/raid1/www/Hosts/bankrupt/TCRLA_Public/250428.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
Monday, April 28, 2025, Vol. 26, No. 84
Headlines
A R G E N T I N A
ARGENTINA: Bessent Signals Willingness to Offer a Credit Line
ARGENTINA: IMF Keeps 5.5% Growth Forecast for Country in 2025
B A R B A D O S
BARBADOS: To Benefit From IDB, OPEC Co-Financing Initiative
B R A Z I L
VIRGOLINO DE OLIVEIRA: Chapter 15 Case Summary
VIRGOLINO DE OLIVEIRA: June 2 Chapter 15 Recognition Hearing Set
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Begins Formal Tariff Talks With U.S.
M E X I C O
BANCO AZTECA: Moody's Affirms Ba2 Deposit Ratings, Outlook Stable
P U E R T O R I C O
OFG BANCORP: S&P Raises Long-Term ICR to 'BB-', Outlook Stable
S U R I N A M E
PORT OF SPAIN SHOPPING: Mall Tenants Struggle
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A R G E N T I N A
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ARGENTINA: Bessent Signals Willingness to Offer a Credit Line
-------------------------------------------------------------
Ignacio Olivera Doll and Daniel Flatley at Bloomberg News report
that US Treasury Secretary Scott Bessent said the Trump
administration would be willing to offer Argentina's government a
specific credit line if a global shock jeopardized President Javier
Milei's economic turnaround, according to three people with direct
knowledge of his comments.
Bloomberg relates that the US government would be willing to use
the Exchange Stabilization Fund, or ESF, to support Argentina, if
something happened through no fault of its own as long as Milei
stays the course on his policies, Mr. Bessent said on April 21 at a
closed-door JPMorgan Chase & Co. event in Washington, according to
the people.
Mr. Bessent's comments showed a deepening of US-Argentina ties and
helped lift assets, said Walter Stoeppelwerth, chief investment
officer at Buenos Aires-based brokerage Grit Capital Group,
Bloomberg relays.
Argentine sovereign bonds climbed across the curve, leading
emerging markets on April 21. Securities due in 2035 touched 66.4
cents on the dollar, according to indicative pricing compiled by
Bloomberg.
"Bonds rose because there's an increasing expectation that the US
will have Milei's back in the case of a crisis", Bloomberg quotes
Carolina Gialdi, head of international sales at Max Capital in
Buenos Aires, as saying.
Created in the 1930s, the ESF has been part of over a hundred
credit or loans by the US Treasury to foreign governments and
central banks to help stabilize currencies, according to the
Treasury website.
Mr. Bessent's latest comments appear to go a step beyond his
remarks in an interview with Bloomberg News in Buenos Aires two
weeks ago, where he visited Milei and praised his reform agenda as
a model for other pro-market governments in Latin America,
Bloomberg says.
"At the end of the day, we have the Exchange Stabilization Fund,
too. We haven't committed to being part of that, but could be," Mr.
Bessent said April 14 during a rare visit for a US Treasury
secretary to the crisis-prone nation.
Bloomberg notes that the Trump administration proved crucial to
Argentina securing a $20 billion program with the International
Monetary Fund earlier this month.
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.
In March 2022, the International Monetary Fund (IMF) approved a new
30-month arrangement under an Extended Fund Facility for Argentina
in the amount of SDR 31.914 billion (equivalent to US$44 billion,
or 1000 percent of quota). The IMF Executive Board's decision
allowed the authorities an immediate disbursement of an equivalent
of US$9.65 billion in March 2022.
Argentina's IMF-supported program seeks to improve public finances
and start to reduce persistent high inflation through a
multi-pronged strategy, involving a gradual elimination of monetary
financing of the fiscal deficit and enhancements in the monetary
policy framework.
On April 11, 2025, the International Monetary Fund (IMF) approved
a 48-month Extended Fund Facility (EFF) arrangement for Argentina
totaling US$20 billion (or 479 percent of quota), with an immediate
disbursement of US$12 billion, and a first review planned for June
2025 with an associated disbursement of about US$2 billion. The
program is expected to help catalyze additional official
multilateral and bilateral support, and a timely re-access to
international capital markets.
On Feb. 17, 2025, S&P Global Ratings lowered its local currency
sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and
its national scale rating to 'SD' from 'raB+'. At the same time,
S&P affirmed its 'CCC/C' foreign currency sovereign credit ratings
on Argentina. The outlook on the long-term foreign currency rating
remains stable.
On Jan. 8, 2025, Moody's Ratings raised Argentina's local currency
ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1
from Caa3. Moody's said the decision to raise the local and
foreign currency ceilings reflects the increased predictability and
the greater consistency in economic policy that has led to a rapid
reduction in monetary and fiscal imbalances that were stoking very
high inflation.
On Nov. 15, 2024, Fitch Ratings upgraded Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CC',
and its Long-Term Local-Currency IDR to 'CCC' from 'CCC-'.
Argentina's upgrade to 'CCC' from 'CC' reflects developments that
have improved Fitch's confidence in the authorities' ability to
make upcoming foreign-currency bond payments without seeking relief
of some sort.
DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency Issuer Ratings to B (low) from CCC on November 25, 2024.
The trend on all ratings is Stable.
ARGENTINA: IMF Keeps 5.5% Growth Forecast for Country in 2025
-------------------------------------------------------------
Buenos Aires Times reports that the International Monetary Fund
(IMF) has maintained its 5.5 percent growth projection for
Argentina in 2025, despite global trade uncertainty.
Buenos Aires Times relates that the multilateral lender cited
"positive data" seen in the early months of the year. It
acknowledged that tighter fiscal policy had been offset by a rise
in market confidence, allowing it to hold its forecast despite
mounting global uncertainty.
"We still have that forecast basically because of the positive
numbers we saw," the report quotes Petya Koeva Brooks, a senior
economist at the IMF, as saying at a press conference. "Despite the
fiscal adjustment, there was an increase in confidence and that
allows us to sustain the projection."
However, Brooks warned that the outlook was subject to greater risk
amid rising financial restrictions and price effects triggered by
an increasingly unstable global context, Buenos Aires Times
relays.
According to the report, the comments were made during a press
briefing at the IMF's Spring Meetings in Washington, where
economists warned of the growing impact of global trade tensions.
In particular, they pointed to the disruptive effect of tariff
measures introduced by US President Donald Trump, which are
expected to slow global growth.
Buenos Aires Times says the IMF downgraded its global forecast to
2.8 percent, urging governments to restore predictability in trade
relations and ensure monetary policy remains flexible.
"All countries will be affected negatively by the uncertainty that
cuts investment and production," said IMF Chief Economist
Pierre-Olivier Gourinchas, although he noted that some emerging
markets may benefit from a new trade alignment.
According to Buenos Aires Times, the IMF revised its estimate of a
recession in the United States in 2025, increasing the probability
from 25 percent last October to 40 percent in April.
Argentina's forecast comes shortly after the IMF approved a new
US$20-billion bailout for the country, replacing the previous
failed programme, the report notes.
The deal includes fresh disbursements, extended repayment terms,
and stricter policy benchmarks -- including commitments on fiscal
consolidation and inflation control.
The agreement was endorsed by the IMF board in March following
intense negotiations and is seen as a crucial step for stabilising
Argentina's volatile economy and restoring international
credibility, Buenos Aires Times states.
At an event on the sidelines of the institution's Washington
meetings, IMF Managing Director Kristalina Georgieva expressed
confidence that Argentina is on the road to recovery.
"What will change the future of Argentina is sticking to the
reforms and creating confidence that this time is different," Ms.
Georgieva stated at a meeting of global parliamentarians in
Washington, Buenos Aires Times relays.
Praising attempts to lower inflation, Ms. Georgieva said that
Argentina needed to build credibility and "create the sense of
confidence that this time is different, and stay the course."
Buenos Aires Times adds that the IMF chief said that could bring in
wealth outside the banking system held informally or overseas by
Argentines.
"I was told -- I don't know if it's true -- that there's more than
US$200 billion under the mattress and God knows where else. If that
money were invested in Argentina, just imagine what that country
would be," the IMF chief said at the event.
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.
In March 2022, the International Monetary Fund (IMF) approved a new
30-month arrangement under an Extended Fund Facility for Argentina
in the amount of SDR 31.914 billion (equivalent to US$44 billion,
or 1000 percent of quota). The IMF Executive Board's decision
allowed the authorities an immediate disbursement of an equivalent
of US$9.65 billion in March 2022.
Argentina's IMF-supported program seeks to improve public finances
and start to reduce persistent high inflation through a
multi-pronged strategy, involving a gradual elimination of monetary
financing of the fiscal deficit and enhancements in the monetary
policy framework.
On April 11, 2025, the International Monetary Fund (IMF) approved
a 48-month Extended Fund Facility (EFF) arrangement for Argentina
totaling US$20 billion (or 479 percent of quota), with an immediate
disbursement of US$12 billion, and a first review planned for June
2025 with an associated disbursement of about US$2 billion. The
program is expected to help catalyze additional official
multilateral and bilateral support, and a timely re-access to
international capital markets.
On Feb. 17, 2025, S&P Global Ratings lowered its local currency
sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and
its national scale rating to 'SD' from 'raB+'. At the same time,
S&P affirmed its 'CCC/C' foreign currency sovereign credit ratings
on Argentina. The outlook on the long-term foreign currency rating
remains stable.
On Jan. 8, 2025, Moody's Ratings raised Argentina's local currency
ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1
from Caa3. Moody's said the decision to raise the local and
foreign currency ceilings reflects the increased predictability and
the greater consistency in economic policy that has led to a rapid
reduction in monetary and fiscal imbalances that were stoking very
high inflation.
On Nov. 15, 2024, Fitch Ratings upgraded Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CC',
and its Long-Term Local-Currency IDR to 'CCC' from 'CCC-'.
Argentina's upgrade to 'CCC' from 'CC' reflects developments that
have improved Fitch's confidence in the authorities' ability to
make upcoming foreign-currency bond payments without seeking relief
of some sort.
DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency Issuer Ratings to B (low) from CCC on November 25, 2024.
The trend on all ratings is Stable.
===============
B A R B A D O S
===============
BARBADOS: To Benefit From IDB, OPEC Co-Financing Initiative
-----------------------------------------------------------
Radio Jamaica News reports that Barbados is among countries
expected to benefit from a new collaborative framework between the
Inter-American Development Bank and the OPEC Fund for International
Development which will enable the institutions to explore joint
co-financing opportunities in key sectors for Latin America and the
Caribbean.
According to Radio Jamaica, the IDB said along with its private
sector firm IDB Invest, the initiative will allow for opportunities
in several areas including infrastructure, renewable energy,
transportation, reliance and mitigation, social infrastructure,
sustainable agriculture and biodiversity preservation.
As reported in the Troubled Company Reporter - Latin America on
April 18, 2025, Moody's Ratings upgraded the long-term issuer
ratings of the Government of Barbados' to B2 from B3. The outlook
remains stable.
===========
B R A Z I L
===========
VIRGOLINO DE OLIVEIRA: Chapter 15 Case Summary
----------------------------------------------
Lead Debtor: Virgolino de Oliveira S.A. Acucar e Alcool
Grupo Virgolino de Oliveira
Fazenda Santo Antonio, S/N
Municipio de Ariranha
Estado de Sao Paulo 15.960-000
Brazil
Business Description: Virgolino de Oliveira S.A. – Acucar e
Alcool is a Brazilian agribusiness
company engaged in the production of raw
sugar, ethanol, and byproducts such as
molasses, fusel oil, vinasse, bagasse,
and electricity. It operates several
sugarcane processing facilities in São
Paulo state.
Foreign Proceeding: Receivership Process of Virgolino de
Oliveira S.A. Acucar e Alcool – Em
Recuperacao Judicial [In Receivership],
et al., in progress with the Sole Bench
of the Judicial District of Santa
Adelia, State of Sao Paulo, in the court
records number 1000626-29.2021.8.26.0531
Chapter 15 Petition Date: April 9, 2025
Court: United States Bankruptcy Court
Southern District of New York
Nine affiliates that concurrently filed voluntary petitions for
relief under Chapter 15 of the Bankruptcy Code:
Debtor Case No.
------ --------
Virgolino de Oliveira S.A. Acucar e Alcool (Lead) 25-10696
Agropecuaria Nossa Senhora do Carmo S.A. 25-10698
Acu-careira Virgolino de Oliveira S.A. 25-10699
Agropecuaria Terras Novas S.A. 25-10700
Usina Catanduva S.A. Acucar e Alcool 25-10701
RO Servicos Agrcolas S.A. 25-10702
Estate of Carmen Ruete de Oliveira 25-10703
Carmen Aparecida Ruete de Oliveira 25-10704
Virgolino de Oliveira Filho 25-10705
Judge: Hon. Martin Glenn
Foreign Representative: Marcos Roberto dos Santos
c/o Grupo Virgolino de Oliveira
Brazil
Foreign
Representative's
Counsel: Howard P. Magaliff, Esq.
R3M LAW, LLP
6 East 43rd Street
21st Floor
New York, NY 10017
Tel: 646-453-7851
E-mail: hmagaliff@r3mlaw.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of the Chapter 15 petition is available for free
on PacerMonitor at:
@
www.pacermonitor.com/view/XGCSTPY/Virgolino_de_Oliveira_SA_Acucar__nysbke-25-10696__0001.0.pdf?mcid=tGE4TAMA
VIRGOLINO DE OLIVEIRA: June 2 Chapter 15 Recognition Hearing Set
----------------------------------------------------------------
Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern
District of New York granted a motion filed by Marcos Roberto dos
Santos, the authorized foreign representative of Brazilian sugar
producer and distributor Virgolino de Oliveira S.A. Acucar e
Alcool, for entry of an order scheduling a recognition hearing and
approving the form and manner of notice in its Chapter 15 Cases.
Virgolino de Oliveira SA filed for Chapter 15 bankruptcy protection
in New York last April 9, 2025, disclosing $735 million in debt.
Specifically, Marcos Roberto dos Santos, the Foreign
Representative, by his attorneys R3M Law, LLP, filed a Verified
Petition for (I) Recognition of Foreign Main Proceeding, (II)
Recognition of Foreign Representative, and (III) Relief Pursuant to
11 U.S.C. Secs. 105(a), 1507(a), 1509(b), 1515, 1517, 1520, 1521
and 1525 in the Bankruptcy Court for the Southern District of New
York. Among other things, the Verified Petition requests entry of
an order recognizing the Brazilian Reorganization as a foreign main
proceeding pursuant to section 1517 of the Bankruptcy Code.
The Recognition Hearing will be held before the Court on June 2,
2025, at 2:00 p.m. (prevailing Eastern time) before the Honorable
Martin Glenn. The Recognition Hearing will be conducted virtually
using Zoom for Government. Parties wishing to appear must register
in advance using the Electronic Appearance portal located on the
Court's website at
https://www.nysb.uscourts.gov/ecourt-appearances
Responses or objections to the Motion and proposed order, if any,
must be in writing, conform to the Federal Rules of Bankruptcy
Procedure and be filed with the Bankruptcy Court electronically by
registered users of the Bankruptcy Court's case filing system (the
User's Manual for the Electronic Case Filing System can be found at
the official website for the Bankruptcy Court,
www.nysb.uscourts.gov, and, by all other parties in interest, on a
3.5 inch disk, in text-searchable Portable Document Format (PDF),
Word or any other Windows-based word processing format (in either
case, with a hard copy delivered to Chambers), and be served by
email upon (i) R3M Law, LLP, attorneys for the Foreign
Representative, Attn: Howard P. Magaliff, Esq.,
hmagaliff@r3mlaw.com, and (ii) the United States Trustee, Attn:
Andrea B. Schwartz, Esq., Andrea.B.Schwartz@usdoj.gov, with a
courtesy copy to the Court, so as to be received by 4:00 p.m.
(prevailing Eastern time) on May 27, 2025.
The Foreign Representative may file a reply to any objections by
4:00 p.m. (prevailing Eastern time) on May 30, 2025.
A copy of the Court's Order dated April 16, 2025, is available at
https://urlcurt.com/u?l=reNiHB PacerMonitor.com
About Virgolino de Oliveira SA
Virgolino de Oliveira S/A - Acucar e Alcool provides agriculture
processing services. The Company transforms sugar cane juice into
different sized sucrose crystals and produces fuel, ethanol, and
renewable electrical power. Virgolino de Oliveira serves customers
in Brazil.
Virgolino de Oliveira SA sought relief under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 25-10696) on April 9,
2025. In its petition, the Debtor reports $735 million in debt.
Honorable Bankruptcy Judge Martin Glenn handles the case.
The Debtor is represented by Howard P. Magaliff, Esq. of R3M Law
LLP.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Begins Formal Tariff Talks With U.S.
--------------------------------------------------------
Dominican Today reports that the Dominican Republic and the United
States held a high-level meeting in Washington to discuss the
recent global tariff measure announced by the U.S. government. The
meeting was described as positive and constructive, with both sides
agreeing to continue dialogue through established channels, the
report says. The U.S. acknowledged the Dominican Republic's
strategic role in the region and explained that the 10% tariff
applied to the country is part of a broader international trade
policy.
According to Dominican Today, the Dominican delegation presented a
detailed report highlighting national achievements in areas such as
economic growth, bilateral cooperation, migration, security, and
anti-narcotics efforts, which was well received by U.S. officials.
Dominican Today relates that the Dominican government expressed its
desire to maintain fair trade conditions comparable to other
countries in the region with U.S. agreements.
Both parties agreed to continue discussions and work on addressing
issues raised in the USTR's trade barriers report, Dominican Today
says. The Dominican delegation included ministers of industry,
foreign affairs, and finance, who have been leading a coordinated
national response since early April when the U.S. tariff measure
was announced, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the Island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
S&P Global Ratings affirmed its 'BB' long-term foreign and local
currency sovereign credit ratings on the
Dominican Republic on December 3, 2024. The outlook remains stable.
S&P also affirmed its 'B' short-term sovereign credit ratings and
kept the transfer and convertibility (T&C) assessment unchanged at
'BBB-'.
Fitch, on November 26, 2024, affirmed the Dominican Republic's
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-'.
The Rating Outlook is Positive.
Moody's credit rating for Dominican Republic was last set at Ba3 in
August 2023 with the outlook changed to positive.
===========
M E X I C O
===========
BANCO AZTECA: Moody's Affirms Ba2 Deposit Ratings, Outlook Stable
-----------------------------------------------------------------
Moody's Ratings has affirmed all ratings and assessments assigned
to Banco Azteca, S.A. (Banco Azteca), including its Ba2 long-term
local and foreign currency bank deposit ratings and Ba1 long-term
local and foreign currency Counterparty Risk Ratings. The Baseline
Credit Assessment (BCA) and adjusted BCA of ba3, the long and
short-term Counterparty Risk Assessments of Ba1(cr) and Not
Prime(cr), respectively, as well as the short-term local and
foreign currency bank deposit ratings and Counterparty Risk Ratings
of Not Prime were also affirmed. The outlook on the long-term
deposit ratings is stable.
RATINGS RATIONALE
Banco Azteca's ba3 BCA incorporates its established franchise in
the consumer lending market in Mexico, ranking as the 5th largest
bank in the system, adequate capitalization, and the high net
interest margins (NIMs) that help to mitigate the high credit costs
embedded in its subprime consumer lending business. The bank's
focus on unsecured consumer loans to low-income individuals is
somewhat also mitigated by its steady and granular deposit base
that accounted for 80% of total funding in December 2024. This also
benefits the bank's liquidity structure, which have historically
remained ample. The stable outlook reflects Moody's views that
Banco Azteca's Ba2 supported credit profile is well positioned amid
the weakening macroeconomic conditions and high volatility expected
for the coming quarters that could impact borrowers' repayment
capacity and business volumes.
Banco Azteca has a long-track record of high NIMs that offset the
high operating and credit costs of its business model, that
includes a labor-intensive collection and a large branch network.
In 2024, profitability ratio, measured by net income rose to 1.7%
of tangible assets from 1.0% in the previous year, as a result of
increased interest income on loans and fee income, while loan loss
provisions and operating costs remained stable. At the same time,
several new digital competitors catering to underserved populations
have emerged, increasing competition for Banco Azteca. The bank's
NIMs will face higher funding costs due to customers seeking better
investment returns. In 2024, Banco Azteca's capital position
benefitted from a strong internal earnings generation and
conservative dividend policy of around 30% of the previous year's
profits. Tangible common equity to Moody's Ratings-adjusted
risk-weighted assets (TCE/RWAs) stood at an adequate to 12.8% as of
December 2024.
The ba3 BCA assigned to Banco Azteca also incorporates its
long-track record of high charge-offs levels, and its concentrated
corporate loan portfolio with a high share of related-party
exposures. With constant efforts around the improvement in its
collection process, the bank's non-performing loan (NPL) ratio,
classified as Stage-3 loans under IFRS accounting standards,
improved to 3.8% of gross loans in December 2024, from 4.2% a year
earlier, which net charge-offs in 2024 stayed at 7.1% of total
loans (9.0% in 2023). However, the weakening operating environment
in Mexico anticipated for 2025, ad potential falls in the volume of
remittances could negatively affect subprime consumers in the
country, with implications to the bank's core business. The high
buffer of loan loss reserves maintained by Banco Azteca that
accounted for 3.1x problem loans in December 2024 is an important
mitigant against rising credit losses.
Banco Azteca's Ba2 long-term deposit ratings benefit from one notch
of uplift from the ba3 standalone BCA, by the incorporation of
Moody's assessments of a moderate probability of government
support. In Moody's assessments, Moody's considers the potential
systemic effects and financial stability of the Mexican system that
would result from an unsupported failure of the bank, given its
substantial customer base exceeding 25 million clients as of
December 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure on Banco Azteca's BCA and deposit ratings could
arise if tangible common equity ratio and profitability indicators
improve consistently in the coming 12 to 24 months; and as the
balance sheet concentration and related-party exposures are
reduced, which could be an indication of diminished exposure to
unexpected losses. An improvement in Banco Azteca's loan quality
metrics, while maintaining stable capital levels, could add
positively pressure on the bank's ratings and assessments.
A downgrade to the bank's ba3 BCA could lead to a downgrade of the
Ba2 long-term deposit ratings. Banco Azteca's ratings may face
downward pressure if Mexico's credit conditions deteriorate more
than expected in 2025, resulting in a material deterioration for
Banco Azteca's asset quality metrics. The increasing loan loss
provisioning expenses, with consequently reduction of overall
profitability, and a fall in capitalization, would also negatively
affect the bank's BCA.
The principal methodology used in these ratings was Banks published
in November 2024.
=====================
P U E R T O R I C O
=====================
OFG BANCORP: S&P Raises Long-Term ICR to 'BB-', Outlook Stable
--------------------------------------------------------------
On April 24, 2025, S&P Global Ratings raised its long-term issuer
credit rating on OFG Bancorp to 'BB-' from 'B+'. S&P also raised
its issuer credit rating on Oriental Bank to 'BB+' from 'BB'. The
outlook is stable.
The upgrade reflects S&P's belief that OFG will continue to
generate steady performance, aided by prudent risk management and a
relatively resilient Puerto Rican economy. Despite varied
operating conditions in recent years, the company's more
conservative risk appetite--as demonstrated by continued credit
tightening initiatives and sensible interest rate risk
management--has enabled the bank to deliver solid and consistent
profitability, aiding business stability.
Though OFG remains the third-largest bank based in Puerto Rico, its
continued technological investment (as part of its Digital First
strategy) has resulted in improved digital products and
capabilities. This has, in turn, led to customer acquisition and a
somewhat improved competitive position.
In addition, OFG--which has higher exposure to consumer credit, at
over 40% of loans--has benefited from solid economic trends in
Puerto Rico, with unemployment near historical lows. Although we
expect net charge-offs to continue normalizing from historically
low levels, we think that sustained hurricane and earthquake
relief, and other government program funds, may continue to help
asset quality.
Furthermore, OFG's strong performance reflects its solid
profitability and earnings retention. This has led to higher
capital ratios, further supporting organic loan growth. The bank
has also maintained its stable funding and liquidity metrics; those
metrics in recent years have been at levels that are substantially
improved from historical levels.
That said, tariffs and trade uncertainty could pose a risk to the
Puerto Rican economy and the broader U.S. economy, particularly to
consumer credit. However, S&P thinks OFG's strong earnings base can
sustain a sharp rise in provisioning, and its total loss-absorbing
capacity (Tier 1 capital and reserves) of over 18% of loans
provides a meaningful buttress against higher credit losses.
As such, S&P thinks OFG is well positioned to navigate
macroeconomic uncertainty--particularly at this rating, which
remains at the lower end of the range of ratings on U.S. banks.
S&P expects earnings to remain solid, further supporting already
strong capital ratios. The company's earnings and capital should
continue to benefit this year from its prudent investment of excess
liquidity into securities at elevated interest rates in 2022 (OFG
held nearly $2 billion of cash on its balance sheet at the start of
the rate cycle, with the securities portfolio more than doubling
since then).
This resulted in an additional uplift to its net interest margin,
coupled with a relatively smaller impact of unrealized losses on
securities despite the rise in market interest rates. While the net
interest margin has remained stable in recent quarters--at a high
5.42% as of March 31, 2025--it has moderated since 2023, reflecting
growing earning assets, elevated deposit costs stemming from an
influx of government deposits, and interest rate cuts weighing on
asset yields.
Capital ratios, as a result, increased year over year, despite
somewhat increased shareholder payouts, and they remain well above
the medians of rated peers; OFG had a common equity Tier 1 ratio of
14.27% as of March 31, 2025. Tangible capital metrics are well
above those of most regional banks, with the tangible common
equity-to-tangible assets ratio at 10.30% as of March 31, 2025.
While S&P expects asset quality metrics to deteriorate somewhat
from relatively low levels, it thinks OFG's improved credit profile
will support loan performance. Overall credit metrics have
remained significantly favorable to pre-pandemic levels, despite
increased losses in recent periods.
Additionally, nonperforming assets substantially declined over the
last decade, from over 9% of loans and other real estate owned to
below 2% in the last couple years. This reflects OFG's incremental
derisking of its portfolio, with its sales of nonperforming loans
and its tightened underwriting standards, particularly within its
consumer portfolio. The proportion of originated subprime auto
loans (measured by FICO below 660) decreased to about 13% in 2024
from 35% in 2020.
However, credit metrics still lag those of its rated mainland
peers, exacerbated by the company's concentrated loan portfolio
(which is almost entirely in Puerto Rico).
S&P said, "Additionally, we think OFG is relatively more sensitive
to economic cycles, since auto loans make up just over 30% of the
total loan portfolio. However, used-auto values could be supported
by the impact of tariffs, and that may mitigate the potential for
credit losses.
"We think OFG's funding and liquidity measures, which have improved
over time, compare favorably to some mainland peers'." Following
bank consolidation in Puerto Rico, OFG has meaningfully reduced its
reliance on wholesale and brokered deposit funding to relatively
modest levels.
This, in addition to the stickiness of its deposit franchise in
Puerto Rico, has supported funding costs, which remain below those
of most rated U.S. banks. While uninsured deposits remain high at
just over half of total deposits, on-balance-sheet liquidity is
nearly 30% of total assets, and S&P expects the bank to maintain
solid liquidity buffers.
S&P said, "The stable outlook reflects our expectation that OFG
will maintain strong earnings performance, robust capital levels,
and adequate reserve coverage against potentially higher credit
deterioration amid macroeconomic uncertainty with rising tariffs.
We also expect that continued federal relief funding will aid
economic conditions in Puerto Rico, which should benefit OFG's
substantial consumer portfolio.
"Additionally, we expect funding and liquidity metrics to remain in
line with recent levels."
Downside scenario
S&P said, "We could lower our ratings if the local economy weakens
or if financial aid, though pledged, declines materially and, in
turn, weakens local economic conditions.
"We could also lower our ratings if asset quality deteriorates more
than we expect, resulting in higher provisioning and worse
profitability, or if we project that capital ratios will decline
substantially below strong levels. We could also consider lowering
the ratings if funding and liquidity measures materially weaken."
Upside scenario
S&P's unlikely to raise the ratings in the next 12 months given the
already appropriate peer comparisons. Over time, it could consider
raising the ratings if:
-- Regional economic conditions further improve,
-- Revenue and geographic diversification increase meaningfully,
and
-- Asset quality, financial performance, and funding and liquidity
metrics are in line with those of its higher-rated peers.
===============
S U R I N A M E
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PORT OF SPAIN SHOPPING: Mall Tenants Struggle
---------------------------------------------
Melissa Maynard at Trinidad Express reports that several business
owners at the Port of Spain Shopping Complex, formerly New City
Mall say they are struggling to stay afloat even though they pay
subsidized rent.
Sometimes days go by and there are no sales at the store she works
at, says a representative of the mall, notes the report.
Several tenants who wished not to be identified told Express
Business that they believe slow sales are linked to people's fear
of crime in the capital, thus reducing foot traffic through the
mall, according to Trinidad Express.
"The foot traffic has really dropped drastically from the years
gone. Sales dropped really drastically and I believe that is a part
to play with the crime . . . people are actually afraid to come to
the mall and shop, they rather go online," said Kim, a sales
representative, the report discloses.
She believes that the struggle is across the board for everyone
occupying a space in the mall, the report relays.
Meanwhile, another business proprietor said people are afraid to
come into the mall due to the stigma, the report relays. However,
she also pointed out that people are unaware there is a food court
in the mall, suggesting proper signage to assist in this area, the
report says.
One retailer, in the mall for 15 years, said due to the state of
the economy and the Covid-19 pandemic, the reduced rent offered to
businesses is helpful, the report notes. Noting also that sales
have declined, she said, "overall it's a (situation) everywhere".
While external factors may be affecting business sales, tenants
also raised the issue of the management in the mall, the report
notes. They cited several challenges affecting them, including
frequent water issues and pipeline leakage.
Most tenants expressed the need for improved conditions at the mall
and for greater visibility of security, the report adds.
New Mall
The Ministry of Housing and Urban Development turned the sod to
construct a shopping complex next to the mall, the report notes.
The five-storey building will consist of 22 shop units, which will
be rented to tenants for as low as $500 per month, the report
says.
"Beyond providing commercial spaces, Port of Spain Shopping Complex
remains committed to ensuring that its tenants thrive and achieve
long-term self-sufficiency," Housing Minister Adrian Leonce said.
The shopping complex, he said, is expected to be completed in
November of this year, the report relays.
When asked about their views on the new mall, businesses at Port of
Spain Shopping Complex welcomed the idea, with one person
suggesting that the mall may draw foot traffic to the mall, should
customers not find what they are looking for at one store, the
report discloses.
"I think is a good thing; everybody has to live," another said,
notes the report.
But one proprietor expressed that tenants in the new mall may
experience a similar situation with slow sales as customers may not
want to venture to this part of Port of Spain, the report notes.
She added that in relation to what tenants are experiencing with
declining customers due to crime, the new mall may experience the
same problem owing to crime concerns, the report relays.
Moreover, she said the stigma of the facility being a "ghetto mall"
exists in some people's minds, pointing out that "some characters"
passing through the mall give that impression. She believes the
mall should have a dress code, the report relays.
The new shopping complex will bring back the love in Port of Spain,
according to another tenant, who added, "I am honestly excited
about it because I want things to go back to how it was . . . in
terms of clients," the report adds.
Ugrades Ongoing
Contacted for a comment on the concerns raised by tenants, chairman
of Port of Spain Shopping Complex Ltd Montgomery Guy said he was
taken back by the complaints, saying that the mall has been
receiving various upgrades over a three-year period with an
estimated cost of $3 million, the report notes.
"So, under the PSIP Development Fund, monies would have been
allocated to Port of Spain Shopping Complex Ltd that focus on doing
developmental work at what was formerly New City Mall, the report
says. Now, we have spent quite a lot of money doing renovations,
fixing the plumbing, doing over the flooring, painting over the
building to upgrade that mall," Guy said, the report relays. He
said over the period the mall has been transformed from an
infrastructural perspective and work is ongoing.
He noted that plumbing issues have been fixed. But more than that,
he said, assistance in training entrepreneurs free of charge and an
overall strategy to improve and invite customers to the mall is in
progress, the report says.
"We have retained the services of a marketing consultant who has
begun, because we interviewed tenants themselves to give their
testimonies to share the products and services that they provide to
encourage persons to come visit the mall, and we've been utilising
social media to roll out," Guy explained, the report discloses.
Additionally, he disclosed that come a new security system will be
commissioned at the mall as well as a free wifi zone for tenants
and customers, the report says.
"We are currently working to implement a technology-driven security
apparatus system with improved surveillance cameras, improved
monitors, and we're introducing AI technology towards face
recognition," he explained, the report relays.
This, Guy believes, will foster foot traffic to the mall and will
help increase sales for businesses, the report says.
According to the report, he said a police presence will be
initiated explaining, "We met with the mayor of Port of Spain.
We've had discussions on improving our working relationship, and
we've gotten a commitment for the municipal police and so on to
have patrols.
"So, while we have a building well painted, flooring done, and so
on, the idea is to also create that blanket of security and take
the assurance that visiting our mall is safe. That's the investment
in the technology or security apparatus, and the investment in
having a strong security firm, and the collaborations with the
Trinidad and Tobago Police Service," the report adds.
*********
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