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       T R O U B L E D   C O M P A N Y   R E P O R T E R

                 L A T I N   A M E R I C A

          Wednesday, July 12, 2023, Vol. 24, No. 139

                           Headlines



B R A Z I L

BADESC: Fitch Affirms 'BB-/B' LongTerm IDRs, Outlook Stable
BANCO DE BRASILIA: Fitch Affirms 'B' IDRs & Alters Outlook to Neg.
BRAZIL: Lula Expresses Concern Over Possible Bankruptcies


M E X I C O

BRASKEM IDESA: S&P Lowers ICR to 'B', Outlook Negative


P A R A G U A Y

PARAGUAY: Fitch Rates USD500MM Bonds Due in 2033 'BB+'


P U E R T O   R I C O

GUR-MEAT INC: Seeks to Hire Vilarino & Associates as Legal Counsel


T R I N I D A D   A N D   T O B A G O

TRINIDAD & TOBAGO: Moody's Affirms Ba2 Issuer & Unsecured Ratings

                           - - - - -


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B R A Z I L
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BADESC: Fitch Affirms 'BB-/B' LongTerm IDRs, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Agencia de Fomento do Estado de Santa
Catarina S.A. - Badesc's (Badesc) Long-Term Local and Foreign
Currency Issuer Default Ratings (IDRs) at 'BB-' and Short-Term IDRs
at 'B'. The Long- and Short-Term National Ratings have also been
affirmed at 'AA(bra)' and 'F1+(bra)', respectively. The Rating
Outlook of the Long-Term IDRs and National Rating remains Stable.

KEY RATING DRIVERS

Ratings Driven by SSR: Badesc's IDRs and National Ratings are
driven by the Shareholder Support Rating (SSR) and based on
expected support from its parent (Santa Catarina State), and are
linked to Fitch's assessment of the parent's credit quality,
reflecting a high probability of support from its parent. Fitch
considers Badesc to be a core subsidiary as Badesc plays an
important role for the development and economic growth of Santa
Catarina. Badesc's 'AA(bra)' Long-Term National Rating reflects the
institution's creditworthiness relative to that of other Brazilian
issuers.

No Standalone Credit Profile Assessed: As is the case for other
policy agencies, Fitch does not assess Badesc's Standalone Credit
Profile (SCP), since according to Fitch's methodology, SCPs are not
usually assigned to development agencies or to other NBFIs whose
operations are largely determined by their policy roles.

Important Regional Policy Role: Badesc is a development agency that
has a policy role to promote the State of Santa Catarina's economic
growth and social development. Its strategy is aligned with
regional development objectives and is highly influenced by
regional government policy. Badesc's SSR is highly influenced by
its role. The institution is focused on microfinance, operations
with small and medium enterprises (SMEs) as well as financing Santa
Catarina State municipalities' development projects and
initiatives.

Structure and Regulation Favor Shareholder Support: Policy
agencies' regulation is also a significant factor for Badesc's
rating. The local regulator, the Brazilian Central Bank, imposes
limitations on development agencies' scope of products and
ownership. Development agencies like Badesc can only be owned by
their state of origin and cannot be sold privately. Therefore,
Fitch believes that this favors support if needed. In its
assessment, Fitch considers the current size of Badesc relative to
the financial capacity of Santa Catarina, the high reputational
risk and the high level of operational integration between both.

Adequate Asset Quality: Badesc reported a slight decrease of its
loan portfolio in 2022, 1.4% lower when compared with 2021. Loans
are divided between microcredit (10%), loan to municipalities
(13.7%) and private sector operations, mainly SMEs (76.3%).
Impaired loans reached 5.6% at end-2022 (four-year average of
7.4%). The NPL past-due more than 90 days ratio increased to 1.6%
at end-2022 from 0.7% at end-2021. Badesc's coverage of impaired
loans ratio stood at a comfortable level of 95.1%. Although
delinquency deteriorated slightly in 1Q23, Fitch believes Badesc
will be able to maintain adequate asset quality metrics in 2023.

Good Profitability: Badesc's profitability has historically been
good, with a high pre-tax profit/average assets ratio of 8% at
end-2022, compared with 7.4% at end-2021 and a 5.5% four-year
average. At the same time, the ROAE was adequate at 8.9% in 2022,
explained by the entity's large equity base. Profitability has also
been supported by a good efficiency ratio, which reached 38.6% at
end-2022. In addition, different from other development agencies,
Badesc's operations are broadly funded by its own equity, which
reduces funding costs and the impact of higher domestic interest
rates.

Robust Capitalization Metrics: Badesc has a comfortable capital
structure, considering its relatively modest size and role. The
agency's Common Equity Tier 1 Ratio was at a comfortable 66.1% at
end-2022. Regulatory capital would be higher if not for the
deduction of municipalities' dedicated capital, which is deducted
from the regulatory metrics.

Less Diversified Funding, Strong Liquidity: Badesc's liquidity
position is strong, with liquid assets (invested in government
securities and funds) of BRL 461 million, or one-third of Badesc's
assets. As a result of a regulatory limitation that prevents
development agencies from raising deposits in the market, Badesc's
main source of funding (excluding capital) is from federal
government lines established with government entities such as
BNDES, FINEP and FUNGETUR. The entity's strategy is to diversify
its funding options, both domestically and abroad to support growth
in the upcoming years.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade

IDRs, SSR, NATIONAL RATINGS

-- The ratings could be affected by a negative change in Fitch's
assessment of Santa Catarina's credit quality;

-- The ratings could be affected by reduction of
propensity/capacity from Santa Catarina to support, which is not
currently under Fitch's expectations.

Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade

IDRs, SSR, NATIONAL RATINGS

-- A positive rating action on Brazil's IDRs;

-- The ratings could be affected by a positive change in Fitch's
assessment of Santa Catarina's credit quality.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

Badesc ratings are 'driven by the credit quality of its parent',
Santa Catarina State

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 BRASILIA: Fitch Affirms 'B' IDRs & Alters Outlook to Neg.
------------------------------------------------------------------
Fitch Ratings has revised the Rating Outlook on Banco de Brasilia
S.A.' (BRB) Long-Term National Rating to Negative from Stable, and
affirmed the rating at 'A-(bra)'. Fitch has also affirmed BRB's
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
at 'B'/Outlook Stable.

The Negative Outlook on BRB's National ratings reflects Fitch's
reassessment on the Government of Federal District (GDF) credit
risk relative to national peers, reducing its ability to provide
support to BRB, whose ratings are notched from, given the ongoing
deterioration of the state's operating balance. Fitch expects GDF's
operating margins to continue weakening in the initial years of the
scenario horizon from an already low level in 2022. The payroll
bill is expected to continue pressuring operating expenditures,
while tax policy volatility will lead to revenue losses in the
short term.

The bank's Viability Rating (VR) is not part of this review and was
last downgraded on June 6, 2023, to 'b' from 'b+' and placed on
Rating Watch Negative. There has not been any material development
in the bank's financial performance since then.

KEY RATING DRIVERS

Ratings Driven by Shareholder Support: BRB's IDRs and Shareholder
Support Rating (SSR) are driven by shareholder support of its
majority shareholder, the GDF, as per Fitch criteria's "higher of"
approach, reflecting Fitch's assessment that the support is
stronger than BRB's standalone profile (as reflected in its VR).
BRB's National Ratings are notched from Fitch's view of GDF's
creditworthiness on the national scale. Fitch believes the bank's
national scale rating better reflects its creditworthiness relative
to its respective supporting entity.

The Negative Outlook on the National Ratings reflects Fitch view of
GDF's deteriorating fiscal flexibility to support the bank and
Fitch's view that a downgrade on the state would likely result in a
downgrade of the issuers' Long-Term National Ratings. The Stable
Outlook on the Long-Term IDR reflects Fitch's view that any
downside on the banks' IDRs, that could potentially arise from
further weakening of GDF's creditworthiness, would be limited, due
to sufficient headroom on BRB's main source of support in the
international scale.

Moderate Probability of Support: The support assessment combines
GDF's moderate propensity to support BRB and limited ability to do
so. BRB is strategically important to GFD, as it is the local
government's main financial agent and has a meaningful share in the
Federal District's loans and deposits. The support assessment is
also influenced by its strategic core role and importance as a
development bank in BRB's hometown, the Federal District, by
providing consumer and commercial lending and, to a lesser extent,
with municipalities on a development bias. Fitch also believes that
the local regulator would likely favor support of BRB by the parent
state as needed.

VR Not Affected: The bank's VR, which indicates its standalone
credit strengths, is not affected by this development. In June
2023, Fitch downgraded BRB's VR and placed it on Rating Watch
Negative, highlighting further weakening in the bank's core
capitalization and earnings following the announcement of its 1Q23
financial statements, as well as uncertainty about the sufficiency
and timeliness of core capital strengthening measures.

For details on the Key Rating Drivers and Sensitivities of BRB's
VR, please see the press release " Fitch Downgrades BRB's L-T IDRs
to 'B'/Stable; Places VR Rating on Negative Watch", dated June 6,
2023.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade

NATIONAL RATINGS

BRB's Long-Term National Ratings could be downgraded if GDF's
operating balances continue to deteriorate, which would likely
jeopardize its ability to service debt and put further pressure on
the state's creditworthiness in the national scale, from which
BRB's ratings are notched from.

IDRs and SSR

Material negative changes in Fitch's assessment of GDF's ability
and willingness to provide support to BRB could affect the
Shareholder Support Rating (SSR) of the bank.

Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade

IDR, SSR and NATIONAL RATINGS

Positive changes in Fitch's assessment of GDF's ability and
willingness to provide support to BRB could affect the ratings.
This is unlikely in the near term due to GDF's key financial
metrics.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

BRB's ratings are linked to GDF's.

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.


BRAZIL: Lula Expresses Concern Over Possible Bankruptcies
---------------------------------------------------------
Arkady Petrov at Rio Times Online reports that Luiz Inacio Lula da
Silva, the former President of Brazil, expressed concern over the
high interest rate of 13.75 percent maintained by the Central Bank,
warning that it could lead to the bankruptcy of many companies.

He criticized the rigidity of inflation targets and called for a
change in the mechanism, according to Rio Times Online.

Lula emphasized the challenges companies face in raising funds for
investments with such high-interest rates, stating that the current
situation could lead to numerous bankruptcies, the report notes.

He argued that it is necessary to reconsider the rigid inflation
targets and adopt a more flexible approach, the report adds.

                              About Brazil

Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022
Brazilian general election. He was sworn in on January 1, 2023, as
the 39th president of Brazil, succeeding Jair Bolsonaro.

As recently reported in the Troubled Company Reporter-Latin
America, Fitch Ratings, in December 2022, affirmed Brazil's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook. The ratings are constrained by high
government indebtedness, a rigid fiscal structure, weak economic
growth potential, and a record of governability challenges that
have hampered efforts to address these fiscal and economic issues
and clouded policy predictability. The Stable Outlook reflects
Fitch's expectation that growth will slow in the coming year and
that recent fiscal improvement will erode under a new government,
but within a margin consistent with the current rating, and from a
better starting point than previously expected. Uncertainty is
elevated regarding the plans of the incoming government and the
extent to which these could ease or aggravate fiscal and economic
challenges. However, Fitch does not expect policies that
jeopardize broad economic stability.

Standard & Poor's affirmed its 'BB-/B' long- and short-term
foreign and local currency sovereign credit ratings on Brazil, and
the outlook remains stable (June 2022).  The stable outlook
reflects S&P's base-case assumption that Brazil will maintain its
fiscal anchors over the next two years despite an increasing
interest burden, preventing significant fiscal slippage and
limiting the rise in its already high debt burden.

Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook.  Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.

DBRS's credit rating for Brazil is BB (low) with stable outlook
(March 2018).




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M E X I C O
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BRASKEM IDESA: S&P Lowers ICR to 'B', Outlook Negative
------------------------------------------------------
S&P Global Ratings lowered its issuer credit and issue-level
ratings on Mexico-based polyethylene producer Braskem Idesa
S.A.P.I. (BI) to 'B' from 'B+'. The recovery rating on rated debt
remains unchanged at '3', indicating its expectations for
meaningful (50%-90%; rounded estimate 65%) recovery prospects in
the event of a payment default.

The negative outlook reflects S&P's view that BI could continue
facing downside risks such as weak prices for its products
(polyethylene), increasing its weighted net debt to EBITDA ratio
beyond its current expectations.

S&P said, "In line with our expectation, BI's EBITDA plummeted by
about 60% to about MXN5.3 billion at the end of 2022 compared with
previous year. In addition, its net debt to EBITDA rose to about
7.0x from 3.1x due to supply-demand dynamics and polyethylene
prices plunging during the second half of 2022. Despite the basic
consumption nature of BI's products, we forecast a challenging
environment for 2023 given that polyethylene prices could rise at a
sluggish pace, potentially denting BI's EBITDA and credit metrics.
However, as polyethylene prices remain weak, and we expect the same
for the rest of 2023, we now forecast BI's net debt to EBITDA to be
about 11x at the end of 2023, well above our 5x threshold for our
current assessment of the company's financial risk profile as
highly leveraged. This is a significant deviation from our previous
belief that the company could improve its credit metrics upon
better polyethylene prices.

"We expect lower EBITDA for the remainder of 2023 -- about MXN3.3
billion (approximately $180 million), which in turn should raise
net debt to EBITDA to about 11x by year-end. Nonetheless, we still
expect a broadly steady demand for the company's products (high-
and low-density polyethylene), given their diverse final
applications and the resiliency of the industries that BI serves
due to its basic consumption nature (packaging, hygiene, cleaning,
pharmaceuticals, food, and beverage among others). This factor
supports the company's top-line revenue despite persistent
inflation, which we expect to ease in the next 12-18 months. On the
other hand, if polyethylene prices continue to drop and raw
material prices unexpectedly increases because of complex
macroeconomic conditions, the company's net debt to EBITDA could
continue rising, leading us to review BI again."

Although business conditions will remain difficult for the
remainder of the year, the company still maintains a solid
liquidity position with a cash balance of about MXN6.4 billion
(about $350 million) as of March 31, 2023. Even though the company
has breached maintenance covenants under its bank loan of about
$127 million due to high leverage, BI has obtained waiver until
March 2024. Still, BI has a comfortable debt maturity profile, with
no material debt obligations for the remainder of the year, as the
company has already covered its 2023 loan amortizations. BI's debt
structure remains unchanged: its two senior secured notes of $900
million due 2029 and $1.2 billion due 2032 represent about 93% of
its total debt, along with its bank loan of about $127 million.
Interest coverage will remain tight for the next 12-18 months
unless the company's EBITDA bounce back. S&P said, "However,
although BI currently maintains sufficient liquidity to meet its
financial burdens and operational commitments, we believe that
liquidity could erode in the next 12-18 months if its cash flows
don't recover as we expect. Nonetheless, we currently view BI's
liquidity position as adequate for the next 12 months, assuming a
gradual recovery in its EBITDA and cash flows. Moreover, although
we estimate lower EBITDA than in the previous year, we expect BI to
deploy its capital expenditures (capex) prudently to preserve its
cash and continue complying with its financial obligations."

ESG credit indicators: E-3, S-2, G-2




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P A R A G U A Y
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PARAGUAY: Fitch Rates USD500MM Bonds Due in 2033 'BB+'
------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to Paraguay's USD500
million bonds maturing in 2033. The notes have a coupon of 5.85%.

KEY RATING DRIVERS

The bond ratings are in line with Paraguay's Long-Term Foreign
Currency Issuer Default Rating (IDR) of 'BB+'.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade

-- The bond rating would be sensitive to any negative changes in
Paraguay's Long-Term Foreign Currency IDR.

Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade

-- The bond rating would be sensitive to any positive changes in
Paraguay's Long-Term Foreign Currency IDR.

ESG CONSIDERATIONS

Paraguay has an ESG Relevance Score of '5' for Political Stability
and Rights as World Bank Governance Indicators have the highest
weight in Fitch's SRM and are therefore highly relevant to the
rating and a key rating driver with a high weight. As Paraguay has
a percentile rank below 50 for the respective Governance Indicator,
this has a negative impact on the credit profile.

Paraguay has an ESG Relevance Score of '5' for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption as
World Bank Governance Indicators have the highest weight in Fitch's
SRM and are therefore highly relevant to the rating and are a key
rating driver with a high weight. As Paraguay has a percentile rank
below 50 for the respective Governance Indicator, this has a
negative impact on the credit profile.

Paraguay has an ESG Relevance Score of '4' for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
World Bank Governance Indicators is relevant to the rating and a
rating driver. As Paraguay has a percentile rank below 50 for the
respective Governance Indicator, this has a negative impact on the
credit profile.

Paraguay has an ESG Relevance Score of '4' for Creditor Rights as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Paraguay, as for all sovereigns. As Paraguay
has a fairly recent restructuring of public debt in 2004, this has
a negative impact on the credit profile.




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P U E R T O   R I C O
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GUR-MEAT INC: Seeks to Hire Vilarino & Associates as Legal Counsel
------------------------------------------------------------------
Gur-Meat Inc. seeks approval from the U.S. Bankruptcy Court for the
District of Puerto Rico to hire Vilarino & Associates, LLC as its
counsel.

The firm's services include:

  (a) advise the Debtor with respect to its duties, powers and
      responsibilities in this Chapter 11 case under the laws of
      the United States and Puerto Rico in which the Debtor
      conducts its operations, does business, or is involved in
      litigation;

  (b) advising the Debtor to determine whether reorganization is
      feasible and, if not, helping the Debtor in the orderly
      liquidation of its assets;

  (c) assisting the Debtor in negotiations with creditors for the
      purpose of proposing and confirming a viable plan of
      reorganization;

(d) preparing legal papers;

(e) appearing before the bankruptcy court, or any court in
     which the Debtor asserts a claim interest or defense directly
or
     indirectly related to this bankruptcy case;

(f) performing such other legal services for the Debtor as may
     be required in these proceedings or in connection with the
     operation of and involvement with the Debtor's business,
including
     but not limited to, notarial services;

(g) employing other professional services, if necessary.

The firm will be paid at these rates:

      Javier Vilarino, Esq.    $350 per hour
      Associates               $275 per hour
      Paralegals               $150 per hour

Vilarino & Associates is a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code, according to
court filings.

The firm can be reached through:

      Javier Vilarino, Esq.
      Vilarino & Associates, LLC
      P.O. Box 9022515
      San Juan, PR 00902-2515
      Tel: (787)565-9894
      Email: jvilarino@vilarinolaw.com

                        About Gur-Meat Inc.

Gur-Meat Inc., a company in Garrochales, P.R., filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D.P.R. Case No. 23-01914) on June 23, 2023, with $292,906 in assets
and $3,598,904 in liabilities. Mariely Ramos Rojas, president,
signed the petition.

Judge Maria De Los Angeles Gonzalez presides over the case.

Javier Vilarino, Esq., at Vilarino & Associates, LLC represents the
Debtor as counsel.




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T R I N I D A D   A N D   T O B A G O
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TRINIDAD & TOBAGO: Moody's Affirms Ba2 Issuer & Unsecured Ratings
-----------------------------------------------------------------
Moody's Investors Service has affirmed the Government of Trinidad &
Tobago's long-term local and foreign currency issuer and senior
unsecured ratings at Ba2. The outlook was changed to positive from
stable.

The positive outlook reflects improved prospects that Trinidad &
Tobago's (T&T's) fiscal consolidation momentum triggered by energy
price windfall gains will be more sustained than projected in
Moody's baseline scenario, despite lower gas prices, owing to the
implementation of structural spending and revenue measures aimed at
reducing fiscal accounts' sensitivity to energy prices. A sustained
return to economic expansion after several years of contraction,
supported by the projected increase in oil production starting this
year would also enhance economic resiliency, as would continued
diversification efforts in the non-energy sector. The government's
adopted structural fiscal and economic reforms are reflected in an
improving institutions and governance strength assessment as a
driver of this action.

The rating affirmation of the Ba2 ratings reflects T&T's very high
exposure to carbon transition risks stemming from a declining oil
and gas production profile that informs its weak trend growth
projected for 2018-27. It captures the comparatively high adjusted
general government debt/GDP ratio in comparison with peers,
mitigated by sizable government financial assets. Event risk is
driven by the large bank and non-bank financial system that
represents a potential source of contingent liabilities for the
sovereign in case of a systemic banking crisis. Meanwhile, gross
financing needs remain contained and foreign exchange reserves
adequate.

Local currency (LC) and foreign currency (FC) country ceilings
remain unchanged at Baa2 and Ba1, respectively. The three-notch gap
of the LC ceiling at Baa2 with the sovereign rating reflects the
economy's significant exposure to the hydrocarbon sector with
spillovers to activity in the non-energy sector, balanced by low
exposure to domestic and geopolitical risk. The FC ceiling remains
at Ba1. The two-notch gap with the LC ceiling captures potential
transfer and convertibility risks reflected in the track record of
balance of payments weakness over the past few years, which
contributed to reported foreign exchange shortages and has the
potential to affect the import capacity of small and medium-sized
businesses in the non-energy sector.

RATINGS RATIONALE

RATIONALE FOR THE POSITIVE OUTLOOK

SUBSIDY REFORM AND NON-OIL REVENUE RAISING MEASURES HAVE REDUCED
FISCAL SENSITIVITY TO ENERGY PRICES

The boost to energy prices following Russia's invasion of Ukraine
has generated an energy revenue windfall gain of about six
percentage points (pp) of GDP in fiscal 2022 (ending September),
turning the primary balance to a surplus of 3.2% of GDP from an
originally budgeted deficit at 2.7%. Similarly, the adjusted
general government debt/GDP ratio declined to 67.7% in fiscal 2022
from the initially projected increase to over 85%, indicating
improving fiscal strength because of the windfall gain.

Starting fiscal 2022, the government has introduced several
structural spending and revenue measures which increase the
likelihood that the fiscal windfall gain will be preserved in the
future. Specifically, the government's projected maintenance of
primary surpluses at 0.2% of GDP in fiscal 2023 followed by 1.7% in
fiscal 2024 and 2.4% in fiscal 2025 would support T&T's positive
credit momentum against Moody's projection for a return to narrow
primary deficits in the central scenario in light of lower energy
prices. Similarly, a renewed reduction in the adjusted general
government debt/GDP ratio from the projected 70.7% of GDP to 67.2%
in fiscal 2025 as projected by the government against Moody's
baseline of a stabilization at close to 71% would also support the
credit profile.

On the spending side, the government's decision to liberalize fuel
prices and cap fuel subsidies at TT$1 billion (0.5% of GDP) in the
fiscal 2023 budget will allow for fiscal savings estimated at 0.7%
of GDP. In addition, a new electricity tariff regime with more
cost-effective rates is scheduled to be published this fiscal year,
followed by revised water tariffs in fiscal 2024. T&T's fuel,
electricity and water rates are among the lowest globally,
underpinning T&T's large transfer and subsidy bill to households,
SOEs and local authorities at a projected 17% of GDP in fiscal
2023. For fiscal 2024 and fiscal 2025, the government projects the
transfer and subsidy bill to decline significantly to 14.2% of GDP
and to 13.1%, respectively, in the wake of these reforms. The
social impact will be mitigated by a shift to targeted direct
income transfers.

On the revenue side, initiatives to raise non-oil revenue include
the establishment of the Trinidad and Tobago Revenue Authority
(TTRA), which will be operational this fiscal year and improve
revenue administration and collection, in addition to the
implementation of the gambling tax and the property tax starting in
fiscal 2024. These measures support the strengthening fiscal
accounts' shock absorption capacity.

EFFORTS TO ADDRESS DECLINING DOMESTIC GAS SUPPLY AND FOCUS ON
ENERGY TRANSITION OPPORTUNITIES WILL BOLSTER ECONOMIC RESILIENCY

T&T is a mature hydrocarbon producer with declining domestic supply
trends and recoverable gas reserves of about 10 years, elements
that expose the sovereign to very high energy transition and
economic diversification risks. Low energy prices and supply
disruptions have led to annual economic contractions since fiscal
2015. The economy expanded again by 2.1% in 2022, driven by a
strong rebound in the non-energy sector. The government projects
the energy sector expand again in 2023 with a renewed boost to oil
production after several years of decline, while gas production is
projected to pick up in subsequent years with the start of  Shell's
Manatee field among others. The capacity to slow the weakening
energy production trend would support growth and economic
resiliency.

Part of the government's strategy to mitigate the declining
domestic gas supply trend is to promote T&T's role as regional
energy hub by collecting, processing, and re-exporting natural gas
from other Caribbean countries. This strategy builds on T&T's
comparative advantage as the only Caribbean nation with significant
LNG and ammonia/methanol production capacity in place to supply
world markets. The two-year license granted by the United States of
America, Government of (Aaa stable) to T&T in January 2023 to
develop the 4.2 trillion cubic foot (tcf) Dragon gas field offshore
Venezuela, Government of (C stable) via an Office of Foreign Assets
Control (OFAC) waiver from sanctions represents an important
development that will test the viability of this strategy.

In the petrochemicals sector, the country is among the largest
exporters of ammonia and methanol globally and government plans are
underway to leverage this infrastructure by producing and
transporting green hydrogen following the targeted ramping up of
the country's renewable energy capacity. The government's
commitment to reduce greenhouse gas emissions and achieve a 30%
renewable energy source target by 2030 supports T&T's energy
transition efforts, opening the door for increased economic
diversification.

IMPROVED GOVERNANCE ASSESSMENT SUPPORTS THE EXPECTATION THAT FISCAL
AND ECONOMIC IMPROVEMENTS WILL BE PRESERVED

An improved institutions and governance assessment reflects
authorities' willingness and ability to mitigate the economy's
energy dependence as evidenced by structural fiscal and economic
reforms that can materially reduce the economy's sensitivity to
energy price cycles. Improving economic and institutional strength
underpins Moody's expectation of more robust economic resiliency
and policy response capacity, elements that Moody's anticipates
will prevent a significant debt build-up in the event of declining
energy prices.

RATIONALE FOR THE Ba2 RATING AFFIRMATION

The rating affirmation of the Ba2 ratings reflects T&T's profile as
a mature hydrocarbon producer that informs weak trend growth in
2018-27. The rating also captures the comparatively high adjusted
general government debt/GDP ratio projected at close to 70% in 2023
as compared to a median of Ba-rated peers at 47%. Event risk
considerations relate to the size of the banking system at over 80%
of GDP and the presence of a large non-bank financial sector, which
standing at about 100% of GDP also represents a potential source of
contingent liabilities for the sovereign in case of a systemic
banking crisis. The government's gross financing needs remain
contained at about 8% of GDP, while liquid foreign exchange
reserves (i.e. total reserves minus gold minus SDR) provide
adequate coverage of imports (at 6 months) and of upcoming external
debt obligations.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE RISKS

Trinidad & Tobago's ESG Credit Impact Score is highly negative
(CIS-4), reflecting very high exposure to environmental risks
derived from carbon transition.

Trinidad & Tobago's exposure to environmental risks is highly
negative (E-4 issuer profile score) and is related to carbon
transition risk. With a gradual slowdown and eventual fall in
hydrocarbon demand, Trinidad & Tobago's credit profile will face
downward pressures in the longer term.

Exposure to social risks is moderately negative (S-3 issuer profile
score). Historically, social considerations have not affected
Trinidad & Tobago's credit profile significantly, although social
demands for maintaining housing, education and health services
could strain government finances. Although the population is
markedly divided by ethnic lines, any potential tensions are
channeled institutionally, with political parties prizing social
stability.

The influence of governance on Trinidad & Tobago's credit profile
is also moderately negative (G-3 issuer profile score), reflecting
its weak government effectiveness. Despite significant efforts in
recent months to improve data reporting, data limitations and
institutional constraints limit the government's capacity to
execute fiscal policy.

GDP per capita (PPP basis, US$): 30,075 (2022) (also known as Per
Capita Income)

Real GDP growth (% change): 2.1% (2022) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 8.7% (2022)

Gen. Gov. Financial Balance/GDP: 0.6% (2022) (also known as Fiscal
Balance)

Current Account Balance/GDP: 18.3% (2022) (also known as External
Balance)

External debt/GDP: 54.9% (2022)

Economic resiliency: ba2

Default history: No default events (on bonds or loans) have been
recorded since 1983.

On July 06, 2023, a rating committee was called to discuss the
rating of the Trinidad & Tobago, Government of. The main points
raised during the discussion were: The issuer's economic
fundamentals, including its economic strength, have not materially
changed. The issuer's institutions and governance strength, have
materially increased. The issuer's fiscal or financial strength,
including its debt profile, has not materially changed. The issuer
has become increasingly susceptible to event risks.

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

A track record of continued primary surpluses as targeted by the
government that places the debt/GDP ratio on a downward trajectory
would further strengthen the sovereign credit profile. T&T's credit
standing would also benefit from measures that prove effective in
in addressing the weakening energy production trend with a boost to
oil production, or by accessing gas supplies from neighboring
countries, as these elements would support growth and economic
resiliency providing the government additional room to make
continued progress with the structural economic diversification
agenda.

Conversely, stalling of fiscal reforms e.g., subsidy reform and
tariff liberalization, as well as a renewed build-up in the
debt/GDP ratio would undermine the sovereign credit profile.
Significantly weaker-than-anticipated growth stemming from delayed
oil or gas projects, or a stagnating non-oil sector, as well as a
material drawdown of foreign exchange reserves as a result of
capital outflows would adversely affect the sovereign credit
outlook.

The principal methodology used in these ratings was Sovereigns
published in November 2022.



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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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