risk that a default by one of them
would pose to G&TC. As a result, their Guatemalan scale ratings are
at the same levels of G&TC's national ratings. GTC's National
Ratings in Panama also reflect the potential support from G&TC and
its risk profile relative to other issuers in Panama and the local
OE. The revision of these subsidiaries' long-term national rating
Outlooks to Stable from Negative mirrors G&TC's ratings' Outlook
revision.

Conticredit's senior debt issuances' national ratings are aligned
to those of their respective issuer. Their probability of default
is the same as of Conticredit as they do not have specific
collateral.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative
rating action/upgrade:

-- G&TC's IDRs, VR and National Ratings could be downgraded if
    the deterioration of its financial profile caused by the
    pandemic turns out to be significantly more important than
    anticipated. G&TC's ratings would also be downgraded in a
    scenario of a significant deterioration of asset quality,
    which increases the bank's impairment levels, and results in a
    sustained decline in the bank's operating profits to risk
    weighted assets ratio consistently below 1% and FCC ratio
    continuously below 10%;

-- G&TC' IDRs, SR and SRF are also sensitive to a downgrade of
    the sovereign rating.

-- The national ratings of Conticredit, Fin G&T and GTC could be
    downgraded if G&TC's ratings are downgraded or in case of a
    lower appreciation by Fitch of support from G&TC.

-- Conticredit's senior unsecured debt national ratings would be
    downgraded in case of negative rating actions on Conticredit's
    National ratings.

Factors that could, individually or collectively, lead to positive
rating action/downgrade:

-- There is limited upside potential given that ratings are at
    the sovereign level. However, over the medium term, G&T's
    IDRs, VR, SR and SRF could be upgraded in the event of an
    upgrade of Guatemala´s sovereign rating and improvement of
the
    operating environment, especially if accompanied by further
    improvements and stability in its asset quality and
    profitability metrics.

-- G&TC's National Scale Ratings could be upgraded only over the
    medium term and should be accompanied by NPL metrics
    consistently below 1.5% and operating profits metric
    sustainably above 2%, while maintaining its current FCC ratio
    levels.

-- The national ratings of Conticredit, Fin G&T and GTC could be
    upgraded if G&TC's ratings are upgraded.

-- Conticredit's senior unsecured debt would be upgraded in case
    of positive rating actions on Conticredit's National ratings.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.

SUMMARY OF FINANCIAL ADJUSTMENTS

Fitch reclassified prepaid expenses and other deferred assets as
intangible assets and deducted them from total equity since the
agency believes they have low capacity to absorb losses.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

G&TC's VR and IDRs are at the sovereign level and are highly
influenced by the operating environment in Guatemala. G&TC's
subsidiaries' national ratings, G&T Conticredit, Financiera G&TC,
and GTC Bank, are based on G&TC's ability and propensity to provide
support.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This 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.


BANCO INDUSTRIAL: Fitch Alters Outlook on 'BB-/B' IDRs to Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Banco Industrial, S.A.'s (Industrial)
Foreign and Local Currency Long-Term (LT) Issuer Default Ratings
(IDR) at 'BB-', Short-Term (ST) IDR at 'B' and Viability Rating
(VR) at 'bb-'. Fitch also affirmed the LT and ST National Ratings
of Industrial at 'AA(gtm)' and 'F1+(gtm)', respectively, as well as
those of its subsidiaries and sister companies. The Rating Outlooks
of the LT IDRs and National LT ratings were revised to Stable from
Negative.

The Outlook revision of Industrial and related entities' Long-Term
Ratings to Stable is mainly driven by the Outlook revision to
Stable from Negative of Fitch's assessment of the operating
environment (OE) faced by Guatemalan banks. In Fitch's view, the
downside risks from the impact of the pandemic on banks'
performance have decreased and are less than initially expected.
Although uncertainty surrounding the pandemic persist, Guatemala's
expected GDP recovery in 2021 (3.9%) and the bank's risk-control
initiatives implemented sustain Fitch's expectations of
Industrial's stable financial profile in the rating horizon.

KEY RATING DRIVERS

Industrial's IDRs and national ratings are based on its intrinsic
profile, reflected in its VR, which is highly influenced by the
Guatemalan OE, which Fitch estimates will be less challenging, due
to the expected business dynamism recovery and low impact of the
crisis observed on loan quality metrics, since relief measures
ended in December 2020. Although there are still uncertainty
factors associated with the pandemic, the agency considers that
potential effects on Industrial's financial performance would be
manageable and mitigated by the prudential actions taken in 2020.

Industrial's VR is also highly influenced by its robust company
profile, mirrored by its strong local franchise and regional
presence in Central America, providing a relevant competitive
position. Industrial is the largest bank in Guatemala, with 28.4%
and 24.9% market share by loans and deposits, respectively, in
2020.

Industrial's VR also factors its financial performance
characterized by stable loan quality and lower-than- local and
regional peers non-performance loans (NPLs +90 days) metric,
reflecting consistent underwriting standards, robust risk controls
and a focus in large corporate clients. As of YE20, the NPL ratio
was 0.9% (industry: 1.8%), while its reserves for impaired loans
increased prudently, reaching 260%. Industrial entered in the
crisis with a good position and Fitch believes that any impact
would be controllable for the bank, standing at levels commensurate
with the current category.

Industrial's profitability remained stable, demonstrating its
resilience to prevailing conditions. As of YE20, the operating
profit to risk weighted assets (RWA) ratio was 2.4% (average:
2.2%). Fitch estimates its evolution will remain in 2021, driven by
better economic prospects, expected charges for NPLs consistent
with a more benign OE, along with other actions made by the bank.

The positive trend seen in capitalization, stabilized in 2020,
provides further cushion to absorb possible pressures could arise,
attenuating its sensitivity to OE. As of YE20, the Fitch Core
Capital (FCC) to RWA ratio was 12.2%. Similar behavior was observed
in the regulatory metrics, expecting this year get stronger, thanks
to ample reserves for NPL and subordinated debt and hybrid
instruments, which give moderate buffers above regulatory
requirements.

The bank's diversified and low-cost funding structure is
underpinned on its solid local franchise and its leading position
in deposits, translating into a broad deposit base, its main
funding source (75.1%), which is complemented by other financing
options. Also, ample access to resources from national and
international markets provides great flexibility to Industrial. In
2020, the loan-to-deposit ratio stood at 74.5%.

Support Rating (SR) and Support Rating Floor (SRF)

Industrial's SR of '4' reflects Fitch's opinion of the limited
probability of extraordinary support that Industrial will receive
from the sovereign (BB-/Stable), if required. Fitch's support
assessment also considers the small relative size of the banking
system, Industrial's systemic importance in Guatemala and its
deposit-based funding structure. Industrial's SRF is one notch
below the Guatemala's sovereign rating and, according to Fitch's
criteria, indicates the minimum level to which the entity's LT IDR
could fall as long as Fitch's appreciation of the support factors
does not change.

Debt and Other Hybrid Securities

Industrial Senior Trust (ISnT) notes rating is in line with
Industrial's IDR, reflecting that are the senior unsecured
obligations and the likelihood of default is the same as the bank.

Industrial's Subordinated Tier I capital (IST-I) notes are rated
four notches below Industrial's IDR given its deep subordination
status and discretionary coupon omission.

Industrial Subordinated Trust's (ISbT) notes, a special issuance
vehicle, as well as the Industrial Subordinated Notes (ISN) are two
notches below Industrial's IDR, reflecting the subordinated status,
ranking junior to all Industrial's senior indebtedness, pari passu
with all other unsecured subordinated debt and senior to
Industrial's capital and tier I hybrid securities.

Subsidiaries and Affiliated Companies

The National Ratings for the Guatemalan subsidiaries Financiera
Industrial, S.A. (FISA) and Westrust Bank (International) Limited
(Westrust), and its sister company, Contecnica, S.A., through its
holding Bicapital Corporation (Bicapital), are aligned with
Industrial's National Ratings. This reflects Fitch's opinion of the
bank's strong propensity and ability to provide them support, if
required. Fitch's support assessment considers with high importance
the relevant role of them in Industrial's local business model and
strategy.

BI Bank, S.A.'s national ratings in Panama are driven by the
potential support from its sister company, Industrial, through
Bicapital. Fitch's support assessment significantly weights the
implication of a default of this subsidiary on the reputation of
the group. The revision of these entities' LT National ratings
Outlooks to Stable mirrors the same action on Industrial's
ratings.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative
rating action/downgrade:

-- Industrial's IDR, VR and National Ratings could be downgraded
    if sustained deterioration in asset quality and financial
    performance drive its FCC ratio to a level consistently below
    10%;

-- Industrial's IDRs, SR and SRF are also sensitive to a
    downgrade of Guatemala's sovereign rating;

-- The ratings of the IST-I, ISnT, ISbT and ISN notes would be
    downgraded if Industrial's IDR is downgraded;

-- Westrust, FISA and Contecnica's National Ratings could be
    downgraded in the event of a downgrade in Industrial's
    National Rating, and also if Fitch's assessment of
    Industrial's willingness to support the entities changes;

-- BI Bank's ratings in Panama could be downgraded in case of a
    lower Industrial's ability, as reflected by its IDR, and
    propensity to provide support.

Factors that could, individually or collectively, lead to positive
rating action/upgrade:

-- Industrial's IDRs, VR and National Ratings have limited
    upgrade potential due to the current levels of the sovereign
    rating, Country Ceiling and OE;

-- The IDRs and VR could be upgraded in the event of an upgrade
    of Guatemala's sovereign rating and a sustained improvement of
    the operating environment in conjunction with a sustained
    financial performance;

-- There is limited upgrade potential for Industrial's SR and
    SRF, as it would result from an upgrade of Guatemala's
    sovereign rating;

-- The ratings of the IST-I, ISnT, ISbT and ISN notes would be
    upgraded if Industrial's IDR is upgraded;

-- Westrust, FISA and Contecnica's National Ratings could be
    upgraded in the event of an upgrade in Industrial's National
    Rating;

-- BI Bank's ratings in Panama could be upgraded in case of
    positive changes in Industrial's ability to support it, as
    reflected by its Foreign Currency IDR, and propensity to
    provide support.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.

SUMMARY OF FINANCIAL ADJUSTMENTS

Banco Industrial and Westrust: Prepaid expenses and other deferred
assets were reclassified as intangible assets and deducted from
total equity as Fitch considers these to have low capacity to
absorb losses.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

The ratings of the subsidiaries and sister companies of Banco
Industrial: Westrust, Financiera Industrial, Contecnica and BI Bank
are driven by support from Banco Industrial; while the ratings of
the special purpose vehicles Industrial Senior Trust and Industrial
Subordinated Trust are linked to the rating of Banco Industrial.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This 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.


BANTRAB: Fitch Affirms 'BB-' LT IDRs & Alters Outlook to Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Banco de los Trabajadores' (Bantrab)
Viability Rating (VR) at 'bb-' and Long-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) at 'BB-', while the
long-term Outlook was revised to Stable from Negative. In addition,
Fitch upgraded Bantrab's Long-Term National-Scale Rating to
'A(gtm)' from 'A-(gtm)' and revised the Rating Outlook to Stable
from Negative.

The Outlook revision of Bantrab's long-term ratings to Stable is
mainly driven by the Outlook revision to Stable from Negative of
Fitch's assessment of the operating environment (OE) faced by
Guatemalan banks. In Fitch's view, the downside risks from the
impact of the pandemic on banks' performance have decreased and are
less than initially expected. The upgrade on National-Scale ratings
reflects company profile's strength, which results in a positive
effect on the bank's financial profile, namely its high
profitability and robust capitalization.

KEY RATING DRIVERS

IDRS AND NATIONAL RATINGS

Bantrab's IDRs and national ratings are driven by its VR. Bantrab's
VR is highly influenced by bank's company profile and earnings &
profitability assessment. Bantrab is characterized by its focus on
consumer lending with the risk control mechanism of collecting
payments via payroll, which has enabled the bank to have a relevant
market position in retail banking and allowed it to register a
constant and stable financial income stream.

Also, the bank's operating profitability is a rating strength and
will remain as such in the foreseeable future. Profitability is
also boosted due to a decreased funding cost alongside low loan
impairment charges (LICs) and adequate operational efficiency. As
of YE 2020, operating return over risk-weighted assets (RORWA) was
5.8%, higher than its 2016-2019 average of 4.4% and the industry's
2.4%. As of 1Q21, operating RORWA was 5.14%, while net ROAE was
20%.

Fitch believes that Bantrab will continue to yield sound loan asset
quality indicators as its loan placement policy of collecting via
payroll will remain one of its competitive advantages over its
peers. As of YE 2020, its 90+days impaired loans ratio of 1.2%
shows a well-controlled credit portfolio for a mainly consumer
lending bank while loan loss allowances for such impairments were
high 237.7%. As of 1Q21, 90+days overdue loans were a still low
1.7% with a loan loss coverage of 173.1%.

Fitch believes that Bantrab's capitalization is strong and expects
it to continue to record healthy levels in the medium term. It is
the highest amongst its peers in the Guatemalan industry, which
provides the bank with a strong loss absorption capacity. As of
2020, its FCC is a high 21.5%. The bank's capitalization is favored
by the high profitability of its operations combined with its
structurally low dividend pay-out. As of 1Q 2021, FCC was 21.8%.

Fitch believes that Bantrab's funding and liquidity structure
remains adequate as per its business model but still has a margin
of improvement in relation to its higher-rated local peers. Its
deposit structure is based on term deposits of highly renewable
rate but highly concentrated. Positively, the bank's deposit cost
has decreased progressively due to its successful repricing
strategy and increased liquidity in the banking system. On the
other hand, the bank lags behind its competitors in potential
contingent access to credit lines. Loans-to-deposits ratio was
66.9% as of 1Q21, slightly better than the 68.1% and 69.41% of 2020
and 2019, respectively.

SUPPORT RATING (SR) AND SUPPORT RATING FLOOR (SRF) - Bantrab

Bantrab's SR and SRF of '5' and 'NF', respectively, indicate that,
although possible, external support cannot be relied upon given the
currently low state ownership and relatively limited systemic
importance.

NATIONAL RATINGS - FINANCIERA DE LOS TRABAJADORES, S.A. (FINTRAB)

Fintrab's National ratings are underpinned by institutional support
it would likely receive from its shareholder, Bantrab. Fitch's
opinion of support is based on the significant reputational risk
that a default would pose to Bantrab. As a result, Fintrab's
National-Scale ratings were upgraded because of their alignment to
Bantrab's national ratings.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to a
positive rating action/upgrade:

IDRs and VR - BANTRAB

-- There is limited upside potential given that IDRs and VR are
    at the sovereign level.

-- Bantrab's National Scale ratings could be upgraded if further
    improvements of its funding and liquidity profile materialize.
    Namely, the further decrease of its financial cost alongside
    improvements in concentrations per depositor and the
    establishment of more alternative funding sources.

SUPPORT RATING and SUPPORT RATING FLOOR

-- There is limited upside potential for Bantrab's SR due to low
    systemic significance and nonmaterial government ownership.

NATIONAL RATINGS - FINTRAB

-- Fintrab's ratings could be upgraded if Fitch's evaluation of
    Bantrab's ability and propensity of support to its subsidiary.

Factors that could, individually or collectively, lead to a
negative rating action/downgrade:

IDRs, VR and NATIONAL RATINGS - BANTRAB

-- While not Fitch's base case scenario, the VR, IDR and National
    Ratings could be downgraded if the financial profile
    deteriorated to a point where operating profit to RWAs were
    consistently below 2% thus causing a decline in capitalization
    (FCC/RWA close to 12%).

-- Its VR and IDR are also sensitive to a downgrade of the
    sovereign rating.

SUPPORT RATINGS and SUPPORT RATING FLOOR

-- No downside potential for Bantrab's SR and SRF since they are
    at the lowest level of the scale.

NATIONAL RATINGS - FINTRAB

-- While it is not Fitch's base case scenario, Fintrab's ratings
    could be downgraded if Fitch's evaluation of Bantrab's support
    to its subsidiary resulted in a lower ability and / or
    propensity of providing it.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.

SUMMARY OF FINANCIAL ADJUSTMENTS

Net asset value from an insurance subsidiary, pre-paid expenses and
other deferred assets were reclassified as intangible and deducted
from Total Equity in order to calculate Fitch Core Capital.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

The ratings of Financiera de los Trabajadores, S.A. are
support-driven by the ratings of Banco de los Trabajadores.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This 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.




===========
M E X I C O
===========

GRUPO AXO: Moody's Assigns Ba2 CFR, Outlook Stable
--------------------------------------------------
Moody's Investors Service has assigned a Ba2 corporate family
rating to Grupo Axo, S.A.P.I. de C.V. and a Ba2 rating to its
proposed up to $325 million senior unsecured global bond. The
outlook is stable.

"The Ba2 ratings reflect Axo's solid market position, well known
brands, broad product offering and track record of growth, both
organically and through new licenses and acquisitions." said Sandra
Beltran, Moody's VP Senior Analyst. "We consider Axo's strong
operating cash generation underpinned by a profitable business
model that leverages the company's clout and obtains synergies from
its integration throughout the entire apparel business cycle and
price points" added Beltran.

The proposed issuance proceeds will be used to refinance local
notes and bank debt. As a result, virtually none of Axo's debt will
mature in the next five years. The global bond is rated at the same
Ba2 level of the corporate family rating and will rank pari passu
with all other unsecured and unsubordinated debt obligations of
Axo.

The rating of the proposed global bond assumes that the issuance
will be successfully completed and that the final transaction
documents will not be materially different from draft legal
documentation reviewed by Moody's to date. It also assumes that
these agreements are legally valid, binding and enforceable.

This is the first time Moody's assigns ratings to Axo.

The rating assignment entails governance considerations, including
Axo's status as a privately held company. The company is controlled
by founder shareholders that are also involved in the management,
where most of its members have been working together, on average,
for 18 years. Through a 45% stake in Axo, General Atlantic is a key
partner and its involvement in the board balances some of the risks
related to privately held companies. General Atlantic is a global
equity investor with over $53 billion in assets under management.
Independence of the board is weak with only five out of fifteen
members being independent and CEO and Chairman functions are not
separated. However, General Atlantic has four members appointed and
along with independent members have presence on each of audit,
finance, digital and compensation committees. Reporting, processes
and controls are in compliance with public companies' standards
given local public bonds. Although the company has remained highly
acquisitive in the past, it has track record of being successful at
integrating operations. Axo has a target gross leverage of 2.5x -
3.0x and has also formalized policies to maintain minimum cash at
10% of net sales and to incur in hedging activities.

RATINGS RATIONALE

The Ba2 ratings reflect Moody's expectations of strong
profitability. In 2020, Axo's EBIT margin was 3%, reflecting the
COVID-19 related decline in revenues. On a normalized basis,
Moody's estimates EBIT margin to be close to 12%, a healthy level
for the apparel industry. Historically, Axo has reported strong
cash from operations. In 2020, despite the coronavirus pandemic,
cash from operations was MXN1.2 billion. Through 2021, Moody's
expects cash generation to continue to strengthen towards MXN2.2
billion as the negative effect from COVID-19 lockdowns is phased
out. Cash will also benefit from synergies from Privalia
acquisition yet to be achieved and by Axo's cost savings strategy.
Some of Axo's credit weaknesses include a relatively modest scale
for the Ba category and a high share of sales related to license
arrangements. However, these risks are balanced by its solid market
position due to its portfolio of well-known owned and licensed
brands and established relationships with wholesale customers and
licensing partners. Axo has a long-term track record of successful
operations under the licensing business model and has become a
partner of choice for international apparel brands entering Latin
America. Also, through acquisitions the company has entered
different segments and channels. In 2015, the company acquired
Promoda, a leading off-price retailer in Mexico and in 2019 Axo
closed the acquisition of Privalia, an off-price online
marketplace. The price point of Promoda and Privalia products
allows Axo to reach most Mexican households.

Axo's ratings are limited by credit metrics that are weak for the
Ba2 rating following the COVID-19 disruptions that pressured
revenues and profitability. Recovery is underway but risks remain
given the still fluid pandemic situation and a sluggish consumer
environment. Strict quarantine measures remained through the
beginning of 2021, with mandatory closures being lifted until
February. As a result, net sales in January 2021 were still 32.2%
down when compared to the same period in 2020 and it was only until
February that sales and EBITDA started to recover. During the
pandemic, Axo's leverage increased significantly. In 2020, leverage
measured as gross debt/EBITDA, including Moody's standard
adjustments, was 5.3x, well above the 3.1x in 2019. Although the
deterioration was visible and current leverage is high for the Ba2
rating, the effect was milder when compared to other rated
companies focused in apparel retail. The effect was contained by
Axo's conservative financial policy and leverage profile that
proved the stability of its business model. As the operation
recovers, Moody's expects leverage to decline to 3.3x in 2021 and
to 2.7x in 2022.

Axo's liquidity is good. As of March 31, 2021, the company's cash
balance amounted MXN3.0 billion. During 2020, in response to the
uncertainty of the circumstances surrounding the COVID-19 outbreak
and as a precautionary measure, the company borrowed an aggregate
net amount of MXN1.6 billion to boost cash. Axo is currently
working on a liability management plan to roll over close to $314
million maturities under local notes and bank debt through the
issuance of a senior unsecured global bond. As a result, the
company will have a comfortable maturity profile, with virtually
all its debt coming due on 2026. Historically, free cash flow has
remained negative affected by high capital investments that have
supported its organic growth and expansion of omnichannel and
digital capabilities. However, at the operating level, cash
generation has been strong on a sustained basis. As the environment
remains highly competitive, flexibility to cut capex might tighten.
Therefore, Moody's expect free cash flow to remain pressured
through 2023.

The stable rating outlook reflects Moody's expectation that Axo
will be able to recover brick-and-mortar sales as the effect of the
pandemic abates through 2023. Moody's also expects the company to
continue to expand through omnichannel and in their digital
business given ongoing investments and favorable consumer trends.
As a result, Moody's expects Axo to be able to protect its market
position in the evolving competitive landscape.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

The ratings could be upgraded if Axo demonstrates consistent
comparable sales growth, while maintaining solid operating margins,
very good liquidity and a balanced financial strategy.
Quantitatively, an upgrade would require debt/EBITDA sustained
below 3.5 times and EBIT/interest expense above 3.0 times, as
adjusted by Moody's.

Conversely, a rating downgrade could be triggered if the company
fails to reduce leverage as projected or if its credit metrics
deteriorate significantly because of operating difficulties or a
further potential deterioration in its market-leading position.
Specifically, a downgrade could result if Moody's adjusted leverage
remains above 4.5 times and EBIT/interest expense below 2.0 times
beyond 2022.

The principal methodology used in these ratings was Retail Industry
published in May 2018.

Headquartered in Mexico City, Grupo Axo, S.A.P.I. de C.V. (Axo) is
a multi-brand fashion platform sourcing and marketing owned and
licensed internationally recognized brands through own stores and
e-commerce platforms under the formats of full price and discount
price, as well as with a presence in department stores. The company
is privately held and controlled by a group of founder shareholders
through 55% stake of the voting rights. The balance is hold by
General Atlantic, a global equity investor with over $53 billion in
assets under management.


MEXICO: U.S. Prepares to Cut Air Safety Rating, Sources Say
-----------------------------------------------------------
Frank Daniel, Tracy Rucinski, and David Shepardson at Reuters
report that the U.S. government is preparing to downgrade Mexico's
aviation safety rating, a move that would bar Mexican carriers from
adding new U.S. flights and limit airlines' ability to carry out
marketing agreements, four sources briefed on the matter said.

The Federal Aviation Administration's (FAA) planned move is
expected be announced in the coming days and follows a lengthy
review of Mexico's aviation oversight by the agency, according to
Reuters.

Sources briefed on the matter, speaking on condition of anonymity,
said the FAA has had lengthy talks with Mexican aviation regulators
about its concerns, the report notes.  The sources said these
concerns had not all been addressed following an in-country
assessment, the report relays.

The sources added that Mexican government officials have been
informed about the planned action and raised concerns, the report
discloses.

One airline industry source said the FAA's concerns did not involve
flight safety issues but rather Mexico's oversight of air carriers,
the report says.

Downgrading Mexico from Category 1 to Category 2 would mean that
current U.S. service by Mexican carriers would be unaffected, but
they could not launch new flights and airline-to-airline marketing
practices such as selling seats on each other's flights in
code-share arrangements would be restricted, the report relays.

The action would mean that the FAA has determined that Mexico does
not meet International Civil Aviation Organization (ICAO) safety
standards as part of its safety assessment program, the report
notes.

Mexico has been a top vacation spot for U.S. travelers during the
COVID-19 pandemic, spurring U.S. airlines to redirect capacity they
had previously flown to Europe before transatlantic travel
restrictions were imposed last year, the report discloses.

In April, Mexico was the by far the busiest foreign air destination
- with nearly 2.3 million passengers on U.S.-Mexico flights - more
than three times that of the Dominican Republic, the next highest
country, according to industry data, the report relays.

An FAA spokesman declined to comment.

Mexico's Communications and Transport Ministry did not immediately
respond to a request for comment.

Delta Air Lines (DAL.N), which has a codeshare arrangement with
Aeromexico (AEROMEX.MX), will have to issue new tickets for some
passengers booked on Aeromexico flights as a result of the
downgrade, sources said, the report notes.

Delta and Aeromexico declined to comment.

The report relays that Delta and Aeromexico, joint venture partners
since 2017, are together offering about 3,900 transborder flights
in June, more than any other carrier, according to global data
aviation company Cirium.  Delta owns 49% of Aeromexico but took a
$770 million charge on its investment last year after the carrier's
Chapter 11 bankruptcy filing, the report notesa.

Carlos Ozores, an aviation consultant at global consulting and
digital services provider ICF, said the move could impact Delta and
Aeromexico's codeshares, which drive incremental sales, and force
growth-driven low-cost airline Volaris to revisit expansion plans
to the United States, the report discloses.

This would not be the first time the FAA downgraded Mexico's air
safety rating, the report relays.  In 2010, the agency downgraded
Mexico to Category 2 due to suspected shortcomings within its civil
aviation authority, then restored its top rating about four months
later, the report notes.

The FAA has said that downgrades mean an aviation authority is
deficient in areas such as technical expertise, trained personnel,
record-keeping and inspection procedures, the report says.  Mexican
authorities said in 2010 there was no deterioration of flight
safety and that the downgrade was due to a shortage of flight
inspectors, the report adds.


VERACRUZ STATE: Moody's Alters Outlook on B1 Rating to Positive
---------------------------------------------------------------
Moody's de Mexico S.A. de C.V. affirmed the issuer ratings for the
State of Veracruz at B1/Baa2.mx (Global Scale, local
currency/Mexico National Scale), affirmed its baseline credit
assessment at b1 and changed the outlook to positive from stable.

At the same time, Moody's de Mexico affirmed the debt ratings of
following eight enhanced loans issued by the state at Baa3/Aa3.mx:

MXN10 billion from Banobras (original face value) with a maturity
of 20 years and a pledge of 13.15% of the state's General Fund of
Participaciones revenues.

MXN7.5 billion from Banobras (original face value) with a maturity
of 20 years and a pledge of 9.86% of the state's General Fund of
Participaciones revenues.

MXN2.5 billion from Banobras (original face value) with a maturity
of 20 years and a pledge of 3.2869% of the state's General Fund of
Participaciones revenues.

MXN2.5 billion from Banobras (original face value) with a maturity
of 20 years and a pledge of 3.2869% of the state's General Fund of
Participaciones revenues.

MXN2.5 billion from Banobras (original face value) with a maturity
of 20 years and a pledge of 3.2869% of the state's General Fund of
Participaciones revenues.

MXN1 billion from BanBajío (original face value) with a maturity
of 20 years and a pledge of 1.3148% of the state's General Fund of
Participaciones revenues.

MXN1 billion from BBVA Bancomer (original face value) with a
maturity of 20 years and a pledge of 1.31% of the state's General
Fund of Participaciones revenues.

MXN1 billion from BBVA Bancomer (original face value) with a
maturity of 20 years and a pledge of 1.31% of the state's General
Fund of Participaciones revenues.

Moody's de Mexico also affirmed the Baa2/Aa2.mx ratings of the
following five enhanced loans issued by the state:

MXN2 billion from BBVA Bancomer (original face value) with a
maturity of 20 years and a pledge of 2.6295% of the state's General
Fund of Participaciones revenues.

MXN2 billion from Santander (original face value) with a maturity
of 20 years and a pledge of 2.6295% of the state's General Fund of
Participaciones revenues.

MXN2 billion from Santander (original face value) with a maturity
of 20 years and a pledge of 2.6295% of the state's General Fund of
Participaciones revenues.

MXN2 billion from Santander (original face value) with a maturity
of 20 years and a pledge of 2.6295% of the state's General Fund of
Participaciones revenues.

MXN1 billion from Banorte (original face value) with a maturity of
20 years and a pledge of 1.3448% of the state's General Fund of
Participaciones revenues.

RATINGS RATIONALE

RATIONALE FOR THE POSITIVE OUTLOOK AND AFFIRMATION OF THE ISSUER
RATINGS

The change in outlook to positive and the affirmation of the
ratings reflects sustained improvements in Veracruz's liquidity,
solid gross operating surpluses which were maintained even amid
pressure related to the pandemic and continued progress reducing
the state's accumulated arrears and off balance sheet
contingencies. Veracruz's financial metrics have been on a steadily
improving trend in recent years and compare favorably against
national peers.

Importantly, Veracruz has exhibited improvements in governance that
have supported surpluses and improved liquidity. Growth in expenses
has remained below revenue growth for the past five years, which is
reflected in positive operating balances that averaged 7.3% of
operating revenue in 2019 and 2020, and Moody's expects the state
will be able to maintain operating surpluses of 4.8% in 2021 and
4.6% in 2022 even amid a slowdown in growth in federal transfers.

These results have supported a strong recovery in Veracruz's
liquidity position, which buttresses its ability to manage
unexpected shocks. The state ended 2020 with a cash position that
covered 1.74x its current liabilities, up from 1.64x the previous
year and dramatically higher than 0.05x reported in 2016. This
improvement in liquidity has gone hand in hand with a reduced
dependence on short-term bank borrowing to bridge liquidity needs.
Short-term debt fell to 3.9% of direct debt in 2020 from 8.5% in
2016, and the state aims to continue gradually reducing its use of
short-term borrowing in 2021 and 2022. While Veracruz's cash
financing result will likely weaken in 2021 given plans to increase
infrastructure spending, this will be financed with new long-term
debt and will therefore not have a negative impact on liquidity.

Veracruz's overall debt levels remain high relative to Mexican
peers, with net direct and indirect debt equaling 75.9% of
operating revenue in 2020, though debt service costs remain
manageable. The state refinanced all of its long-term debt in 2019
and 2020 to secure better conditions. Moody's expect leverage will
rise modestly in 2021 as the state plans to acquire additional
long-term debt to finance capital spending, but NDID will remain in
a similar range at 79.9% of operating revenue at the end of 2021
and 75.6% in 2022.

Veracruz also continues to make progress in reducing off-balance
sheet contingencies accumulated in previous years, which reduces
uncertainty about its total liabilities. In parallel, the state is
also negotiating to reduce and ultimately pay off past-due federal
taxes and contributions to the federal pension system.

RATIONALE FOR THE AFFIRMATION OF THE ENHANCED LOAN RATINGS

The affirmation of the 13 enhanced loans reflects the affirmation
of Veracruz's issuer ratings. Per Moody's methodology on rating
enhanced loans, the loan ratings are directly linked to the credit
quality of the issuer, which ensures that underlying contract
enforcement risks, economic risks and credit culture risks (for
which the issuer rating acts as a proxy) are embedded in the
enhanced loans ratings.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS

Sustained improvements in Veracruz's governance are a key driver
behind the change in outlook for the issuer ratings to positive
from stable. The state's improved governance has been instrumental
in the improvement its key financial metrics. In addition,
transparency has improved substantially in recent years, and
financial statements are published in full and in a timely manner.

Veracruz's primary social risk relates to demographic trends in the
state workforce that contribute to unfunded pension liabilities,
though these liabilities are modest compared with other Moody's
rated Mexican states. Social considerations were not key drivers in
today's action. In addition, environmental considerations are not
material to the state's ratings.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

If Veracruz sustains recent improvements in governance that lead to
continued strengthening in its liquidity, additional progress in
reducing contingencies and arrears and continues to report positive
operating balances and manageable debt levels, the ratings could be
upgraded. Although a downgrade is currently unlikely in view of the
positive ratings outlook, Moody's would consider downgrading
Veracruz's ratings if the state's liquidity deteriorates markedly
and its dependence on short-term debt rises again, or if governance
and management practices deteriorate.

Given the links between the loans and the credit quality of the
obligor, changes in the ratings of Veracruz, either upwards or
downwards, could have symmetrical impacts on the ratings of the
enhanced loans. Additionally, downward pressure could arise if debt
service coverage levels fall materially below Moody's current
forecasts.

The principal methodology used in rating the issuer ratings was
Regional and Local Governments published in January 2018.




=============
U R U G U A Y
=============

URUGUAY: Entered Crisis With Macroeconomic Imbalances, IMF Says
---------------------------------------------------------------
The International Monetary Fund (IMF) staff issued on May 25, 2021,
a concluding statement of the agency's 2021 official visit to
Uruguay.

An IMF mission met virtually with the Uruguayan authorities during
May 18 to 24 to discuss recent economic developments and policy
priorities. This concluding statement summarizes the mission's main
takeaways.

1. Uruguay entered the COVID-19 crisis with solid institutions but
pre-existing macroeconomic imbalances. The country enjoys a
well-functioning democracy, strong governance and institutions, and
a high degree of social cohesion—with high per-capita income and
relatively low rates of poverty, inequality, and informality. In a
region with recurrent financial and social instability, Uruguay's
stable economy stands out, bolstered by its solid financial sector,
healthy reserve buffers and investment grade status. However,
following a decade of robust growth fueled by a commodity price
boom that ended in 2014-15, public finances weakened, and growth
became anemic in the years preceding the pandemic-with growing
evidence of lack of labor market dynamism, low investment, and
competitiveness concerns, especially in non-commodity tradable
sectors. Inflation remained high in comparison to other
inflation-targeting countries, and de-dollarization was still a
pending assignment.

2. The policy response to the pandemic effectively deployed
available policy space while balancing medium-term objectives. The
government's efforts have simultaneously focused on mitigating the
economic and social effects of the pandemic while advancing reforms
to tackle pre-existing macroeconomic imbalances and boost potential
growth.

The successful handling of the health crisis kept a low case count
for much of 2020, while preventing large-scale lockdowns and, thus,
limiting the impact on economic activity. While the situation
deteriorated markedly in recent months, the country's fast vaccine
rollout is commendable and should allow for a prompt reopening of
the economy.

Fiscal policy appropriately focused on sustaining the economy and
protecting the most vulnerable while taking steps to ensure
medium-term fiscal sustainability, in the context of limited fiscal
space. The sound existing social protection and health care
systems, combined with the low case count in the early months,
limited the demand for resources needed to directly tackle the
health crisis, especially compared with other countries in the
region, allowing the government to focus fiscal efforts on
sustaining employment, keeping firms afloat and supporting
vulnerable groups. Earmarking through the COVID Fund promoted
fiscal transparency and provided clarity on the temporary nature of
the fiscal loosening. The legislated fiscal rule to underpin the
authorities' envisaged medium-term fiscal consolidation and the
steps taken toward its implementation—despite the need to attend
the urgency of the pandemic—are important advances.
The temporary relaxation of financial regulations (especially the
extension of bank loan repayments), the expansion of credit
guarantees for SMEs and direct credit lines to COVID-affected
businesses provided needed relief to firms and households. Negative
real monetary policy rates, coupled with clear forward guidance,
provided adequate support to the economy while the recently
announced reforms to the monetary policy framework signaled a
renewed commitment to the objective of bringing down inflation as
the recovery takes hold. April's inflation reading, the first to
fall within the target range in several years, is an encouraging
development.

3. While COVID cases are still high, the recovery is expected to
accelerate in the second half of 2021, supported by favorable
external conditions and a rapid vaccination campaign. Following the
5.9 percent contraction in 2020 and a setback in the recovery in
the first months of 2021 amid a spike in COVID-19 cases, the
economy is expected to gain strength on the back of elevated
commodity prices and large ongoing investment projects. Activity is
expected to accelerate in the second half of this year—to deliver
growth for the year as a whole near 3 percent—as the economy
gradually reopens, although the precarious health situation in
neighboring countries will remain a headwind, especially for
tourism-related sectors. Near-term fiscal risks are limited thanks
to an efficient debt management in the last two decades—which has
resulted in a more resilient debt maturity and currency
structure—and healthy liquidity buffers. Supported by its
investment grade status, market access to sovereign borrowing
remains at very favorable conditions, including in the recent local
currency issuance. Despite lower profitability, the financial
sector also remains resilient with capital and liquidity beyond
regulatory requirements.

4. Fiscal policy should continue to support the recovery while
completing the foundations for a durable medium-term consolidation.
As the economy reopens and continues to recover, fiscal support
should shift from policies to preserve jobs and keep firms afloat
to policies that stimulate demand and job creation. Given weak
public finances, laying out a clear path to regaining fiscal
sustainability and rebuilding fiscal policy space will also be of
the essence, especially with a view to maintaining Uruguay's
favorable rating in the markets. The authorities' envisaged
consolidation appears achievable although it needs to be
underpinned with concrete measures and a full implementation of the
fiscal rule. The planned savings are expected to stabilize the
debt-to-GDP ratio over the medium-term, although leaving limited
space to respond to future shocks. The pension reform would also
lend credibility to fiscal sustainability, although the associated
fiscal savings will likely take time to materialize.

5. Enhancements to the monetary policy framework are commendable.
Recent reforms to re-affirm the primacy of inflation over other
objectives—e.g. re-adopt the interest rate as main instrument,
recalibrate the inflation target range, improve transparency, and
enhance the central bank's communication strategy—are welcome.
The monetary stance remains appropriately accommodative in response
to the pandemic shock. As the economy comes out of the crisis,
maintaining a monetary policy stance consistent with the inflation
target will be key to strengthen credibility and anchor inflation
expectations. Initiatives to encourage a greater use of the peso in
lending and pricing of goods and services are welcome, although
reducing dollarization and fostering financial deepening hinge
primarily on achieving low and stable inflation.

6. Advancing envisaged structural reforms will be needed to boost
potential growth over the medium term. While the recovery is
underway, achieving higher growth - especially if the current
favorable terms of trade are not sustained - will require
addressing pre-existing structural weaknesses. Reforms that
mitigate 'scarring' from the COVID-19 crisis and facilitate
resource reallocation may need to be prioritized. In particular,
labor market policies that allow for retraining, provide incentives
to hire and conduct on-the-job training, and better align wages
with productivity would support the recovery while sustaining
employment and building the foundations for healthy and inclusive
growth. Continuing with the reform of state-owned enterprises to
increase their efficiency and reduce public utility costs would
also improve competitiveness and foster investment. Policies to
increase female labor force participation and to improve education
outcomes will also be key to raise growth and living standards over
the medium term.

7. Protecting vulnerable groups will be key for the recovery and
the success of the reform agenda. While the country continues to
compare favorably to peers, weakened social conditions due to the
pandemic and pre-existing problems of youth unemployment and child
poverty could gradually erode the social fabric. Promoting growth
while guarding social protection programs and maintaining adequate
welfare benefits—that balance coverage and incentives to
work—will ensure the benefits of higher growth are shared evenly
and the success of the reform agenda. Given limited fiscal space,
this will require enhancing spending efficiency by carefully
prioritizing spending.

8. The mission supports the authorities' prudent macroeconomic
management during the last year and their reform agenda. The
general political consensus on the needed reforms is encouraging,
although Uruguay's challenges are longstanding and have been
magnified by the pandemic. As the economy recovers from the health
crisis, the authorities should advance decisively to complete the
implementation of the envisaged reforms.

The mission thanks the authorities for the warm hospitality, the
open discussions, and the quality of the engagement. The annual
Article IV consultation mission is expected to take place in
September of this year.



                           *********


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
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Chapman, Editors.

Copyright 2021.  All rights reserved.  ISSN 1529-2746.

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