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T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Friday, May 23, 2025, Vol. 26, No. 103
Headlines
A R G E N T I N A
ARGENTINA: Milei Delays 'Mattress Dollars' Plan Due to Election
PLUSPETROL SA: Fitch Assigns 'BB' LongTerm IDRs, Outlook Stable
PROVINCE OF MENDOZA: S&P Affirms 'B-' ICR, Outlook Stable
TELECOM ARGENTINA: Fitch Rates USD500MM Unsec. Notes 'B'
[] Fitch Hikes LongTerm IDRs on 3 Argentinian Corporates to CCC+
[] Fitch Upgrades Ratings on 4 Argentinian Banks
B R A Z I L
AZUL SA: S&P Lowers ICR to 'CCC-' on Elevated Default Risk
BRF SA: S&P Places 'BB' ICR on Watch Positive Amid Marfrig Merger
ELETROBRAS: Fitch Alters Outlook on 'BB-' IDRs to Stable
GOL LINHAS: Court OKs Plan of Reorganization, Exit Expected in June
GOL LINHAS: Exceeds $1.9-Billion Chapter 11 Exit Finance Goal
INVEPAR: S&P Downgrades ICR to 'D' on Judicial Protection Approval
OI SA: S&P Lowers ICR to 'SD' on Deferred Interest Payments
C O L O M B I A
GRUPO CIBEST: Fitch Assigns 'BB+' LongTerm IDRs, Outlook Negative
GRUPO CIBEST: S&P Assigns 'BB/B' ICRs, Outlook Negative
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Two Urban Areas Get Remittances
J A M A I C A
JAMAICA: BOJ Injects US$90 Million Into Forex Market
JAMAICA: Poultry Industry Contributes $310 Billion to Economy
JAMAICA: Poultry Sector Powers a $310-Billion Economic Engine
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Business Chambers Call For Probe
TRINIDAD & TOBAGO: Forex Demand Fuelling Strain
- - - - -
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A R G E N T I N A
=================
ARGENTINA: Milei Delays 'Mattress Dollars' Plan Due to Election
---------------------------------------------------------------
Buenos Aires Times reports that President Javier Milei's government
has postponed the announcement of new measures designed to
encourage savers to bring their stashed dollars back into the
formal economy.
After trailing the announcement for the last couple of weeks,
Presidential Spokesperson Manuel Adorni said that the "economic
announcement the National Government had prepared for today has
been postponed," according to Buenos Aires Times.
He said the goal is to prevent political opponents from having the
opportunity to "accuse a package of transcendental measures for all
Argentine savers of being electioneering" – a nod to Adorni's run
as a candidate in the Buenos Aires City Legislature elections
taking place, the report notes.
According to reports, the new economic measures will be announced
after the election, the report relays.
The Milei government wants to encourage residents to spend their
offshore or cash savings and inject them into the formal banking
system, the report discloses. To that end, it has repeatedly put
out messages stating that there will be no investigation by
regulatory agencies into money outside the traditional economy, the
report relays.
However, the scheme will require a series of legal amendments to
prevent it from being an explicit "whitewash" or amnesty, who would
require formal consideration in the National Congress, the report
relays.
Several analysts have predicted changes to the income tax system
may also be forthcoming, the report discloses.
Earlier, Economy Minister Luis 'Toto' Caputo confirmed that his
officials are working on a series of deregulatory measures that
will facilitate the use of dollars for domestic expenses without
having to explain the source of the funds, the report notes.
"What we're going to do more of is make people more inclined to
take their dollars out of their mattresses, safety deposit boxes,
or wherever and spend them," said Caputo. "The idea is not to give
explanations about what you spend, beyond the fact that it wasn't
banked. It's a cultural change that needs to be explained clearly,"
he added.
While details of the scheme remain unknown, some experts have
already sounded warnings about the Milei administration's
"ambitious plan," the report notes.
Economist Nau Bernues, the CEO of Quanestus, told the Noticias
Argentinas news agency that it remains to be seen how the average
Argentine – which for the most part is sceptical and cautious
about its savings – will react, the report relays.
"What the government is proposing is very ambitious," he said,
indicating that "those who have the dollar under their mattress or
in their safety deposit box, which is their insurance, perhaps
their life savings, are not going to touch it for anything, except
if they make it much easier to purchase land, real estate and
assets that the average Argentine assigns a certain amount of
protection to," the report discloses.
However, Bernues said "the government wants to go further and make
the dollar a more transactional currency, allowing people to buy
not only an apartment or a car, but also an appliance or even a
cookie at a kiosk," the report notes.
He concluded: "The government wants Argentines to put dollars into
circulation. It's doing everything possible to ensure that there
are more and more dollars. If that happens with constant pesos or
no issuance, the exchange rate should appreciate. That's why the
economic team is constantly proclaiming that the dollar will go to
1,000 [pesos per greenback]," the report 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.
In March 2022, the International Monetary Fund (IMF) approved a
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) -- with an approved immediate
disbursement of an equivalent of US$9.65 billion. Argentina's
IMF-supported program sought to improve public finances and start
to reduce persistent high inflation through a multi-pronged
strategy.
On April 11, 2025, the IMF further 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.
Fitch Ratings, on May 12, 2025, upgraded Argentina's Long-Term
Foreign-Currency and Local-Currency Issuer Default Rating (IDR) to
'CCC+' from 'CCC'. The upgrade reflects the launch of a new IMF
program, among other things. S&P Global Ratings, in February 2025
lowered its local currency sovereign credit ratings on Argentina to
'SD/SD' from 'CCC/C' and its national scale rating to 'SD' from
'raB+'. Moody's Ratings, in January 2025, raised Argentina's local
currency ceiling to B3 from Caa1 and the foreign currency ceiling
to Caa1 from Caa3. DBRS, Inc. upgraded Argentina's Long-Term
Foreign and Local Currency Issuer Ratings to B (low) from CCC in
November 2024.
PLUSPETROL SA: Fitch Assigns 'BB' LongTerm IDRs, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has assigned Pluspetrol S.A. (PPSA) 'BB' Long-Term
Foreign Currency (FC) and Local Currency Issuer Default Ratings
(IDRs). The Rating Outlook is Stable. Fitch has also assigned a
'BB' rating for the proposed benchmark size unsecured bonds. Net
proceeds will be used to refinance debt, capex, working capital,
M&A in Argentina and/or general corporate purposes.
PPSA's ratings reflect a solid financial profile and growing scale,
supported by a USD500 million subordinated committed credit line
provided by sister company Pluspetrol Resources Corporation S.A.
(Pluspetrol Group going forward).
The 'BB' FC IDR is four notches above Argentina's Country Ceiling
due to hard-currency (HC) cash held abroad and export revenue. The
credit line enhances PPSA's capacity to pay HC debt and highlights
the strategic importance of its assets.
The Stable Outlook reflects Fitch's expectation of maintaining HC
debt service coverage of at least 1.5x and leverage below 3.0x by
2027.
Key Rating Drivers
Rating Above the Country Ceiling: PPSA's cash flow generation is
concentrated in Argentina (CCC+). The Long-Term FC IDR is not
constrained by Argentina's Country Ceiling (B-) given the company's
ability to cover hard currency debt service with export revenue and
cash held abroad, while maintaining a foreign currency debt service
coverage ratio above the threshold of 1.5x over the rating
horizon.
PPSA will have access to a USD500 million subordinated committed
credit line granted by Pluspetrol Group, which Fitch views as
substantial financial support that extends PPSA's capacity to pay
HC debt and highlights the strategic importance of PPSA's assets in
Argentina. This external material support combined with HC cash and
cash flows, enables an uplift of up to four notches above the
Country Ceiling, in accordance with Fitch's Corporate Rating
Criteria.
Ample Financial Flexibility: PPSA's ample financial flexibility,
underpinned by the liquidity support granted by the Pluspetrol
Group, that allows the company to mitigate the risks associated
with its high-risk operating environment.
Fitch forecasts FCF will be negative over the next four years as
the company deploys its growth capex plan of around USD 4.6 billion
over that same period. Fitch acknowledges this capex is strategic,
as the company has no committed capex on its concessions, and this
program can be adjusted to reflect market conditions. Fitch expects
EBITDA leverage to trend towards below 3.0x by FY2027, with gross
debt at or below USD2.5 billion.
Growing Operating Scale: Fitch expects PPSA's production will reach
114,000 boed by FY2026, a 49% CAGR from FY2024, while 1P reserves
should be close to 700 mmboe and a 1P reserve life index (RLI) of
17 years, aligning the operating profile to the midpoint of the
'BB' category. In December 2024, PPSA acquired ExxonMobil
Exploration Argentina S.R.L. from ExxonMobil Argentina Investments
B.V. and QatarEnergy Argentina Holdings LLC., adding significant
reserves and potential for growth, specially from the Bajo del
Choique asset, and transportation capacity.
Improved Business Mix: The Exxon and Qatar acquisition enhances
PPSA's portfolio diversification by balancing exposure between oil
and gas, increasing evacuation capacity and aiming for higher
export revenue, while diversifying assets across conventional and
unconventional resources to focus on long-term growth; the
acquisition added a 21% stake in Oleoductos del Valle S.A.
(Oldeval) and a 17.78% stake in the Oleoducto Vaca Muerta Sur
(VMOS) pipeline. As of FY2024, La Calera concentrated 67% of gas
production and 28% of the oil production.
Peer Analysis
PPSA's ratings compare to those of Pan American Energy S.L. (PAE;
BB-/Stable) and Vista Energy Argentina S.A.U. (Vista Argentina;
BB-/Stable), as all their operations are concentrated in Argentina.
PAE and Vista Argentina have access to HC cash and cash flows that
enables them to be rated three notches above the Country Ceiling of
Argentina. PPSA has a material financial support from a related
party that grants it an additional notch differential in
comparison.
In terms of operational scale and 1P reserves, Fitch projects that
PPSA will reach a total production of approximately 114,000 boed
and 1P reserves of at least 700 mmboe by FY2026, placing PPSA in
the mid-range of the 'BB' category. Fitch expects Vista Argentina's
total production to reach 105,000 boed by 2026, and PAE's medium
production should be close to 222,000 boed and strong 1P reserve
life of close to 19 years compare favorably to other 'BB' rated oil
and gas E&P producers.
Fitch expects PPSA's EBITDA leverage to trend below 3.0x by FY2027.
Compared to its peers, Fitch expects the average leverage of these
E&P companies to be below 2.0x over the next three years. On a boe
basis, PPSA's FY2024 total debt to 1P was $3.5/boe, higher than
Vista's $2/boe.
Key Assumptions
- Average Brent prices from 2025 to 2028 (USD/bbl): 65, 65, 65,
60;
- Average daily production from 2025 to 2028 (kboe/d): 68, 87, 105,
122;
- Oil sales consider discount to Brent of $5/bbl;
- COGS of $28/boe in FY2025; average of $25/boe between 2026 and
2028;
- Royalties of $5/boe between 2025 and 2028;
- Capex of USD1 billion in 2025 and annual average of USD1.2
billion between 2026 and 2028;
- 1P Reserve replacement ratio of 150% in 2026;
- No dividend payments.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Downgrade of the Country Ceiling of Argentina;
- Hard-currency cash flows from operations outside Argentina not
covering hard currency gross interest expense in excess of 1.5x for
24 months;
- Material reduction in external support from related companies;
- PPSA's ratings could be negatively affected if hard currency
liquidity is weakened by capital controls;
- Debt/EBITDA and net debt/EBITDA ratios above 3.0x and 2.5x,
respectively, on a sustained basis;
- Major operational disruptions at key assets, resulting in a
significant reduction in production.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Sustained access to hard currency committed credit lines from
highly rated international banks and exceeding production of
125,000 boed, while maintaining 1P reserve life of at least seven
years, in combination with an upgrade of Argentina's Country
Ceiling.
Liquidity and Debt Structure
PPSA had USD63 million in cash and equivalents and USD167 million
in short-term debt as of FY2024. PPSA, like other E&Ps in
Argentina, has taken advantage of local capital markets to access
cheap financing to fund its operations.
Fitch believes PPSA can comfortably service debt with cash on hand
and cash flows through the rating horizon in the event the company
faces a challenging financing environment due to Argentina's
capital controls. Also, the subordinated committed credit line of
up to USD500 million enhances the company's financial flexibility.
The rating case assumes PPSA's FCF will be negative through the
rating horizon.
Issuer Profile
PPSA a midsize O&G producer with average estimated production of
72,279 boe/d by of FY2025. PPSA ranks as the fifth and sixth
largest O&G operator in Vaca Muerta, respectively, and the second
largest company in Vaca Muerta by acreage.
Date of Relevant Committee
23-Apr-2025
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
----------- ------
Pluspetrol S.A. LT IDR BB New Rating
LC LT IDR BB New Rating
senior unsecured LT BB New Rating
PROVINCE OF MENDOZA: S&P Affirms 'B-' ICR, Outlook Stable
---------------------------------------------------------
S&P Global Ratings, on May 16, 2025, affirmed its 'B-' global scale
issuer credit and issue ratings on the province of Mendoza. The
outlook remains stable.
Outlook
The stable outlook reflects S&P's expectation of continuity of
Mendoza's cautious fiscal policy execution amid a moderate economic
recovery, although a decline in inflation could pressure the budget
in the next 12 months. Risks posed by Argentina's weak external
liquidity and persistent economic vulnerabilities remain
pronounced.
Downside scenario
S&P said, "We could lower the ratings on the province of Mendoza in
the upcoming 12 months if adverse developments undermine the
sovereign's already limited access to financing amid increased
macroeconomic instability or a tightening of access to foreign
exchange, impairing the Argentine local and regional governments'
(LRGs') ability to service their foreign-currency debt. We could
also downgrade the province following a deterioration of its fiscal
profile that could heighten liquidity pressures."
Upside scenario
S&P said, "Mendoza's SACP is one notch above our final rating.
Because Argentine LRGs do not meet the conditions for us to rate
them above the sovereign, an upgrade of Mendoza would require an
improvement in our transfer and convertibility (T&C) assessment of
Argentina and/or the predictability of the fiscal federal system,
either of which would likely stem from the sovereign's improved
creditworthiness."
Rationale
S&P said, "We revised Mendoza's SACP to 'b' from 'b-', reflecting
the province's track record of fiscal resiliency amid sharp shifts
in economic policies. This included the challenging conditions of
2024, when real revenues in particular came under additional
pressure. While economic growth in province has been weak, its
financial management has shown capacity to navigate very difficult
macroeconomic conditions. It has generated strong fiscal results,
namely operating and after-capex surpluses, which have lowered debt
and increased cash coverage. Like other Argentine provinces,
Mendoza remains cut off from international debt markets. However,
the combination of accumulated cash reserves and a contained
amortization profile, with financing options in the domestic
capital market, reduces refinancing risk. However, in our view,
Argentina's volatile and underfunded institutional framework and
our 'B-' T&C assessment cap our ratings on Mendoza at 'B-'."
The economic recovery and deceleration of inflation should help
improve budgetary planning, although the sovereign's fiscal stance
could add fiscal pressure on Mendoza
Argentina's macroeconomic imbalances and track record of
inconsistent economic policies have constrained LRGs' space for
effective financial planning and weighed on their budgetary
execution. The shift toward market-oriented economic policies and
fiscal "shock therapy" under President Javier Milei's
administration have been key in starting to normalize the economy.
However, its initiatives (cuts in some transfers and infrastructure
spending) have also led to stress for the provincial governments.
Argentina's fluid macroeconomic conditions have shortened Mendoza's
planning horizon. That said, the province's fiscal resilience
reflects cautious budgetary and debt management practices, which
have been strengthened by continuity in local political management.
Governor Alfredo Cornejo is serving his second term and will
complete the third consecutive mandate of the Radical Party (UCR)
in the province.
S&P said, "We expect Argentina's real GDP to grow 4.8% this year,
following two consecutive years of economic contraction. The
provincial administration has taken advantage of the recent
stabilization of the Argentine economy and the sovereign's efforts
to foster an investor-friendly economy. It's renewing the push to
develop its own mining sector. Located in the Andes, Mendoza has
huge copper potential, but social resistance has limited investment
in the past. There are exploratory projects that could open space
for larger-scale investment in the future; this would replace the
now-stagnant oil sector. Development of potential new high-income
sectors could, over time, improve the province's trend growth and
raise income levels. We expect Mendoza's GDP per capita to reach
$9,100 in 2025, the same level as 2017, and below the Argentine
average of $16,000."
Financing requirements will remain limited and manageable in the
local market
Despite economic recovery in the second half of 2024 that resulted
in softer contraction in GDP than we initially anticipated, the
erosion of provincial revenues was comparable to that of 2020.
Transfers declined (in real terms) due to the sovereign's halt to
most non-automatic transfers, while the decline in provincial
financial sector revenue hurt local taxation. Mendoza offset a 10%
reduction in real revenue by limiting the real increase in
operating spending to maintain an operating surplus to revenue
ratio of around 16%.
S&P expects Mendoza's operating surplus to remain strong at about
15% of operating revenue in 2025. As inflation comes down, a key
tool for fiscal flexibility will likely be lost. That said, the
recovery in economic activity should help the province navigate the
transition, and Mendoza has already demonstrated some capacity to
navigate a slowdown in inflation in 2024.
Moreover, the composition of the budget has been improving over the
last several years, with capital expenditures (capex) increasing to
11.5% of the budget at the end of 2024, from 7% in 2019-2021. In
addition, at the end of 2024, the province cleared national and
provincial legal authorizations to start executing US$1 billion
(30% of operating revenues) of the Resarcimiento trust (former
Portezuelo del Viento hydro plant funds). This opens space for
faster capex execution financed directly by funds from this trust.
S&P said, "We anticipate limited financing needs in the next three
years. We think after-capex surpluses will gradually shift toward a
deficit, but that would be fully financed by trust assets.
Borrowing will thus be required only to roll over amortization
payments. Mendoza remains cut off from international debt markets.
We think the $110 million in annual principal debt payments due in
2025-2027 (around 3% of operating revenues) will be refinanced in
the domestic market. At the same time, accumulated free cash
savings could cover debt service payments for the next 12 months
and mitigate liquidity pressures. We note that the coverage ratio
is subject to volatility because the bulk of the debt service is
denominated in dollars, while cash reserves are mostly in local
currency.
"Nonetheless, we highlight that Mendoza has deleveraged
consistently since 2020. We estimate debt stock will remain at 18%
of operating revenues, down from 60% in 2020. The administration's
debt strategy aims to lower foreign exchange exposure to 70% at the
end of 2025 from nearly 90% at the end of 2024, as it issues debt
in Argentine pesos. However, the still short-term appetite of the
local capital market could mean a shorter debt maturity profile.
"In accordance with our relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable." At the onset of the committee, the chair confirmed
that the information provided to the Rating Committee by the
primary analyst had been distributed in a timely manner and was
sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
Ratings Affirmed
Mendoza (Province of)
Issuer Credit Rating B-/Stable/--
Mendoza (Province of)
Senior Unsecured B-
TELECOM ARGENTINA: Fitch Rates USD500MM Unsec. Notes 'B'
--------------------------------------------------------
Fitch Ratings has assigned a 'B' rating with Recovery Rating of
'RR3' to Telecom Argentina S.A.'s proposed issuance of up to USD500
million senior unsecured notes, expandable to USD1.0 billion. The
notes mature in 2033. The proceeds will be used mainly to prepay in
whole or in part the existing loans associated with the acquisition
of Telefónica Móviles Argentina S.A (Telefónica Argentina),
among others uses.
Telecom Argentina's ratings reflect Fitch's expectation that the
operator can continue mitigating inflationary pressures while
maintaining its strong market position. Despite the macroeconomic
instability in Argentina, where most of its operations and assets
are located, the company has historically managed to pass most
inflation effects onto consumers, alleviating some macroeconomic
risks.
Telecom Argentina's robust financial and operational profile is
supported by its strong cash flow generation, relatively
conservative capital structure, and competitive strengths in both
fixed and mobile services.
Key Rating Drivers
Country Ceiling Limits FC Ratings: Telecom Argentina's Long-Term
Foreign Currency Issuer Default Rating (FC IDR) is limited by
Argentina's 'B-' Country Ceiling. Fitch believes any default by the
company would likely stem from transfer and convertibility
restrictions rather than a significant decline in operational
performance.
Strong Operator, Weak Operating Environment: Telecom Argentina is
the leading integrated operator in the country, with strong
competitive positions in both fixed and mobile services. The
company's robust product offerings and brand recognition bolster
its ability to generate strong cash flow. Historically, Telecom
Argentina has managed the volatile macroeconomic environment by
adjusting service prices to counteract rising operational costs,
thus maintaining solid credit metrics. As Fitch anticipated, the
appreciation of the peso in real terms in 2024 allowed for the
reduction of leverage to its long-term trend, reaching net leverage
of 2.1x in 2024.
Acquisition of Telefónica Argentina: Telecom Argentina's ratings
were unaffected by the acquisition of Telefónica Argentina. Fitch
projects a limited impact on pro forma net leverage, which the
company estimates at 1.9x for the LTM ending in March 2025. The
acquisition cost was USD1.245 billion, financed with a USD1.170
million of bank loans. Fitch expects the purchase to enhance its
leading position in the local market, expanding mobile and fixed
broadband market share to about 58% and 46%, respectively.
Management expects Synergies in opex, as well as capex
optimization, especially for 'Fiber to the Home' development. The
acquisition is subject to final regulatory approval.
Price-Setting Independence: Fitch expects Telecom Argentina to
continue adjusting prices to mitigate inflationary pressures,
maintaining an EBITDA margin between 20% to 25% over the rating
horizon. In April 2024, the Argentine government repealed a prior
policy that regulated the prices of internet, mobile phone, and
cable television services, granting telecom service providers the
freedom to set their own tariffs. Since March 2023, Telecom
Argentina has been raising prices monthly to keep pace with
accelerated inflation.
Solid Financial Profile and Market position: Telecom Argentina's
financial structure is among the strongest of Fitch-rated telecom
companies in the region, characterized by a conservative capital
structure and cash flow generation. Fitch projects the company's
net debt/EBITDA ratio will remain below 2.7x over the rating
horizon, aligning with stronger investment-grade operators in the
region. However, fluctuations in the Argentine peso introduce
volatility to the company's leverage profile. Fitch expects the
company to refinance upcoming maturities and maintain debt levels
around USD 3.4 billion in 2025 (including debt from the Telefónica
Argentina acquisition).
Peer Analysis
The speculative ratings of Telecom Argentina compare with Argentine
issuers YPF S.A. (CCC+) and Arcor S.A.I.C. (B/Stable), which
experience rating constraints from the difficulties of operating in
Argentina despite having solid business and capital structures.
Arcor's ratings are higher than those of YPF and Telecom Argentina
because it has operations in Brazil and holds cash abroad in its
foreign subsidiaries.
Telecom Argentina's business and financial profile are similar or
superior to regional investment grade telecom companies like
Telefónica Móviles Chile (BBB-/Negative) or Empresa Nacional de
Telecomunicaciones S.A. (BBB-/Stable). Telecom Argentina also has a
more conservative capital structure or a stronger market position
than some telecoms rated in the 'BB' range.
Key Assumptions
- The company is able to pass on the majority of inflation to
consumers each year;
- Net leverage trending near 2.0x (2.5x considering the
consolidation of Telefonica Argentina operation);
- EBITDA margins around 25-26% (around 20% considering the
consolidation of Telefonica Argentina);
- Capital intensity around 17%-18%.
Recovery Analysis
For going-concern EBITDA, Fitch assumes Telecom Argentina would be
unable to pass on a significant portion of Argentina's projected
inflation, while the company's expenses would rise with inflation.
Under this scenario EBITDA margins drop significantly to 20%. Fitch
uses a 4x multiple, lower than the average telecom Enterprise
value/EBITDA multiple of 5x-7x, to apply a discount for Argentine
assets.
Although Fitch's recovery methodology suggests an 'RR2' Recovery
Rating for Telecom Argentina, the methodology also applies a
standard cap of 'RR4' for instrument ratings in Argentina. Fitch
applies country-specific caps to instrument ratings for a given
jurisdiction, reflecting its view that average recoveries could be
lower in regimes that are debtor-friendly and/or have weak
enforceability and higher in regimes that are creditor-friendly
and/or have strong enforceability. The caps limit the assignment of
higher Recovery Ratings for obligations of issuers that are
incorporated or whose assets or cash flows are in less
creditor-friendly jurisdictions.
However, per Fitch's Country Specific Treatment of Recovery
Criteria, when an issuer enters a distressed or defaulted state,
such as Argentina (CCC), Fitch can assign a higher Recovery Rating
to a debt instrument if Fitch believes that recoveries in that
particular case will be consistent with a higher Recovery Rating,
as Fitch does in this case. Therefore, Fitch has assigned Telecom
Argentina's senior unsecured notes a Recovery Rating of 'RR3'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade Factors that Could, Individually or
Collectively, Lead to Positive Rating Action/Upgrade
- Telecom Argentina's FC IDR is bound by Argentina's 'B-' Country
Ceiling; therefore, an upgrade of the Argentine sovereign rating
and concurrent upgrade of the Argentine Country Ceiling would
result in an upgrade;
- Telecom Argentina's LC IDR is constrained by the difficult
Argentine OE; therefore, a decrease in macroeconomic turmoil could
result in an upgrade.
Liquidity and Debt Structure
Telecom Argentina maintains sufficient liquidity, with ARS511
billion in cash available and investments against ARS898 billion in
short-term debt as of March 2025. The company also possesses ample
borrowing capacity in local capital markets. The majority of
Telecom Argentina's cash and debt is denominated in U.S. dollars.
The new unsecured notes will be used to partially refinance bank
loans for USD1.17 billion used to acquire Telefónica Argentina.
While Telecom Argentina has smaller operations outside of Argentina
in Paraguay, Uruguay, Chile, and the U.S., Fitch does not view
these operations as substantial enough to bypass the Argentine
Country Ceiling (B-).
Telecom Argentina's refinancing risk is deemed manageable. The
company's liquidity and financial flexibility are bolstered by
strong cash flow, which Fitch expects to sufficiently cover capital
expenditures. Telecom Argentina also has a longstanding track
record of refinancing and rolling over bank debt and loans from
international agencies, such as the International Finance
Corporation.
Issuer Profile
Telecom Argentina S.A. is the largest integrated telecommunications
services provider in Argentina, offering broadband, pay TV and
fixed and mobile telecommunications services throughout the
country. The company also has smaller operations in Paraguay,
Uruguay, Chile, and the U.S.
Criteria Variation
Fitch has applied a variation from its "Country-Specific Treatment
of Recovery Ratings Criteria," specifically the section titled:
"When an Instrument Enters a Distressed or Defaulted State." The
criteria allow a Recovery Rating to be assigned above the defined
cap for distressed issuers when Fitch has reason to believe that
recoveries in an individual case would be consistent with a higher
Recovery Rating.
Fitch has extended this analytical approach to all Argentine-based
corporates rated 'B-', reflecting their highly speculative credit
profiles and their operations within the distressed operating
environment in Argentina (CCC).
Date of Relevant Committee
26-Jul-2024
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
----------- ------ --------
Telecom Argentina S.A.
senior unsecured LT B New Rating RR3
[] Fitch Hikes LongTerm IDRs on 3 Argentinian Corporates to CCC+
----------------------------------------------------------------
Fitch Ratings, on May 19, 2025, upgraded the Long-Term Foreign
Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs)
for the following Argentinian corporates to 'CCC+' from 'CCC':
- AES Argentina Generacion S.A. (AES Argentina)
- Agua y Saneamientos Argentinos S.A.'s (AySA)
- YPF S.A.
Fitch has also upgraded AySA's senior unsecured ratings to 'CCC+'
with a Recovery Rating of 'RR4' from 'CCC'/ 'RR4' and YPF S.A.'s
senior unsecured ratings to 'CCC+' with a Recovery Rating of 'RR4'
from 'CCC'/'RR4'.
The actions follow Fitch's recent upgrade of Argentina's sovereign
FC and LC IDR rating to 'CCC+' from 'CCC'.
Key Rating Drivers
Fitch has upgraded AES Argentina's IDR to be in line with the
sovereign rating, because the company's revenues are highly exposed
to the government. AES Argentina is also exposed to Compania
Administradora del Mercado Mayorista Electrico's (CAMMESA), which
depends on financial support from the Argentine government in the
form of subsidies.
Fitch has upgraded AySA's ratings to be in line with the sovereign
rating. The company relies on capital injections from the
government to support its debt obligations in the
short-to-mid-term. AySA provides important water/wastewater utility
services for the most economically important region in Argentina,
which underpins Fitch's expectations for continued government
support.
Fitch has upgraded YPF S.A.'s ratings to be in line with the
sovereign rating due to the linkage between the two ratings. The
linkage reflects ownership structure, government oversight, history
of support, and significance of the company in executing government
policy role. Argentina controls the company through its 51% stake,
and provincial government officials serve on the company's board of
directors. Under Fitch's Government Related Entities Criteria,
incentives to support and contagion risks are high, leading to the
equalization of the ratings.
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
Agua y Saneamientos Argentinos S.A. has an ESG Relevance Score of
'4' for Governance Structure due to its nature as a majority
government-owned entity and the inherent governance risk that
arises with a dominant state shareholder, which has a negative
impact on the credit profile, and is relevant to the rating[s] in
conjunction with other factors.
YPF S.A. has an ESG Relevance Score of '4' for GHG Emissions & Air
Quality due to the growing importance of the continued development
and execution of the company's energy-transition strategy, which
has a negative impact on the credit profile, and is relevant to the
rating[s] in conjunction with other factors.
YPF S.A. has an ESG Relevance Score of '4' for Governance Structure
due to its nature as a majority government-owned entity and the
inherent governance risk that arises with a dominant state
shareholder, which has a negative impact on the credit profile, and
is relevant to the rating[s] in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Agua y Saneamientos
Argentinos S.A. LT IDR CCC+ Upgrade CCC
LC LT IDR CCC+ Upgrade CCC
senior unsecured LT CCC+ Upgrade RR4 CCC
YPF S.A. LT IDR CCC+ Upgrade CCC
LC LT IDR CCC+ Upgrade CCC
senior unsecured LT CCC+ Upgrade RR4 CCC
AES Argentina
Generacion S.A. LT IDR CCC+ Upgrade CCC
LC LT IDR CCC+ Upgrade CCC
[] Fitch Upgrades Ratings on 4 Argentinian Banks
------------------------------------------------
Fitch Ratings, on May 19, 2025, took the following rating actions
on four Argentine banks and two Uruguayan branches of Argentine
banks.
Banco Santander Argentina S.A. and Banco BBVA Argentina S.A.:
- Long-Term (LT) Foreign Currency (FC) and Local Currency (LC)
Issuer Default Ratings (IDRs) upgraded to 'B-' from 'CCC'.
The Rating Outlook is Stable;
- Short-Term (ST) FC and LC IDRs upgraded to 'B' from 'C';
- Viability Ratings (VRs) upgraded to 'ccc+' from 'ccc'.
Fitch has also withdrawn Banco Santander Argentina S.A. and Banco
BBVA Argentina's Government Support Rating (GSR) of 'no support'
(ns) as it is no longer considered relevant to the agency's
coverage. Simultaneously, Fitch has assigned a 'b-' Shareholder
Support Rating (SSR) as expected support for these two banks from
their parent companies is possible due to the major flexibilization
in FX controls in Argentina. The SSR drives the banks' IDRs.
Banco Macro S.A. and Banco Supervielle S.A.:
- LT FC and LC IDRs upgraded to 'CCC+' from 'CCC';
- ST FC and LC IDRs affirmed at 'C';
- GSR affirmed at 'no support';
- VRs upgraded to 'ccc+' from 'ccc'.
Fitch typically does not assign Outlooks to ratings in the 'CCC+'
categories or below.
Banco de la Nacion Argentina - Sucursal Uruguay (BNAUY) and
Provincia Casa Financiera:
- LT FC and LC IDRs upgraded to 'CCC+' from 'CCC'.
Both entities are full branches of their respective parents, Banco
de la Nacion Argentina (BNA) and Banco de la Provincia de Buenos
Aires (BAPRO), and part of the same legal entities. As a result,
their IDRs reflect Fitch's opinion of BNA's and BAPRO without
country risk constraint.
This portfolio review follows the recent upgrade of Argentina's
sovereign to 'CCC+' from 'CCC'. Following this action, Fitch
upgraded its assessment of the Argentinean banks' operating
environment (OE) score to 'ccc+' from 'ccc' with a Stable Outlook.
Fitch's assessment of the OE directly impacts these banks'
standalone ratings and constrains their VRs.
Argentina's improved macroeconomics have resulted in an enhanced
economic development that will improve Fitch's core metrics to
evaluate its score of the OE. The country's estimated GDP per
capita for 2024 is USD13.5 thousand and Fitch's operational risk
index (ORI) percentile is 45.4% (as of April 25), which explains
the implied score of 'bb'. Fitch adjusted the implied OE due to two
negative adjustments: Sovereign Rating and Macroeconomic
Stability.
Fitch expects real credit growth to improve in 2025, driven by
economic recovery and increased demand for private credit. Fitch
expects a strong recovery of 5.6% in 2025 after real GDP contracted
by only 1.7% in 2024, which was less than its previous projection.
In addition, the banking system has been reducing its exposure to
public sector, which is a positive development. The non-performance
loans have markedly declined below 2% while capital and liquidity
ratios remain solid, and reserve coverage has improved.
Argentina's economy is achieving a swift recovery, supported by
disinflation increasing real incomes and a reactivation in credit
intermediation after a long period of crowding out by public
borrowing. Fitch expects real interest rates to turn positive as
money demand continues to recover given the government's tightening
of monetary policy, a gradual reduction in inflation, and the
removal of exchange controls.
Fitch has withdrawn Banco Santander Argentina S.A. and Banco BBVA
Argentina's GSR of 'no support' as it is no longer considered
relevant to the agency's coverage.
Key Rating Drivers
Santander Argentina / BBVA Argentina:
In Fitch's view, regardless of the banks' overall adequate
financial condition, their viability ratings upgraded to 'ccc+' are
constrained by Argentina's IDRs and the agency's assessment of the
OE. The LT FC and LC IDRs of Santander Argentina and BBVA Argentina
are now driven by the SSR of 'b-' and capped by the sovereign
country ceiling of 'B-', as Fitch believes that once most FX
controls have been removed, the likelihood of ordinary shareholder
support will be forthcoming, if needed. The ultimate parents of
these banks are highly rated, and the size of the subsidiaries is
low relative to the provider of support while the role in the group
has a moderate importance factor for the assessment of the SSR.
The LT IDRs are now at 'B-' with a Stable Outlook.
Macro/Supervielle:
The LT IDRs of Macro and Supervielle are driven by their VRs,
upgraded one notch to 'ccc+' from 'ccc'. Banco Macro VR is below
the implied VRs due to the sovereign rating and OE constraints,
while Supervielle VR is in line with its implied VR. Fitch believes
that regardless of these banks' overall adequate financial profile,
the VRs are highly influenced by the 'ccc+' OE score.
In addition, although most of these banks have good domestic or
established niche franchises, funding profiles and adequate loss
absorption capacity, as reflected in their implied VR above or at
the OE score, the level of exposure of sovereign risk is still
relevant to their credit profiles. While a sovereign default is not
currently Fitch's baseline scenario, Fitch acknowledges the
possibility that, in the event of a sovereign default in a specific
currency, the government might impose restrictions on banks'
ability to service their obligations in that currency (e.g.,
capital controls).
Banco de la Nacion Argentina (Sucursal Uruguay) - BNAUY:
BNAUY is a full branch of BNA, which has a leading franchise and
systemic importance in Argentina. BNAUY is the same legal entity as
BNA, and therefore its IDRs reflect Fitch's opinion of BNA without
country risk constraints. BNA is fully owned by the Argentine state
and its liabilities, including branches abroad, are guaranteed by
the sovereign.
The outcome of the rating committee would have been the same
whether Fitch applied its methodology registered in Uruguay (from
Sept. 28, 2023) or its new "Bank Rating Methodology" published on
March 21, 2025.
Provincia Casa Financiera:
Provincia is a branch of BAPRO and part of the same legal entity.
Provincia's IDRs reflect Fitch's opinion on BAPRO without country
risk constraints. BAPRO has a leading franchise and systemic
importance in Argentina and the province of Buenos Aires, as the
bank is the second largest entity in terms of deposits and the
third in terms of assets.
The outcome of the rating committee would have been the same
whether Fitch applied its methodology registered in Uruguay (from
Sept. 28, 2023) or its new "Bank Rating Methodology" published on
March 21, 2025.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Santander Argentina/BBVA Argentina:
- The IDRs and SSR would be downgraded if Fitch perceives a
material weakening of the parent's ability or willingness to
support these banks;
- The IDRs are sensitive to changes in the country ceiling, as
banks' IDRs are almost always capped at the Country Ceiling.
Santander Argentina/BBVA Argentina/Macro/Supervielle:
- The VR is sensitive to changes in the sovereign rating or further
deterioration in the OE beyond current expectations that leads to a
significant deterioration in its financial profile;
- Any policy announcements that would be detrimental to the banks'
ability to service its obligations would be negative for their
creditworthiness.
BNAUY/Provincia Casa Financiera:
- The IDRs would be pressured by a downgrade of Argentina's
sovereign rating or a significant deterioration in BNA and BAPRO's
financial profiles caused by a deterioration in the Argentine's
OE;
- Any policy announcement in Argentina that would be detrimental to
either BNA's or BNAUY's and BAPRO's or Provincia's ability to
service their obligations would be negative for their
creditworthiness.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Santander Argentina/BBVA Argentina:
- Rating actions on the bank's IDRs and SSR are sensitive to those
of the sovereign and Country Ceiling.
Santander Argentina/BBVA Argentina/Macro/Supervielle:
- The VRs would benefit from an upgrade of Argentina's sovereign
rating.
BNAUY/Provincia Casa Financiera:
- The IDRs of BNAUY and Provincia reflect Fitch's opinion of BNA
and BAPRO, respectively.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
Subordinated Debt
Macro's subordinated debt was upgraded to 'CCC-' with a Recovery
Rating of 'RR6' from 'CC'/'RR6' and is two notches below the bank's
upgraded viability rating of 'ccc+', reflecting Fitch's base case
notching for loss severity. These securities are plain vanilla
subordinated liabilities, without any deferral feature on coupons
and/or principal. The 'RR6' for subordinated debt reflects expected
recoveries for nonperformance hybrids securities relative to
Macro's senior unsecured debt.
Government Support Rating
Macro: GSR of 'no support' reflects Fitch's view that, despite the
bank's systemic importance, government support cannot be relied
upon because of constraints on the government's ability to provide
support.
Supervielle: GSR of 'no support' reflects Fitch's view that,
despite the bank's moderate franchise, government support cannot be
relied upon given constraints on the government's ability to
provide support.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Subordinated Debt: Any change, either positive or negative, to
Macro's VR could result in a similar change to the subordinated
debt rating.
Government Support Rating: Changes in the GSR are unlikely in the
medium term given the low sovereign rating of Argentina.
VR ADJUSTMENTS
Santander Argentina:
- The VR of 'ccc+' has been assigned below the 'b-' implied VR due
to the following adjustment reasons: OE/Sovereign Rating Constraint
(negative);
- The OE score of 'ccc+' has been assigned below the 'bb' implied
score due to the following adjustments reasons: Sovereign Rating
(negative) and Macroeconomic Stability (negative);
- The Business Profile score of 'b' has been assigned below the
'bb' implied score due to the following adjustment reason: Business
Model (negative);
- The Earnings and Profitability score of 'b-' has been assigned
below the 'bb' implied score due to the following adjustment
reason: Historical and Future Metrics (negative).
BBVA Argentina:
- The VR of 'ccc+' has been assigned below the 'b-' implied VR due
to the following adjustment reasons: OE/Sovereign Rating Constraint
(negative);
- The OE score of 'ccc+' has been assigned below the 'bb' implied
score due to the following adjustment reasons: Sovereign Rating
(negative) and Macroeconomic Stability (negative);
- The Business Profile score of 'b' has been assigned below the
'bb' implied score due to the following adjustment reason: Business
Model (negative);
- The Earnings and Profitability score of 'ccc+' has been assigned
below the 'b' implied score due to the following adjustment reason:
Historical and Future Metrics (negative).
Macro:
- The VR of 'ccc+' has been assigned below the 'b-' implied VR due
to the following adjustment reasons: OE/Sovereign Rating Constraint
(negative);
- The OE score of 'ccc+' has been assigned below the 'bb' implied
score due to the following adjustment reasons: Sovereign Rating
(negative) and Macroeconomic Stability (negative);
- The Business Profile score of 'b' has been assigned below the
implied score of 'bb' due to the following adjustment reason:
Business Model (negative);
- The Asset Quality score of 'b-' has been assigned below the
implied score of 'bb' due to the following adjustment reason:
Historical and Future Metrics (negative);
- The Earnings and Profitability score of 'ccc+' has been assigned
below the implied score of 'bb' due to the following adjustment
reason: Historical and Future Metrics (negative);
- The Capitalization and Leverage score of 'b' has been assigned
below the implied score of 'bb' due to the following adjustment
reason: Leverage and risk weight calculation (negative).
Supervielle:
- The OE score of 'ccc+' has been assigned below the 'bb' implied
score due to the following adjustment reasons: Sovereign Rating
(negative) and Macroeconomic Stability (negative).
Public Ratings with Credit Linkage to other ratings
The IDRs and SSRs of Santander Argentina and BBVA Argentina are
linked to the ratings of their parent companies, Banco Santander,
S.A. and Banco Bilbao Vizcaya Argentaria, S.A., respectively.
The IDRs of BNAUY and Provincia reflect Fitch's opinion of BNA and
BAPRO, respectively.
ESG Considerations
Santander Argentina, BBVA Argentina, Macro and Supervielle have an
ESG Relevance Score of '4' for Management Strategy due to the high
level of government intervention in the Argentine banking sector.
The enforcement of interest rate caps can lead to inadequate loan
pricing applies significant pressure on the banks' net interest
margins. In addition, restrictions on fee levels can negatively
affect performance ratios. This challenges the banks' ability to
define and execute their own strategies, which has a negative
impact on the credit profile and is relevant to the rating in
conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Banco de la
Nacion Argentina
(Sucursal
Uruguay) LT IDR CCC+ Upgrade CCC
LC LT IDR CCC+ Upgrade CCC
Banco Santander
Argentina S.A. LT IDR B- Upgrade CCC
ST IDR B Upgrade C
LC LT IDR B- Upgrade CCC
LC ST IDR B Upgrade C
Viability ccc+ Upgrade ccc
Government Support ns Affirmed ns
Shareholder Support b- New Rating
Government Support WD Withdrawn
Banco Macro S.A. LT IDR CCC+ Upgrade CCC
ST IDR C Affirmed C
LC LT IDR CCC+ Upgrade CCC
LC ST IDR C Affirmed C
Viability ccc+ Upgrade ccc
Government Support ns Affirmed ns
Subordinated LT CCC- Upgrade RR6 CC
Banco
Supervielle S.A. LT IDR CCC+ Upgrade CCC
ST IDR C Affirmed C
LC LT IDR CCC+ Upgrade CCC
LC ST IDR C Affirmed C
Viability ccc+ Upgrade ccc
Government Support ns Affirmed ns
Banco BBVA
Argentina S.A. LT IDR B- Upgrade CCC
ST IDR B Upgrade C
LC LT IDR B- Upgrade CCC
LC ST IDR B Upgrade C
Viability ccc+ Upgrade ccc
Government Support ns Affirmed ns
Shareholder Support b- New Rating
Government Support WD Withdrawn
Provincia Casa
Financiera LT IDR CCC+ Upgrade CCC
LC LT IDR CCC+ Upgrade CCC
===========
B R A Z I L
===========
AZUL SA: S&P Lowers ICR to 'CCC-' on Elevated Default Risk
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on
Brazilian-based airline company Azul S.A. to 'CCC-' from 'CCC+'. At
the same time, S&P lowered its issue rating on the company's senior
unsecured notes due 2026 to 'CC' from 'CCC-'; the '6' recovery
rating is unchanged. S&P also lowered its national scale rating to
'brCCC-' from 'brBB+'.
The negative outlook reflects the increased likelihood of a default
in the next six to 12 months.
The downgrade reflects S&P's view that Azul's very tight liquidity
increases default risk within the next few months. As of March 31,
2025, Azul's cash and liquid investments amounted to approximately
R$655 million. Although the company successfully raised R$600
million in additional funding from bondholders, this is a
short-term bridge financing with a 120-day maturity.
While Azul's debt maturities are not particularly
substantial--totaling around R$730 million over the next 12
months--the company's obligations related to operating lease
payments, interest expenses, working capital, and capital
expenditures (capex) are considerable. S&P estimates these needs
are R$7.4 billion-R$7.8 billion over the same period.
Azul raised R$3.0 billion through new superpriority notes during
its debt restructuring earlier this year but still reported cash
burn of almost R$750 million in the first quarter. In the first
three months of the year, the company reported an operating cash
flow deficit of R$313 million, driven by substantial interest
expenses, working capital outflows, and restructuring-related
costs. Additionally, Azul paid slightly over R$1.0 billion in
leases and about R$1.9 billion in debt maturities.
Azul's operating results in the first quarter fell short of our
expectations, and we now forecast material negative free operating
cash flow (FOCF) after lease payments. The main reasons for the
weaker performance were depreciation of the Brazilian real (R$) and
rising fuel prices. S&P does anticipate healthy demand, alongside
lower fuel prices and a more favorable exchange rate for the
remainder of the year, which should contribute to revenue and
EBITDA growth in 2025.
S&P now estimates approximately 10% revenue growth for 2025, with
EBITDA expected to rise to about R$6.8 billion this year, up from
R$5.9 billion in 2024. However, given the substantial lease
payments, working capital requirements, other financial expenses,
and capx, we forecast significant FOCF deficits after lease
payments of R$1.6 billion-R$1.8 billion for 2025.
Over the past two years, Azul has undergone two debt
restructurings, neither of which has provided adequate relief to
its capital structure and cash flows. Despite reporting strong
operating margins, the company's high debt burden and lease
expenses leave it highly vulnerable to downturns in the industry or
broader macroeconomic challenges. S&P believes until Azul can
demonstrate improved cash flow generation and liquidity, access to
capital markets (either for new financing or equity follow-on) is
largely restricted.
Azul is working on potential new financing using a guarantee from
the Brazilian Export Guarantee Fund (FGE) to finance fuel
purchases. This financing could amount to up to R$2.0 billion and
could provide some liquidity relief and facilitate negotiations
with investors.
The negative outlook reflects the increased short-term liquidity
pressures and our view that S&P could lower its ratings on Azul if
it pursues a new debt restructuring within the next six to 12
months or is unable to pay its financial obligations.
S&P could downgrade Azul if:
-- S&P believes a default is a virtual certainty;
-- The company announces or undertakes another distressed
restructuring that S&P could consider equivalent to a default; or
-- The company pursues a legal restructuring.
A positive rating action could result from significant liquidity
relief amid stronger-than-expected recovery in its cash flows. It
could also stem from new cash proceeds from new long-term
funding--for instance, if the company manages to get financing with
FGE guarantees.
BRF SA: S&P Places 'BB' ICR on Watch Positive Amid Marfrig Merger
-----------------------------------------------------------------
S&P Global Ratings placed its 'BB' issuer credit and issue-level
ratings on BRF S.A. on CreditWatch with positive implications. S&P
also affirmed its 'brAAA' national scale rating on the company,
with a stable outlook.
The CreditWatch positive listing reflects that upon the closing of
the announced transaction, S&P will upgrade BRF to 'BB+',
reflecting its view of the combined entity.
As disclosed by both companies, the merger would occur through the
full incorporation of BRF by Marfrig in the form of a share swap.
Moreover, the minority shareholders of BRF would receive a 0.8
share of the combined company for each BRF share they own. The
Molina family, which controls Marfrig, would own 41.5% of the new
company. Currently, Marfrig holds a stake of 50.49% in BRF,
followed by Saudi Agricultural and Livestock Investment Co. (SALIC;
11.6%). The deal also involves additional dividend payments for
shareholders that accept the swap: R$3.5 billion from BRF and R$2.5
billion from Marfrig to be paid in the second half of the year,
compared with S&P's previous estimates of R$1.5 billion in outflows
from each company during 2025.
S&P said, "Our rating on Marfrig incorporates its full
consolidation of BRF, given the former's control of the latter.
Therefore, we expect the combined company MBRF Global Foods S.A. to
carry the same risk as Marfrig does currently.
"We believe the merger will strengthen BRF's overall credit
quality, and we expect it and its debt to carry the same credit
risk as the combined company, if the transaction closes as
announced. The merger is subject to the approval of both companies'
shareholders' assemblies expected in June 18, which is likely
considering the current ownership control, and to that of antitrust
bodies.
"We expect BRF's operating performance in 2025 to be solid amid a
favorable scenario for poultry spreads in Brazil and globally.
Also, the company continues to focus on expanding its processed
food operations and investing in improving efficiency, which should
continue to support profitability. For 2025, we estimate BRF's
nominal EBITDA close to R$10 billion and net adjusted leverage to
remain below 2.0x with enough cushion to absorb the potential
increase in dividends from the transaction.
"The CreditWatch positive listing reflects our expectation that the
merger will benefit BRF's credit quality, considering our view of
the consolidated operations and assuming the transaction to be
concluded according to the announced terms. We expect to resolve
the CreditWatch listing once the incorporation is concluded, with a
potential one-notch upgrade of BRF."
ELETROBRAS: Fitch Alters Outlook on 'BB-' IDRs to Stable
--------------------------------------------------------
Fitch Ratings has affirmed Centrais Eletricas Brasileiras S.A.'s
(Eletrobras) Long-Term Foreign and Local Currency Issuer Default
Ratings (IDRs) and senior unsecured bonds at 'BB-'. Fitch has also
affirmed the National Scale ratings for Eletrobras and its
subsidiary Companhia Hidro Eletrica do Sao Francisco (Chesf),
including Chesf's local debenture issuance, at 'AA(bra)'. The
Rating Outlook was revised to Stable from Negative.
The Stable Outlook reflects the group's positive performance and
expectation of higher cash generation from the sale of uncontracted
energy at better prices than previously anticipated. This should
allow Eletrobras to maintain leverage consistent with the current
IDRs.
Eletrobras' ratings consider its significant and diversified asset
base, which dilutes operational and regulatory risks. Fitch
projects that the group's EBITDA will grow, and it will benefit
from strong liquidity and a manageable debt maturity schedule.
Chesf's rating is equal to Eletrobras' rating due to medium-to-high
incentives of support from the parent.
Key Rating Drivers
Improving Leverage: Strong EBITDA performance allows Eletrobras to
present leverage profile consistent with the current IDRs. Net
adjusted financial leverage, including off-balance guarantees,
should range 3.5x-4.0x until 2028, with 3.9x in 2025 and 3.5x in
2026, with average gross leverage around 5.0x for the period. The
scheduled indemnity reduction on the transmission segment (annual
revenues will decrease by BRL6.5 billion starting in July 2028)
will challenge further leverage reduction the following years.
Out of the BRL2.4 billion to support Eletronuclear S.A.
(Eletronuclear)'s new debenture issuance, which will be used in
investments on the nuclear plant Angra 1, Fitch does not
incorporate additional guarantees to Eletronuclear, including
related to the pre operational nuclear plant Angra 3.
Strong Business Profile: Eletrobras is Brazil's largest generation
and transmission company, with 44 GW of installed generation
capacity and 74,000 km of transmission lines, or 22% and 37% of
respective national market share. The business diversification in
segments and assets reduces operational and regulatory risks for
the group. Around 60% of consolidated revenues have contracts in
the regulated market, 40% from the transmission segment and 20% for
generation. These revenues are adjusted annually by inflation
rates, which provides some visibility on cash generation.
Capex Pressures FCF: Fitch estimates strong capex plan of BRL18.0
billion to Eletrobras in the 2025-2026 period, which will result in
negative FCF of BRL6.7 billion and BRL860 million, respectively,
mitigated by a robust liquidity position. Financial obligations
from the privatization and expected cash outflows from
contingencies will affect the company's CFFO, which should reach
BRL6.2 billion in 2025 and BRL9.5 billion in 2026. Positively,
higher prices in the generation segment, revenues increase from
investments in transmission segment and expected efficiency gains
should moderately improve Eletrobras' EBITDA in the coming years.
The base case forecasts BRL16.9 billion in 2025 and BRL20.6 billion
in 2026.
Exposure to Price Risk: Eletrobras' high uncontracted energy
generation capacity exposes the group to energy price risk. Fitch
expects that the energy that is becoming uncontracted from quotas
regime will be sold at better prices than the current ones. Fitch
estimates the group will have to recontract 2.8GW in 2025, 5.8GW in
2026 and 9.2GW in 2027, which represent uncontracted positions of
15%, 32% and 52%, respectively. Fitch's base case scenario
considers energy sales prices of BRL174/MWh in 2025, BRL192/MWh in
2026 and BRL186/MWh in 2027, compared to around BRL90/MWh of ending
contracts of the quotas regime.
Subsidiary's Rating Equalized: Fitch equalizes the National Scale
ratings of Chesf and Eletrobras due to the medium to high set of
legal, operational and strategic incentives for the controlling
shareholder to support the subsidiary, if needed. Eletrobras holds
a 100% stake of Chesf and this subsidiary is included in cross
default clauses of the parent's Eurobonds and local debentures. The
operating and strategic incentives are mainly based on the
importance of Chesf's assets for Eletrobras group and the
centralized operational and financial decisions.
Peer Analysis
Eletrobras' IDRs reflect its geographic concentration in Brazil,
compared with its peers operating in higher rated countries in the
region, such as Chile (A-/Stable) and Colombia (BB+/Negative) where
Enel Americas S.A. (BBB+/Stable) and Interconexion Electrica S.A.
E.S.P. (BBB/Negative) are respectively located. Locally,
Eletrobras' 'BB-' rating is two to three notches below the LC IDR
of other Brazilian generation and transmission groups, due to its
lower operating performance and weaker financial profile, despite
its larger size and asset diversification.
In generation, Engie Brasil Energia S.A. (Engie Brasil) and Auren
Energia S.A. (Auren) both have FC IDRs of 'BB+'/Stable and LC IDRs
of 'BBB-'/Stable. Eletrobras has an installed capacity of
approximately 44.2GW, which compares favorably with Engie Brasil
(9.3GW) and Auren (8.8 GW). Eletrobras is also the largest power
transmission company in Brazil, with 74,013 km of transmission
lines in operation, compared to 11.943 km for Transmissora Alianca
de Energia Eletrica S.A. (Taesa, FC and LC IDRs BB+/Stable) and
7,139 km for Alupar Investmento S.A. (Alupar, FC IDR BB+/Stable, LC
IDR BBB-/Stable).
Eletrobras has higher gross and net leverage than most of its
higher rated peers. Eletrobras's expected gross and net leverage
for 2025, 5.7x and 3.9x, respectively, compares to gross and net
leverage of 3.7x and 3.2x for Engie Brasil, 4.2x and 3.7x for Taesa
and 4.0x and 3.0x for Alupar. Alupar and Taesa also have a lower
business risk profile due to their concentration in the electricity
transmission segment, which has lower volatility than generation.
Key Assumptions
Fitch's Key Assumptions within the Rating Case for the Issuer
Include
- Annual energy sales of 16.0GW on average during 2025-2028;
- Average sales price for the uncontracted capacity of BRL174/MWh
in 2025, BRL192/MWh in 2026 and BRL186/MWh in 2027;
- Selling, general and administrative expenses adjusted by
inflation;
- Dividends of 25% of net income from 2026 on;
- Capex of BRL32.8 billion in 2025-2028;
- No cash disbursements associated with outstanding guarantees to
nonconsolidated subsidiaries;
- Fitch did not include construction of nuclear plant Angra 3 in
its assumptions.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Total adjusted leverage above 6.0x or net adjusted leverage above
5.0x on a sustainable basis;
- Higher pressure on expected FCF;-
- Deterioration of debt and liquidity profiles;
- Continuity of a high uncontracted energy position;
- Increasing risk relative to off-balance-sheet guarantees.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Better than expected FCF trends;
- Eletrobras' uncontracted energy position declines, allowing
greater cash flow visibility;
- Total adjusted leverage below 5.5x and net adjusted leverage
below 4.0x on a sustainable basis.
Liquidity and Debt Structure
Eletrobras' strong liquidity and ample access to funding are key
rating considerations because they improve its financial
flexibility to raise additional debt to support the expected
negative FCF and rollover debt. The group's consolidated cash and
marketable securities of BRL30.3 billion on March 31, 2025 compare
with BRL28.1 billion debt due until 2028, including short-term debt
of BRL10.1 billion.
Eletrobras' adjusted consolidated debt of BRL71.2 billion was
mainly concentrated in debentures (56%) and Brazilian state-owned
entities (16%). Foreign currency debt is manageable and hedged to
BRL, representing around 18% of the group's debt. Off balance sheet
debt of BRL25.3 billion mainly consisted of corporate guarantees of
loans to UHE Belo Monte (BRL13.7 billion) and Angra 3 (BRL6.0
billion).
Issuer Profile
Eletrobras is the largest electric energy group in Brazil. It
operates in the energy generation and transmission segments. The
group is responsible for 22% of the installed generation capacity
and 37% of the transmission lines in the country.
Summary of Financial Adjustments
Net revenues and EBITDA net of construction revenues and cost.
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 Prior
----------- ------ -----
Centrais Eletricas
Brasileiras S.A.
(Eletrobras) LT IDR BB- Affirmed BB-
LC LT IDR BB- Affirmed BB-
Natl LT AA(bra) Affirmed AA(bra)
senior unsecured LT B B- Affirmed BB-
Companhia Hidro
Eletrica do Sao
Francisco S.A. Natl LT AA(bra) Affirmed AA(bra)
senior secured Natl LT AA(bra) Affirmed AA(bra)
GOL LINHAS: Court OKs Plan of Reorganization, Exit Expected in June
-------------------------------------------------------------------
GOL Linhas Aereas Inteligentes S.A., one of the leading airlines in
Brazil, announced on May 20, 2025, that the U.S. Bankruptcy Court
has decided to confirm GOL's Chapter 11 Plan of Reorganization.
With confirmation secured, GOL remains on track to emerge from its
restructuring process in early June 2025.
Throughout the course of its United States Chapter 11 process, GOL
has made significant strides forward in improving its competitive
position, financial foundation and operational performance. Key
milestones of the process included:
-- Securing US$ 1 billion in debtor-in-possession financing, which
bolstered liquidity and allowed GOL to re-invest in its aircraft
fleet;
-- Negotiating concession packages totaling US$ 1.1 billion from
lessors covering all aircraft in GOL's fleet, including financial
support to clear its maintenance backlog while also providing
permanent savings on rent and end of lease obligations;
-- Obtaining support from Brazilian banks, including restructuring
approximately US$ 150 million of local debentures and access to
approximately US$ 340 million of receivables factoring, a critical
working capital tool for Brazilian companies;
-- Identifying and beginning implementation of a US$ 181 million
annual profit improvement program to solidify GOL as one of the
most cost competitive airlines in South America;
-- Negotiating a Plan Support Agreement with Abra Group Limited and
the Unsecured Creditors Committee to deleverage GOL through a
reduction of up to approximately US$ 1.6 billion of prepetition
funded debt and up to US$ 0.8 billion of other obligations;
-- Finalizing an agreement with the Brazilian governmental
authorities to reduce unpaid government taxes, contingencies, and
other liabilities by approximately US$ 750 million and to generate
approximately US$ 184 million of liquidity through 2029;
-- Reaching an agreement with The Boeing Company on modifications
of the purchase contracts to provide US$ 262 million of concessions
and incremental liquidity through 2029 and over US$ 0.7 billion of
total relief; and
-- Securing US$ 1.9 billion in exit financing which provides ample
liquidity to repay the Company's DIP maturity in full upon
emergence, while also providing additional liquidity to support
GOL's execution of its business plan.
The Company is now positioned to emerge from the process with:
-- Meaningfully strengthened balance sheet: Upon emergence, GOL
will move forward with a strong liquidity position of approximately
US$ 900M and significantly reduced leverage of 5.4x at exit, and
projected net leverage of 2.9x by year-end 2027.
-- Overhauled all-Boeing 737 fleet on track to return to
pre-pandemic domestic capacity: In 2024, GOL overhauled over 50
engines and remains on track to have all aircraft in the air by the
first quarter of 2026. The Company also continues to strengthen its
fleet, with expected delivery of five additional Boeing 737 MAX in
2025.
-- Positive business momentum built on recent outperformance: As a
result of the fleet overhaul, in the fourth quarter of 2024 and
first quarter of 2025, GOL's operational and financial performance
has exceeded the expectations previously outlined in its 5-Year
Plan, with strong and growing demand translating to 17.4%
year-over-year recurring EBITDA growth and 19.4% year-over-year net
revenue growth in the first quarter.
GOL is entering its next phase with a strong market position and
best-in-class customer offering as it continues to rebuild its
network in key markets, serving 30 million passengers across 65
domestic destinations and 16 international destinations in 2024.
Driven by its mission of being "First for All," GOL offers
passengers the largest number of seats, more space between seats
and the greatest onboard experience including internet, movies and
live TV. Through its Smiles loyalty program, which is the largest
loyalty program in Brazil and the second largest program in Latin
America, GOL offers customers access to over 50 partner airlines,
three co-branded credit card options and over 550,000 product
options to redeem on non-travel partners. As the Company continues
to execute its proven network expansion strategy, GOL is
well-positioned to deploy its rebuilt capacity both domestically
and internationally by leveraging its significant presence in key
Brazilian hubs. In particular, its strategic global partnerships
allow for adding new service profitably to new or underserved
domestic and international routes.
Next Steps
Having secured confirmation of its Plan, GOL is now focused on
completing the final steps necessary to complete its exit from the
Chapter 11 process, including its shareholders' meeting to approve
the capital increase contemplated under the Plan, which will take
place on May 30, 2025. Following implementation of the Plan, Abra
will remain GOL's largest indirect shareholder.
GOL reiterates that, under the terms of the Plan, it will
significantly reduce its indebtedness by converting into equity or
extinguishing up to approximately US$ 1.6 billion of its
pre-Chapter 11 funded debt and up to approximately US$ 850 million
of other obligations. As such, considering that the conversion will
be carried out based on the economic value of GOL's shares prior to
the conversion, in accordance with applicable law, a substantial
dilution of GOL's currently outstanding shares is expected (subject
to shareholders' preemptive rights as provided under Brazilian
law).
Advisors
In the context of its restructuring efforts, GOL is working with
Milbank LLP as legal advisor, Seabury Securities, LLC as investment
banker, lead placement agent for the US$ 1.9 billion exit notes,
financial advisor and sole restructuring advisor, BNP Paribas
Securities Corp. as bookrunner (B&D) and placement agent for the
exit notes, and AlixPartners, LLP as financial advisor. In
addition, Lefosse Advogados acts as GOL's Brazilian legal advisor.
About GOL Linhas
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and cargo;
and maintenance services for aircraft and components in Brazil and
internationally. The company offers Smiles, a frequent-flyer
program to approximately 20.5 million members, allowing clients to
accumulate and redeem miles. It operates a fleet of 146 Boeing 737
aircraft with 674 daily flights. The company was founded in 2000
and is headquartered in Sao Paulo, Brazil.
GOL Linhas Aereas Inteligentes S.A. and its affiliates and its
subsidiaries voluntarily filed for Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 24-10118) on Jan. 25, 2024.
GOL Linhas estimated $1 billion to $10 billion in assets as of the
bankruptcy filing.
The Debtors tapped Milbank Llp as counsel, Seabury Securities Llc
as restructuring advisor, financial advisor and investment banker,
Alixpartners, LLP, as financial advisor, and HUGHES Hubbard & Reed
LLP as aviation related counsel. Kroll Restructuring Administration
LLC is the claims agent.
GOL LINHAS: Exceeds $1.9-Billion Chapter 11 Exit Finance Goal
-------------------------------------------------------------
Rick Archer at law360.com reports that Brazilian airline Gol Linhas
announced it overshot its goal of finding buyers for all $1.9
billion in exit financing notes it will issue under its proposed
Chapter 11 plan, causing it to trim back the interest rate and
reduce the commitment it got in a creditor deal earlier this
month.
About GOL Linhas
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and
cargo; and maintenance services for aircraft and components in
Brazil and internationally. The company offers Smiles, a
frequent-flyer program to approximately 20.5 million members,
allowing clients to accumulate and redeem miles. It operates a
fleet of 146 Boeing 737 aircraft with 674 daily flights. The
company was founded in 2000 and is headquartered in Sao Paulo,
Brazil.
GOL Linhas Aereas Inteligentes S.A. and its affiliates and its
subsidiaries voluntarily filed for Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 24-10118) on Jan. 25, 2024.
GOL Linhas estimated $1 billion to $10 billion in assets as of the
bankruptcy filing.
The Debtors tapped Milbank LLP as counsel, Seabury Securities LLC
as restructuring advisor, financial advisor and investment banker,
Alixpartners, LLP, as financial advisor, and HUGHES Hubbard & Reed
LLP as aviation related counsel. Kroll Restructuring Administration
LLC is the claims agent.
INVEPAR: S&P Downgrades ICR to 'D' on Judicial Protection Approval
------------------------------------------------------------------
S&P Global Ratings considers Investimentos e Participacoes em
Infraestrutura S.A. (Invepar) in general default. As a result, S&P
Global Ratings lowered its global scale issuer credit and national
scale ratings on Invepar to 'D' (default) from 'CC' and 'brCC'. S&P
also lowered the ratings on its third and fifth debentures to 'D'
from 'brC' and withdrew the recovery ratings. In addition, S&P
removed all the ratings from CreditWatch with negative
implications, where they were placed on May 13, 2025.
S&P will reevaluate its ratings on Invepar once it has more
visibility about the potential judicial reorganization plan and the
company's new capital structure.
On May 16, 2025, Rio de Janeiro's Fifth Business Court approved the
precautionary measure filed by Invepar the day before, giving the
company and its subsidiaries--Linha Amarela S.A. (Lamsa), Línea
Amarela Brasil Participações, and Concessionária BR 040 (Via
040)--a 30-day deadline to file for judicial reorganization if no
agreement is reached with its creditors during that period.
This follows the debt acceleration of Invepar's third and fifth
debentures totaling Brazilian real (R$) 676.7 million earlier this
month.
Although the precautionary measure is an out-of-court protection,
S&P understands that it is essentially a debt standstill, which it
considers equivalent to a default.
S&P said, "The 'D' ratings reflect our view that the precautionary
measure granted to Invepar and other group companies is effectively
equivalent to a debt payment suspension. It allows the group to
avoid meeting its financial obligations, including the third and
fifth debentures totaling R$676.7 million that were earlier
accelerated, and the former debt of Via 040 amounting to R$850
million. The protective measure is part of Invepar's strategy to
preserve its cash position that we estimate at about R$100 million
as of Dec. 31, 2024, pro forma the sale of its 4.73% stake in VLT
Carioca S.A. (VLT).
"We will reassess the group's capital structure and our ratings
once the debt restructuring plan is submitted and approved."
OI SA: S&P Lowers ICR to 'SD' on Deferred Interest Payments
-----------------------------------------------------------
S&P Global Ratings lowered the global scale and Brazil national
scale issuer credit ratings on Brazilian telecom operator Oi S.A.
to 'SD' from 'CCC' and 'brB', respectively. S&P also lowered the
issue rating on its US$505 million notes due 2027 to 'D' from
'CCC+'.
S&P said, "At the same time, we lowered the issue rating on the
senior secured notes due 2026 to 'CCC-' from 'CCC+'. The recovery
rating on the notes is '3', reflecting our view that the company
will remain current on its payments and that debtholders would have
meaningful recovery (rounded 60%) in a new distress scenario.
We downgraded Oi following its receipt of a waiver from creditors
and its failure to meet interest payments on part of its debt due
on March 31, 2025."
Oi S.A. recently announced that the holders of its US$505 million
priority notes due 2027 and its 13th private debentures have agreed
to capitalize the total interest accrued on such instruments
maturing on March 31, 2025, to the principal balance.
The company negotiated a waiver with the creditors of its 2027
priority notes and its 13th debentures, allowing it to defer
interest payments due on that date.
S&P said, "We anticipate that Oi will continue to generate negative
EBITDA in 2025 and very low EBITDA in 2026, and we expect it will
require additional waivers for the upcoming quarterly interest
payments on the same debt instruments. However, we believe Oi will
remain current on its other debt obligations, including the 2026
notes."
===============
C O L O M B I A
===============
GRUPO CIBEST: Fitch Assigns 'BB+' LongTerm IDRs, Outlook Negative
-----------------------------------------------------------------
Fitch Ratings has assigned Grupo Cibest S.A. (Cibest) Long-Term
Local and Foreign Currency Issuer Default Ratings (IDRs) of 'BB+',
respectively, and Short-Term Local and Foreign Currency IDRs of
'B'. The Rating Outlook on the LT IDRs is Negative.
The Negative Outlook on the LT IDRs reflects the same Outlook on
Bancolombia, as the ratings are directly linked. This mirrors
Colombia's Outlook, as Bancolombia is constrained by the
sovereign's rating based on its current intrinsic credit profile.
Fitch views Bancolombia's ratings, currently in line with the
sovereign, as more sensitive to a potential downgrade stemming from
a downward sovereign rating revision because Fitch is unlikely to
rate Colombian banks higher than the sovereign.
Key Rating Drivers
Well-known Subsidiaries' Creditworthiness: Cibest is the new
Holding Company for Bancolombia and related entities, commonly
known as Grupo Bancolombia. Cibest will directly consolidate
Bancolombia (main subsidiary), Banistmo (Panamanian bank),
Bancoagricola (El Salvatorian bank), BAM (Guatemalan bank), and
other non-financial entities. Fitch will monitor the process of
incorporation and its evolution but does not anticipate any impact
on the ratings of Bancolombia and related companies in Central
America. Also, Fitch anticipates that their respective business
profiles will remain unchanged under the new structure.
Strong Group Profile: Cibest's rating are driven by the business
and financial profile of its main operating subsidiary, Bancolombia
rated 'BB+/Negative'. This is the largest bank in Colombia and
possess a strong business and financial profile. The group also has
a footprint, of mostly banking operations, in Panamá, Guatemala
and El Salvador, among others, which further enhances its profile.
Fitch expects Cibest's cash flow to be sufficient and consistent,
coming mostly from Bancolombia in the form of dividends.
Moderate Double Leverage: Fitch expects Cibest's double leverage
ratio (equity investments in subsidiaries + intangibles/equity) to
remain around 105% on an unconsolidated basis. While there is room
to increase double leverage while maintaining rating equalization,
the group does not plan to significantly increase equity
investments in its subsidiaries. Fitch also expects Cibest's
dividend flow from its subsidiaries to be sufficient to maintain a
moderate double leverage ratio.
Risk Profile Linked to Main Subsidiary: Around 70% of total
consolidated assets come from Bancolombia, and therefore their risk
profiles are highly linked. Fitch expects Cibest's liquidity
management to be prudent, relying on Bancolombia's structure and
practices and with a proper use of cash flows. On a consolidated
basis, credit risk metrics, such as asset quality or profitability,
should be similar to those of its main subsidiary.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Cibest's IDRs could be downgraded if there is a significant and
sustained increase in double leverage above 120%. This would lead
to a rating one notch below Bancolombia's IDRs;
- A downgrade of Bancolombia will result in a similar action for
Cibest because the ratings are equalized.
- Although not an imminent risk, an increased contribution of
assets from subsidiaries with a riskier profile or a significant
deterioration in the current creditworthiness of its subsidiaries
could pose downside risks to Cibest's ratings.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- An upgrade of Cibest's IDRs would result from any positive change
in Bancolombia's ratings.
Date of Relevant Committee
May 14, 2025
Public Ratings with Credit Linkage to other ratings
The ratings of Grupo Cibest are directly linked to those of
Bancolombia S.A.
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
----------- ------
Grupo Cibest S.A. LT IDR BB+ New Rating
ST IDR B New Rating
LC LT IDR BB+ New Rating
LC ST IDR B New Rating
GRUPO CIBEST: S&P Assigns 'BB/B' ICRs, Outlook Negative
-------------------------------------------------------
S&P Global Ratings assigned its 'BB/B' global scale issuer credit
ratings to Grupo Cibest S.A. S&P also affirmed its 'BB+/B' global
scale issuer credit ratings on Bancolombia S.A. (Bancolombia),
Bancolombia Panama S.A., and Banistmo S.A. The outlook on the
long-term ratings on Grupo Cibest and these banking subsidiaries is
negative.
Finally, S&P affirmed its 'B-/B' global scale issuer credit ratings
on Banco Agricola S.A., and the outlook remains stable.
Grupo Cibest S.A. is the new non-operating holding company and
ultimate parent for all of Grupo Bancolombia's subsidiaries and
business lines.
Because Cibest depends on dividends from its subsidiaries to
service its financial obligations, the rating on Cibest is one
notch below the group credit profile ('bb+'). S&P also incorporates
Cibest's adequate cash position and low leverage in our analysis.
S&P said, "In our view, the corporate restructure will enable the
group to have a clearer structure with Cibest as the nonoperating
holding company and parent for all the operating financial
entities, including its largest banking subsidiaries in Colombia
and Central America. Grupo Cibest will replace Grupo Bancolombia as
the parent and will consolidate Bancolombia on an individual basis,
Bancolombia Panama, Banistmo, and Banco Agricola. It will also
consolidate Banco Agromercantil, Wompi, Renting Colombia, Wenia,
and Nequi, which are all not rated.
"In this regard, we expect Cibest's financials--on a consolidated
basis--to vary slightly compared with those of Grupo Bancolombia.
This corporate action will not entail immediate changes to the
overall group's operations, debt structure, divestment of assets,
or the withdrawal from any of its current lines of business. Thus,
our group credit profile (GCP) for Cibest and subsidiaries on a
consolidated basis is 'bb+'.
"The anchor, or starting point for our rating, on Cibest is 'bb+',
which reflects our view of the weighted average economic risk in
the countries where the bank has most of its loan portfolio. As of
March 2025, Cibest's largest loan exposures were Colombia (71%),
Panama (12%), Guatemala (7%), and El Salvador (6%). The anchor also
reflects the industry risk for the Colombian banking system, where
Cibest is domiciled.
"We expect Bancolombia to account for the majority of Cibest's
total assets, total capital, and operating revenues. Therefore, we
don't anticipate any change in the new group's management, business
strategy, operating performance, and risk profile.
"We believe that the strong franchise and geographic
diversification of the group's subsidiaries will help Cibest
maintain its market share and business stability over the next two
years. Cibest has a strong market share in the countries in which
it operates, mainly through Bancolombia, which benefits from its
status as the Colombian bank with the largest customer base in the
country--27.9% of total loans and 26.5% of total deposits as of
March 2025. In addition, we expect Cibest to hold a strong market
position in Central America through its subsidiaries during the
next few years.
"We expect Cibest to maintain a high payout ratio, which could
limit its internal capital generation, resulting in modest adjusted
capital growth and subdued capitalization compared with other large
groups in the region. We base our view of Cibest's capital and
earnings on our consolidated forecasted risk-adjusted capital (RAC)
ratio of about 4.9% for 2025-2026 based on our expectation that
Cibest will maintain an aggressive payout policy during the next
two years.
"Additionally, we consider Cibest will have low quality of capital
because of the notable amount of goodwill denominated in foreign
currency in its capital structure. In this regard, we estimate
goodwill revaluations will have a larger impact on its total
adjusted capital than capital revaluations during exchange rate
fluctuations.
"We believe the isolation of the Colombian business will enable the
group to strengthen Bancolombia's capital allocation and better
communicate with the market regarding regulatory
deductions--goodwill will be deconsolidated from Bancolombia's
capital ratios while reducing its exposure to foreign exchange
volatility. Nonetheless, we foresee Bancolombia will maintain high
dividend distributions. These would translate to a RAC ratio (on an
individual basis) of about 4.0% for the next two years, still below
those of other large banks in Latin America.
"We believe Cibest's asset quality metrics are manageable despite
increasing risks and adverse economic conditions in some of the
countries where it operates. Cibest has stable and manageable asset
quality metrics and a resilient loan portfolio stemming from its
diversification in terms of geography, sector, and single name
exposures along with prudent lending standards. Additionally, it
has adequate coverage of its nonperforming assets (NPAs), which is
above its main peers in Colombia and in line with the other banking
systems in the region.
"We forecast Cibest will have an NPA ratio of about 3.2% and credit
losses of 1.9%-2.0% in 2025-2026. We think Cibest will prioritize
the stabilization of asset quality indicators over higher credit
growth, especially in the consumer segment where the Colombian
banking system has faced drastic deterioration because of the
credit conditions in the country."
Cibest will have stable, diversified funding and manageable
liquidity for 2025-2026. Cibest has a stable funding structure with
a large and highly diversified deposit base. Cibest's funding
consists of deposits (87%)--with more than 35% of deposits coming
from the retail segment--debt (11%), and repos (2%). Moreover, the
bank's stable funding ratio has historically exceeded 100%.
Cibest's liquidity mainly consists of cash and government
securities with manageable refinancing risk. Likewise, S&P believes
Grupo Cibest's banks could continue issuing market debt if economic
conditions are viable and within their appetite for cost of
funding. Cibest's ratio of broad liquid assets to short-term
wholesale funding was 4.2x as of March 2025.
The rating on Cibest is one notch below its GCP of 'bb+'. This
notch of subordination reflects Cibest's dependence on dividends
from its subsidiaries to service its financial obligations.
S&P said, "Typically, we rate a speculative-grade financial
institution's NOHC two notches below its GCP. However, in our view,
Grupo Cibest won't face significant regulatory restrictions to
receive dividend payments from its regulated operating subsidiaries
in the next years, considering its subsidiaries' adequate
regulatory capital metrics. In fact, historically, Cibest's main
operating subsidiaries in Colombia, Panama, El Salvador, and
Guatemala have upstreamed a high amount of dividends to the parent
without any restrictions, and we expect this to continue.
"Additionally, we expect double leverage at the holding company to
remain low, at about 105% over the next 12 months, while its cash
position is sufficient to cover its financial obligations.
"We view environmental, social, and governance (ESG) credit factors
for Cibest as neutral to its credit quality. We think that Cibest
has an experienced management team, as well as sound governance
practices and clear targeted markets for growth and profitability.
"In addition, we expect Cibest will continue implementing top-notch
sustainability standards and guidelines, as demonstrated by the
decarbonization of the loan portfolio and the reduction of exposure
to sectors with high greenhouse gas emissions in favor of a gradual
shift toward energy transition schemes. We expect the group's
leading sustainability efforts--seen in its underwriting policies
and customer service--will support its long-term success,
reputation, and client loyalty.
"The negative outlook on Cibest mirrors our negative outlook on
Colombia. We rarely rate financial institutions above the long-term
sovereign credit rating because, during sovereign stress, the
government's regulatory and supervisory powers may restrict a
bank's or financial system's flexibility. Therefore, we believe
financial groups are affected by many of the same economic factors
that cause sovereign stress.
"The negative outlooks on subsidiaries Bancolombia, Banistmo, and
Bancolombia Panama mirror the outlook on Grupo Cibest. The ratings
on these subsidiaries will move in tandem with those on their
parent because we consider them integral to the group's current
identity and future strategy.
"If we downgrade Colombia in the next 12 months, we could take the
same action on Cibest's consolidated credit profile, and therefore
on the ratings on its subsidiaries Bancolombia, Bancolombia Panama,
and Banistmo. Additionally, we could take a negative rating action
if Cibest's consolidated RAC ratio falls below 3% or if its NPAs
deteriorate beyond our expectations, leading us to revise down our
group credit profile.
"Additionally, we could downgrade Cibest if its double leverage
ratio increases above 120% in the next 12 months.
"If we revise the outlook on Colombia to stable in the next 12
months, we would take the same action on Cibest and its
subsidiaries Bancolombia, Banistmo, and Bancolombia Panama."
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Two Urban Areas Get Remittances
---------------------------------------------------
Dominican Today reports that between January and April 2025,
Greater Santo Domingo and Santiago received 58.5% of all
remittances sent to the Dominican Republic, significantly outpacing
other regions like the East and South. According to Central Bank
data, the country received a total of US$3,917.4 million during
this period, with the National District alone accounting for 37.5%
of these funds, the report notes.
In April 2025, remittances reached US$954.6 million -- an 11%
increase compared to April 2024. After the National District, the
provinces of Santiago and Santo Domingo received the next largest
shares at 13% and 8%, respectively. Other notable provinces include
Duarte (4.6%), La Vega (3.6%), Peravia (3.5%), and Puerto Plata
(2.9%), according to Dominican Today.
Regionally, the Northern Region led with 13% of total remittances,
followed by the Eastern Region with 8%, and the Southern Region
with just 5.9%. The majority of formal remittance flows -- 82.7% --
originated from the United States, home to the largest Dominican
population abroad, the report notes.
Other key sources included Spain, contributing US$53.8 million
(6.1% of the total), making it the second-largest sender, the
report relays. Italy, Haiti, and Switzerland each contributed
1.2%, while Canada and France also ranked among the top countries
sending remittances, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCR-LA reported in April 2019 that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic was raised
to 'BB' in December 2022 with stable outlook. Moody's credit
rating for Dominican Republic was last set at Ba3 in August 2023
with the outlook changed to positive. Fitch, in December 2023,
affirmed the Dominican Republic's Long-Term Foreign-Currency Issuer
Default Rating (IDR) at 'BB-' and revised the outlook to positive.
=============
J A M A I C A
=============
JAMAICA: BOJ Injects US$90 Million Into Forex Market
----------------------------------------------------
RJR News reports that the Bank of Jamaica pumped another US$30
million in the foreign exchange market in order to help stabilise
the dollar and contain inflation.
This marks the third straight day of intervention in the foreign
exchange market, bringing the total to US$90 million, according to
RJR News.
This follows the intervention of $30 million, for which 46 bids
valued at US$73.1 million were submitted, the report notes.
The BOJ accepted only 20 bids for the $30 million it pumped in the
market, 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.
On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a
positive rating outlook. In October 2023, Moody's upgraded the
Government of Jamaica's long-term issuer and senior unsecured
ratings to B1 from B2, and senior unsecured shelf rating to (P)B1
from (P)B2. The outlook has been changed to positive from stable.
In September 2024, S&P affirmed 'BB-/B' longterm foreign and local
currency sovereign credit ratings on Jamaica and revised outlook to
positive.
JAMAICA: Poultry Industry Contributes $310 Billion to Economy
-------------------------------------------------------------
RJR News reports that a new study commissioned by the Caribbean
Poultry Association and conducted by Ernst and Young Caribbean
estimates the contribution of the poultry industry to the Jamaican
economy is $310 billion or almost 9% of GDP.
The study, the first of its kind in the region, also stressed that
the industry can satisfy 88% of the local demand for poultry meat,
according to RJR News.
Managing Director of Ernst and Young Caribbean, Christopher
Sambrano, says the poultry industry is important to Jamaica's GDP
growth, employment creation, food security and nutrition, the
report notes.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea. Jamaica
is an upper-middle income country with an economy heavily dependent
on tourism. Other major sectors of the Jamaican economy include
agriculture, mining, manufacturing, petroleum refining, financial
and insurance services.
On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a
positive rating outlook. In October 2023, Moody's upgraded the
Government of Jamaica's long-term issuer and senior unsecured
ratings to B1 from B2, and senior unsecured shelf rating to (P)B1
from (P)B2. The outlook has been changed to positive from stable.
In September 2024, S&P affirmed 'BB-/B' longterm foreign and local
currency sovereign credit ratings on Jamaica and revised outlook to
positive.
JAMAICA: Poultry Sector Powers a $310-Billion Economic Engine
-------------------------------------------------------------
Karena Bennett at Jamaica Observer reports that Jamaica's poultry
industry is generating far more economic value than previously
documented -- some $309.6 billion, according to new research
commissioned by the Caribbean Poultry Association (CPA) and carried
out by EY Services, formerly Ernst and Young.
The findings were presented by Christopher Zambrano, managing
partner for Caribbean Strategy and Transactions at EY Barbados,
during the CPA's 8th International Technical Symposium at the
Jamaica Pegasus Hotel in Kingston. The two-day event, held May
13-14, gathered close to 300 regional players under the theme
'Beyond Farming: The True Impact of Poultry,' according to Jamaica
Observer.
What the study uncovered was a sector whose reach extends far
beyond feed mills and broiler houses -- it touches every aspect of
the Jamaican economy from employment and utilities to advertising,
insurance and tax revenue, the report notes.
"We estimate that the poultry industry supports nearly 392,000
people through direct, indirect and induced activity," Zambrano
told the audience. "Wages totalled $62.6 billion, and broader
economic linkages took that figure up nearly $310 billion," he
added.
Those estimates, however, are likely conservative, the report
notes.
The study, which began in March 2024 after a year-long design
phase, relied on official data, surveys and interviews; but
excluded unregistered poultry farmers, a group believed to make up
a significant share of the market, the report discloses. Zambrano
said efforts to quantify the informal segment proved unreliable,
prompting them to err on the side of caution, the report relays.
Still, the figures represent a breakthrough for an industry long
seen as a staple of Jamaica's food economy but rarely documented
with this level of detail, the report notes.
Jamaica currently supplies roughly 88 percent of its poultry needs
locally, with small contract farmers accounting for approximately
40 per cent of total output, the report says. Six parishes produce
the majority of the country's poultry; those parishes are also home
to more than half the population which means the industry's
economic impact is tightly interwoven with community livelihoods,
the report relays.
EY's analysis also found that over 100,000 Jamaicans are directly
employed in poultry, supporting households of roughly 300,000
people, the report discloses. Spending by the sector includes $5
billion on utilities, $9 billion on transport, $1.3 billion on
advertising and promotion and $1.2 billion in insurance, the report
relays. Statutory and income tax contributions add another $3.6
billion annually, the report notes.
Beyond these visible flows, the study also modelled the sector's
macroeconomic impact, the report relays. The researchers found
that when broiler (chicken) production in Jamaica goes up by 1 per
cent, the average income per person in the country increases by
about 2.6 per cent, the report says.
Zambrano, whose team included economists and researchers from The
University of the West Indies and EY's Jamaica office, said the
study drew on global best practices, including a 2020 analysis from
the US Poultry and Egg Association to calculate industry
multipliers, the report notes.
The findings come at a time when food security remains high on the
region's agenda, the report relays. The CPA study also supports
Jamaica's positioning under Caricom's '25 by 2025' initiative,
which aims to slash the regional food import bill by 25 per cent,
the report discloses. That target was later revised to 22 per
cent, but the urgency remains, the report relays.
"Food security, post-COVID, has taken on the same level of
importance as financial stability," Zambrano said. "That's why we
took on this project, not just as accountants, but as stakeholders
in regional resilience," he added.
Despite Jamaica's production strength, the study noted that
imported poultry -- mainly low-cost cuts such as chicken back and
chicken necks -- still accounts for about 12 per cent of domestic
market, the report relays. However, local producers say that with
existing infrastructure, the country has the capacity to meet 100
per cent of local demand, the report notes.
Price competitiveness, long a sticking point in local versus import
debates, also appears less of an issue than assumed, the report
relays. EY's analysis showed that whole chicken prices in Jamaica
closely follow those in the US, even though the two countries have
different market systems, the report discloses.
"So what this study did was really focus on whole chicken because
we can't use parts . . . and then say chicken is cheaper in the US
than in Jamaica. Chicken prices are way up here on the US coasts,"
Zambrano said, pointing to the map. "But when you get into the
mid-states, it's cheaper. In the Caribbean… we are selling
chicken at the same price basically," he added.
Beyond the economics, Zambrano said the study also highlighted the
poultry sector's adherence to health and safety standards --
covering animal welfare, breeding, labelling, processing and
storage -- and its integration into regulated supply chains,
particularly in tourism and institutional catering, the report
relays.
These factors, Zambrano suggests, could position poultry as a model
for reform in other agricultural segments, the report notes.
"These measures have ensured that poultry products are processed,
bred, and marketed in line with international and regional food and
safety, animal welfare, and consumer protection requirements. So,
in conclusion, ladies and gentlemen, the poultry industry has a
far-reaching impact on Jamaica's economy," he added.
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.
On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a
positive rating outlook. In October 2023, Moody's upgraded the
Government of Jamaica's long-term issuer and senior unsecured
ratings to B1 from B2, and senior unsecured shelf rating to (P)B1
from (P)B2. The outlook has been changed to positive from stable.
In September 2024, S&P affirmed 'BB-/B' longterm foreign and local
currency sovereign credit ratings on Jamaica and revised outlook to
positive.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: Business Chambers Call For Probe
---------------------------------------------------
Melissa Maynard at Trinidad Express reports that two business
chambers have expressed concern and are calling for immediate
action in response to Prime Minister Kamla Persad-Bissessar's claim
of a foreign exchange "cartel" allegedly operating among banking
officials and business entities.
Persad-Bissessar made the disclosure during a post-Cabinet
briefing, according to Trinidad Express.
Speaking to the Express, the Chaguanas Chamber of Commerce
expressed serious concern over the Prime Minister's remarks,
describing the allegation as "a significant and serious claim
which, if verified, could have wide-ranging implications for the
business community and the national economy".
The Chaguanas Chamber acknowledged the long-standing challenges
local businesses particularly small and medium-sized enterprises
(SMEs) face in accessing foreign exchange, the report notes. "At
this time, we believe it is prudent to await further clarification
and the outcome of any investigations or reviews that may follow,"
said Baldath Maharaj, president of the Chaguanas Chamber, the
report relays. "We trust that the relevant authorities will
address the matter with the transparency and urgency it deserves,
so that public confidence in our financial and economic systems can
be preserved."
Maharaj reaffirmed the Chamber's position on the matter,
emphasising its commitment to fairness and equity in forex access.
"The Chaguanas Chamber of Commerce remains committed to advocating
for fairness, equity, and improved access to foreign exchange for
all businesses," he added. "We look forward to the facts being
established and any appropriate action being taken in the interest
of economic stability and national development."
Meanwhile, president of the Greater San Fernando Area Chamber of
Commerce (GSFCC), Kiran Singh, welcomed the Prime Minister's call
for investigation, stating that the allegations must be "thoroughly
investigated by the ministerial committee set up by the Prime
Minister," the report notes.
"It is no secret that the Greater San Fernando Area Chamber of
Commerce (GSFCC) has been stating for several years that large
conglomerates seem to have easier access to forex than those who
comprise the SME sector," Singh said. "This situation did not
happen overnight but morphed into the painful debacle we experience
on a daily basis," he added.
Singh accentuated the persistent difficulties SMEs face, despite
previous engagements with the EXIM Bank aimed at mitigating the
forex crisis, the report notes. "SMEs have complained bitterly
about it, getting little relief," he said, noting that while there
has been some "movement towards eliminating this crisis," much
remains to be done, the report relays.
Highlighting the economic weight of the SME sector, Singh added:
"We continue to remind the country that the SME Sector is the
largest employer after the government. We cannot manufacture
everything this country needs. Importation remains inevitable
until the oil and gas sector is re-energised amid the import
substitution and diversification plans," the report discloses.
Persad-Bissessar mandated that the ministers of Finance Dave
Tancoo; Planning and Economic Affairs and Development Kennedy
Swaratsingh; and Trade, Investment and Tourism Kama Maharaj bring a
report on forex distribution and leakages over the past ten years,
the report says.
"This report will be made public and identify the main users . . .
the main facilitators of this unfair distribution and explain to
the public how this entire forex distribution cartel and conspiracy
between certain bank operatives and businesses operate," she
added.
TRINIDAD & TOBAGO: Forex Demand Fuelling Strain
-----------------------------------------------
Trinidad Express reports that Trinidad and Tobago nationals,
seeking to bypass the challenges of accessing foreign exchange at
home, have found at least three creative ways to obtain it in
Guyana.
And the increased demand is putting additional pressure on Guyana's
foreign currency market, according to its vice-president Bharrat
Jagdeo, according to Trinidad Express.
Jagdeo made the comments during his weekly press conference, where
he noted that Guyana's foreign currency market has "changed in
complexity and depth" over the past five years, the report notes.
He said total imports into Guyana were valued at US$2.2 billion in
2020, the report relays. This year, that figure is projected to
surge to US$9 billion, the report discloses.
Jagdeo said Guyana's exports, including oil, are estimated at US$19
billion, the report notes.
"We have a trade surplus of about US$10 billion but our imports
have grown phenomenally," he added.
Jagdeo said foreign currency is required to fund the imports.
He said there are now "new features" in Guyana's currency market
that have fuelled demand, the report says.
"Historically, very little capital goods were financed from our
foreign currency market. It used to be mainly consumer goods and
intermediate goods, but our capital imports have grown from US$690
million to over US$4 billion," Jagdeo said, the report notes.
Jagdeo said that while this growth is putting pressure on Guyana's
balance of payments and exchange rate in the short term, it will be
beneficial in the long run, the report relays.
Jagdeo said the second reason for pressure on Guyana's foreign
currency market is "Trinidadian demand," the report notes.
"You know in Trinidad it is practically impossible to get foreign
currency in that market. People don't write about that, but in
Trinidad, businessmen have to wait for ages -- six months, eight
months, etcetera -- they cannot get foreign currency in that
market; you should examine what's going on," Jagdeo said.
"Over the last few years, we have witnessed a phenomenon here where
we believe that some of the invoices submitted by companies are
inflated. They are local companies but they are inflated invoices,
so that when payment goes to their suppliers, it's for goods that
would go into Trinidad and Tobago," he added.
Jagdeo said that, in addition, cambios and banks in Guyana have
been selling foreign exchange to Trinidadians travelling there
specifically to obtain foreign currency, the report notes.
"And then, thirdly, you have some local companies now that are
capitalising on the arbitrage: so they buy from the bank and the
cambio at maybe 216 or so, and they are selling to the Trinidadian
at 220, 224; they are making money now on the side," he said, the
report relays.
"So we have a big additional demand now -- apart from the growth
generally of the economy and the increase in consumer goods,
intermediate and capital goods import to US$9 billion now; and we
also have this new demand," he said, the report notes.
Speaking at the post-Cabinet press conference, Prime Minister Kamla
Persad-Bissessar said Finance Minister Davendranath Tancoo,
Planning, Economic Affairs and Development Minister Kennedy
Swaratsingh, and Trade, Investment and Tourism Minister Satyakama
"Kama" Maharaj have been mandated to prepare a report on foreign
exchange distribution and leakages over the past ten years, the
report discloses.
"This is a serious matter. One of the cries we heard in the country
was about the issue of forex; so we need to know where the forex
went, to whom it went, why it went, how it went and how it was
deployed and how it was used. These reports will come to us and we
will share them with you," Persad-Bissessar added.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Copyright 2025. All rights reserved. ISSN 1529-2746.
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