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250603.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 Tuesday, June 3, 2025, Vol. 26, No. 110 Headlines A R G E N T I N A ARGENTINA: Caputo Confirms First Peso-Denominated Debt Sale ARGENTINA: Has Cut 48,000 Public-Sector Jobs Since Taking Office ARGENTINA: Steps in Currency Market Despite Letting Peso Float B E R M U D A DIGICEL MIDCO: S&P Assigns B' Issuer Credit Rating, Outlook Stable B R A Z I L AZUL SA: Fitch Lowers LongTerm IDRs to 'D' Amid Restructuring COMPASS GAS: Fitch Affirms & Then Withdraws BB IDR, Outlook Stable C A Y M A N I S L A N D S AUB SUKUK: Fitch Affirms 'BB+' Rating on Sr. Unsecured Notes J A M A I C A EQUITYLINE MORTGAGE: Investors Face $850MM Loss on Investment JAMAICA: BOJ to Offer Another Fixed Rate Certificate of Deposit JAMAICA: Traditional Export Crops Down in First Quarter - - - - - ================= A R G E N T I N A ================= ARGENTINA: Caputo Confirms First Peso-Denominated Debt Sale ----------------------------------------------------------- AFP News reports that Argentina's government unveiled the first sale of peso-denominated debt in nearly a decade in a high-stakes test of international investor confidence under budget-slashing President Javier Milei. The auction will be for a maximum US$1 billion, the Milei administration said, according to AFP News. Argentina is seeking to boost foreign reserves to meet International Monetary Fund loan requirements, the report notes. The "BONTE" will be a fixed-rate Treasury bond in pesos, but can be purchased in dollars and matures in May 2030, the report relays. The instrument includes a two-year put option, giving investors an early exit alternative before the next presidential election in late 2027, the report recalls. "Argentina regains access to international markets to refinance capital debt in local currency," Economy Minister Luis Caputo wrote on the X social network, the report says. In April 2025, Argentina received an initial US$12 billion from a new US$20-billion loan agreed by the International Monetary Fund (IMF), the report notes. The injection from the IMF and others is crucial for replenishing Argentina's meagre foreign reserves, reviving growth and tackling inflation – a key focus for President Milei ahead of national midterm elections in October, the report adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. In March 2022, the International Monetary Fund (IMF) approved a 30-month arrangement under an Extended Fund Facility for Argentina in the amount of SDR 31.914 billion (equivalent to US$44 billion, or 1000 percent of quota) -- with an approved immediate disbursement of an equivalent of US$9.65 billion. Argentina's IMF-supported program sought to improve public finances and start to reduce persistent high inflation through a multi-pronged strategy. On April 11, 2025, the IMF further approved a 48-month Extended Fund Facility (EFF) arrangement for Argentina totaling US$20 billion (or 479 percent of quota), with an immediate disbursement of US$12 billion, and a first review planned for June 2025 with an associated disbursement of about US$2 billion. The program is expected to help catalyze additional official multilateral and bilateral support, and a timely re-access to international capital markets. Fitch Ratings, on May 12, 2025, upgraded Argentina's Long-Term Foreign-Currency and Local-Currency Issuer Default Rating (IDR) to 'CCC+' from 'CCC'. The upgrade reflects the launch of a new IMF program, among other things. S&P Global Ratings, in February 2025 lowered its local currency sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and its national scale rating to 'SD' from 'raB+'. Moody's Ratings, in January 2025, raised Argentina's local currency ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1 from Caa3. DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local Currency Issuer Ratings to B (low) from CCC in November 2024. ARGENTINA: Has Cut 48,000 Public-Sector Jobs Since Taking Office ---------------------------------------------------------------- Buenos Aires Times reports that President Javier Milei's government says that almost 48,000 public sector workers have been let go in Argentina since his administration took office 17 months ago. Overall, staffing numbers have been cut by 9.6 percent as part of Milei's "chainsaw" austerity policy, one of his flagship approaches to government, according to Buenos Aires Times. This has resulted in annual savings of around US$1.885 billion, claimed a report by the Deregulation & State Transformation Ministry published. Some US$942 million was down to not paying salaries, with a similar amount attributed to "workplace infrastructure costs," the report notes. It is unclear if that figure includes severance costs for laid-off workers, the report relays. According to the report, filed by the Ministry's impact evaluation unit, 47,925 jobs have been removed from the state payroll between December 2023, Milei's first month in office, and April 2025, the report discloses. Breaking down the figures, the largest reductions were seen in the National Public Administration (APN) and at state-owned enterprises, registering drops of 13.7 percent and 16.4 percent respectively, the report says. Permanent and temporary staff fell by eight percent, with individuals employed under the Framework Law (Law 25.164, legislation written specifically for the hiring state workers) down 20 percent and 'monotributista' freelancers slashed 55.2 percent, the report relays. The Deregulation & State Transformation Ministry said the figures "reflect the government's commitment to reducing public expenditure and its determination to deliver on promises of efficiency and austerity in public administration," the report discloses. The portfolio, led by Federico Sturzenegger, said Milei's chainsaw approach "will be intensified this year with further staff reductions and the elimination of departments that do not serve an essential purpose," the report says, Any further lay-offs are likely to be met with opposition from public-sector employees, many of whom have taken to the streets this year to protest against austerity measures, the report relays. Trade unions have staged a string of general strikes since Milei, a self-described "anarcho-capitalist" libertarian economist, came to power in December 2023, the report recalls. Milei came to power vowing to fix Argentina's perennially crisis-hit economy by slashing public spending and through deregulation, the report notes. Last year, the country recorded its first budget surplus in a decade and runaway inflation has dropped dramatically, but purchasing power, employment and consumer spending have fallen, the report adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. In March 2022, the International Monetary Fund (IMF) approved a 30-month arrangement under an Extended Fund Facility for Argentina in the amount of SDR 31.914 billion (equivalent to US$44 billion, or 1000 percent of quota) -- with an approved immediate disbursement of an equivalent of US$9.65 billion. Argentina's IMF-supported program sought to improve public finances and start to reduce persistent high inflation through a multi-pronged strategy. On April 11, 2025, the IMF further approved a 48-month Extended Fund Facility (EFF) arrangement for Argentina totaling US$20 billion (or 479 percent of quota), with an immediate disbursement of US$12 billion, and a first review planned for June 2025 with an associated disbursement of about US$2 billion. The program is expected to help catalyze additional official multilateral and bilateral support, and a timely re-access to international capital markets. Fitch Ratings, on May 12, 2025, upgraded Argentina's Long-Term Foreign-Currency and Local-Currency Issuer Default Rating (IDR) to 'CCC+' from 'CCC'. The upgrade reflects the launch of a new IMF program, among other things. S&P Global Ratings, in February 2025 lowered its local currency sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and its national scale rating to 'SD' from 'raB+'. Moody's Ratings, in January 2025, raised Argentina's local currency ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1 from Caa3. DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local Currency Issuer Ratings to B (low) from CCC in November 2024. ARGENTINA: Steps in Currency Market Despite Letting Peso Float -------------------------------------------------------------- Ignacio Olivera Doll at Bloomberg News reports that after pledging a free-floating currency a month ago, Argentina's government has intervened in the market to influence the peso's value, a move that stands in sharp contrast to its commitments to the International Monetary Fund. The Central Bank confirmed it sold US$409 million in futures contracts on April 30 – nearly 14 percent of total open interest reported that day on the local A3 futures market – confirming what many investors had been suspecting for weeks, according to Bloomberg News. Looking to stabilise the market, the Central Bank lowered implied rates and facilitated cheaper Treasury financings ahead of key debt auctions, Bloomberg News relays. Consulting firms believe that the intervention in April wasn't a one-time off, but intensified the following month, especially on May 7, when the spot peso strengthened nearly six percent, Bloomberg News discloses. That day, futures sales surged to historic highs, marking the largest increase in open interest since President Javier Milei took office, Bloomberg News says. "The dynamics observed in May suggest that an escalation of this intervention was the main driver behind the consistent decline in the exchange rate during the month," Gabriel Caamano, an economist at Outlier Economy & Finance, wrote in a recent note to clients, Bloomberg News discloses. The research firm estimates the Central Bank's current short position is close to US$1 billion, potentially even higher, Bloomberg News relays. It remains unclear whether the intervention raised red flags at the IMF, Bloomberg News relays. Under the agreement signed in April, Argentine authorities did not expect to intervene in the non-deliverable futures (NDF) or parallel markets unless disorderly conditions emerge, Bloomberg News notes. While the IMF hasn't publicly criticised the Central Bank's recent move, a person with direct knowledge said it will be reviewed as part of the formal assessment of Argentina's monetary and exchange rate policies, Bloomberg News discloses. An IMF spokesperson said "the fund continues to support the authorities in their efforts to create a more stable and prosperous Argentina," adding that "there is a shared recognition with the authorities about the importance of strengthening external buffers," Bloomberg News notes. Argentina's Central Bank didn't immediately respond to a request for comment. To be sure, Argentina will very likely receive a US$2-billion disbursement from the IMF in June after the next review of the US$20-billion program, Bloomberg News relays. Although policymakers are deviating from what they indicated to the Fund regarding futures, they're still complying with two of the three key criteria of the deal — an improvement from the previous government that at one point missed all three, Bloomberg News discloses. The Central Bank's interventions have created a clear financial incentive for investors, Bloomberg News relays. On May 7, trading volumes surged and the spread between yields on peso bonds and peso futures — the so-called synthetic dollar — widened to around 20 percent, compared to seven percent to eight percent for instruments linked to the dollar, said Pedro Morini, head of strategy at brokerage firm PPI, Bloomberg News says. The synthetic position, created by combining peso bonds with currency hedges in the futures market, reflects the market's implied return on a dollar-denominated investment in pesos, Bloomberg News discloses. While that advantage has narrowed in recent weeks, it offered attractive coverage for investors betting on peso-denominated Treasury bonds, aligning with the government's goal to maintain fiscal and financial surpluses, Bloomberg News relays. Officials have already announced the launch of a five-year, fixed-rate peso bond, targeting international investors, Bloomberg News notes. Those who hedged with futures in recent weeks were able to do so at a relatively low cost, Bloomberg News relates. Investor concerns about Argentina's compliance with its IMF agreement extend beyond the futures market, Bloomberg News discloses. Under the deal, the country has committed to increasing its net international reserves by US$4.4 billion by June 13 — the first in a series of targets outlined in the recently signed agreement, Bloomberg News relays. However, estimates from private economists suggest that the Central Bank remains far from meeting this goal, making a waiver appear increasingly inevitable, Bloomberg News notes. Adding to the uncertainty, Milei and Economy Minister Luis Caputo have repeatedly downplayed the importance of accumulating reserves at the Central Bank. Finance Secretary Pablo Quirno conceded that "the reserves target is a number that will have to be accumulated," Bloomberg News relays. The market is already pricing in that the reserves target won't be met, Morini said, Bloomberg News notes. According to his estimates, Argentina needs to accumulate another US$5 billion to hit the mark. "That's why bonds haven't recovered from their recent highs and country risk remains elevated," he said. "It's an extremely ambitious goal," he added. The sale of new peso-denominated bonds, which can be purchased in dollars, aims to help the Central Bank build reserves, Bloomberg News notes. In addition, authorities have announced a US$2-billion repurchase agreement with international banks, of which approximately US$500 million would be eligible to count toward the reserve target, Bloomberg News relays. "The math doesn't add up. But we hope it doesn't cause a stir at the IMF," Morini 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. ============= B E R M U D A ============= DIGICEL MIDCO: S&P Assigns B' Issuer Credit Rating, Outlook Stable ------------------------------------------------------------------ S&P Global Ratings, on May 27, 2025, assigned its 'B' issuer credit rating to Digicel Midco Limited. At the same time, S&P assigned its 'B-' rating to its $455 million senior unsecured notes due 2028 and its 'B' rating to the $1.26 billion senior secured notes due 2027, issued through its Digicel International Finance Limited (DIFL) subsidiary. The stable outlook reflects S&P's view that Digicel will continue to post lower leverage and stable free operating cash flow (FOCF) for the next 12 months, while addressing debt refinancing needs in a timely manner. In January 2024, the Caribbean telecom group Digicel overhauled its organizational, debt, and ownership structure. As a result, Digicel Midco Limited (Digicel) was established to consolidate the group's operations and close to 99% of its outstanding financial obligations. S&P said, "We assess Digicel's business risk profile as weak, reflecting its solid position in markets that have high barriers to entry, but are exposed to substantial macroeconomic volatility. Digicel operates in 25 markets in the Caribbean and Central America, in most of which it's the market leader. Most of these are two-player markets, with carrier-owned infrastructure. We believe this creates high barriers to entry for potential competitors, which would have to make sizable investments and perhaps wouldn't reach the sufficient return due to the small scale of these countries. Moreover, this allows the company to generate high ARPUs across most of its markets, with pricing strategies and service offerings that are very dynamic and built to suit for each market. As a result, we forecast Digicel to maintain adjusted EBITDA margins above 40% in fiscals 2025-2027." Nevertheless, the downside to this footprint is that Digicel is exposed to emerging markets with highly volatile conditions, and their telecom industry mostly driven by prepaid customers. While this can bolster profitability in the short term, the company is vulnerable to sudden swings that can stem from inflationary pressures, weaker consumption dynamics, or weather-related disasters. Specifically, Digicel's large presence in Jamaica, Haiti, or El Salvador, which together accounted for close to 42% of total revenue in fiscal 2024, compares unfavorably with the more stable nature of RGUs in the developed markets where rated peers operate. This limits S&P's view of its business risk profile. The company's new management and owners have defined a business plan with specific goals of improving creditworthiness. On Jan. 29, 2024, the Digicel group completed the reorganization of its corporate and financial structure. As part of the restructuring, were the following factors: -- Unsecured debt instruments were equitized, turning creditors into the main owners of the company; -- New debt with strict covenants was issued; -- New management with a broader expertise in the telecom industry was appointed; and -- Operations and footprint were optimized through a new corporate structure. Management has shifted to focus on each of the company's markets, away from centralized operations, along with a prudent approach toward growth and capital expenditure (capex). Digicel's five-year plan has specific targets for the improvement of its financial position, including reducing leverage to 3.25x by 2028 and raising cash flow. These factors support S&P's view of the company's management and governance and financial policy, both of which are neutral to the final rating. S&P said, "Our base-case scenario considers that Digicel will reduce leverage and keep it between 3.0x-4.0x in the coming years, which underpins our view of its financial risk profile. Thanks to the new strategy, profitability rose in 2024 through optimized direct and subscriber acquisition costs and a moderate approach toward capex. We expect the company to also maintain a moderate approach towards debt in the future. These factors will enable Digicel to reduce adjusted debt to EBITDA below 4x in the next 12 months. Even though we expect capex to return to mid-cycle levels near $240 million in fiscals 2026-2027 due to ongoing needs to improve the LTE and fiber networks, as well as to expand the Digicel+ and Digicel Business brands, we forecast that Digicel will continue to post positive FOCF. Therefore, along with lower leverage, our view of the financial risk profile considers that the company will maintain the FOCF to debt ratio of at least 5% on a weighted average basis. The negative capital structure modifier reflects potential currency risks to Digicel's debt. While the debt is in dollars, only about one-third of revenue is in the same currency, creating a currency mismatch. The company intends to offset this exposure by matching some of the regional operating costs to earnings in local currencies in markets such as Haiti and Jamaica. Digicel also seeks to transfer regional cash accounts into dollar-denominated accounts on a recurring basis. S&P said, "Nevertheless, we don't view these initiatives as an equivalent to fully hedging this exposure, through either financial derivatives or generating revenue in dollars. In this sense, adverse exchange-rate movements could weaken cash flow and/or leverage ratios. As a result, we assess Digicel's capital structure as negative, which has a one-notch downward effect on the rating. "Our capital structure assessment also considers that the company has sufficient time to refinance DIFL's senior secured obligations due May 2027, as well as an ample liquidity headroom in the short term. However, if these maturities remain on the balance sheet during 2026, the capital structure would likely have a broader downward impact on the rating. The latter could also prompt us to revise our assessment of Digicel's liquidity to a weaker category. Therefore, a timely refinancing of these obligations will be a key driver of the ratings stability in the short term. "The stable outlook on Digicel reflects our view that it will reduce leverage below 4x in the next 12-24 months thanks to its revised strategy, while maintaining a cautious approach to debt financing and capex. At the same time, our outlook considers the company's ample liquidity headroom in the short term and a more prudent financial policy. "We could downgrade Digicel in the next 12 months if leverage doesn't fall below 4x because of increased debt or a delay in improving EBITDA. We could also lower the ratings if the FOCF to debt ratio drops and remains below 5% consistently. A downgrade would also follow an increased refinancing risk, stemming from the failure to refinance DIFL's senior secured notes in the short term, which would pressure its debt maturity profile and weaken its liquidity position in 2026. "Although unlikely, we could revise our outlook to positive or raise the ratings if leverage drops below 3x or FOCF to debt rises above 10.0%. Such metrics could result from stronger profit margins because of operating efficiencies and improved ARPUs across the markets, or the company using available cash to pay down a significant proportion of its currently outstanding debt. An upgrade could also stem from the currency risk to its debt dropping below 15% through a financial hedge or by increasing dollar-denominated revenue. At the same time, an upgrade would require Digicel to maintain a sufficient liquidity headroom and timely refinancing of the 2027 and 2028 notes." =========== B R A Z I L =========== AZUL SA: Fitch Lowers LongTerm IDRs to 'D' Amid Restructuring ------------------------------------------------------------- Fitch Ratings, on May 28, 2025, downgraded Azul S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'D' from 'CCC-', and its National Scale Rating to 'D(bra)' from 'CCC-(bra)'. Fitch has also downgraded Azul Secured Finance LLP's senior secured notes to 'C' with a Recovery Rating of 'RR4' from 'CCC-'/'RR4' and Azul Investments LLP's unsecured notes affirmed at 'C'/'RR6'. The downgrades to 'D' follow Azul's announcement that it has initiated a restructuring of its debt under Chapter 11 in the United States and the appropriate process in Brazil. Once the airline exits the administration proceedings, Fitch will assess its new strategy and restructured financial profile and re-rate Azul accordingly. Key Rating Drivers Chapter 11 Announcement: Azul announced on May 28, 2025 that it has entered into Restructuring Support Agreements with its key stakeholders, including its existing bondholders; largest lessor AerCap, representing the majority of the company's lease liability; and strategic partners United Airlines, Inc. (BB/Positive) and American Airlines, Inc. (B+/Stable) to effectuate a full capital structure reorganization process under the Chapter 11 Process in U.S. Restructuring Process: Azul aims to improve its capital structure, and the announcement already includes a commitment of approximately USD1.6 billion in debtor-in-possession (DIP) financing throughout the process, elimination of over USD2.0 billion of debt, and contemplates further equity financing of up to USD950 million upon emergence. From the DIP financing amount, USD670 million of which will go to bolster liquidity. This financing will be addressed through exit debt and includes a USD650 million backstopped Equity Rights Offering and up to USD300 million in equity from United and American Airlines, subject to the satisfaction of certain conditions. Unsustainable Capital Structure: Azul's high interest and rental expenses burden as a result of several restructuring processes since Covid amid of a scenario of high interest rates in Brazil and foreign exchange volatilities has resulted in a recurring cash flow burn and an unsustainable capital structure. In its original base case, Fitch has Azul's adjusted EBITDA at around BRL7billion during 2025. Fitch also has the lease rental, interest, and capex projected to total BRL8 billion in 2025. As of March 31, 2025, Azul's total debt was BRL35.8 billion per Fitch´s calculations. Peer Analysis The rating has been downgraded to 'D' as the company has entered voluntary administration. Key Assumptions The recovery analysis assumes that Azul would be considered a going concern in bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. Going Concern Approach Azul's going concern EBITDA is BRL2.5 billion, which incorporates the low-end expectations of Azul's EBITDA post-pandemic, adjusted by lease expenses, and a discount of 20%. The going concern EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level on which Fitch bases the valuation of the company. The enterprise value (EV)/EBITDA multiple applied is 5.5x, reflecting Azul's strong market position in Brazil. Fitch applies a waterfall analysis to the post-default EV, based on the relative claims of the debt in the capital structure. The debt waterfall assumptions consider the company's total debt as of March 31, 2025. These assumptions result in a recovery rate for the first-lien and superpriority secured bonds within the 'RR1' range and second-lien secured notes within the 'RR2' range. However, due to the soft cap of Brazil at 'RR4', Azul's senior secured notes are rated at 'C'/'RR4'. For the unsecured notes, the recovery is in the 'RR6' range, resulting in a rating of 'C'/'RR6'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - The company is rated 'D', and therefore, there can be no negative rating action on the IDR. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Fitch will rate AZUL following its exit from the administration proceedings based on its new strategy and financial profile. Liquidity and Debt Structure Azul's short-term maturities totaled BRL4.9 billion (BRL0.8 billion of financial debt and BRL4.1 billion of leasing obligations) as of March 31, 2025. Azul's readily available cash, per Fitch's criteria, declined to BRL0.5 billion from BRL1.3 billion at the end of December 2024. According to Fitch's estimates, Azul would not be able to generate enough cash flow and lacks sufficient liquidity to fulfill those obligations without new money. Total debt was BRL35.8 billion, and primarily consists of BRL18.8 billion of leasing obligations, BRL185 million of cross-border senior unsecured notes due 2026, and BRL10.1 billion of secured issuances due 2028, 2029 and 2030. Issuer Profile Azul is one of Brazil's largest airlines, dominating the regional market and serving as the sole carrier on 82% of its routes. In 2024, 93% of its revenues came from passengers, while 7% came from cargo and other sources. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- AZUL Investments LLP senior unsecured LT C Affirmed RR6 C Azul S.A. LT IDR D Downgrade CCC- LC LT IDR D Downgrade CCC- Natl LT D(bra) Downgrade CCC-(bra) Azul Secured Finance LLP senior secured LT C Downgrade RR4 CCC- super senior LT C Downgrade RR4 CCC- Senior Secured 2nd Lien LT C Downgrade RR4 CCC- COMPASS GAS: Fitch Affirms & Then Withdraws BB IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Compass Gas e Energia S.A.'s (Compass) Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'. Fitch has also affirmed the National Scale Rating (NSR) of Compass, its subsidiary TRSP - Terminal de Regaseificação de GNL de São Paulo S.A. and their senior unsecured debentures at 'AAA(bra)'. The Rating Outlook is Stable. Fitch has subsequently withdrawn Compass' IDRs. Compass' ratings reflect its linkage with parent Cosan S.A. (IDRs: BB/Stable; NSR: AAA(bra)/Stable). Cosan controls the subsidiary decisions and financial policies through its 67.6% ownership of Compass. Compass' Standalone Credit Profile (SCP) is higher than Cosan's due to the subsidiary's robust business profile in the natural gas industry, primarily supported by its controlling ownership of Companhia de Gas de Sao Paulo - COMGAS (Foreign Currency IDR: BB+/Stable; Local Currency IDR: BBB-/Stable; NSR: AAA(bra)/Stable). Compass benefits from a strong flow of dividends from COMGAS and a low net debt/dividends ratio. The ratings have been withdrawn for commercial reasons. Key Rating Drivers Linkage to Cosan: Fitch equalizes Compass' and Cosan's ratings based on its "Parent and Subsidiary Rating Linkage Criteria." Cosan controls the subsidiary's decisions and has the ability to influence its financial policies, including the prioritization of dividends. There is also reduced legal ring-fencing to protect Compass from its weaker controller. Fitch has equalized the rating of TRSP to that of Compass considering the high legal incentives and medium strategic incentives Compass has to provide support to the subsidiary. Compass guarantees 100% of TRSP's debt. Strong Gas Distribution Subsidiary: Compass's main subsidiary, COMGAS, provides robust dividends to the company, which supports its low leverage. Compass also benefits from asset diversification in the natural gas industry through other distributors and gas trading. The company also operates infrastructure of regasification and storage of natural gas, through its fully owned subsidiary TRSP, and develops a biogas production plant. Fitch views Compass' SCP weaker than COMGAS's, a natural gas distributor with a strong financial profile that is subject to regulatory and debt restrictions that limit Compass's access to its cash solely through dividends. COMGAS's business profile is solid as the largest company in the sector in Brazil, with operations in the state of São Paulo, and a more diversified and profitable customer base compared to its Brazilian peers. Manageable Industry Risk: Compass' exposure to the natural gas distribution sector is credit positive given the significant growth potential for its business. Natural gas distributors operate under long-term concession contracts with cost pass-through mechanisms that protect their cash flows, despite moderate demand volatility. The natural gas distribution operations are expected to contribute more than 80% of Compass's consolidated EBITDA by 2029, with about 75% coming from COMGAS. Sound Financial Structure: Compass' consolidated financial profile should remain conservative over the next three years, with net leverage below 2.5x, supported by the improving performance of Commit Gás S.A.'s (Commit) subsidiaries, other distributors, and natural gas commercialization and regasification activities. At the holding level, the net-debt-to-dividends-received ratio is expected to remain conservative, peaking at 2.7x in 2025, which includes the TRSP debt guarantee of around BRL800 million. Fitch's base case scenario considers that dividends received by Compass will service its debt and the cash surplus distributed to Cosan. Strong Cash Flow Generation: Fitch estimates Compass' consolidated EBITDA at BRL4.7 billion in 2025, increasing to BRL5.6 billion by 2027. Compass' consolidated cash flow from operations (CFFO) should register BRL3.4 billion in 2025, with negative free cash flow (FCF) of about BRL300 million after dividend distribution of BRL1.0 billion, investments around BRL2.2 billion, and tax liability payment of BRL500 million. Compass' consolidated CFFO is expected at BRL3.5 billion and investments at BRL2.3 billion, on annual average from 2026 to 2028, with negative FCF at around BRL400 million after BRL1.4 billion of average annual dividends. Peer Analysis Compared to Latin American peers in the energy and natural gas sectors, Compass' ratings are influenced by its ownership structure and operational environment. The company's SCP for the Local Currency IDR compares with Energisa S.A. (BB+/Stable Outlook), a holding company with various operational subsidiaries, primarily in the energy distribution segment in Brazil. Energisa has solid growth potential, performs above average compared to the main peers in its main segment and is expected to maintain moderate leverage. Fitch believes Compass will gradually increase the diversification of its portfolio while maintaining a conservative financial profile. Compass's credit profile also compares to UGI International, LLC (UGII; BB+/Stable) which has a market-leading position as a distributor of liquefied petroleum gas (LPG) in Europe, with a business model supported by customer and supplier diversification and estimated net leverage ratios around 3.0x. Compass' SCP assessment is inferior to that of GNL Quintero S.A. (GNLQ; A-/Stable), which owns and operates the largest liquefied natural gas regasification terminal in Chile. Despite GNLQ's single asset operation, its leverage indicators are expected to decline to about 1.5x, and its credit profile benefits from activities in a country with better operational environment. Key Assumptions - COMGAS's marginal annual growth of 0.1% in the total volume distributed (excluding the thermoelectric generation segment); - Annual increase in COMGAS's contribution margin in line with Fitch's inflation estimates; - Compass' annual dividend distribution to Cosan of BRL1.2 billion on average in 2025-2027 and a BRL1.5 billion disbursement related to capital reduction in 2025. RATING SENSITIVITIES For Compass: Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of Cosan's ratings; - A downgrade of COMGAS's National Scale Rating. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive factors are not applicable, as the rating is already at the highest level of Fitch's National Scale Rating. For TRSP: Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of Compass' National Scale Rating; - Fitch's perception of reduced support incentives from Compass. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive factors are not applicable, as the rating is already at the highest level of Fitch's National Scale Rating. Liquidity and Debt Structure Fitch expects the holding Compass to maintain a robust liquidity exceeding BRL700 million and extended debt maturity. The recent debenture issuance, up to BRL3.2 billion with final maturity in 2032, will extend financial obligations, given use of proceeds for a prepayment offer of its existing debts: the second and the third debenture, maturing in 2030 and 2029, respectively. The debt exchange also allows for reduction in financial costs to CDI+0.65% to 0.7% per year, from an average of CDI+1.33% per year . As of March 31, 2025, Compass had a cash and equivalents balance of BRL758 million, and its adjusted total debt had an outstanding balance of BRL4.1 billion, with only BRL99 million maturing in the short term related to debt interest. The adjusted debt of the holding included a guarantee for debts of BRL800 million at TRSP, according to the agency's methodology. On a consolidated basis, the adjusted total debt at the end of March 2025 was BRL14.1 billion, with BRL1.1 billion maturing in the short term. This debt mainly consisted of BRL9.8 billion in debentures and BRL2.9 billion in loans from the Banco Nacional de Desenvolvimento Econômico e Social (BNDES), primarily allocated to COMGAS. Issuer Profile Compass is a non-operating subsidiary controlled by Cosan and is responsible for developing the group's activities within the natural gas industry in Brazil. Compass is strategically focused on distribution, regasification infrastructure and non-directional trading of natural gas. 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 ----------- ------ ----- TRSP - Terminal de Regaseificacao de GNL de Sao Paulo S.A Natl LT AAA(bra) Affirmed AAA(bra) senior unsecured Natl LT AAA(bra) Affirmed AAA(bra) Compass Gas e Energia S.A. LT IDR BB Affirmed BB LT IDR WD Withdrawn LC LT IDR BB Affirmed BB LC LT IDR WD Withdrawn Natl LT AAA(bra) Affirmed AAA(bra) senior unsecured Natl LT AAA(bra) Affirmed AAA(bra) =========================== C A Y M A N I S L A N D S =========================== AUB SUKUK: Fitch Affirms 'BB+' Rating on Sr. Unsecured Notes ------------------------------------------------------------ Fitch Ratings has affirmed Ahli United Bank B.S.C. (c)'s (AUB) Long-Term (LT) Issuer Default Rating (IDR) at 'BB+', with a Negative Outlook. Fitch has also affirmed AUB's Viability Rating (VR) at 'bb-'. Key Rating Drivers AUB's LT IDR reflects potential support from Kuwait Finance House (K.S.C.P) (KFH; A/Stable), its shareholder, as reflected by a 'bb+' Shareholder Support Rating (SSR). The Negative Outlook on AUB's IDR reflects that of Bahrain's sovereign rating, due to the cap on the LT IDR by Bahrain's Country Ceiling. AUB's VR balances its high exposure to lower-rated countries against resilient asset quality and strong profitability and capitalisation. It is constrained at one notch above Bahrain's sovereign rating (B+/Negative), due to material exposure to the domestic market, although the bank could remain solvent in a sovereign default. AUB's VR of 'bb-' is below its 'bb' implied VR, due to a negative adjustment for its business profile. Country Ceiling Constrains Support: KFH would have a high propensity to provide support to AUB, given the latter's full ownership by KFH, its notable role in the group, close operational parent-subsidiary integration and a high reputational risk for the parent from a subsidiary's default. However, the likelihood of support for AUB from KFH and, consequently, the bank's LT IDR, are constrained by Bahrain's 'BB+' Country Ceiling. High Exposure to Volatile Markets: AUB operates across the strong Gulf Cooperation Council markets and in the UK, but also in the higher-risk Egypt and Bahrain. After the sale of its Kuwaiti subsidiary in 1Q24, the contribution of the bank's operations in lower-rated countries rose to over half of gross financing at end-2024. This affects its assessment of AUB's operating environment and its business profile. Adequate Franchise; Rebranding Underway: AUB is a domestic systemically important bank with regional operations. Following the conversion to an Islamic bank in 2024, its subsidiaries were renamed under the KFH brand in January 2025, with the Bahraini core entity's rebranding planned for completion in 3Q25. This will strengthen AUB's integration with the parent. Moderate Risk Appetite: AUB's risk appetite is moderate, with prudent underwriting standards and adequate risk controls, as underlined by its resilient asset quality. Resilient Asset Quality: AUB has a solid asset structure, with the financing book accounting for 37% of total assets at end-1Q25, while non-financing assets were mostly liquid. The bank's Stage 3 receivables equalled a low 2.6% of gross financing at end-1Q25, while their coverage by reserves was 200%. Fitch expects the financing quality to remain stable in 2025-2026, supported by mostly stable operating environments in the Gulf Cooperation Council and improved conditions in Egypt. Strong Profitability: AUB's operating profit surged to 5.8% of risk-weighted assets (RWAs) in 2024 (2023: 2.3%) and was similar at an annualised 5.4% in 3M25. This was driven by lower RWAs, due to balance sheet deleveraging and prudential benefits from the Islamic conversion, but also because of higher margins and investment income. Fitch expects the bank's core profitability to moderate in 2025-2026, but remain well above the average 2% of 2021-2023. High Capital Buffer: AUB's capitalisation is strong, with a common equity Tier 1 (CET1) ratio of 21.5% at end-1Q25 (end-2024: 23.2%), including prudential benefits. This provides a substantial buffer above the 10.5% regulatory threshold. Additional Tier 1 perpetual securities support AUB's total capital ratio of 26% end-1Q25. Fitch expects the bank's capital buffer to remain high in 2025-2026 on strengthened internal capital generation. Deposits Contraction; Adequate Liquidity: AUB's deposit base shrank about 50% in 2024, due to the sale of a Kuwaiti subsidiary, before stabilising in 1Q25. The bank's gross financing/deposits ratio was moderate at 85% at end-1Q25, and Fitch expects it to remain stable in 2025-2026. Reliance on wholesale funding was high, at 36% of liabilities at end-1Q25, but the repayment schedule is manageable for the bank. AUB's liquidity buffer is comfortable, covering 38% of customer deposits at end-1Q25. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of AUB's SSR and LT IDR could result from a downgrade of Bahrain's sovereign rating or a downward revision of Bahrain's Country Ceiling. A downgrade of the Bahraini sovereign rating would result in a downgrade of AUB's VR. A downgrade of the VR could also arise from a material deterioration of the bank's operating environments. A substantial deterioration in the bank's asset quality, manifested in the Stage 3 financing ratio rising above 5%, combined with an operating profit below 1.25% of RWAs on a sustained basis, could lead to a VR downgrade. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of AUB's SSR and LT IDR is unlikely, given the Negative Outlook on the LT IDR. An upgrade would require an upward revision of Bahrain's Country Ceiling. A VR upgrade would require an upgrade of the Bahraini sovereign rating and a strengthening of the bank's business profile, underpinned by a higher exposure to low-risk operating environments on a sustained basis, while maintaining a stable financial profile. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS AUB's LT IDR (xgs) is two notches below KFH's LT IDR (xgs) of 'BBB-(xgs)', based on support considerations. Its Short-Term (ST) IDR and ST IDR (xgs) are mapped to the bank's LT IDR and LT IDR (xgs), respectively. AUB's senior unsecured debt and sukuk, issued through AUB Sukuk Limited (AUBSL), a wholly owned special-purpose vehicle, are rated in line with the bank's IDRs and IDRs (xgs). A default of these senior unsecured obligations would equal a default by AUB, in accordance with its rating definitions. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES AUB's LT IDR (xgs) is sensitive to a rating action on KFH's LT IDR (xgs). AUB's ST IDR and ST IDR (xgs) are sensitive to changes in AUB's LT IDR and LT IDR (xgs), respectively. The senior unsecured debt and sukuk ratings are sensitive to changes in AUB's IDRs and IDRs (xgs). VR ADJUSTMENTS The operating environment score of 'bb' is below the 'a' category implied score due to the following adjustment reasons: sovereign rating (negative) and geographical scope (positive). The capitalisation and leverage score of 'bb+' is below the 'bbb' category implied score due to the following adjustment reason: leverage and risk-weight calculation (negative). Public Ratings with Credit Linkage to other ratings The IDRs of AUB are linked to KFH's. ESG Considerations As an Islamic bank, AUB needs to ensure compliance of its entire operations and activities with sharia principles and rules. This entails additional costs, processes, disclosures, regulations, reporting and sharia audit. This results in a ESG Governance Structure Relevance Score of '4' for the bank, which has a negative impact on the bank's credit profile and is relevant to the rating in combination with other factors. In addition, Islamic banks have an ESG Relevance Score of '3' for exposure to social impacts, above sector guidance for an ESG relevance score of '2' for comparable conventional banks, which reflects certain sharia limitations being embedded in Islamic banks' operations and obligations, although this only has a minimal credit impact on the entities. 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 ----------- ------ ----- AUB Sukuk Limited senior unsecured LT BB+ Affirmed BB+ senior unsecured LT (xgs) BB(xgs) Affirmed BB(xgs) Ahli United Bank B.S.C. (c) LT IDR BB+ Affirmed BB+ ST IDR B Affirmed B Viability bb- Affirmed bb- LT IDR (xgs) BB(xgs) Affirmed BB(xgs) ST IDR (xgs) B(xgs) Affirmed B(xgs) Shareholder Support bb+ Affirmed bb+ senior unsecured LT BB+ Affirmed BB+ senior unsecured ST B Affirmed B senior unsecured ST (xgs) B(xgs) Affirmed B(xgs) senior unsecured LT (xgs) BB(xgs) Affirmed BB(xgs) ============= J A M A I C A ============= EQUITYLINE MORTGAGE: Investors Face $850MM Loss on Investment ------------------------------------------------------------- Jamaica Observer reports that Jamaican investors who poured US$5.37 million ($845.50 million) into EquityLine Mortgage Investment Corporation (ELMIC) are bracing for devastating losses as court proceedings suggest limited recovery from the Canadian mortgage lender. The latest court filing by KSV Restructuring Inc, receiver for EquityLine SPV Limited Partnership, revealed these details, according to Jamaica Observer. The SPV (special purpose vehicle) was formed in June 2021 by ELMIC to access a credit facility from Equitable Bank, Canada's seventh-largest bank, the report notes. KSV was appointed receiver of EquityLine SPV in August 2024 after Equitable Bank and Computershare Trust Company of Canada (CTCC) uncovered proceedings that had taken place without their knowledge, the report relays. KSV later found that 25 mortgages arranged by EquityLine SPV — valued at CAD$11.8 million — were in default, with at least eight mortgagors alleging fraud, the report relays. Three mortgagors have filed legal action against CTCC which holds the legal title to the mortgage loans on behalf of EquityLine SPV, the report discloses. Among the mortgagors alleging fraud is Margaret Ellen Jank, a 72-year-old single woman who has filed two legal claims against CTCC, EquityLine SPV, ELMIC and several other parties, the report says. Jank is retired and earns CAD$28,883 in annual fixed income, the report relays. These claims are being spearheaded by Paula Fazari, her daughter and litigation guardian, with Geoffrey Adair listed as the attorney of record, the report discloses. Jank's legal team sought to lift the stay of proceedings applied against EquityLine SPV to allow for her to bring a motion for a partial summary judgement to discharge the CAD$335,000 mortgage against her property, the report relays. However, KSV opposed this proposal as it would defeat the single proceeding model of administering the EquityLine SPV estate, the report notes. Also, KSV mentioned that this would create risk of inconsistent findings and increase the cost of administering the estate which requires it to understand the validity and enforceability of the allegedly fraudulent mortgages, the report discloses. Justice Jessica Kimmel, the judge overseeing the Equitable Bank versus EquityLine SPV case, approved the request by KSV and Jank to adjudicate the request to discharge the Jank mortgage subject to a particular process, the report relays. That process would include KSV seeking a response and position from Sergiy Shchavyelyev, founder and president of the EquityLine Group of companies; Terry Walman, an attorney at law, who should respond within 30 days; and KSV reviewing EquityLine SPV's books and records relating to Jank's mortgage along with her supporting documents in a reasonable and proportionate manner, with KSV to provide a response within 60 days of May 16, the report discloses. If KSV determines that the Jank mortgage charge should be discharged, then this determination would be binding on all other parties mentioned in the claim with KSV to process the discharge request, the report relays. However, if KSV does not determine that the Jank mortgage charge should be discharged, Jank could bring a motion to the court to set aside KSV's determination and request the Ontario Superior Court of Justice discharge the mortgage charge, the report notes. This isn't great news for Jamaican investors as the realisable value of EquityLine SPV's portfolio might be reduced even further, making any recovery of their investment even more dismal, the report says. When Equitable Bank began its legal proceedings in June 2024 it was stated that there were 34 mortgages worth CAD$18.12 million on EquityLine SPV's books relative to the CAD$10.07 million owed to Equitable Bank, the report relays. However, Equitable discovered that most of the mortgages were in default, the report notes. ELMIC withdrew its 2023 audited financials after Grant Thornton LLP, an auditing firm in Canada, requested it withdraw its auditor's report, the report notes. As a result, investors don't have a true estimation of the business' true state, the report discloses. The last set of numbers made available showed that ELMIC had a CAD$5.98-million shareholder deficit which meant that liabilities exceeded assets, the report relays. ELMIC's last reported asset base for 2023, with the consolidation of EquityLine SPV, was CAD$47.26 million and liabilities of CA$53.24 million, the report says. EquityLine Mortgage Investment Corporation listed on the Jamaica Stock Exchange (JSE) in January 2019 where it raised US$5.37 million by issuing series A redeemable preferred shares, the report notes. Investors received preferred dividends at an 8.0 per cent yield which totalled approximately US$2.15 million over the five years the company maintained its payments, the report relays. However, the principal component was not repaid to Jamaican investors after multiple announcements. Sigma Global Bond, Sigma Optima, Sagicor Pooled Equity Fund and Sigma Global Markets Fund own two-thirds of the preferred shares, the report notes. These funds are all managed by Sagicor Group Jamaica Limited, the report says. ELMIC was delisted from the JSE in October 2024 for multiple breaches of market rules, the report discloses. At least six active legal claims have been filed against ELMIC over the last year, with the next case hearing to be discussed next month, the report relays. ELMIC narrowly dodged going into receivership along with its affiliate companies in December after KSV sought the request through the courts, the report adds. JAMAICA: BOJ to Offer Another Fixed Rate Certificate of Deposit --------------------------------------------------------------- RJR News reports that the Bank of Jamaica offered another 30-day fixed rate certificate of deposit on May 28, 2025 in order to take another $45 billion out of circulation as it struggles to stabilise the exchange rate. The dollar fell to J$160.23 to US$1 at the end of trading on Monday, May 26, according to RJR News. Financial institutions and members of the public who take up this offer will be paid 6% interest per annum, but this will be taxed up at 25%, the report notes. The instrument will mature on June 27 this year, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a positive rating outlook. In October 2023, Moody's upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to B1 from B2, and senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has been changed to positive from stable. In September 2024, S&P affirmed 'BB-/B' longterm foreign and local currency sovereign credit ratings on Jamaica and revised outlook to positive. JAMAICA: Traditional Export Crops Down in First Quarter ------------------------------------------------------- Jamaica Observer reports that output for some traditional export crops declined by 23.5 per cent during the first quarter of 2025, largely due to the devastation caused by Hurricane Beryl in late 2024, data from the Planning Institute of Jamaica (PIOJ) has shown. According to preliminary estimates released by the entity, key crops such as bananas and sugar cane were severely affected, the report notes. This, as banana production fell by 24.9 per cent, while sugar cane declined by 6.8 per cent, significantly weighing down the sector's overall performance, according to Jamaica Observer. "Relative to other agricultural crops, this crop group requires a longer gestation period — that is, a longer maturity time from planting to harvest, upwards of nine months," PIOJ Director General Dr Wayne Henry explained during a recent briefing, the report relays. The banana industry was among the hardest hit by the hurricane, the report discloses. Preliminary assessments by the island's Banana Board indicated losses of nearly 80 per cent for that crop as well as plantains, the report says. In the powerful storm's aftermath major producers such as JP Farms and other large growers reported substantial damage to their fields which saw approximately 1,200 of some 1,500 hectares of commercial banana crops becoming affected, the report relays. Sugar cane production also suffered significant setbacks, with an average loss of 40 per cent islandwide, the report notes. Of that amount, 20 per cent occurred in the east while the south-west accounted for 80 per cent of the losses, the report relays. In contrast, the "other agricultural crops" category grew by 5.8 per cent, buoyed by increased production in eight of nine crop groups, the report relays. The most notable gains were recorded in cereals (up 21.7 per cent), yams (up 7.9 per cent), legumes (up 7.7 per cent), vegetables (up 7.3 per cent), other tubers (up 6.4 per cent), and fruits (up 3.8 per cent), the report says. Despite the overall flat performance, the local agriculture sector showed signs of resilience, posting a modest 0.1 per cent increase in real value added for the quarter, the report relays. The PIOJ attributed this to various social and economic support measures, the report notes. This follows sharp contractions of 12.5 per cent and 10.6 per cent in the July-September and October-December quarters, respectively, the report discloses. "The industry's performance reflected continued recovery, facilitated by favourable weather conditions and targeted assistance provided to farmers. These efforts supported replanting initiatives and boosted production levels, particularly for short-term crops," the PIOJ noted, the report discloses. The quarter's results were also supported by improved productivity, with output per hectare increasing in five of the nine main crop groups. Additionally, there was a 2.0 per cent increase in the hectares of domestic crops harvested, the report says. "Compared to the corresponding quarter in 2024, output rose in seven parishes, led by Manchester [up 16.1 per cent] and Trelawny [up 5.5 per cent]," Henry also added. However, growth in the sector was tempered by a 1.5 per cent decline in animal farming, the report relays. This downturn contributed to a 20.5 per cent reduction in egg production, which outweighed a slight 0.3 per cent increase in poultry meat, the report discloses. Agriculture, which registered the smallest output within the goods-producing industries, is nonetheless expected to play a vital role alongside tourism and construction in driving the estimated economic growth of 0.5 to 1.5 per cent during the current April–June quarter, according to the PIOJ's short-term outlook, the report notes. "This performance will be supported by increased output in agriculture due to continued strengthening in domestic crop production and a reduction in the drag on growth from the export crop component, as longer-term crops begin to recover," the PIOJ said in its report, Jamaica Observer relays. "The projection for fiscal year 2025/26 is for growth within the range of 1.0 per cent-2.0 per cent. All industries are forecast to record growth, as the recovery from the weather-related shocks in 2024 will become more pronounced in the latter half of calendar year 2025," it added. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a positive rating outlook. In October 2023, Moody's upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to B1 from B2, and senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has been changed to positive from stable. In September 2024, S&P affirmed 'BB-/B' longterm foreign and local currency sovereign credit ratings on Jamaica and revised outlook to positive. ********* 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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