/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/240620.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, June 20, 2024, Vol. 25, No. 124 Headlines A R G E N T I N A ARGENTINA: Central Bank to Hold Talks Over Risks From Bond Puts ARGENTINA: IMF OKs US$800 Million as Milei Eyes New Deal ARGENTINA: Milei Looks to Keep Winning Streak Alive in IMF Meeting MASTELLONE HERMANOS: Fitch Affirms B- LongTerm IDRs, Outlook Stable B R A Z I L BANRISUL: Moody's Alters Outlook on 'Ba2' CFR to Stable BRAZIL: GDP Drops Slightly in April, Annual Growth Remains Strong BRAZIL: Uncertain Climate Repels Global Investment C A Y M A N I S L A N D S XP INC: Fitch Affirms 'BB' LongTerm IDRs, Outlook Stable J A M A I C A JAMAICA: Secures US$20MM World Bank Loan to Support SPIRO X X X X X X X X LATAM: Inflation Landscape: Early 2024 Snapshot - - - - - ================= A R G E N T I N A ================= ARGENTINA: Central Bank to Hold Talks Over Risks From Bond Puts --------------------------------------------------------------- Ignacio Olivera Doll at Bloomberg News reports that Argentina's Central Bank is in talks with executives at commercial banks to reduce the overhang of puts on sovereign peso debts, days after President Javier Milei said they were the main obstacle to lifting exchange controls, according to people with direct knowledge of the negotiations. Central Bank Governor Santiago Bausili is leading the meetings together with the directors Nicolas Ferro and Alejandro Lew, and deputy governor Vladimir Werning, said the people, who weren't allowed to speak on the record, according to Bloomberg News. The main interlocutors are executives from the four banks with the largest holdings of puts — Banco Santander Argentina, Banco de Galicia y Buenos Aires SAU, Banco Macro and BBVA Argentina — and representatives of the banking chambers, Bloomberg News relays. The puts - pledges by the Central Bank to buy back the notes if they fall below a certain price - are currently valued at 20 trillion pesos (around US$16 billion at parallel exchange rate), the people said, Bloomberg News discloses. Should banks exercise them, the authorities would be forced to print more money, stoking inflation and undermining the peso, Bloomberg News relays. Officials and executives are now talking about different alternatives to solve the problem, Bloomberg News notes. One of them is to change the legal format of puts, allowing banks to exercise them only when they demonstrate extreme liquidity needs, said the people, Bloomberg News relays. The Central Bank and the commercial banks involved didn't immediately respond to a request for comment, except for Macro, which declined to respond. The Central Bank had used the puts to encourage demand for domestic debt sales, Bloomberg News notes. In that sense they worked, with the banks' exposure to the public sector increasing to 27 percent of their assets in March, from 17 percent in the same month of the previous year, according to official data, Bloomberg News adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. The IMF's executive board completed on August 23, 2023, the fifth and six reviews of Argentina's 30-month Extended Fund Facility (EFF), and approved a US$7.5-billion disbursement to Argentina as part of the larger program, which refinances payments Argentina owes the institution from a previous bailout that failed to stabilize the economy in 2018. Argentina would receive another IMF disbursement in November of about US$2.75 billion pending another staff-level agreement and board approval. S&P Global Ratings, on March 15, 2024, raised its local currency sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and its national scale rating to 'raB+' from 'SD'. S&P also raised its long-term foreign currency sovereign credit rating to 'CCC' from 'CCC-' and affirmed its 'C' short-term foreign currency rating. The outlook on the long-term ratings is stable. In addition, S&P revised its transfer and convertibility assessment to 'CCC' from 'CCC-'. S&P said the stable outlook on the long-term ratings balances the risks posed by pronounced economic imbalances and policy uncertainties with the favorable change in near-term debt service obligations. S&P also expect no further debt exchanges that it would likely consider to be distressed. Fitch Ratings upgraded on June 13, 2023, Argentina's Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from 'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'. Fitch typically does not assign Outlooks to sovereigns with a rating of 'CCC+' or below. The upgrade of the FC IDR reflects that Fitch no longer deems a default-like process to have begun, as the authorities have not signaled a clear intention to follow through with an intra-public debt swap announced in March. The new 'CC' rating signals a default event of some sort appears probable in the coming years, regardless of the outcome of upcoming elections. The affirmation of the LC IDR at 'CCC-' follows the peso debt swap in June that Fitch did not deem to be a "distressed debt exchange" (DDE). Moody's Investors Service, in September 2022, affirmed Argentina's Ca foreign-currency and local-currency long-term issuer and senior unsecured ratings. The outlook remains stable. The decision to affirm the Ca ratings balances Argentina's limited market access, weak governance, and history of recurrent debt restructurings with recent efforts to marshal fiscal and monetary measures to start addressing underlying macroeconomic imbalances in the context of the IMF program that was approved in 2022, according to Moody's. DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer Rating at CCC and downgraded its Long-Term Local Currency Issuer Rating to CCC from CCC (high) on March 3, 2023. ARGENTINA: IMF OKs US$800 Million as Milei Eyes New Deal -------------------------------------------------------- Patrick Gillespie at Bloomberg News reports that the International Monetary Fund's executive board approved the latest review of Argentina's US$44-billion program, unlocking another disbursement as President Javier Milei eyes a new program with fresh funding. IMF leadership approved a staff-level agreement that will send about US$800 million to Argentina to help refinance debts the nation owes the Washington-based lender, according to Bloomberg News. IMF officials applauded Milei's economic program, which has eased monthly inflation for five straight months, albeit as another recession threatens the country, Bloomberg News relays. Milei plans to meet with IMF Managing Director Kristalina Georgieva on the sidelines of the Group of Seven summit in Italy, Bloomberg News relays. Milei and Economy Minister Luis Caputo, however, have already made clear the government wants to replace the current program with a new one that has more money than the roughly US$44 billion that stems from a separate, failed agreement the two sides reached in 2018, Bloomberg News says. Caputo acknowledged earlier that negotiating a new program will take time, but did not provide a more specific horizon, Bloomberg News notes. Milei says fresh funding, from the IMF or elsewhere, will be critical to how quickly Argentina can lift currency controls and scrap capital restrictions, policy steps necessary for the country to eventually return to international debt markets for the first time since a sovereign debt restructuring in 2020, Bloomberg News discloses. The IMF board approval is the latest in a series of positive developments for Milei, Bloomberg News relays. China renewed a portion of an US$18-billion currency swap line with Argentina, while senators in Buenos Aires passed the majority of Milei's economic reforms, notching a major legislative victory, Bloomberg News relays. And monthly inflation in May cooled to lowest level since early 2022, according to data published, Bloomberg News adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. The IMF's executive board completed on August 23, 2023, the fifth and six reviews of Argentina's 30-month Extended Fund Facility (EFF), and approved a US$7.5-billion disbursement to Argentina as part of the larger program, which refinances payments Argentina owes the institution from a previous bailout that failed to stabilize the economy in 2018. Argentina would receive another IMF disbursement in November of about US$2.75 billion pending another staff-level agreement and board approval. S&P Global Ratings, on March 15, 2024, raised its local currency sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and its national scale rating to 'raB+' from 'SD'. S&P also raised its long-term foreign currency sovereign credit rating to 'CCC' from 'CCC-' and affirmed its 'C' short-term foreign currency rating. The outlook on the long-term ratings is stable. In addition, S&P revised its transfer and convertibility assessment to 'CCC' from 'CCC-'. S&P said the stable outlook on the long-term ratings balances the risks posed by pronounced economic imbalances and policy uncertainties with the favorable change in near-term debt service obligations. S&P also expect no further debt exchanges that it would likely consider to be distressed. Fitch Ratings upgraded on June 13, 2023, Argentina's Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from 'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'. Fitch typically does not assign Outlooks to sovereigns with a rating of 'CCC+' or below. The upgrade of the FC IDR reflects that Fitch no longer deems a default-like process to have begun, as the authorities have not signaled a clear intention to follow through with an intra-public debt swap announced in March. The new 'CC' rating signals a default event of some sort appears probable in the coming years, regardless of the outcome of upcoming elections. The affirmation of the LC IDR at 'CCC-' follows the peso debt swap in June that Fitch did not deem to be a "distressed debt exchange" (DDE). Moody's Investors Service, in September 2022, affirmed Argentina's Ca foreign-currency and local-currency long-term issuer and senior unsecured ratings. The outlook remains stable. The decision to affirm the Ca ratings balances Argentina's limited market access, weak governance, and history of recurrent debt restructurings with recent efforts to marshal fiscal and monetary measures to start addressing underlying macroeconomic imbalances in the context of the IMF program that was approved in 2022, according to Moody's. DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer Rating at CCC and downgraded its Long-Term Local Currency Issuer Rating to CCC from CCC (high) on March 3, 2023. ARGENTINA: Milei Looks to Keep Winning Streak Alive in IMF Meeting ------------------------------------------------------------------ Manuela Tobias & Kevin Simauchi at Bloomberg News report that President Javier Milei will walk into a meeting with the head of the International Monetary Fund emboldened by the most successful series of wins since the libertarian economist took power in Argentina six months ago. After pulling an all-nighter amid violent protests outside, the opposition-controlled Senate broadly approved Milei's sweeping package of economic reforms, according to Bloomberg News. A day earlier, the Central Bank renewed a US$5-billion loan from China as part of its vital currency swap line, according to Bloomberg News. And, fresh consumer price data showed monthly inflation cooling to its slowest pace since January 2022, Bloomberg News relays. Investors cheered the news, Bloomberg News discloses. Argentina's sovereign dollar bonds rose at least a cent across the curve, posting the best performance in emerging-market debt, Bloomberg News says. That should give Milei confidence as he sits down with IMF chief Kristalina Georgieva on the sidelines of the Group of Seven summit in Italy. His aim is to begin talks on a new program with fresh funds replace to replace the US$43-billion plan put in place by his predecessor, Bloomberg News notes. "Positive developments should pave the way for smoother negotiations with the IMF," Kezia McKeague, managing director at Washington-based consultancy McLarty Associates, said by text message, Bloomberg News relays. "Though the IMF board's appetite for a new program remains to be seen," she added. What appeared to be a messy foreign trip riddled with stops and starts is now shaping up to be a resounding success for Milei, who lingered on the tarmac in Buenos Aires, taking off after the reform bill passed, according to people familiar with his travel plans, Bloomberg News relays. "This is an indubitable success by the government," Alejandro Catterberg, director of top Argentine polling firm Poliarquía, said by text message, Bloomberg News discloses. In Europe, Milei will be embraced by his far-right allies that trounced the left in European Parliament elections, including G7 host Giorgia Meloni, Bloomberg News notes. He'll also meet with weakened French President Emmanuel Macron on the sidelines of the event, Bloomberg News says. And the Argentine leader could find himself in the same room with his Brazilian counterpart, Luiz Inácio Lula da Silva, Bloomberg News discloses. Though the neighbouring heads of state won't hold a formal bilateral meeting, it will be their first in-person encounter after the Brazilian leftist skipped Milei's inauguration in December after being derided as a "communist" during Argentina's presidential campaign, Bloomberg News says. Though Milei's party holds just seven of 72 seats in the upper chamber, his government was able to win approval from senators for its sweeping deregulation bill as well as most of an accompanying fiscal package, Bloomberg News notes. While income and property tax proposals were rejected in a chapter-by-chapter vote, they could still be salvaged in a lower house vote expected to take place at the end of the month, Bloomberg News relays. In all, Milei's reforms are set to attract multi-million-dollar investments to Argentina, ease its rigid labour laws and enable the privatization of multiple state-run ventures to help put the crisis-prone nation back on a prosperous track, Bloomberg News notes. Corporate leaders were quick to praise the legislative victory, Bloomberg News relays. "Clearly this piece of legislation will help the development of the industry," Marcos Bulgheroni, chief executive officer of Pan American Energy Group and one of Argentina's most prominent business leaders, told his peers at an investment conference in Rio de Janeiro, Bloomberg News relates. A measure in Milei's reform bill, known in Spanish by its acronym RIGI, provides tax breaks and other incentives for foreign investment, Bloomberg News discloses. Veteran business executives emphasized its importance as the bills near the finish line, Bloomberg News relates. "The bill had generated expectations even among people who didn't know the text. The day after, with the bill approved, a lot more people who were in a wait-and-see mode will move to identify the opportunities," Jose Luis Manzano, president of Integra Capital SA, told reporters at the same event, Bloomberg News adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. The IMF's executive board completed on August 23, 2023, the fifth and six reviews of Argentina's 30-month Extended Fund Facility (EFF), and approved a US$7.5-billion disbursement to Argentina as part of the larger program, which refinances payments Argentina owes the institution from a previous bailout that failed to stabilize the economy in 2018. Argentina would receive another IMF disbursement in November of about US$2.75 billion pending another staff-level agreement and board approval. S&P Global Ratings, on March 15, 2024, raised its local currency sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and its national scale rating to 'raB+' from 'SD'. S&P also raised its long-term foreign currency sovereign credit rating to 'CCC' from 'CCC-' and affirmed its 'C' short-term foreign currency rating. The outlook on the long-term ratings is stable. In addition, S&P revised its transfer and convertibility assessment to 'CCC' from 'CCC-'. S&P said the stable outlook on the long-term ratings balances the risks posed by pronounced economic imbalances and policy uncertainties with the favorable change in near-term debt service obligations. S&P also expect no further debt exchanges that it would likely consider to be distressed. Fitch Ratings upgraded on June 13, 2023, Argentina's Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from 'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'. Fitch typically does not assign Outlooks to sovereigns with a rating of 'CCC+' or below. The upgrade of the FC IDR reflects that Fitch no longer deems a default-like process to have begun, as the authorities have not signaled a clear intention to follow through with an intra-public debt swap announced in March. The new 'CC' rating signals a default event of some sort appears probable in the coming years, regardless of the outcome of upcoming elections. The affirmation of the LC IDR at 'CCC-' follows the peso debt swap in June that Fitch did not deem to be a "distressed debt exchange" (DDE). Moody's Investors Service, in September 2022, affirmed Argentina's Ca foreign-currency and local-currency long-term issuer and senior unsecured ratings. The outlook remains stable. The decision to affirm the Ca ratings balances Argentina's limited market access, weak governance, and history of recurrent debt restructurings with recent efforts to marshal fiscal and monetary measures to start addressing underlying macroeconomic imbalances in the context of the IMF program that was approved in 2022, according to Moody's. DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer Rating at CCC and downgraded its Long-Term Local Currency Issuer Rating to CCC from CCC (high) on March 3, 2023. MASTELLONE HERMANOS: Fitch Affirms B- LongTerm IDRs, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has affirmed Mastellone Hermanos Sociedad Anonima's Long-Term Foreign Currency Issuer Default Rating (IDR) and Local Currency Long-Term IDR at 'B-' The Rating Outlook is Stable. In addition, Fitch has affirmed Mastellone's senior secured debt rating at 'B-'/'RR4'. The ratings reflect Mastellone's manageable debt maturity profile, leverage, and interest expenses. The ratings also incorporate Fitch's expectation that Mastellone will be able to refinance short-term maturities in the local markets. The Long-Term Foreign Currency IDR is constrained by Argentina's 'B-' Country Ceiling. KEY RATING DRIVERS Stable Leverage: Mastellone's estimated gross leverage in ARS should remain at around 3x for the next few years. Argentina's highly inflationary environment and weak currency conditions may temporarily affect leverage metrics; however, the company has shown operational resilience and the ability to access local sources of funding. Fitch forecasts EBITDA to remain around USD100 million in 2024 and 2025. These figures are in line with 2023, when gross leverage in ARS was 3.2x and EBITDA reached USD112 million. Inflation Pressures Operations: Fitch expects Mastellone's operating performance to remain under pressure throughout 2024 due to economic imbalances in Argentina that affect milk consumption and profit margins. The company's results for 2023 were affected by the 118% depreciation of the FX rate up to 800 ARS/USD during December. Registered annual devaluation reached 356% and accumulated inflation hit a record high of 211%, causing significant price increases of milk and related products in the country. Comfortable Debt Maturity Profile: Mastellone has a comfortable debt maturity profile. The company has a local note due in June 2024 of around USD43 million, and amortization payments on a USD44 million secured loan due in 2029. The local bonds are UVA denominated but payable in pesos. The ratings incorporate Fitch's assumption that the company will be able to refinance the notes in the local markets as Argentinean investors seek protection from rampant inflation through USD linked or inflation protected instruments. Mastellone also has a secured USD111 million bond due in June 2026. Geographic Concentration: Mastellone is concentrated in Argentina (rated 'CC'), where it generates around 80% of its sales. This exposes the company to hyperinflation and other direct and indirect sovereign-related risks, including currency depreciation. In 2023, the company generated about 12% of sales in Brazil (BB/Stable) and around 8% in Paraguay (BB+/Stable) and other countries. This distribution remained flat as of 1Q2024. Foreign Exchange Risk: Most of Mantellone's debt is denominated in USD, and over 80% of sales are in Argentine pesos. The company refinanced its debt in 2021 and reduced exposure to USD by extending the larger portion of its debt repayments to 2026. Capital controls in Argentina limit access to USD, and Fitch expects these controls to remain in place for the time being. Difficulty accessing foreign currency increases refinancing risk for all Argentinean companies. Exports and operations overseas mitigate this risk for Mastellone. Persistent Operating Environment Risk: Fitch assumes Mastellone will maintain a prudent approach to growth, as Argentina's operating environment remains weak. Fitch will monitor Mastellone's ability to balance capex, while maintaining enough liquidity to fulfil short-term obligations and keep leverage stable. The company's assets and cash flow come almost entirely from domestic sources. Volatility of Raw Milk Production: The company is exposed to raw milk production volatility, and a shortage could interrupt the company's export and foreign businesses, or increase production costs. Mastellone's business is divided among sales to Argentine, Brazilian and Paraguayan domestic markets and exports, with excess raw milk supply exported. Strong Business Position: Mastellone is the largest dairy company and the leading processor of dairy products in Argentina, operating as the number one player in the fluid milk market, based on physical volume, with a market share of approximately 65%. The company is the leader in the production of fresh dairy products, most of which goes to the domestic market. Mastellone benefits from economies of scale in production, marketing and distribution and ranks among the top five South America dairy market leaders. The company purchases about 13% of all raw milk in Argentina, which provides it with a degree of negotiating power. Arcor and Bagley Call Option: Arcor S.A.I.C. and Bagley Argentina, S.A., together, own about 49% of Mastellone's shares, and Arcor has a call option for outstanding corporate stock of Mastellone that started in 2020. Fitch views Mastellone as strategic for Arcor in the long term. DERIVATION SUMMARY Mastellone has a weaker position in scale, product diversification, profitability and geographic diversification compared with international peers such as Fonterra Co-operative Group Limited (A/Stable), Nestle SA (A+/Stable), Sigma Alimentos, S.A. de C.V. (BBB/Stable) and Arcor (B/Stable). KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case of the Issuer - Revenues in USD similar to the average of the past four years. - EBITDA and EBITDA margin approaching USD100million and 8% for 2024-2025. - Debt/EBITDA remains below 3.5x in ARS or 3x in USD for 2024-2025. - No material sales under public bids within the ratings horizon. RECOVERY ANALYSIS Mastellone's bonds have an 'RR4' Recovery Rating to reflect average recovery expectation for creditors in the event of a default. The recovery analysis assumes that Mastellone would be a going concern (GC) in bankruptcy and that it would be reorganized rather than liquidated. GC Assumptions: - A 10% administrative claim. - The GC EBITDA is estimated at ARS41,271 million. The GC EBITDA estimate is a discount of 60% to Fitch's forecasted 2024 EBITDA. It assumes further peso devaluation and potential stress to Mastellone's cash generation in the event of a reorganization. - EV multiple of 5x. With these assumptions, Fitch's waterfall generated recovery computation (WGRC) for the senior unsecured notes is in the 'RR3' band. However, according to Fitch's "Country-Specific Treatment of Recovery Ratings Criteria," the Recovery Rating for corporate issuers in Argentina is capped at 'RR4'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade of the Argentine sovereign could result in a positive rating action for the Foreign Currency IDR; - Increased ownership above 50% by Arcor and Bagley could result in positive actions for both the Foreign and Local Currency IDRs. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of Argentina's country ceiling rating would likely lead to a negative rating action on the Foreign and Local Currency IDRs; - Sustained debt to EBITDA above 5x. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Mastellone's liquidity is adequate. Cash position as of 1Q2024 was ARS40.3 billion or approximately USD46 million. The debt is comprised of the USD111 million secured bond due in June 2026, a five-year USD44 million secured loan amortized over 13 quarterly periods beginning June 2026. Mastellone has one local bond due in June 2024, which Fitch expects the company to refinance through instruments such as UVA, Badlar, dollar linked or export pre-financing. ISSUER PROFILE Mastellone is the largest dairy company and the leading processor of dairy products in Argentina. It is first in the fluid milk market, based on physical volume. The company maintains the first or second market position in most of its product lines. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Mastellone Hermanos Sociedad Anonima LT IDR B- Affirmed B- LC LT IDR B- Affirmed B- senior secured LT B- Affirmed RR4 B- =========== B R A Z I L =========== BANRISUL: Moody's Alters Outlook on 'Ba2' CFR to Stable ------------------------------------------------------- Moody's Ratings has affirmed all ratings and assessments assigned to Banco do Estado do Rio Grande do Sul S.A. (Banrisul), including its long- and short-term local and foreign currency deposit ratings at Ba3 and Not Prime, its long- and short-term counterparty risk ratings at Ba2 and Not Prime, respectively, as well as the bank's foreign currency subordinated debt rating of B2 (hyb). Moody's also affirmed Banrisul's standalone baseline credit assessment (BCA) and adjusted BCA, both at ba3, and the long- and short-term counterparty risk assessments at Ba2(cr) and Not Prime(cr). The outlook on Banrisul's long-term deposit ratings has changed to negative, from stable. At the same time, Moody's also affirmed the ratings and assessments assigned to Banco Cooperativo Sicredi S.A. (Sicredi), including the long-term corporate family rating (CFR) of Ba2, long and short-term local currency issuer ratings of Ba2 and Not Prime, the long and short-term local and foreign currency counterparty risk ratings of Ba1 and Not Prime, respectively. In addition, Moody's affirmed Sicredi's standalone and adjusted baseline credit assessments of ba2, as well as its long and short-term counterparty risk assessments of Ba1(cr) and Not Prime(cr). The outlook on the long-term issuer rating and corporate family rating has changed to stable, from positive. RATINGS RATIONALE These rating actions were prompted by the historical floods that affected the state of Rio Grande do Sul, and the still high degree of uncertainty regarding the severity of the losses associated with the risk conditions in the region and timing of the recovery. With a high degree of credit exposure concentrated in the local state, these banks demonstrate financial resilience and both banks have reserve and capital buffers to absorb rising asset risks, but their financial fundamentals will likely be impacted in the medium term by increasing environmental risks. Reflecting Moody's views of potential negative impact on Sicredi's ratings because prolonged environmental risks, Moody's changed the credit impact score to CIS-3, from CIS-2. At the same time, Moody's changed Banrisul's environmental issuer profile score to E-4, from E-3, to reflect the bank's heightened exposure to physical climate risks. The change in outlook for Banrisul from stable to negative reflects the bank's high concentration in the state of Rio Grande do Sul, and the uncertainty on the financial impacts as result of the climatic event. Sicredi's outlook change to stable, from positive, factored the potential losses that could affect the bank's financial profile as 30% of its operations are located in the Rio Grande do Sul. AFFIRMATION OF BANRISUL'S RATINGS AND OUTLOOK CHANGED TO NEGATIVE By affirming Banrisul's ba3 BCA and Ba3 deposit ratings, Moody's acknowledge the bank's current manageable asset risk and high liquidity levels, that alongside government measures to alleviate the financial impact brings resilience to its financial profile. With 85% of its operations in the state of Rio Grande do Sul, Banrisul's focus on secure consumer and agricultural loans has been able to maintain asset quality metrics below industry averages amid a high interest rate environment since 2021. As of March 2024, however, problem loans increased to 2.9%, from 2.3% one year prior, a deterioration primarily related to its portfolio of small and medium sized companies (SMEs), a segment highly affected by recent floods. Maintaining adequate loan loss reserves level, that covered 170% of problem loans in March 2024, the bank also kept steady core deposit funding structure, predominantly comprised of granular and low-cost deposits from individuals, that has historically ensured ample liquidity level. The change in the deposit rating outlook to negative, from stable, incorporates Banrisul's already modest profitability and capitalization, when compared to other large commercial banks in Brazil, that will likely be affected by a moderation in business volumes and higher credit impairments in the next quarters. Capitalization measured by Moody's preferred metric, tangible common equity to risk weighted average ended March 2024 at 7.6%, while profitability was 0.6% as measured by net income to tangible assets. AFFIRMATION OF SICREDI'S RATINGS AND OUTLOOK CHANGED TO STABLE Banco Sicredi's Ba2 long-term issuer rating affirmation reflects the cooperative's long track record of superior asset quality metrics, underpinned by a disciplined risk management, adequate capitalization, and robust earnings profile, buffers that will help to absorb increasing losses related to the recent floods in the state where the bank has 30% of its credit operations. As a cooperative system, Sicredi benefits from a granular and low-cost core deposit base that safeguards the bank from market fluctuations and fosters its substantial loan growth capacity. Despite the strong expansion in recent years (17.8% loan growth in 2023), capitalization and asset quality remained under control, with problem loans ratio at 1.5% as of latest numbers in December 2023, and tangible common equity ratio staying at 12.3% in the same period. Sicredi maintains high reserve coverage level, that accounted for 3.2x times problem loans at the end of 2023, which will help to offset rising asset risks ahead. As of December 2023, net income to tangible assets ratio was 2.1%. Sicredi's liquidity benefits from a central management, which is handled at its banking entity, secured by a cross guarantee of its 104 credit unions in case of any liquidity or capital requirements. As of December 2023, liquid assets to tangible banking assets stood at 29.4%. The change in the rating outlook to stable, from positive, takes into account the increase challenges that Sicredi will face in the coming quarters with the crystallization of asset risks arising from the floods and the moderation in business volumes that will affect the firm's future earnings generation. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Banrisul Given the negative outlook, Moody's do not anticipate upward pressures on Banrisul's ratings at this point. The bank's ratings could be downgraded in case of a sharp deterioration on asset quality, and consequently on profitability and capital with the materialization of medium term risks related to of the bank's businesses affected by recent climatic events. Sustainable core earnings generation, adequate liquidity and capitalization through the reconstruction of Rio Grande do Sul state would be material developments to stabilizing its ratings. Sicredi Sicredi's ba2 BCA is at the same level Government of Brazil's sovereign rating. Downward rating pressure could stem from its the deterioration of its financial profile including a deterioration in the quality of its loan portfolio that could result from its rapid expansion and its exposure to the climatic events in Rio Grande do Sul, which would strain Sicredi's future profitability and capital generation capacity. The principal methodology used in these ratings was Banks Methodology published in March 2024. BRAZIL: GDP Drops Slightly in April, Annual Growth Remains Strong ----------------------------------------------------------------- The Rio Times at reports that in April, Brazil's Gross Domestic Product (GDP) dipped by 0.1% compared to March, according to the FGV/Ibre GDP Monitor. Despite this slight monthly decline, the annual growth comparison with April 2023 was an impressive 5.1%, according to The Rio Times. Over the past 12 months, the cumulative growth rate stood at a positive 2.7%, the report notes. Juliana Trece, the coordinator of the GDP Monitor, highlighted that while the economy remained stable in April, this stability signaled a slowdown in growth after a robust start to the year, the report relays. The 5.1% annual growth across investments, industry, consumption, exports, and imports shows strong economic performance compared to 2023, the report discloses. In the rolling quarter ending in April 2024, GDP increased by 2.8% compared to the previous year's equivalent period, the report relays. Household consumption grew by 5.5% during this quarter, with significant gains in services and non-durable goods, the report discloses. Investment, measured by Gross Fixed Capital Formation (FBCF), rose by 4.8% in the same quarter, the report says. Contributions came from machinery and equipment, which climbed 5.5%, construction, which increased by 3.5%, and other assets, which surged by 7.2%, the report notes. Brazil's GDP Drops Slightly in April, Annual Growth Remains Strong Exports of goods and services also showed strong performance, growing by 8.8% in the quarter ending in April compared to the same period the previous year, the report relays. Imports of goods and services saw an even more substantial rise, increasing by 11.6%, driven by services and intermediate goods, the report discloses. From January to April, the GDP reached R$ 3.63 trillion in current values, the report says. The investment rate in the economy was 17.6% in April, the report notes. The GDP Monitor uses the same data and methods as the Brazilian Institute of Geography and Statistics (IBGE), the report notes. This report is crucial as it provides early indicators of the country's economic health, guiding policy decisions and market expectations, 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. S&P Global Ratings raised on Dec. 19, 2023, its long-term global scale ratings on Brazil to 'BB' from 'BB-'. The outlook on the long-term ratings is stable. S&P affirmed Brazil's global scale short-term ratings at 'B' and its national scale long-term rating at 'brAAA'. S&P also raised the transfer and convertibility assessment on the country to 'BBB-' from 'BB+'. S&P said, "The stable outlook reflects our expectation that Brazil will maintain A strong external position, thanks to strong commodity output and limited external financing needs. We also believe Brazil's institutional framework can sustain stable and pragmatic policymaking based on extensive checks and balances across the executive, legislative, and judicial branches of government. We expect a very gradual fiscal correction but anticipate fiscal deficits will remain large." Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable Outlook. Fitch said Brazil's ratings are supported by its large and diverse economy, high per-capita income, and deep domestic markets and a large cash cushion that support the sovereign's financing flexibility and its high local-currency debt share. Strong external finances support resilience to shocks, underpinned by a flexible exchange rate, robust international reserves and a sovereign net external creditor position. The ratings are constrained by weak economic growth potential, relatively low governance scores, high and rising government debt/GDP, and budgetary rigidities. A new fiscal framework introduced this year aims to anchor a gradual consolidation process and address these fiscal weaknesses, but its effectiveness is increasingly unclear. 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 Inc., on August 15, 2023, upgraded Brazil's Long-Term Foreign and Local Currency - Issuer Ratings to BB from BB (low). At the same time, DBRS Morningstar confirmed Brazil's Short-term Foreign and Local Currency - Issuer Ratings at R-4. The trend on all ratings is Stable (March 2018). BRAZIL: Uncertain Climate Repels Global Investment -------------------------------------------------- Richard Mann at Rio Times Online reports that Brazil faces challenges from high U.S. interest rates and more attractive opportunities abroad, which sharply contrast its internal uncertainties. Amid this turmoil, the country is quickly losing its appeal to international investors, according to Rio Times Online. Recently, political instability and critical remarks by the nation's president marked a trading session where the primary stock index fell by 1.40%, the report notes. That day, foreign entities withdrew billions, pushing their yearly total withdrawals to a substantial figure, the report relays. Analysts suggest that there are no immediate internal catalysts to rejuvenate market confidence. Ongoing fiscal issues and negative reactions to monetary policies continue to erode investor trust, the report discloses. With no rate cuts anticipated, the financial outlook remains bleak, raising questions about future sources of capital, the report says. As foreign investment retreats, its impact resonates through the substantial funds invested in emerging markets, the report notes. Persistent high rates in the U.S. necessitate a reallocation of these funds, causing significant shifts in market dynamics, the report relays. Optimism in various regions is leading to a reallocation of funds, potentially disadvantaging exposed markets such as Brazil and Mexico, which are seeing decreased investments, the report discloses. Experts identify unresolved political tensions and fluctuating exchange rates as additional complexities that contribute to market instability, the report relays. These factors, combined with high inflation expectations, limit the possibility of normalizing monetary policies, placing interest-sensitive companies at risk, the report notes. However, a slight recovery in commodity prices might provide some support to the primary stock index, the report relays. Brazil's Uncertain Climate Repels Global Investment In international discussions, it has been found that the sentiment among global investors suggests that local economic conditions are undervalued, the report notes. This opens opportunities for potentially lucrative investments that aim to capitalize on the discrepancies between perceived and actual economic health, the report says. The focus of recent strategic discussions has been on the future moves of the central bank and the broader implications of the fiscal and political landscape, the report notes. These discussions underscore the severity of the situation, highlighting the urgent need for stability to regain investor confidence and rejuvenate financial markets, 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. S&P Global Ratings raised on Dec. 19, 2023, its long-term global scale ratings on Brazil to 'BB' from 'BB-'. The outlook on the long-term ratings is stable. S&P affirmed Brazil's global scale short-term ratings at 'B' and its national scale long-term rating at 'brAAA'. S&P also raised the transfer and convertibility assessment on the country to 'BBB-' from 'BB+'. S&P said, "The stable outlook reflects our expectation that Brazil will maintain A strong external position, thanks to strong commodity output and limited external financing needs. We also believe Brazil's institutional framework can sustain stable and pragmatic policymaking based on extensive checks and balances across the executive, legislative, and judicial branches of government. We expect a very gradual fiscal correction but anticipate fiscal deficits will remain large." Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable Outlook. Fitch said Brazil's ratings are supported by its large and diverse economy, high per-capita income, and deep domestic markets and a large cash cushion that support the sovereign's financing flexibility and its high local-currency debt share. Strong external finances support resilience to shocks, underpinned by a flexible exchange rate, robust international reserves and a sovereign net external creditor position. The ratings are constrained by weak economic growth potential, relatively low governance scores, high and rising government debt/GDP, and budgetary rigidities. A new fiscal framework introduced this year aims to anchor a gradual consolidation process and address these fiscal weaknesses, but its effectiveness is increasingly unclear. 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 Inc., on August 15, 2023, upgraded Brazil's Long-Term Foreign and Local Currency - Issuer Ratings to BB from BB (low). At the same time, DBRS Morningstar confirmed Brazil's Short-term Foreign and Local Currency - Issuer Ratings at R-4. The trend on all ratings is Stable (March 2018). =========================== C A Y M A N I S L A N D S =========================== XP INC: Fitch Affirms 'BB' LongTerm IDRs, Outlook Stable -------------------------------------------------------- Fitch Ratings has affirmed XP Inc.'s (XP) Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) at 'BB'. The Rating Outlook is Stable. Fitch has also affirmed Banco XP SA's National Long- and Short-Term Ratings at 'AAA(bra)'/'F1+(bra)', respectively. The Rating Outlook for the long-term Rating is Stable. KEY RATING DRIVERS Ratings Driven by Standalone Credit Profile: XP's 'BB' Long-Term Local and Foreign Currency IDRs are driven by its Standalone Credit Profile (SCP), which considers the company's strong franchise and business model, coupled with a robust financial profile. Strong Business Profile; Solid Execution: XP has a solid business model, with a strong retail brokerage franchise. Additionally, its investment platform has evolved into a full financial solution encompassing complementary products for both retail and corporate clients such as insurance, banking and retirement plans. XP's solid execution reflects its ability to generate sustained growth despite domestic challenges. XP reported total operating income of USD2.15 billion in the last four-year average between 2020-2023, commensurate with the assigned 'bb' score for its business profile. The score Outlook revision to Positive, reflecting Fitch's expectation that XP's ongoing growth strategy for its core and complementary business will potentially increase its revenue generation and aid diversification. Adequate Risk Profile: XP's risk profile reflects the likelihood of operational, cyber and reputational risks, although these have been well-managed by a sophisticated risk management framework. XP's growth has outpaced peers, particularly in retail lending and insurance, but is in line with the company's strategic planning and market opportunities. Fitch also considers XP's high volume of private securities, although the entity is constantly revolving those assets, which reduces relevant credit risks. Asset Quality Remains Strong: XP's credit risk stems from its lending assets and the securities portfolio held, which encompass most of the group's assets. Although XP reported a slight increase in delinquency metrics in 1Q24, impaired loans rose to 0.9% from 0.8% at YE 2023, more than 85% of XP's lending portfolio is secured by client's assets in custody by the group. Fitch expects that delinquency to remain low. For the same period, the loan loss reserve coverage ratio was a strong 1.3x from 1.4x at YE 2023. XP's non-loan exposures, notably trading securities, losses have been low in this portfolio. Resilient Profitability: XP has consistently demonstrated robust profit margins, driven by the sustained expansion of its main brokerage services and asset management, as well as the introduction of new business sectors. The firm has seen a significant rebound in corporate fees. XP's core ratio of operating profit to average equity has remained strong at 21.7% as of March 2024. This figure is comparable to the performance in previous years, albeit slightly lower than the four-year average of 25.1%. Although Fitch anticipates the domestic operating environment could pose growth-related challenges, particularly within the brokerage services and the growth of assets under custody. XP's profitability is expected to remain resilient and gradually more diversified. This expectation is bolstered by the expansion of complementary business units that are less variable, such as insurance and banking divisions, coupled with the continued operational efficiency ratios. Fitch revised the outlook for XP's earnings and profitability score to Positive from Stable. Higher Leverage but Mitigated by Capital Generation: Growth in banking activities — deposits and lending products — has resulted in an increase, although at a slower pace, in XP's adjusted tangible leverage ratio, defined by Fitch as tangible assets excluding securities borrowed and reverse repurchase agreements, divided by tangible equity. This ratio increased to 9.6x at March 2024 from 9.3x at YE 2023 and 7.2x in 2022, but still commensurate with its ratings. Fitch believes XP's leverage metrics are likely to continue increasing, potentially reaching the upper range of Fitch's leverage benchmark of 12x in the rating horizon, as a result of lending and trading portfolios growth. However, XP is likely to sustain a strong internal capital generation. This underpins the revision of the capitalization and leverage score outlook to Negative. Growing Funding Franchise, Strong Liquidity: Fitch views XP's liquidity and funding profile as strong. Due to the expansion of its bank-like activities, XP has reduced its dependency on wholesale funding lines over the past year. Its Customer funding base, considering letras and structured notes, grew by 38% yoy, representing 89% of XP's total debt as of March 2024. Complementary funding lines are comprised of bonds, debentures and financial borrowings. Compared to other larger domestic peers, Fitch considers XP's funding profile less diversified, with a relative short track record. Liquid assets, comprised by repos, government securities and other liquid assets cover a large part of the company's short-term liabilities, with a strong liquid assets to short-term funding ratio of 105% in March 2024, compared with 110% at YE 2023. Banco XP Banco XP's National Ratings are based on Fitch's view that the company's operation is fully integrated with its parent in terms of management, systems and strategy. Fitch believes this creates a highly correlated credit profile between the companies. Banco XP is one of the most relevant subsidiaries in terms of assets, accounting for more than 46% of the consolidated numbers as of December 2023. According to Fitch's methodology, in such cases the agency assigns group ratings to both parent and subsidiary. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade XP Inc. IDRs; Banco XP National Ratings - Rating downside would be primarily contingent on a downgrade of the Brazilian sovereign rating; XP Inc. IDRs - Ratings could be downgraded under a scenario where XP reports operational incidents that could result in severe damage to the company's image, leading to a substantial outflow of client's assets; - XP's ratings could also suffer if the entity reports relevant losses regarding its own securities portfolio (including loans) and/or strong volatility in its profitability metrics; - An unexpected increase in the company's leverage through the rating horizon, tangible leverage ratio above 12x and/or a significant decrease in the group's regulatory metrics in Brazil - CET 1 ratio below 11%. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade XP Inc. IDRs, - Rating upside is limited in the short term. However, on the long-term XP's ratings could benefit in the case the entity is able to achieve its growth strategic objectives, reporting a substantially higher level of total operating income; - An upgrade would also require XP to sustain its current outstanding profitability and asset quality metrics, in addition to a stability on its leverage ratios; - An upgrade of the Brazilian sovereign rating would also be necessary for an upgrade of XP's ratings, as Fitch considers it unlikely that XP's ratings could be above the sovereign given the significant holding of sovereign securities. Banco XP National Ratings - The National Scale Ratings of Banco XP are at the highest level on the national scale; therefore, they cannot be upgraded. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS XP's unsecured senior notes rating is equalized with the Long-Term IDR, as the probability of default is the same as that of the entity. The notes will also rank pari passu with other senior unsecured obligations. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - XP's senior unsecured debt ratings are sensitive to a change in its IDR. Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - XP's senior unsecured debt ratings are sensitive to a change in its IDR. ADJUSTMENTS The Asset Quality score has been assigned below the implied score due to the following adjustment reason(s): Non-Loan Exposure. The Earnings & Profitability score has been assigned below the implied score due to the following adjustment reason(s): Revenue Diversification. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Banco XP S.A Natl LT AAA(bra)Affirmed AAA(bra) Natl ST F1+(bra)Affirmed F1+(bra) XP Inc. LT IDR BB Affirmed BB ST IDR B Affirmed B LC LT IDR BB Affirmed BB LC ST IDR B Affirmed B senior unsecured LT BB Affirmed BB ============= J A M A I C A ============= JAMAICA: Secures US$20MM World Bank Loan to Support SPIRO --------------------------------------------------------- RJR News reports that the Government of Jamaica has signed a US$20 million loan agreement with the World Bank to support a new project, called SPIRO: Jamaica Social Protection for Increased Resilience and Opportunities. This project will support the implementation of Jamaica's unemployment insurance program, according to RJR News. At the signing ceremony, Finance Minister Dr Nigel Clarke said the scheme will make workers and their families more resilient to shocks, the report relays. He said there may be further consultations to full establish a few parameters, the report notes. SPIRO is set to conclude on January 31, 2030, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. In October 2023, Moody's upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to B1 from B2, and senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has been changed to positive from stable. The upgrade of Jamaica's rating to B1 reflects the government's sustained commitment to fiscal consolidation and debt reduction. The positive outlook reflects Moody's assessment that a continuation of the favorable fiscal trajectory will further increase Jamaica's credit resilience. S&P Global Ratings raised on September 13, 2023, its long-term foreign and local currency sovereign credit ratings on Jamaica to 'BB-' from 'B+', and affirmed its short-term foreign and local currency sovereign credit ratings at 'B'. The stable outlook reflects S&P's expectation that the government will remain committed to prudent fiscal policies and reducing debt, as well as supportive economic policies including a flexible exchange rate regime and effective monetary policy. In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. =============== X X X X X X X X =============== LATAM: Inflation Landscape: Early 2024 Snapshot ----------------------------------------------- Richard Mann at Rio Times Online reports that from January through May 2024, Latin America's economies displayed a mosaic of inflation rates, painting a complex yet intriguing economic scenario. At the forefront, Argentina's inflation soared to 71.9%, signaling a persistent battle despite efforts to cool down price hikes, according to Rio Times Online. Its annual inflation, alarmingly high at 276.4%, contrasts starkly with Costa Rica's nearly stagnant 0.07%, demonstrating the region's economic disparities, the report notes. Brazil and Mexico, two of the region's largest economies, reported inflation rates of 2.27% and 1.29%, respectively, the report relays. These figures, while modest, reflect underlying economic currents shaping their financial landscapes, the report discloses. Venezuela's inflation remains high at 7.8% according to its central bank and 15.3% from private estimates, indicating severe economic challenges, the report relays. Colombia faced post-pandemic inflation pressures, pushing rates to 3.78%, underlining recovery challenges, the report discloses. Controlled Inflation in Uruguay and Paraguay Uruguay and Paraguay showed controlled inflation of 3.25% and 3.2%, indicating moderate price rises, the report relays. Nicaragua and Chile experienced inflation of 2.58% and 2.4%, reflecting a mild cost increase without major disruptions, the report notes. Further, Bolivia, Honduras, and Ecuador observed inflation rates between 1.67% and 1.95%, the report discloses. In the Caribbean, the Dominican Republic and Panama showed restrained inflation at 0.64% and 0.9%, respectively, the report relays. El Salvador and Guatemala, with even lower rates, reflect a controlled price environment, benefiting consumers, the report relays. The report discloses that Latin America's Inflation Landscape: Early 2024 Snapshot Here is a detailed breakdown of inflation rates across Latin American countries from January to May 2024: -- Argentina witnessed a significant inflation rate of 71.9% from January to May, despite monthly deceleration efforts, with an annual inflation reaching 276.4%. -- Venezuela, another country facing high inflation, reported a 59.2% annual rate. The Central Bank of Venezuela noted a 7.8% inflation rate over the five months, while private estimates by the Venezuelan Finance Observatory indicated a higher rate of 15.3%. -- Colombia has struggled to reduce inflation post-pandemic, accumulating 3.78% in the first five months, with a year-over-year rate of 7.16%. -- Uruguay reported a five-month inflation rate of 3.25%, with an annual rate of 4.10%. -- Paraguay saw its prices increase by 3.2% during this period, with an annual inflation rate of 4.4%. -- Nicaragua recorded a 2.58% inflation rate for the five months, with an annual increase of 5.45%. -- Chile experienced a 2.4% rise in prices from January to May, with a year-over-year inflation rate of 4.1%. -- Brazil, the largest economy in Latin America, saw prices rise by 2.27% over the period, with an annual increase of 3.93%. -- Bolivia had a 1.95% inflation rate for the five months, with a year-over-year rate of 3.52%. -- Honduras accumulated an inflation rate of 1.86% from January to May, with an annual rate of 4.94%. -- Ecuador experienced a cumulative inflation rate of 1.67% by May, with an annual rate of 2.53%. -- Peru, focusing on Lima Metropolitan prices, recorded a 1.45% increase over the period, with a year-over-year rate of 2%. -- Mexico saw a moderate increase of 1.29% in inflation from January to May, with an annual rate of 4.69%. -- El Salvador experienced a 1.06% inflation rate from January to April, with a year-over-year price increase of 1.42%. -- Panama reported a 0.9% inflation rate from January to May, with an annual increase of 1.3%. -- Guatemala registered an inflation rate of 0.8% by May, with an annual rate of 3.76%. -- Dominican Republic saw a 0.64% inflation rate for the period from January to May, with an annual rate of 3.2%. -- Costa Rica had the lowest inflation, with only a 0.07% increase from January to May, and an annual inflation rate similarly low at 0.07%. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2024. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *