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250528.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, May 28, 2025, Vol. 26, No. 106 Headlines A R G E N T I N A ARGENTINA: No Need to Report Bank Transfers Below US$43,700 GENERACION MEDITERRANEA: Fitch Cuts Issuer Default Ratings to 'RD' B R A Z I L AZUL SA: Brazil Not Considering Specific Aid for Airline AZUL SA: Seeks $600MM Financing for Possible U.S. Bankruptcy Filing GOL LINHAS: US Trustee Wants to Appeal Chapter 11 Plan Approval HIDROVIAS DO BRASIL: Fitch Revises 'BB-' IDRs to Watch Positive C H I L E TELEFONICA MOVILES: S&P Lowers LT ICR to 'BB', Outlook Negative G U A T E M A L A GUATEMALA: S&P Hikes LongTerm Sovereign Credit Ratings to BB+ J A M A I C A JAMAICA: BOJ Cuts Interest Rate to 5.75%, Warns of US Policy Risks M E X I C O LEISURE INVESTMENTS: Xpand Appointed as New Committee Member N I C A R A G U A NICARAGUA: Fitch Affirms 'B' Foreign Currency IDR, Outlook Stable P A N A M A BANCONAL: Fitch Affirms 'BB+' LongTerm Foreign Currency IDR BANISTMO SA: Fitch Affirms 'BB+' LongTerm IDR, Outlook Negative CAJA DE AHORROS: Fitch Affirms 'BB+' LongTerm Foreign Currency IDR MULTIBANK INC: Fitch Affirms 'BB+' LongTerm IDR, Outlook Negative P U E R T O R I C O PUERTO RICO: Dechert LLP Updates List of PREPA Bondholders T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Extends Tax/Nat'l Insurance Amnesty to Aug. 2 X X X X X X X X LATAM: Poultry Producers Decry Barriers to Regional Trade - - - - - ================= A R G E N T I N A ================= ARGENTINA: No Need to Report Bank Transfers Below US$43,700 ----------------------------------------------------------- Manuela Tobias & Patrick Gillespie at Bloomberg News report that President Javier Milei's revamp lets Argentines send US$43,700, with no questions asked. According to the report, this is part of Milei's proposal of an overhaul of Argentina's tax system in order to cut red tape and encourage use of greenbacks that were previously undeclared. The country's tax agency, ARCA, will stop collecting large swathes of information from citizens and businesses, ranging from used car and home sales to everyday supermarket purchases, according to Bloomberg News. The government also aims to raise the threshold for banks to report consumer transactions, Bloomberg News notes. Bank transfers below 50 million pesos (US43,700) will no longer need to be reported, well above the previous one million peso threshold and far more than the US limit of US$10,000, Bloomberg News relays. Withdrawals from automated tellers less than US$8,750 will also be exempt - while every transaction was previously logged, Bloomberg News relays. Used car sellers and real-estate agents will no longer have to submit those transaction details to the tax agency, Bloomberg News notes. Starting June 1, the tax agency will also eliminate the requirement for Argentines to declare their assets in their statements, which will apply to the 2025 tax year, Bloomberg News discloses. "This regime change aims to give back liberty to the people," Economy Minister Luis Caputo said at a press conference in the presidential palace, "and stop treating people who have had to seek refuge in informality as criminals," Bloomberg News relays. The government has been touting the announcement for weeks as a way to encourage the use of dollars held outside Argentina's banking system, Bloomberg News discloses. South America's second-largest economy has had currency controls for nearly 10 years and has long penalised citizens for buying more than US$200 on the government-controlled exchange rate, Bloomberg News relays. It remains to be seen, however, whether it actually lures greenbacks out of wary Argentines' safes after years of distrusting the financial system, Bloomberg News says. "To keep growing the economy at these levels – which are around six percent – we need the economy to remonetise. It's almost more natural for that remonetisation to take place in dollars," Caputo said. He estimates there are about US$37 billion worth of pesos in the economy and five to ten times as much in greenbacks, Bloomberg News notes. The government's push to incentivise dollar use is part of a strategy to boost stagnant consumer spending while keeping inflation – measured in pesos – low ahead of midterm elections in October, Bloomberg News relays. Caputo was flanked by the head of the ARCA tax collection agency, Juan Pazo, Central Bank Governor Santiago Bausili and Presidential Spokesman Manuel Adorni, Bloomberg News discloses. "Your dollars, your choice," Adorni declared in his introductory remarks. "What's yours is yours and you can spend and use it as you like, without having to demonstrate all the time where you got it," he added. Milei also plans to send a bill to Congress to shield taxpayers from being penalized for their participation in the new tax system retroactively, Pazo said, Bloomberg News relays. The measures broadly reflect Milei's campaign pledges to implement what he called a "competition of currencies" between dollars and pesos, Bloomberg News relays. Many Argentines interpreted his message as an intent to dollarise considering the peso's infamous track record and after the libertarian hoisted dollar sign billboards with his face on them during the campaign. Since taking office, Milei has backpedalled from his most dramatic promises including closing the Central Bank, though he still floats it as a long-term goal, Bloomberg News notes. Last month, Milei secured a US$20-billion aid package from the International Monetary Fund to lift most of the capital and currency controls he inherited, Bloomberg News discloses. While traders were betting the policy change would come with a peso devaluation, the currency has instead strengthened between the government's control bands, Bloomberg News relays. The peso's long-running strength has made Argentina expensive in dollar terms, paving the way for the world's second most expensive Big Mac (US$7) and Latin America's priciest cup of coffee (US$3.50), Bloomberg News relays. Caputo said the measures had nothing to do with the new agreement with the IMF, and added they had no estimate for how much money the change would bring into the system, Bloomberg News notes. Argentina is a bi-monetary economy, where most citizens earn salaries in pesos but save in dollars, a historic reality after several crises, including the peso losing 99 percent of its value against the dollar over the past 10 years, Bloomberg News discloses. It's common for a bank checking account to be denominated in pesos with a savings account in greenbacks. Home sales are done in dollars and largely all cash as the mortgage market is just starting to revive under Milei, Bloomberg News relays. Bloomberg News discloses that government officials estimate that Argentines hold over US$200 billion in US cash savings inside the country but outside the official banking system, either in tightly controlled safe deposit boxes and, more often "under the mattress and God knows where," as IMF Managing Director Kristalina Georgieva quipped last month. "If this money comes out and it works for Argentina, just imagine what the country will be like," he added. 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. GENERACION MEDITERRANEA: Fitch Cuts Issuer Default Ratings to 'RD' ------------------------------------------------------------------ Fitch Ratings has downgraded Generacion Mediterranea S.A.'s (GEMSA) Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) to 'Restricted Default' (RD) from 'C'. Fitch has also affirmed GEMSA's senior secured and unsecured notes co-issued by GEMSA and Central Termica Roca S.A. at 'C' as Fitch expects average recovery prospects. The downgrade follows the company's missed coupon payment on its Class XIX, XX, XL and XLI local notes maturing in November 2031 upon expiration of the 10-day grace period, which occurred on May 16. The 'RD' rating indicates an issuer that has experienced an uncured payment default but has not entered bankruptcy filings or ceased operating. Key Rating Drivers Missed Coupon Payment: GEMSA did not pay the coupon for local notes with principal totaling USD29 million and international notes with principal of USD354 million on May 5. The local notes each had a grace period of 10 days and remained uncured at expiry of the period. Fitch treats the uncured expiry of any applicable original grace period as an 'RD'. GEMSA's USD354 million international notes, in which the coupon payment was missed on May 5, have a grace period of 30 days. Potential Debt Restructuring: On May 6, 2025, GEMSA announced that they have engaged with local and international financial advisory firms to address financial issues. The company additionally mentioned that they are engaging with creditors to reorganize their financial obligations and plan to present a proposal to creditors promptly. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - The IDR could be downgraded to 'D' in the absence of an agreement with lenders and bondholders, leading to bankruptcy filings or other formal insolvency procedures. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Fitch will reassess the IDRs upon the completion of a debt restructuring process; the updated IDRs would reflect the new capital structure and credit profile of the issuer. Liquidity and Debt Structure GEMSA is currently in talks with creditors to reorganize their USD1.5 billion in financial obligations. As of March 31, 2025, remaining debt maturities include USD190 million in 2025, USD196 in 2026 million and USD443 million in 2027. Issuer Profile Generacion Mediterranea S.A. (GEMSA) is a holding company for most of Grupo Albanesi's electricity generation assets. Albanesi has been operating in the sector since 2004, and currently owns or participates in five generation companies: Generacion Mediterranea S.A., Central Termica Roca S.A., GM Operaciones S.A., Generacion Litoral S.A., and Solalban Energia S.A. 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 ----------- ------ ----- Generacion Mediterranea S.A. LT IDR RD Downgrade C LC LT IDR RD Downgrade C senior unsecured LT C Affirmed C senior secured LT C Affirmed C Central Termica Roca S.A. senior unsecured LT C Affirmed C senior secured LT C Affirmed C =========== B R A Z I L =========== AZUL SA: Brazil Not Considering Specific Aid for Airline -------------------------------------------------------- Reuters reports that Brazil's government is not considering providing specific aid for Azul as the airline faces financial hurdles, but money from a local fund will soon be available for carriers, tourism minister Celso Sabino said. "The Brazilian government does not intent to grant any kind of benefit to a particular company. The government thinks of the sector as a whole," Sabino said on the sidelines of an event in Rio de Janeiro, Reuters notes. About Azul S.A. Headquartered in Barueri near the City of Sao Paulo, Brazil, Azul S.A. is a Brazilian airline founded by David Neeleman in 2008. The company is the largest airline in Brazil by number of cities covered and departures, serving more than 160 destinations with an operating fleet of 168 aircraft and operating more than 900 flights daily. In the twelve months ended in June 2024, Azul generated BRL18.7 billion (US$3.4 billion) in net revenue. In mid-2020, Azul Airlines was said to have laid off more than 1,000 airport maintenance workers. The Company was also said to have closed 2021 in losses, but lower than those recorded in 2020. Ratings agencies, in May 2025, downgraded the airlines' ratings amid concerns on cash burn. On May 20, 2025, S&P Global Ratings lowered its issuer credit rating on Azul to 'CCC-' from 'CCC+'. The downgrade reflects S&P's view that Azul's very tight liquidity increases default risk within the next few months. On May 6, 2025, Fitch Ratings downgraded Azul Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'CCC-' from 'CCC'. The downgrades reflect Azul's limited financial flexibility to access liquidity outside its ongoing debt renegotiations with existing bondholders and inability to effectively improve liquidity. Moody's Ratings, on the other hand, on March 17, 2025, affirmed Azul's Caa2 corporate family rating. AZUL SA: Seeks $600MM Financing for Possible U.S. Bankruptcy Filing ------------------------------------------------------------------- Valor International reports that Brazilian airline Azul is facing intensifying financial turbulence, and industry insiders increasingly view a Chapter 11 filing in the United States as an imminent possibility. According to the report, the situation has drawn the attention of Abra Group - the holding company that owns Gol Linhas Aereas Inteligentes SA and signed a memorandum of understanding in January to explore a merger with Azul. For now, sources say Abra remains focused on Gol's own restructuring, which is nearing completion, Valor International relays. Valor International cites that Bloomberg has reported that Azul is in talks with potential lenders to secure approximately $600 million in financing that could support the airline through a potential bankruptcy process. Sources close to the matter say even Abra is unsure about Azul's future, Valor says. According to Valor International, market analysts remain concerned about Azul's liquidity. The company ended the first quarter with R$655 million in cash and cash equivalents - a 51% drop compared to the same period in 2024. The January memorandum of understanding, Valor International points out, between Azul and Abra had initially propped up Azul's stock. But recent market skepticism about whether the merger will proceed has contributed to share price declines in recent weeks. One of the conditions set by Azul and Abra shareholders is that a merged entity must not carry more leverage than Gol, Valor adds. Valor International relays that Gol received a major boost on May 21 when a New York court approved the conclusion of its Chapter 11 process. The company's shares surged 35.29% to R$1.38. Gol expects to formally exit Chapter 11 on June 6. The process began on January 25, 2024. Under the court-approved plan, Gol will reduce its debt by roughly $1.6 billion, with an additional $800 million in liabilities also being removed from its balance sheet. As a result, the airline will emerge with a more robust financial position. Azul, by contrast, Valor International points out, still has significant work ahead to manage its debt load. The airline closed Q1 with net debt of R$31.35 billion, up 50.3% year over year. In a written statement, Azul said it has been engaged in productive dialogue with investors since 2024 to identify paths to long-term sustainability. "As a competitive company, Azul constantly evaluates opportunities to improve liquidity and its capital structure, while remaining committed to meeting its obligations and maintaining service quality," the company said. About Azul S.A. Headquartered in Barueri near the City of Sao Paulo, Brazil, Azul S.A. is a Brazilian airline founded by David Neeleman in 2008. The company is the largest airline in Brazil by number of cities covered and departures, serving more than 160 destinations with an operating fleet of 168 aircraft and operating more than 900 flights daily. In the twelve months ended in June 2024, Azul generated BRL18.7 billion (US$3.4 billion) in net revenue. In mid-2020, Azul Airlines was said to have laid off more than 1,000 airport maintenance workers. The Company was also said to have closed 2021 in losses, but lower than those recorded in 2020. Ratings agencies, in May 2025, downgraded the airlines' ratings amid concerns on cash burn. On May 20, 2025, S&P Global Ratings lowered its issuer credit rating on Azul to 'CCC-' from 'CCC+'. The downgrade reflects S&P's view that Azul's very tight liquidity increases default risk within the next few months. On May 6, 2025, Fitch Ratings downgraded Azul Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'CCC-' from 'CCC'. The downgrades reflect Azul's limited financial flexibility to access liquidity outside its ongoing debt renegotiations with existing bondholders and inability to effectively improve liquidity. Moody's Ratings, on the other hand, on March 17, 2025, affirmed Azul's Caa2 corporate family rating. GOL LINHAS: US Trustee Wants to Appeal Chapter 11 Plan Approval --------------------------------------------------------------- Ben Zigterman of Law360 Bankruptcy Authority reports that on Friday, May 23, 2025, the U.S. Trustee's Office announced its intention to appeal a New York bankruptcy judge's ruling that confirmed the Chapter 11 plan of Brazilian airline Gol Linhas Aereas Inteligentes SA, after the court dismissed the agency's objection to the plan's third-party release clauses. 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 Debtors' claims agent. HIDROVIAS DO BRASIL: Fitch Revises 'BB-' IDRs to Watch Positive --------------------------------------------------------------- Fitch Ratings has revised to Rating Watch Positive (RWP) from Rating Watch Negative (RWN) Hidrovias do Brasil S.A.'s (Hidrovias) 'BB-' Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs), the 'AA-(bra)' National Long-Term Rating, its debentures rating, and Hidrovias International Finance S.a.r.l.'s senior unsecured notes rated 'BB-'. The RWP reflects Ultrapar Participações S.A.'s (Ultrapar) controlling ownership over Hidrovias, following a BRL1.2 billion capital increase, and the expected guarantee by Ultrapar to more than 50% of Hidrovia's pro forma debt, which potentially strengths the legal ties between them. Evidence of tangible incentives for Ultrapar to support Hidrovias will lead to an upgrade in Hidrovia's ratings by at least one notch. The current ratings incorporate Hidrovias' strong business position in Brazil's North Region waterway sector and the Parana-Paraguay river system, bolstered by take-or-pay contracts and financial flexibility. The ratings are constrained by hydrological risks, potential crop failures, and client concentration. Key Rating Drivers Support of the Parent: Hidrovias' credit profile benefits from the increased stake of Ultrapar, which now holds 50.15% following a capital increase of BRL1.2 billion. Ultrapar's tangible support is expected through its guarantee of the announced BRL2.2 billion in new debenture issuance, scheduled for early June, which will account for more than 50% of Hidrovias' pro forma debt as of March 2025. Ultrapar Group is a prominent Brazilian conglomerate with diverse operations primarily focused on the energy, infrastructure, and chemical sectors. The group's business profile is supported by its significant market presence and operational expertise, particularly through its subsidiaries, which include Ipiranga, Ultragaz, Ultracargo and Hidrovias do Brasil. The group's financial profile is bolstered by its ability to leverage economies of scale and diversify its revenue streams across various sectors, maintaining conservative leverage and strong liquidity. Improving Financial Profile: The capital increase added an additional BRL700 million to Hidrovias' cash, in addition to the BRL500 million capitalized AFAC provided by Ultrapar in December 2024, enhancing the issuer's capital structure. Pro forma for the transaction, Hidrovias' net debt/EBITDAR is 4.7x, a significant reduction from 5.8x as of March 2025. Beginning in 2025, a gradual recovery in Hidrovias' volumes, due to improved water levels in the North and South Corridors along with a stable tariff environment, is expected to boost the company's operating cash flow, resulting in a net leverage decrease to 4.3x in 2025 and 3.8x in 2026. Peer Analysis Hidrovias holds the weakest position in the 'BB' rating category compared to regional transportation and logistics peers, which are typically rated 'BB' to 'BBB'. Its rating is constrained by a medium-sized business scale, hydrological risks and the weakest capital structure among Brazilian peers like MRS Logistica S.A. (MRS Logistica; Local Currency IDR BBB-/Stable), Rumo S.A. (Rumo; Local Currency IDR BB+/Stable) and VLI S.A. (VLI; AAA[bra]/Stable). However, Hidrovias' competitive regional position and take-or-pay contracts help mitigate business volatility. Hidrovias' net adjusted leverage is expected to remain higher than other rated Brazilian peers in the transportation and logistics sector with more mature operations and higher ratings. Rumo, VLI and MRS Logistica should report net leverage below 2.5x in the next two years, while Hidrovias' ratings incorporate expectations of a higher net adjusted leverage. Key Assumptions - Issuance of BRL2.2 billion of debentures, guaranteed by Ultrapar; - Full repayment of the third debentures issuance, maturing in 2026, and the BRL1.8 billion of notes, maturing in 2031. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Weak legal, strategic, and operational ties between Hidrovias and Ultrapar; - Net adjusted debt to EBITDAR ratio consistently above 4.5x on a sustained basis; - Deterioration of its liquidity position, with increasing short- to medium-term refinancing risks; - Large debt-funded mergers and acquisitions transactions or entering into a new business in the logistics sector that adversely affects its capital structure on a sustained basis or increases business risk exposure. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Evidence of tangible legal, strategic, and operational ties between Hidrovias and Ultrapar. Liquidity and Debt Structure Hidrovias has consistently maintained strong cash balances. The conclusion of the BRL1.2 billion capital injection in May 2025 improves its financial flexibility and prepares the company to run its main investment plans in the North Corridor, and potentially improve its operating cash flow generation. Pro forma to the transaction, Hidrovia's cash on hand is around BRL1.0 billion. As of March 31, 2025, Hidrovias' cash position was BRL397 million, with short-term debt at BRL392 million, after the amortization of BRL900 million of its notes in February. Total debt stood at BRL3.9 billion, mainly comprising international bonds (55%) maturing in 2031, local debentures (35%) and leasing obligations (7%). Issuer Profile Hidrovias is an integrated logistics provider focused on waterways logistics services. It has an end-to-end infrastructure, including transshipment, port terminals and a fleet of barges, pusher tugs and cabotage vessels. Ultrapar is the main shareholder with a 50.15% stake. Summary of Financial Adjustments - Lease expenses were adjusted back to operating expenses, reducing EBITDA; - The leasing obligation reported in the balance sheet is considered as debt. 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 Hidrovias do Brasil S.A. has an ESG Relevance Score of '4' for Exposure to Environmental Impacts due to the effective impact on the company operations due the hydrological risks, which has a negative impact on the credit profile and is relevant to the ratings 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 Prior ----------- ------ ----- Hidrovias International Finance S.a.r.l. senior unsecured LT BB- Rating Watch Revision BB- Hidrovias do Brasil S.A. LT IDR BB- Rating Watch Revision BB- LC LT IDR BB- Rating Watch Revision BB- Natl LT AA-(bra)Rating Watch Revision AA-(bra) senior unsecured Natl LT AA-(bra)Rating Watch Revision AA-(bra) ========= C H I L E ========= TELEFONICA MOVILES: S&P Lowers LT ICR to 'BB', Outlook Negative --------------------------------------------------------------- S&P Global Ratings lowered the long-term issuer credit and issue-level ratings on telecom provider Telefonica Moviles Chile (TMC) and its debt to 'BB' from 'BB+' S&P said, "The negative outlook reflects our assessment that TMC will continue to face intense competition, which may hinder efforts to improve profitability, limit operating cash flow, and put additional pressure on leverage metrics and liquidity. "As of March 2025, TMC continued to underperform, and we forecast margins will stay between 19%-21% the next two years despite the potential for additional cost efficiencies. SAO PAULO (S&P Global Ratings) May 22, 2025—S&P Global Ratings took the ratings actions described above. Over the past couple of years, TMC has implemented several commercial strategies to address competitive pressures in the Chilean telecom industry. The company has focused on shielding its customer base by targeting higher-end customers rather than competing on prices. While TCM has successfully increased its average revenue per user (ARPU) across it main segments, this improvement has not been enough to offset subscriber losses, with a 2% decrease in postpaid subscribers and marginal decrease in broadband subscribers as of March 2025 versus December 2024. Additionally, lower equipment sales, resulting from changes in the equipment financing policy, have contributed to a total revenue decline of 6.5% year over year." Since 2024, the company has implemented an efficiency plan aimed at reducing commercial and operating costs. By December 2024, TMC successfully reduced its total operating expenses by 6%, primarily through cuts in terminal costs, administrative expenses, and other operating expenses. However, this reduction was insufficient to offset the decline in revenue, resulting in an EBITDA margin of 17.4% as of December 2024 and 17.4% in the rolling 12 months (RTM) as of March 2025. S&P said, "For 2025, we expect the Chilean telecommunications market to remain competitive, driven by operators like Wom and Claro/VTR seeking to capture new customers through more aggressive commercial offerings. Additionally, we foresee potential heightening competition in the fixed-line business in Chile, given TMC, Entel, and Claro/VTR all have access to the same neutral network operated by OnNet. "While we believe TMC has opportunities to implement further cost efficiencies and may benefit from reduced expenses related to deferred customer acquisition commissions, its cost structure remains burdensome versus its current revenue expectations. Consequently, we anticipate margins of about 19% in 2025, gradually improving to about 20% in 2026. "We think TMC's deleveraging will now take longer than previously expected. Over the past two years, the company has reduced its investment pace. We project that TMC will maintain capital expenditure (capex) of approximately Chilean peso (CLP) 162 billion, including a project to upgrade the 5G network, resulting in a capex-to-revenue ratio of 10%, which is below the industry average of about 15%. However, this reduction is insufficient to counteract weaker operating performance. "For 2025, while we expect to see positive free operating cash flow (FOCF), overall cash flow will remain limited. In our view, leverage will peak at 3.8x in 2025 and remain at 3.5x in 2026. "The May 20, 2025, loan agreement with parent TEF for CLP371 billion at a five-year maturity alleviates short-term refinancing concerns. We believe this ongoing support from the parent company will underpin adequate liquidity for TMC for the next 12 to 18 months. Notably, it will help ensure liquidity is sufficient to address amortizations through 2026, especially since cash balances declined to CLP241 million as of March 2025, from CLP502 million at year-end 2024. "We revised down our view of TMC's subsidiary status to nonstrategic from moderately strategic. Our view of TMC as a nonstrategic subsidiary of TEF is based on our belief that it is no longer important to the group's long-term strategy." TEF has publicly expressed its intention to accelerate its retreat from Latin America (excluding Brazil), evidenced by the sale of its operations in Argentina and Peru, as well as the binding agreements to sell its operations in Colombia and Uruguay. S&P believes that TEF will continue executing its strategy and optimizing its portfolio by concentrating on its core operations, which may limit TMC's access to extraordinary support in the foreseeable future. The negative outlook indicates a potential downgrade within the next 12 months if the company's leverage metrics do not improve or liquidity tightens. This scenario could arise if the company continues to experience declines in its customer base, leading to weakened revenue, reduced EBITDA, and diminished cash flow. S&P said, "We could lower the ratings on TMC in the next 12 months if the company continues to struggle with intense competition and slower materialization of cost reduction strategies. This could result in further deterioration of EBITDA margins and leverage levels consistently exceeding 4x. Additionally, a downgrade could occur if the liquidity position weakens due to lower cash flow, with expected liquidity sources falling below 1.2x uses on a consistent basis, or if we perceive a reduced standing in credit markets. "We could revise the outlook to stable in the next 12 months if TMC can return to subscriber growth, which coupled with better ARPU and cost efficiency measures could lead to EBITDA margins remaining above 20% and leverage stabilizing at 3x-4x. Additionally, the company would need to maintain an adequate liquidity position, ensuring that expected sources consistently exceed uses by more than 1.2x." ================= G U A T E M A L A ================= GUATEMALA: S&P Hikes LongTerm Sovereign Credit Ratings to BB+ ------------------------------------------------------------- S&P Global Ratings raised its long-term foreign currency and local currency sovereign credit ratings on Guatemala to 'BB+' from 'BB'. The outlook is stable. S&P also revised up its transfer and convertibility assessment to 'BBB' from 'BBB-' and affirmed its 'B' short-term sovereign credit ratings. Outlook S&P said, "The stable outlook indicates our view that cautious macroeconomic policies and low government debt will persist in the next two years, despite somewhat higher fiscal deficits stemming from the planned rise in infrastructure spending. We also expect Guatemala to sustain its strong external balance sheet even amid uncertain global conditions." Downside scenario S&P said, "We could downgrade Guatemala in the next 12-24 months if a deterioration in global trade and remittances undermines the country's medium-term GDP growth trajectory, which would constrain the government's ability to keep conservative macroeconomic policies and structurally deteriorate its external balance sheet. We could also lower the ratings if there's a substantial increase in fiscal deficits and debt intake to finance operating expenditures, rather than improving the country's infrastructure." Upside scenario S&P could raise the ratings in the next 12-24 months on strong and protracted signs that the Guatemalan government and Congress can consistently collaborate on policy initiatives to improve the resiliency of its economic model and increase the wealth level of its population. This could raise investor confidence and lead to higher-than-expected economic growth, higher per capita income, and better social indicators. Rationale The 'BB+' ratings on Guatemala reflect its track record of macroeconomic stability and economic resiliency. The country's manageable fiscal deficits, very low net debt, strong external profile, and history of sound monetary policy constitute key credit strengths. On the other hand, the country faces substantial social and infrastructure needs, which curtail growth prospects. In addition, the ratings incorporate S&P's view of Guatemala's still-developing public institutions, historically high perceived corruption, and a challenging political environment that constrains policymaking effectiveness. Institutional and economic profile: Long history of conservative macroeconomic policies that we expect to continue -- S&P expects real economic growth of 3.0%-3.5% annually over 2025-2028. -- Political negotiations between the government and Congress have recently enabled more collaboration on policy initiatives. -- Guatemala has maintained cautious fiscal and monetary policies despite still-evolving political institutions. S&P Global Ratings believes there is a high degree of unpredictability around policy implementation by the U.S. administration and responses--specifically with regard to tariffs--and the potential effect on economies, supply chains, and credit conditions around the world. As a result, S&P's baseline forecasts carry a significant amount of uncertainty. As situations evolve, it will gauge the macro and credit materiality of potential shifts and reassess our guidance accordingly. Beyond the uncertainty, our economic forecast for Guatemala incorporates our view that the slowing U.S. economy will hinder Guatemala's growth because of their current links from migration, remittances, exports, and investments. On the other hand, Guatemala's strong macroeconomic policy track record should help mitigate adverse impacts. S&P said, "We expect Guatemala's economy to grow 3.0% over 2025-2026, below the 3.6% average in 2023-2024, and rise to 3.5% in 2027. We assume remittances will grow more slowly as U.S. migration policies grow more restrictive. As a result, we forecast remittances to stabilize at just below 20% of GDP in the next few years. "In our opinion, Guatemala's strong external position (high international reserves and net external creditor position) and fiscal balance sheet (net general government debt below 20% of GDP) will help it face more restrictive U.S. policies on migration and remittances. "We think the impact from tariff policy will be limited. Exports account for only 16% of GDP, compared with around 40% on average in the rest of the central American countries. Furthermore, Guatemala runs a trade deficit with the U.S. and diplomatic relationships remain constructive." S&P estimates Guatemala's per capita GDP at $6,700 for 2025. Despite the stability of its macroeconomic policy, Guatemala still has a high poverty level--at about 55% of the population in 2024--and a large informal economy that employs about 80% of the working-age population. Weak social conditions and poor infrastructure investment will likely continue to drag on growth. However, the country is taking steps to bolster its energy supply, with recent bids related to both electricity generation and transmission that could represent about US$3 billion of private investment over the next five years. Following high political uncertainty early in President Bernardo Arevalo's term, growing political consensus between the government and Congress has allowed for the approval of key legislation, including the 2025 budget, a law to prioritize road infrastructure investments, and competition laws. Despite Guatemala's historically fragmented Congress, greater budget allocations to subnational governments have also contributed to a more favorable political environment to approve these reforms. Nonetheless, the government continues to face important delays in implementing some of its plans. Key delays involve capital execution due to a steep learning curve over the administration's first year in office and anticorruption efforts within infrastructure projects. S&P expects stronger execution in the second half of 2025. On top of that, ongoing discussions about the public-private partnerships law could unlock more of the needed infrastructure investments in the country. To address corruption, the government recently created the National Commission Against Corruption (CNC, for its Spanish acronym), which has already had some promising successes. For example, tax digitalization and transparency has enabled the detection of companies fraudulently doing business with the government. Infighting between the government and the general prosecutor's office highlights challenges on governability. Flexibility and performance profile: Guatemala will face the global economic uncertainty with a very strong external profile and fiscal position -- The government plans to increase capital expenditure (capex), posting somewhat higher government deficits financed through debt. -- Years of strong remittance inflows and high international reserves support external resilience, despite potential deceleration in inflows. -- The central bank's sound monetary policy will keep inflation anchored around its target of 4%. A track record of cautious macroeconomic policies has allowed Guatemala to consistently run manageable fiscal deficits and post the lowest net debt levels in Latin America, estimated at only 14% of GDP in 2025. S&P expects the government to increase fiscal deficits in the next three years to boost capex, mainly for airports, ports, roadways, and energy infrastructure. As a result, it forecasts net general government debt to rise to 2.2% of GDP in 2026-2028. General government revenues will remain low by international comparisons and almost flat at around 16.5% of GDP. The government does not plan to do any major reforms to the tax system. The revenue rise in recent years stemmed from the implementation of electronic invoicing, digital tax declaration forms, and better monitoring at customs, among other measures. S&P believes the space to further increase tax revenue through improved efficiency is narrower. S&P said, "Given our assumption of somewhat higher fiscal deficits, we project government net debt to increase to about 18% of GDP and interest burden to be approximately 9% of government revenue in 2025-2028. Our net debt figure deducts government liquid assets and intra-public sector debt holdings by the country's social security institute." Guatemala's debt and interest burden are exposed to the risk of a sudden depreciation of the domestic currency because about 47% of the sovereign's debt is denominated in U.S. dollars. However, exposure to foreign currency has been consistently decreasing from about 60% in 2015. S&P said, "We think the government could struggle to access funding from domestic financial institutions in a stress scenario, as banks' exposure to the government is already high compared with peers, at about 22% of banking assets. Domestic banks hold about 40% of the central government's debt, and their exposure to the public sector also includes central bank notes and government guarantees of mortgages. "We consider banks' contingent liabilities to be limited. This is because the banking sector has strong capitalization, liquidity, and profitability ratios, and has proven to be resilient to shocks. "Guatemala's external position will remain a key rating strength over the coming years. We expect current account surpluses to gradually narrow over 2025-2028 as remittances slow and the government increases goods imports to execute its infrastructure plans. This will only marginally dent the country's strong external profile, after nine years of strong remittances growth and current account surpluses. We expect foreign direct investment (FDI) to remain low, at about 1% of GDP in the next four years. "We expect Guatemala's narrow net external debt to be 18% of current account payments (CAPs) and a net asset position of 1% of CAPs during 2025-2026. Remittances and external borrowings have allowed the government to accumulate a substantial amount of international reserves, which accounted for 21% of GDP in 2024, and for the private sector to reduce its net external debt. "Guatemala's external position will remain subject to potential changes in remittances, stemming from changes in migration flows and/or potential taxes from the U.S. on remittances, raising risks to external financing. Still, we think external liquidity will remain strong in the next four years, with gross external financing needs averaging 65% of current account receipts and usable reserves." Guatemala's sound monetary policy continues to reflect the central bank's commitment to control inflation as well as its operational independence. Inflation dropped to 2.9%, on average, in 2024, below the central bank's target of 4% (plus/minus 1%), although core inflation is within the target. As a result, the central bank has marginally reduced its monetary policy rate to 4.5% since August 2024, from 5.0% during most of 2024. Despite positive real interest rates, banks' credit to the private sector continues to grow at around 10% per year. In accordance with S&P's 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 Upgraded To From Guatemala Transfer & Convertibility Assessment Local Currency BBB BBB- Guatemala Senior Unsecured BB+ BB Upgraded; CreditWatch/Outlook Action; Ratings Affirmed To From Guatemala Sovereign Credit Rating BB+/Stable/B BB/Positive/B ============= J A M A I C A ============= JAMAICA: BOJ Cuts Interest Rate to 5.75%, Warns of US Policy Risks ------------------------------------------------------------------ Jamaica Observer reports that the Bank of Jamaica (BOJ) disclosed a 25 basis points cut in its key interest rate to 5.75 per cent, its first reduction this year, saying initial US tariff impacts on prices should be minimal though future growth may be affected. The central bank's monetary policy committee (MPC) said the decision reflects inflation's sustained return to the 4-6 per cent target band since September 2024, according to Jamaica Observer. "Annual headline inflation at April 2025 was 5.3 per cent, in line with the outturn for April 2024," the BOJ noted, adding that core inflation — which excludes volatile food and fuel prices — held steady at 4.4 per cent, the report notes. Price stability has been supported by lower global commodity costs, with grain prices down 15.1 per cent year-over-year and oil prices declining 8 per cent, the report relays. "The stable and relatively low headline inflation outturn primarily reflected the non-recurrence of price increases for regulated items (such as bus and taxi fares)", the central bank said, the report notes. The BOJ also noted that while "the first-round impact of the increase in US tariffs on prices in Jamaica will not be significant", there may be "some impact of these policies on Jamaica's GDP growth and the external accounts," the report discloses. The bank warned that "the risks to the inflation forecast are skewed to the upside", pointing to potential pressures from global supply chains and commodity prices, the report says. Still, it projects Jamaica's economy to rebound to 1.0-3.0 per cent growth in FY2025/26 after a contraction last year, even as employment levels "remain high" and wage pressures are "moderating," the report relays. However, the MPC cautioned that uncertainty around US policy shifts — including trade, immigration, and fiscal changes — could "slow the pace of economic activity and increase inflationary pressures" globally, the report notes. Given those uncertainties, the BOJ has indicated that it is ready to "deploy the tools necessary to preserve stability," the report says. "We are prepared to adjust policy if inflation risks materialise," the BOJ said, adding that its action will be dependent on available data, the report relays. It next meets in late June and will announce another decision on June 30, the report discloses. The rate reduction marks a shift from the BOJ's 2022 tightening cycle, when it raised rates to 7 per cent to curb inflation. Now, with price pressures easing and the economy stabilising, the central bank is cautiously pivoting toward supporting growth — while keeping a close eye on global turbulence, 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. =========== M E X I C O =========== LEISURE INVESTMENTS: Xpand Appointed as New Committee Member ------------------------------------------------------------ The U.S. Trustee for Regions 3 and 9 appointed Xpand Staffing, LLC to the official committee of unsecured creditors in the Chapter 11 cases of Leisure Investments Holdings, LLC and its affiliates. The committee is now composed of: 1. Atlantic/Pacific Products, Inc. c/o: John Kosmark P.O. Box 874 North Kingstown, RI 02852 Phone: (401) 294-9570 Fax: (401) 294-9805 atpacusa@hotmail.com 2. Promotions Guy LLC c/o Ryan Schraffenberger 5409 Overseas Highway, Suite 308 Marathon, FL 33050 Phone: (844) 279-5628 ryan@promotionsguy.com 3. Xpand Staffing LLC 8870 W. Oakland Park Blvd., Suite 104 Sunrise, FL 33351 Phone: (954) 554-0009 rrojas@xpandstaffing.com About Leisure Investments Holdings Leisure Investments Holdings LLC and affiliates are operating under the name "The Dolphin Company," manage over 30 attractions, including dolphin habitats, marinas, water parks, and adventure parks, located in eight countries across three continents. Their primary operations are based in Mexico, the United States, and the Caribbean, with locations in Jamaica, the Cayman Islands, the Dominican Republic, and St. Kitts. These attractions are home to approximately 2,400 animals from more than 80 species of marine life, including a variety of marine mammals such as dolphins, sea lions, manatees, and seals, as well as birds and reptiles. As of 2023, the marine mammal population at the Debtors' parks includes roughly 295 dolphins, 51 sea lions, 18 manatees, and 18 seals. Leisure Investments Holdings LLC sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case 25-10606) on March 31, 2025. In its petition, the Debtor reports estimated assets and liabilities between $100 million and $500 million each. Honorable Bankruptcy Judge Laurie Selber Silverstein handles the cases. The Debtors tapped Young Conaway Stargatt & Taylor, LLP as counsel; Riveron Management Services, LLC as restructuring advisor; and Kurtzman Carson Consultants, LLC d/b/a Verita Global, as claims and noticing agent. The U.S. Trustee for Regions 3 and 9 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases. ================= N I C A R A G U A ================= NICARAGUA: Fitch Affirms 'B' Foreign Currency IDR, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed Nicaragua's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B' with a Stable Outlook. Key Rating Drivers Credit Fundamentals: Nicaragua's 'B' rating reflects a prudent fiscal policy and twin surpluses leading to the accumulation of external and fiscal buffers. Set against these strengths are heightened geopolitical risks, including the threat of economic sanctions, higher share of foreign currency debt and financial dollarization relative to peers, weak governance and low GDP per capita. Continued Fiscal Surpluses: Similar to 2023, Nicaragua posted a general government surplus of 2.4% of GDP in 2024 due to continued double-digit revenue growth and expenditure restraint. This has created some space for higher capital spending. Fitch expects a further increase in capital spending that will moderately reduce the fiscal surplus to 2.0% of GDP in 2025 and 1.4% in 2026. Debt Declining; High Fiscal Buffers: The fiscal surplus continues to support the sovereign's build-up of fiscal buffers, amid lower net external financing. The government has paid down higher-interest local bonds and built up its large cash cushion with deposits reaching 12.9% of GDP in 2024. General government debt fell to 39.7% of GDP in 2024 and will remain on a firm downward path. Fitch expects debt to fall to 36.9% in 2025 and 34.7% of GDP in 2026, below the projected 'B' median of 51.5% and 50.6% of GDP, respectively. Most of the debt (92.9%) is denominated in foreign currency, making debt dynamics sensitive to currency risk, although mitigated by substantial international reserves and crawling-peg exchange rate regime. However, Nicaragua has no commercial debt, and its external debt is predominantly in concessional terms. U.S. Policy Risks: Policies under the new Trump administration pose significant risks for Nicaragua. Key administration officials previously led the 2021 RENACER Act sanctions related to human rights issues and have publicly criticized Nicaragua's CAFTA-DR membership. Although there is no mechanism within the agreement to expel Nicaragua, the U.S. could potentially adopt trade restrictions on a bilateral basis. Additionally, Nicaragua's main export destination, the U.S., currently imposes a 10% tariff, which could rise to the original 18% in July when the 90-day delay in "Liberation Day" duties expires. Furthermore, tighter U.S. immigration policy poses a risk to Nicaragua, as remittances accounted for 25% of GDP, with around 83% coming from the U.S. However, Fitch does not expect deportations or migration restrictions significant enough to severely impact remittances and impair growth in Nicaragua and neighbouring economies. External Disbursements Fall: Net external financing fell to 0.7% of GDP in 2024 from 2.4% in 2023, reflecting lower disbursements and higher amortizations. Disbursements from official creditors decreased by 25% in 2024, mostly due to a 35% decline in new loans from CABEI (Nicaragua's largest external creditor). The IADB has reduced disbursements since 2022, while World Bank disbursements have increased since 2023. In the coming years, Fitch expects financing from international financial institutions to continue declining, but net financing should remain slightly positive. Although the government expects increased funding from Chinese state-owned entities, the timing and magnitude remains unclear. Sustained Current Account Surplus: The current account surplus fell to 4.2% of GDP (still high) in 2024 from 8.2% in 2023. This decline stemmed from a substantial deterioration in the goods trade deficit, a decline in the services surplus to a balanced position, and greater profit repatriation by foreign companies (though largely reinvested). Strong remittance growth, which reached 26.6% of GDP, partially offset these pressures. Fitch expects the current account surplus to improve to 5.6% of GDP in 2025—due to a temporary remittance spike amid concerns over tightening U.S. immigration policy—before easing to 4.3% of GDP in 2026. Reserves at Record High: Current account surpluses continue to drive FX reserve accumulation. As of April 2025, reserves stood at USD6.7 billion, covering more than 80% of broad money and around six months of current external payments. The sovereign net foreign debtor position improved to 13% of GDP in 2024 from 30% in 2019. Improved external liquidity buffers mitigate risks related to high financial dollarization of deposits, 66.4% as of March 2025. Growth Moderates: Real GDP growth slowed to 3.6% in 2024 from 4.4% in 2023. Consumption remains the main growth driver, bolstered by a 13% rise in remittances in 2024. Additionally, private investment saw significant growth, and public investment recovered markedly after two years of decline. However, remittance-fuelled growth has led to faster import growth relative to export growth, thus reducing the contribution from net exports. Fitch expects growth to stabilize between 3% and 3.5% in 2025-2026 amid a slowdown in U.S. growth. Inflation Slows: Inflation has significantly slowed to 1.7% yoy as of April 2025, down from 5.4% yoy in April 2024. The BCN began cutting its policy rate in October 2024, bringing it to the current 6.25% level, while maintaining a positive differential relative to the U.S. Fed. As of 2025, the crawling peg regime maintains a 0% depreciation rate. Credit growth remains robust due to reduced, but still abundant, liquidity in the sector and continued normalization in demand and supply conditions following the retrenchment during the 2018 economic crisis. Governance Challenges: Weak governance remains a key constraint for Nicaragua's credit profile. Its composite World Bank Worldwide Governance Indicator is at the 17th percentile with "Rule of Law" and "Control of Corruption" sub-pillars being below the 10th percentile. Political tensions persist under the administration of President Daniel Ortega. The government's crackdown on civil society groups has led to sanctions from the U.S. (mainly targeting individuals) and large out-migration. In November 2024, the congress passed a law against domestic enforcement of international sanctions, which could pose risks to the banking sector. However, the SIBOIF (Superintendencia de Bancos y de Otras Instituciones Financieras) has advised financial institutions to enforce the law partially to maintain their international correspondent banking relations. Banks have successfully navigated these restrictions by avoiding actions that risk violating international sanctions. ESG - Governance: Nicaragua has an ESG Relevance Score (RS) of '5' for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in its proprietary Sovereign Rating Model. Nicaragua has a low WBGI ranking at 17, reflecting episodes of political violence, weak political participation rights and uneven application of the law. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Structural: Intensification of geopolitical risk, for example tightening of international sanctions, and/or domestic political development that severely impair macroeconomic stability and/or external finances. - External: A sharp and sustained decline in international reserves, for example due to reduced access to external financing or a deterioration in the current account balance. - Macro: Deterioration in the policy mix that results in depletion of financial buffers and heightens macroeconomic vulnerabilities. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Structural: Reduced geopolitical risks, including the easing of international tensions and sanctions, that improve the sovereign's access to external financing. - Macro: Maintenance of prudent policy settings and strong economic growth that deliver significant further improvements in financial buffers and public debt/GDP. Sovereign Rating Model (SRM) and Qualitative Overlay (QO) Fitch's proprietary SRM assigns Nicaragua a score equivalent to a rating of 'B' on the Long-Term Foreign-Currency (LT FC) IDR scale. Fitch's sovereign rating committee did not adjust the output from the SRM to arrive at the final LT FC IDR. The committee decided to remove the previous +1 notch on macro as the improved SRM output now captures lower GDP growth volatility and inflation. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within its criteria that are not fully quantifiable and/or not fully reflected in the SRM. Country Ceiling The Country Ceiling for Nicaragua is 'B+', 1 notch above the LT FC IDR. This reflects moderate constraints and incentives, relative to the IDR, against capital or exchange controls being imposed that would prevent or significantly impede the private sector from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments. Fitch's Country Ceiling Model produced a starting point uplift of +1 notch) above the IDR. Fitch's rating committee did not apply a qualitative adjustment to the model result. ESG Considerations Nicaragua has an ESG Relevance Score of '5' for Political Stability and Rights as Worldwide Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As Nicaragua has a percentile rank below 50 for the respective Governance Indicator, this has a negative impact on the credit profile. Nicaragua has an ESG Relevance Score of '5' for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as Worldwide Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Nicaragua has a percentile rank below 50 for the respective Governance Indicator, this has a negative impact on the credit profile. Nicaragua has an ESG Relevance Score of '4' for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Nicaragua, as for all sovereigns. As Nicaragua has a fairly recent restructuring of public debt in 2008, this has a negative impact on the credit profile. Nicaragua has an ESG Relevance Score of '3' for International Relations and Trade as sanctions by the US government and the geopolitical tensions they stem from pose downside risks for the real economy and have complicated external financing availability, which is relevant for the rating in combination with other factors. 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 ----------- ------ ----- Nicaragua LT IDR B Affirmed B ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Country Ceiling B+ Affirmed B+ =========== P A N A M A =========== BANCONAL: Fitch Affirms 'BB+' LongTerm Foreign Currency IDR ----------------------------------------------------------- Fitch Ratings has affirmed Banco Nacional de Panamá's (Banconal) Long-Term Foreign Currency Issuer Default Rating (IDR) and senior debt ratings at 'BB+'. Fitch has also affirmed Banconal's Government Support Rating (GSR) and Viability Rating (VR) at 'bb+'. The Rating Outlook for the Long-Term IDR remains Stable. Additionally, Fitch has affirmed Banconal's Long-Term National Rating at 'AAA(pan)'. The Rating Outlook is Stable. Key Rating Drivers Government Support: Banconal's IDR, GSR, and National Scale ratings are driven by the potential support it would receive from the Republic of Panama (BB+/Stable) if necessary. Fitch's support assessment is highly influenced by the general subsidiary state guarantee for all Banconal's liabilities established in Panama's Organic Law (Article 3). Defining Policy Role: The bank's policy role is of high importance in Fitch's assessment and is a key factor in the government's willingness to provide support. Historically, the bank has acted as an unofficial lender of last resort in Panama. Banconal operates as the financial arm of the Panamanian government and all public entities, in addition to managing the country's banking system clearinghouse. According to Fitch, these functions are long-lasting and difficult to delegate to other government agencies. Fitch views any political influence as adequately managed, even considering the issuer's government ownership. Systemic Importance and Liability Structure: Fitch's support assessment is also moderately impacted by the bank's systemic relevance. The functions highlight Banconal's importance to Panama's banking system. The bank provides essential services for the proper functioning of the financial sector that cannot be provided by other entities. Its role as the government's financial arm results in a liability structure primarily comprised of government deposits, which increases the willingness to provide support. Business Profile: Banconal's business profile reflects its model and nature as a government institution. Its role as a state financial arm also impacts its business model. This profile includes a specific mix of assets that favors liquidity and access to public funds. Good Asset Structure: Banconal's good asset quality benefits from a structure that prioritizes the investment portfolio and liquid assets. The bank manages the largest liquidity reserve in Panama. Its investment portfolio has high credit quality, and interbank deposits are placed in highly rated banking institutions. Stage 3 loans accounted for 2.2% of total loans in December 2024, which the agency considers appropriate. Fitch anticipates the asset quality ratio will remain stable in the short term. Strong Profitability: The bank has a favorable capacity to generate profitability, reflected in an operating profitability ratio over risk-weighted assets (RWA) of 4.4% at the end of 2024 (2021-2024 average: 3.6%). This performance was supported by a solid net interest margin (NIM), along with commercial gains and controlled expenses. Fitch expects the bank to maintain its favorable profitability position thanks to good asset quality management and the expectation of a solid margin, all aligned with the bank's goal of maximizing profitability based on the risk of its operations. Robust Capitalization: Fitch believes Banconal's capitalization has historically been strong and adequate for its risk profile. This was reflected in a common equity tier 1 (CET1) ratio of 17.5% in December 2024, favorable compared to its main peers. According to the entity's growth plans, Fitch anticipates that Banconal's capitalization will remain robust and in line with its current rating level, supported by expected moderate growth and solid earnings generation, bolstered by a firm reserve policy that enhances the bank's capacity to face potential losses. Government Funding: The bank's role as the government's financial arm provides it with access to low-cost funds, which Fitch considers a strength in Banconal's financial profile. Deposits from the Panamanian State constitute over 70% of total deposits as of December 2024, and the associated concentration risk is mitigated by the bank's liquidity level. In December 2024, Banconal's adequate funding and liquidity were evidenced by a loan-to-deposit ratio of 61.6%. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Banconal's IDR, GSR and VR would be downgraded following a downgrade of the sovereign. - Banconal's VR could be negatively affected in a material increase in NPLs and a consistent decline in profitability (operating profit to RWAs consistently below 2%) and/or a decline in capitalization (CET1 consistently below 12%). Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Banconal's IDR and GSR have limited upside potential and would come from a similar action on the sovereign. - National Scale Ratings have no upside potential as they are at the highest level of 'AAA(pan)'. Banconal's VR has also limited upside potential as the sovereign rating acts as a cap to the VR. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Senior unsecured debt is rated at the same level as Banconal's Long-Term IDR. Fitch views the default risk of the senior notes and the bank as equivalent and believes the senior obligations have average recovery prospects. The subsidiary guarantee enforceable under Panamanian law is not a direct guarantee of the notes, which are governed by the laws of the state of New York. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Factors That Could, Individually Or Collectively, Lead To Negative Rating Action/Downgrade - The senior unsecured debt ratings would be downgraded if Banconal's Long-Term IDR is downgraded. Factors That Could, Individually Or Collectively, Lead To Positive Rating Action/Upgrade - The senior unsecured debt ratings would be upgraded if Banconal's Long-Term IDR is upgraded. VR ADJUSTMENTS The Operating Environment Score of 'bb+' has been assigned below the 'bbb' category implied score due to the following adjustment reason: Sovereign Rating (negative). The Funding and Liquidity Score of 'bbb-' has been assigned above the 'bb' category implied score due to the following adjustment reason: Deposit Structure (positive). Public Ratings with Credit Linkage to other ratings Banconal's ratings are driven by the potential support it would receive from the Republic of Panama (BB+/Stable). ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Banco Nacional de Panama LT IDR BB+ Affirmed BB+ ST IDR B Affirmed B Natl LT AAA(pan) Affirmed AAA(pan) Natl ST F1+(pan) Affirmed F1+(pan) Viability bb+ Affirmed bb+ Government Support bb+ Affirmed bb+ senior unsecured LT BB+ Affirmed BB+ BANISTMO SA: Fitch Affirms 'BB+' LongTerm IDR, Outlook Negative --------------------------------------------------------------- Fitch Ratings has affirmed Banistmo, S.A.'s (Banistmo) Long-Term Issuer Default Rating (IDR) at 'BB+'. Fitch has also affirmed Banistmo's Short-Term (ST) IDR at 'B', Shareholder Support Rating (SSR) at 'bb+' and Viability Rating (VR) at 'bb'. The Rating Outlook on Banistmo's Long-Term IDR is Negative. Fitch has also affirmed the National Long- and Short-Term Ratings for Banistmo at 'AA+(pan)' with a Negative Outlook and 'F1+(pan)', respectively. The Negative Outlook on Banistmo's long-term ratings mirrors the Outlook of the shareholder. Key Rating Drivers Support-Driven Rating: Banistmo's IDRs, SSR, National Ratings and senior debt ratings are underpinned by the ability and willingness of its parent, Grupo Cibest S.A. (Grupo Cibest; BB+/Negative), to provide timely support to the bank, if needed. The Negative Outlook on the Banistmo's long-term ratings mirrors the Outlook of the parent. Strategic Role in the Group: Fitch believes Banistmo plays a core and integral part in the long-term strategy of the group. The Panamanian subsidiary operates in a strategically important jurisdiction that offers significant growth potential and profit generation for the group's operations. This is highly weighted in Fitch's assessment of the propensity to provide support, resulting in Banistmo's IDR being equalized with its parent's IDR. Reputational Risk, High Integration: Fitch's assessment moderately weighs the huge reputational risk for Bancolombia and the recently incorporated Grupo Cibest, and for and the potential negative impact that it may have on other related entities if Banistmo defaults. In its support analysis, Fitch also considers the significant management and operational integration between the entities, which has benefited Banistmo's business and financial performance. Sound Domestic Franchise: Banistmo's 'bb' VR is heavily weighted toward its robust business profile and established presence in the Panama's banking market, where it is the second largest bank. The bank's franchise is supported by a strong corporate and retail banking business and benefits significantly from being part of a large regional banking group, which strengthens the bank's loan and deposit base. Banistmo's competitive position is reflected in its high brand recognition and market shares of 9% by total local loans and 11% in customer deposits as of December 2024. No Impact from New Corporate Structure: Grupo Cibest is the new holding company for Bancolombia (Banistmo's former holding company) and related entities. Fitch will monitor Grupo Cibest's process of incorporation and its evolution but does not anticipate any impact on the ratings of the banks in Colombia and Central America. Fitch anticipates that their respective business profiles will remain unchanged under the new structure. Asset Quality Still Pressured: Banistmo's asset quality deteriorated in 2024, supporting Fitch's negative assessment for this factor. Its Stage 3 loan ratio reached 9.5% as of December 2024 from 8.8% at 2023. The decline of Banistmo's loan portfolio further weighs on this ratio amid a still challenging OE and the dynamics in the mortgage and retail sector during the restructuring process. Fitch expects Banistmo's loan quality, measured as Stage 3 ratio, to remain between 9.0% to 9.5% in the mid-term. Its high level of guarantees mitigates potential deterioration of borrower payment capacity, because collateral coverage is about 65% of the portfolio by 2024-end. Low Profitability Metrics: As of December 2024, Banistmo's operating profit to RWA ratio deteriorated to 0.6% due to higher loan impairment charges (LICs), coupled with higher cost of funds due to the increase in term deposits under higher interest rates. Fitch does not expect increasing LICs for 2025 as the new loans should perform better, supported by the initiatives implemented by the bank in recent years as well as the improving collect process. In consequence, Fitch expects that profitability will gradually return to pre-pandemic levels in the rating horizon, although profitability remains sensitive to loan impairment challenges and the NIM volatility. Sufficient Capital Buffers: Fitch views Banistmo's capitalization as adequate for its current balance sheet risks. The bank's CET1 to RWA of 11.6% and its regulatory ratio of 13.4% at December 2024 are above the regulatory requirements (4.5% and 8.5%, respectively). Fitch expects the bank to maintain its ratios in similar levels in the near term, given the expected modest loan expansion, adequate reserve coverage ratios, and the expectation that the bank will keep a steady internal capital generation. Fitch also views the parent's ordinary support favorably. Sound and Diversified Funding Structure: Banistmo's funding structure is stable and robust in Fitch's opinion. This is reflected in the bank's second position in customer deposits in the local financial industry. As of December 2024, customer deposits accounted for approximately 81.6% of its total funding and its loans-to-deposits ratio improved to 107.1% (2023: 112.2%) thanks to a higher customer deposits growth compared to the decrease in loans. The diversified financing profile benefits from good access to local and international institutions, as well as to local and global markets. The financing profile also benefits from the parent's ordinary support and the synergies between them. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Any negative action on Bancolombia's and Grupo Cibest's IDRs would lead to a similar action on Banistmo's SSR. In addition, Banistmo's IDRs, SSR and national ratings could be downgraded if Fitch's assessment of its parent's propensity and ability to provide support to the bank diminishes. - A further deterioration in asset quality that denotes a weakening in the bank's risk profile could pressure Banistmo's VR. The VR could also be downgraded because of a sustained deterioration of profitability and asset quality ratios that undermine the bank's financial performance, driving a decline in its CET1 ratio consistently below 10% and/or its operating profitability/RWA metric consistently below 0.5%. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A positive rating action on Bancolombia's and Grupo Cibest's IDRs could trigger similar rating actions on Banistmo's IDRs, SSR and national ratings. However, this is not the base scenario due to the current Negative Outlook. - Over the medium-to-long term, an upgrade on Banistmo's VR would require its CET1, including counter cyclical buffer (CCB), to improve and be maintained at 16% of RWAs or higher, accompanied by a consistent and substantial strengthening of its core profitability ratio to levels closer to 2%, and a significant improvement in asset quality (with a Stage 3 ratio at levels closer to 5%). OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Banistmo's senior unsecured debt rating is equal to the bank's ratings on both the international and local scales. This is due to Fitch's belief that the debt probability of default is the same as that of the issuer, since senior obligations have average recovery prospects. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Banistmo's senior unsecured debt would mirror any potential downgrade on the bank's international and national ratings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Banistmo's senior unsecured debt would mirror any potential upgrade on the bank's international and national ratings. VR ADJUSTMENTS - The VR has been assigned above the implied viability Rating due to the following adjustment reason: Business profile (positive); - The OE Score of 'bb+' has been assigned below the 'bbb' implied score due to the following adjustment reason: Sovereign Rating (negative). Public Ratings with Credit Linkage to other ratings Banistmo's ratings are based on Fitch's opinion on the ability and propensity of their ultimate parent, Grupo Cibest, to provide support to them, if needed. 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 ----------- ------ ----- Banistmo S.A. LT IDR BB+ Affirmed BB+ ST IDR B Affirmed B Natl LT AA+(pan) Affirmed AA+(pan) Natl ST F1+(pan) Affirmed F1+(pan) Viability bb Affirmed bb Shareholder Support bb+ Affirmed bb+ senior unsecured LT BB+ Affirmed BB+ senior unsecured Natl LT AA+(pan) Affirmed AA+(pan) CAJA DE AHORROS: Fitch Affirms 'BB+' LongTerm Foreign Currency IDR ------------------------------------------------------------------ Fitch Ratings has affirmed Caja de Ahorros' Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB+'. The Rating Outlook is Stable. Additionally, Fitch has affirmed Caja de Ahorros' Short-Term IDR at 'B', Government Support Rating (GSR) at 'bb+', Viability Rating (VR) at 'bb-', Long- and Short-Term National Scale Ratings at 'AAA(pan)'/Stable and 'F1+(pan)', respectively, and national long-term senior unsecured and subordinated debt at 'AAA(pan)'. Key Rating Drivers Government Support: Caja de Ahorros' IDR, GSR, and National Scale Ratings are backed by the potential support it would receive from the Republic of Panama (BB+/Stable Outlook), if needed. Fitch's support assessment is strongly influenced by the government's explicit guarantee for all the bank's obligations, established in its founding law, which is a key factor in its support opinion. Policy Role: Fitch believes the bank's policy role significantly influences the government's willingness to provide support. The bank's mandate is to promote savings and access to housing for Panamanians, as the government's main tool in its national housing policy. This role is reflected in both the bank's mortgage portfolio and savings accounts. According to Fitch, the institution's role is difficult to transfer to other government agencies; the bank has a long history and consolidated experience in low-value mortgages, and serving these segments requires a broad branch infrastructure. Fitch believes that political influence is well-managed, despite the government's ownership of the issuer. Liability Structure and Systemic Importance: The bank's liability structure favors state support, as it is the main depositor and a public entity representing about half of the bank's funding. Fitch considers the institution's systemic importance moderate, given its market position and relevance within the local banking system. Key Development Bank: Caja de Ahorros is a universal commercial bank of the State of Panama with a clear mandate to encourage saving habits among Panamanians and support home acquisition. The bank's franchise is larger than its balance sheet suggests, with a market share of 5.0% by assets and is the country's third most important mortgage lender. However, its performance is constrained by its policy role, which prioritizes social impact on the local economy. The state nature of the bank provides a favorable perception in the local market, reinforced by the state guarantee, and its balance sheet benefits from public funds that enhance its liquidity and provide a cushion for growth. Gradual Improvement in Asset Quality: Caja de Ahorros' asset quality reflects the operational challenge the bank faced since 2022 to normalize affected loans after the end of pandemic relief measures. However, Fitch recognizes the bank's significant improvement. By December 2024, this was reflected in a stage 3 loan ratio of 5.6%, down from 6.2% at the close of 2023. Fitch estimates the bank will continue to show gradual improvements, but anticipates that asset quality performance will remain at similar levels in the medium term. Improving Profitability Trend: The bank's profitability, although modest since 2019, has shown gradual improvements since 2023, as its loan portfolio has progressed in terms of normalization. This was reflected in an operating profit indicator over risk-weighted assets (APR) of 1% at the end of 2024, which compared favorably with its four-year average (2021-2024) of 0.8%. Fitch estimates that Caja de Ahorros' main profitability metric could stabilize around 1% in the short term, and does not rule out an improvement of this evaluation factor. Capitalization with Support: Fitch's assessment of Caja de Ahorros' capitalization and leverage is sustained by ordinary support from the local government. Its common equity tier 1 (CET1) metric of 7.6% at the end of 2024 is backed by Tier 2 capital instruments, which improve its regulatory capital metric to 13.6%. Fitch does not rule out slight improvements in Caja de Ahorros' capitalization due to the agency's profitability expectations and the state's guarantee guarantee provided by its founding law. Government Funding: The government is currently one of the main providers of the bank's funds, allowing Caja de Ahorros to maintain a good loan-to-deposit ratio of 86.9% at the end of 2024. Fitch estimates that Caja de Ahorros' funding and liquidity will maintain a similar dynamic and does not expect significant changes in the medium term. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Caja de Ahorros' IDR and GSR would be downgraded following a downgrade of the sovereign. - Caja de Ahorros' VR could be negatively affected in case of ineffective credit controls for maintaining controlled impairment levels along with a consistent decline in profitability (operating profit to RWAs consistently below 0.5%) and sustained decline in capitalization (CET1 and regulatory dynamic reserves continuously below 9% of its RWAs). Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Caja de Ahorros' IDR and GSR have limited upside potential and would come from a similar action of the sovereign. - Caja de Ahorros' VR also has limited upside potential given the bank's challenges regarding profitability, asset quality and capitalization. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Senior and Subordinated Debt: The Revolving Bond Program for USD 400 million can be issued in both senior and subordinated debt tranches. The senior tranches have the same payment priority as the rest of the entity's obligations. Fitch believes the subordinated tranches have characteristics of low subordination and no coupon flexibility, as a coupon default would trigger a bank default event. The senior and subordinated debt ratings reflect the State of Panama's guarantee for all the bank's obligations established in its inception law, and therefore, their ratings are equal to the long-term national rating. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Factors That Could, Individually Or Collectively, Lead To A Negative/Downgrade Rating Action - The bond program ratings would downgrade if Caja de Ahorros' national long-term rating were downgraded. Factors That Could, Individually Or Collectively, Lead To A Positive/Upward Rating Action - The ratings have no room for improvement as they are the highest on the rating scale. VR ADJUSTMENTS The Operating Environment Score of 'bb+' has been assigned below the 'bbb' category implied score due to the following adjustment reason: Sovereign Rating (negative). The Business Profile score of 'bb' has been assigned above the 'b' category implied score due to the following adjustment reason(s): Market Position (positive), Group Benefits and Risks (positive). The Capitalization & Leverage score of 'bb-' has been assigned above the 'b' category implied score due to the following adjustment reason(s): Capital Flexibility and Ordinary Support (positive). Public Ratings with Credit Linkage to other ratings Caja de Ahorros' ratings are driven by the potential support it would receive from the Republic of Panama (BB+/Stable). 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 ----------- ------ ----- Caja de Ahorros LT IDR BB+ Affirmed BB+ ST IDR B Affirmed B Natl LT AAA(pan) Affirmed AAA(pan) Natl ST F1+(pan) Affirmed F1+(pan) Viability bb- Affirmed bb- Government Support bb+ Affirmed bb+ senior unsecured Natl LT AAA(pan) Affirmed AAA(pan) subordinated Natl LT AAA(pan) Affirmed AAA(pan) MULTIBANK INC: Fitch Affirms 'BB+' LongTerm IDR, Outlook Negative ----------------------------------------------------------------- Fitch Ratings has affirmed Multibank Inc.'s Long- and Short-Term Issuer Default Ratings (IDRs) at 'BB+' and 'B', respectively, including the senior unsecured debt at 'BB+'. Fitch has also affirmed the bank's Shareholder Support Rating (SSR) at 'bb+', Long- and Short-Term National Ratings, and senior unsecured debt at 'AA+(pan)' and 'F1+(pan)', respectively. Additionally, Multibank's national-scale subordinated debt was affirmed at 'AA-(pan)'. The Rating Outlook for the Long-Term ratings is Negative. The Negative Outlook mirrors the Outlook on Banco de Bogota S.A. (Bogota), as Multibank's ratings are equalized with Bogota's, reflecting Fitch's assessment of the potential support they would receive from their parent if required. Key Rating Drivers Shareholder Support: Multibank IDRs and debt ratings are based on the potential support it would receive from its shareholder Bogota, if required, as reflected in the Shareholder Support Rating (SSR) of 'bb+'. The bank's Long-Term IDR and SSR are equalized with Bogota's Long-Term IDR, reflecting Fitch's assessment of the high propensity of support from the parent. The Negative Outlook on Multibank mirrors the parent's Outlook. Core Subsidiary: In Fitch's view, Multibank supports its group's regional franchise and contributes to the group's business model and diversification strategy, providing key products and services in Panama, which is considered a core market for the group. Parent's Ability to Support: Bogota's ability to provide support to Multibank is closely linked to its 'BB+' IDR and considers Multibank's relevant size, as it represents around 15% of Banco de Bogota's consolidated assets. Persistent Weak Asset Quality: Fitch has downgraded its asset quality assessment of Multibank to 'b+'/stable from 'bb-'/stable due to persistently high Stage 3 loans and weaker reserve coverage, which compare unfavorably with 'bb-' assessed banks. The agency expects Multibank to maintain a significantly higher Stage 3 loan ratio compared to its local and international peers. As of December 2024, the ratio was 7.6%, with a 2021-2024 average of 7.1%. Stage 3 loans are concentrated in vulnerable sectors, notably construction, with recovery prospects more likely in the mid-term. Additionally, reserve coverage of 25% is weaker compared to peers, while concentration per debtor remains moderate at 1.5x its CET1. High Credit Costs Limit Profits: Multibank's profitability metrics continue to be hindered by high credit costs due to deteriorated loans. However, a reverse trend could begin with the shared banking agreement with BAC International Bank Inc., which is expected to significantly ease operating costs and improve funding facilities, thereby enhancing the bank's NIM. In 2024, the bank's core metric, the operating profit to RWA ratio, further declined to 0.1% from 0.4% in 2023, lagging its local and international peers. Profits were significantly constrained by heightened credit costs, as evidenced by the loan impairment charges to pre-impairment operating profit ratio, which rose to 84.9% from 60.9% in 2023. Ordinary Support Offsets Modest CET1: Fitch expects Multibank to continue operating with relatively tight capital metrics. However, its capitalization assessment positively considers the potential capital support from its parent, Banco de Bogota S.A., if needed. Despite significantly low reserve coverage, the loss absorption capacity is enhanced by dynamic provisions, which increase its CET1 ratio to RWAs from 9.4% to 11%. The bank's regulatory capital adequacy ratio remains comfortably above the regulatory minimum, bolstered in part by Tier 2 capital notes and the absence of dividend payments since 2019. Reasonable Funding Profile: Fitch believes Multibank's funding will continue to rely on deposits, predominantly from clients with an institutional profile, alongside adequate liquidity management. The bank's funding profile is mostly wholesale, which has resulted in higher credit costs and moderate concentrations. As of December 2024, the bank's loans-to-deposits ratio was 110.6%, which compares unfavorably with its peers. Fitch's liquidity profile assessment also considers potential ordinary support from Banco de Bogotá, if needed. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of Multibank's IDR and SSR could result from a downgrade of Banco de Bogota's (Bogota) IDR or from a reduced propensity of Bogota to support its subsidiary, both of which are currently unlikely. - Multibank's ratings could be downgraded as a result of a sustained asset quality deterioration that further undermines the bank's financial performance and business profile. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive rating actions on Multibank's IDRs, senior unsecured debt rating and SSR could be driven by positive rating actions on Bogota's IDR. - Positive rating actions on Multibank's ratings could be driven by the sustained strengthening of its business profile reflected in profitability ratios consistently near 2% and a CET1 ratio including CCyB of at least 13%. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Senior Unsecured Debt: The ratings of Multibank's outstanding long-term global and national scale senior unsecured obligations are at the same level as the issuer's ratings, as the likelihood of default of the obligations is the same as that of Multibank. Subordinated Debt: The ratings of Multibank's outstanding long-term national scale subordinated obligations are two notched below its anchor ratings, the Long-Term National Scale Rating, which reflects the loss severity given the characteristics (no coupon flexibility). OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: - Multibank's senior unsecured and subordinated debt would mirror any potential downgrade on its ratings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: - Multibank's senior unsecured and subordinated debt would mirror any potential upgrade on the bank's ratings. VR ADJUSTMENTS The Operating Environment score has been assigned at 'bb+', below the implied score of 'bbb', due to the following adjustment reason: Reported and Future Metrics (negative). The Business Profile score has been assigned at 'bb-', above the implied score of 'b', due to the following adjustment reason: Group Benefits and Risks (positive). The Capitalization & Leverage score has been assigned at 'bb-', above the implied score of 'b', due to the following adjustment reason: Capital Flexibility and Ordinary Support (positive). Public Ratings with Credit Linkage to other ratings Multibank's ratings derive from the support of Banco de Bogota ('BB+/Negative') 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 ----------- ------ ----- Multibank, lnc. LT IDR BB+ Affirmed BB+ ST IDR B Affirmed B Natl LT AA+(pan) Affirmed AA+(pan) Natl ST F1+(pan) Affirmed F1+(pan) Viability bb- Affirmed bb- Shareholder Support bb+ Affirmed bb+ senior unsecured LT BB+ Affirmed BB+ senior unsecured Natl LT AA+(pan) Affirmed AA+(pan) subordinated Natl LT AA-(pan) Affirmed AA-(pan) senior unsecured Natl ST F1+(pan) Affirmed F1+(pan) ===================== P U E R T O R I C O ===================== PUERTO RICO: Dechert LLP Updates List of PREPA Bondholders ---------------------------------------------------------- The law firm of Dechert LLP filed an eighth verified statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure to disclose that in the Chapter 11 case of Puerto Rico Electric Power Authority ("PREPA"), the firm represents PREPA Ad Hoc Group. Dechert submits this Eighth Verified Statement to update the PREPA Ad Hoc Group's holdings of Bonds and disclosable economic interests currently held by its Members, as of May 13, 2025. Dechert notes that it does not represent the PREPA Ad Hoc Group as a committee (as such term is used in the Bankruptcy Code and Bankruptcy Rules) and does not undertake to, and does not, represent the interest of, and is not a fiduciary for, any creditor, party in interests, or entity other than the PREPA Ad Hoc Group and Invesco. Dechert has been advised by the Members of the PREPA Ad Hoc Group that its Members either hold, or manage funds and/or accounts that hold, collectively, approximately $2.3 billion in aggregate principal amount of uninsured Bonds, in addition to approximately $448 million in aggregate principal amount of insured Bonds. The members of the PREPA Ad Hoc Group and their bond holdings in PREPA are: Member Uninsured Bonds Insured Bonds ------- --------------- ------------- AllianceBernstein L.P. $170,415,000 $56,305,000 1345 Avenue of the Americas, New York, NY 10105 Aristeia Capital, L.L.C. $41,710,000 $0 One Greenwich Plaza, Suite 300, Greenwich, CT 06830 BNY Mellon Funds Trust $14,500,000 $0 201 Washington Street, 8th Floor, Boston, MA 02108 Capital Research and Management Co. $287,780,000 $51,305,000 333 South Hope Street, 54th Floor Los Angeles, CA 90404 Columbia Management Investment Advisers, LLC $56,975,000 $0 290 Congress Street, Boston, MA 02210 Delaware Management Company a series of Macquarie Investment Management Business Trust $161,190,000 $0 610 Market Street, Philadelphia PA 19106 Ellington Management Group, L.L.C. $23,255,000 $0 711 Third Avenue, New York, NY 10017 Goldman Sachs Asset Management LP $323,127,000 $148,607,000 200 West Street, New York, NY 10282 Invesco Advisers, Inc. $232,598,000 $124,290,000 225 Liberty Street New York, NY 10281 MacKay Shields LLC $608,545,000 $26,045,000 1345 Avenue of the Americas New York, NY 10105 Massachusetts Financial Services Company $145,060,000 $37,320,000 111 Huntington Avenue, Boston, MA 02199 One William Street $74,338,000 $0 Capital Management, L.P., on behalf of certain funds it manages or advises 299 Park Ave., Fl. 25, New York, NY 10171 RUSSELL INVESTMENT COMPANY $26,640,000 $3,980,000 1301 Second Avenue, 18th Floor Seattle, WA 98101 SIG Structured Products, LLC $3,250,000 $0 401 E. City Avenue, Suite 220 Bala Cynwyd, PA 19004 T. Rowe Price $151,120,000 $130,000 100 E. Pratt Street, BA 0754 Baltimore, MD 21202 Tower Bay Asset Management LP $23,460,000 $0 700 Canal Street, Ste 12E Stamford, CT 06902 PREPA Ad Hoc Group is represented by: MONSERRATE SIMONET & GIERBOLINI, LLC Dora L. Monserrate-Peñagarícano, Esq. Fernando J. Gierbolini-González, Esq. Richard J. Schell, Esq. 101 San Patricio Ave., Suite 1120 Guaynabo, PR 00968 Phone: (787) 620-5300 Facsimile: (787) 620-5305 Email: dmonserrate@msglawpr.com fgierbolini@msglawpr.com rschell@msglawpr.com - and - DECHERT LLP G. Eric Brunstad Jr., Esq. Stephen D. Zide, Esq. David A. Herman, Esq. 1095 Avenue of the Americas New York, NY 10036 Phone: (212) 698-3500 Facsimile: (212) 698-3599 Email: eric.brunstad@dechert.com stephen.zide@dechert.com david.herman@dechert.com About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States. The chief of state is the President of the United States of America. The head of government is an elected Governor. There are two legislative chambers: the House of Representatives, 51 seats, and the Senate, 27 seats. The governor-elect is Ricardo Antonio "Ricky" Rossello Nevares, the son of former governor Pedro Rossello. In 2016, the U.S. Congress passed PROMESA, which, among other things, created the Financial Oversight and Management Board and imposed an automatic stay on creditor lawsuits against the government, which expired May 1, 2017. The members of the oversight board are: (i) Andrew G. Biggs, (ii) Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J. Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii) David A. Skeel Jr. On May 3, 2017, the Commonwealth of Puerto Rico filed a petition for relief under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). The case is pending in the United States District Court for the District of Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico' PROMESA petition is available at http://bankrupt.com/misc/1701578-00001.pdf On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation (COFINA) commenced a case under Title III of PROMESA (D.P.R. Case No. 17-01599). Joint administration has been sought for the Title III cases. On May 21, 2017, two more agencies -- Employees Retirement System of the Government of the Commonwealth of Puerto Rico and Puerto Rico Highways and Transportation Authority (Case Nos. 17-01685 and 17-01686) -- commenced Title III cases. U.S. Chief Justice John Roberts named U.S. District Judge Laura Taylor Swain to preside over the Title III cases. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose LLP; and Hermann D. Bauer, Esq., at O'Neill & Borges LLC are onboard as attorneys. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains the case Web site https://cases.primeclerk.com/puertorico Jones Day is serving as counsel to certain ERS bondholders. Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General Obligation Bondholders. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Extends Tax/Nat'l Insurance Amnesty to Aug. 2 ---------------------------------------------------------------- RJR News reports that the Trinidad and Tobago government announced that the tax and national insurance amnesty introduced by the previous government last year has been extended to August 2 this year. The finance minister said the tax amnesty covers penalties and interest in relation to the taxes up to the year of income ending December 31, 2023, according to RJR News. =============== X X X X X X X X =============== LATAM: Poultry Producers Decry Barriers to Regional Trade --------------------------------------------------------- RJR News reports that Members of the Caribbean Poultry Association argue that companies outside the region have an easier time selling poultry to CARICOM countries than regional producers do trading within CARICOM. With less than one per cent of the poultry trade throughout CARICOM originating from companies in the region, players in the industry say non-tariff barriers are curtailing their efforts to do more business in the Caribbean, according to RJR News. Michael Jones of Jamaica Broiler's Group highlighted that sanitary and phytosanitary measures are important for food safety, but said they are often used to delay or obstruct regional trade, the report notes. He was speaking at the Caribbean Poultry Association's eighth international technical symposium and exhibition in New Kingston, the report relays. Meanwhile, a study conducted by the Association indicated that Trinidad and Tobago imported an average US$130 million in poultry meat, Suriname US$97 million and Jamaica US$80 million during the last five years, the report discloses. The study also revealed that Barbados imported US$8.5 million in poultry meat, Belize US$1.1 million and Guyana US$4.9 million during the last five years, the report notes. Some 70 per cent of the poultry imported into CARICOM comes from the United States, followed by imports from Brazil, the United Kingdom, Canada, and the rest of the world, the report adds. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2025. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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