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T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, June 9, 2025, Vol. 26, No. 114
Headlines
A R G E N T I N A
ARGENTINA: Milei's Cuts Are Making Credit Harder to Collect
ARGENTINA: Milei's FX Gambit Sparks Sharpest Demand for Dollars
VISTA ENERGY: Fitch Assigns 'BB-' Rating on Senior Unsecured Bonds
B R A Z I L
AZUL SA: Case Summary & 30 Largest Unsecured Creditors
AZUL SA: Moody's Downgrades CFR to 'Ca' on Chapter 11 Filing
BANCO SOFISA: Moody's Affirms Ba2 Deposit Ratings, Outlook Stable
BRAZIL: Government to Back Bill Cutting Tax Breaks by 10%
BRAZIL: S&P Affirms 'BB/B' Sovereign Credit Ratings, Outlook Stable
GOL LINHAS: Can Implement Ch. 11 Plan With Releases
[] Moody's Takes Action on Ambev, Petrobras & Vale
[] Moody's Takes Actions on 27 Brazilian Financial Institutions
J A M A I C A
JAMAICA: Gov't, Private Must Develop Measures to Drive Investments
M E X I C O
CEMEX SAB: Fitch Rates USD1 Billion Perpetual Subordinated Notes
P U E R T O R I C O
STONEMOR INC: Moody's Upgrades CFR to 'B3', Outlook Stable
T R I N I D A D A N D T O B A G O
TRINIDAD GENERATION: Fitch Gives 'BB' LongTerm IDRs, Outlook Stable
- - - - -
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A R G E N T I N A
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ARGENTINA: Milei's Cuts Are Making Credit Harder to Collect
-----------------------------------------------------------
Ignacio Olivera Doll at Bloomberg News reports that President
Javier Milei's austerity drive has helped steady Argentina's
economy, and yet, financial pressure keeps mounting on consumers
and businesses.
Banks in recent weeks started recording initial signs of credit
deterioration, according to Bloomberg News. Overdue credit card
balances climbed to 2.8 percent in March, the highest in three
years, while defaults on personal loans jumped to 4.1 percent, the
highest in nine months, according to the country's Central Bank,
Bloomberg News notes. The number of bounced cheques is on the rise,
too, Bloomberg News says.
Overall, bad debt charges across Argentina's financial system
reached a five-year peak when measured as a share of total assets,
the Central Bank data shows, Bloomberg News relates. Stress is
also building among corporates, with an increase in business
defaults pointing to more troubles ahead, Bloomberg News
discloses.
The findings underscore some of the challenges that Milei faces as
his administration pushes ahead with aggressive fiscal tightening,
Bloomberg News notes. "It's a yellow light. Credit collection is
becoming more difficult," said Gastón Rossi, director of Banco
Ciudad de Buenos Aires, one of the country's biggest banks,
Bloomberg News discloses.
Just over a year and a half since Milei took office, households are
under strain from stagnant wages and lingering inflation, which is
still running in double digits despite recent declines, Bloomberg
News relays.
Against this backdrop, the number of bounced cheques climbed to the
highest in April since the Covid-19 pandemic five years ago,
topping 64,000 in absolute terms, with a rejection rate of 1.3
percent relative to total cleared cheques, Bloomberg News notes.
For comparison, that ratio stood at 0.8 percent in the United
States in 2024, according to US Federal Reserve data, Bloomberg
News says.
On the corporate side, firms across sectors including industry,
retail, construction and entertainment — particularly exporters
— are feeling the squeeze from weaker consumer spending and
shrinking profit margins, Bloomberg News relays. Companies that
once profited from borrowing in pesos and exploiting differences in
exchange rates are now struggling, Bloomberg News notes.
Many of them have also lost access to a once-lucrative capital
market fuelled by exchange controls, Bloomberg News notes. Local
investors, long eager to snap up dollar-denominated or
dollar-linked corporate debt as a hedge against currency risks, are
becoming more selective, Bloomberg News relays. The lifting of
restrictions has given them new options to dollarise their
portfolios, Bloomberg News notes.
Meanwhile, a recent wave of corporate defaults has prompted sharper
scrutiny of issuers and instruments alike, with companies like
Albanesi SA missing interest payments and Celulosa Argentina SA
warning of a bond default, Bloomberg News discloses. Citrus
producer San Miguel AGICI declared its latest debt issue on the
local market void on May 13, while Petrolera Aconcagua Energia SA
decided to tap overseas investors to raise US$250 million, only to
find little demand, Bloomberg News relays.
The credit jitters are a worrying development for Milei, who faces
midterm elections in October, Bloomberg News notes. The results of
the vote will send a crucial signal to investors on whether the
libertarian president still has broad public support for his
austerity agenda, Bloomberg News says.
"Milei's administration faces a tough choice ahead of the
elections: stabilise or stimulate," said Banco Ciudad's Rossi. "The
government has opted to bring down inflation as quickly as
possible, aiming for the lower rate by October, even if real wages
stagnate or dip slightly," 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.
ARGENTINA: Milei's FX Gambit Sparks Sharpest Demand for Dollars
---------------------------------------------------------------
Manuela Tobias at Bloomberg News reports that demand for dollars in
Argentina hit its highest since 2019 after President Javier Milei
all but eliminated foreign-exchange restrictions in the
crisis-prone South American nation.
About a million Argentines purchased a net total of US$1.9 billion
worth of greenbacks in April, according to Central Bank data,
according to Bloomberg News. That's up sharply from March, when
34,000 people bought just US$6 million in US currency, Bloomberg
News notes.
The libertarian leader announced the loosening of controls on April
11 after scoring a US$20-billion financing package from the
International Monetary Fund, Bloomberg News relays. Among the
restrictions eliminated was a US$200 limit on purchases by
individuals imposed under former president Mauricio Macri during a
run on the currency sparked by his unsuccessful re-election
campaign against a Peronist rival, Bloomberg News says.
About half of the greenbacks stayed within Argentina's banking
system as deposits increased by US$1 billion, according to the
central bank report released, Bloomberg News notes.
Eliminating the controls, collectively known in Argentina as "el
cepo," was a bold move by Milei, who faces midterm elections of his
own in October, Bloomberg News discloses. His administration has
also struggled to accumulate hard-currency reserves in recent
months, Bloomberg News says.
The US$2 billion in purchases "is not a surprisingly high nor
surprisingly low number taking into account it was the first month
without the cepo," said Marcos Buscaglia, co-founder of Buenos
Aires-based consulting firm Alberdi Partners, Bloomberg News
relays.
Historically, dollar demand jumps just before elections. In the
last decades, demand doubled or tripled on average before people
went to vote, according to local brokerage Portfolio Personal
Inversiones, Bloomberg News discloses.
"We should expect greater demand for greenbacks on the eve of
midterm elections on October 26," PPI analysts led by research
chief Pedro Siaba Serrate said in a report to investors, Bloomberg
News relays. "We're awaiting May data to come to a conclusion
about a more stabilised dollar demand," 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.
VISTA ENERGY: Fitch Assigns 'BB-' Rating on Senior Unsecured Bonds
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB-' rating to Vista Energy Argentina
S.A.U.'s (Vista Argentina) proposed benchmark-size unsecured bonds.
Net proceeds will be used for capex, working capital, and general
corporate purposes to grow its oil and gas business in Argentina.
Fitch currently rates Vista Argentina's Long-Term Foreign and Local
Currency Issuer Default Rating (IDR) 'BB-'. The Rating Outlook is
Stable.
Vista Argentina's 'BB-' Foreign Currency IDR is three notches above
Argentina's Country Ceiling (B-) due to cash held abroad and export
revenue covering the next three years of hard currency debt service
by over 1.5x.
The ratings reflect Vista Argentina's strong business and financial
profile, with expected production of 125,000 barrels of oil
equivalent per day (boe/d), 1P reserves of at least 500 million
barrels of oil equivalent (mmboe) in fiscal 2025, and leverage
below 3.0x.
Key Rating Drivers
Rating Above the Country Ceiling: Vista Argentina's cash flow
generation is concentrated in Argentina (CCC+). The Long-Term
Foreign Currency IDR is not constrained by Argentina's Country
Ceiling (B-). This is due to the company's ability to cover hard
currency debt service with export revenue and cash held abroad,
while maintaining a foreign currency debt service coverage ratio
above the threshold of 1.5x for at least three years. This enables
an uplift of up to three notches above the Country Ceiling, in
accordance with Fitch's 'Corporate Rating Criteria'.
The recent acquisition of Petronas E&P Argentina S.A. (PEPASA) will
expand Vista Argentina's hard currency access, as the company can
export 20% of "La Amarga Chica" (LACh) (unconventional concession
in Vaca Muerta) production with a 0% export duty rate and freely
use the proceeds.
Growing Operating Scale: Fitch expects Vista Argentina's production
to average 125,000 boe/d in fiscal 2025, while 1P reserves should
be close to 500 mmboe and a 1P reserve life index (RLI) of 14
years. This operating profile is in line with the midpoint of the
'BB' category. The growth is fueled by the PEPASA acquisition
adding 36,000 bbl/d in production and 140 million barrels of oil
equivalent (mmboe) in 1P reserves based on fiscal 2024 data.
Fitch projects Vista Argentina to deploy USD2.8 billion in capex
over the next three years, focusing on production growth. As of
1Q25, total proforma production reached 114,090 boe/d.
Low-Cost Producer: Fitch estimates an operating cost (cost of goods
sold; COGS) per boe of $31/boe and EBITDA of USD1.4 billion
($31/boe) in fiscal 2025. Vista Argentina is one of the independent
oil and gas producer with the lowest production costs among Fitch's
rated portfolio in Latin America, with half-cycle and full-cycle
costs estimated at $17.2/boe and $26.8/boe, respectively, as of
fiscal 2024. These low costs are driven by economies of scale and
by the company's focus on shale oil and gas, comparing favorably to
other peers in Latin America.
Strong Financial Profile: Fitch projects EBITDA leverage will
remain below 3.0x over the rating horizon, with coverage rations
consistently above 5.0x. On a boe basis, Fitch estimates debt to 1P
to be close to $4/boe in fiscal 2025. Vista Argentina's strong
financial flexibility allows it to mitigate the risks associated
with its high-risk operating environment.
Peer Analysis
Vista Argentina has low production costs compared to other entities
rated by Fitch in Latin America, making it a key differentiator
among its peers. Vista Argentina's fiscal 2023 half-cycle cost
estimated at $13/boe was lower compared to Brava Energia S.A.
(BB-/Stable) at $44/boe, and Prio S.A. (BB/Positive Watch) at
$20/boe.
In terms of operational scale and 1P reserves, Fitch projects that
Vista Argentina's total production will average 125,000 boe/d and
1P reserves of at least 500 mmboe in fiscal 2025, placing Vista in
the mid-point range of the 'BB' category.
Vista Argentina's operations are concentrated in Argentina, which
is a limiting factor for its rating as the operating environment of
'b' poses higher risks compared to its peers. This is the same case
for Pan American Energy S.L. (BB-/Stable), whose rating is also
constrained by the Argentine operating environment. However, its
medium production size of 222 thousand barrels of oil equivalent
per day (kboe/d) and strong 1P reserve life of close to 19 years
compare favorably to other 'BB' rated oil and gas exploration and
production (E&P) producers.
Fitch expects Vista Argentina's EBITDA leverage to remain below
3.0x throughout the rating cycle. Compared to its peers, Fitch
expects the average leverage of these E&P companies to be also
below 3.0x over the next three years. On a boe basis, Vista's
fiscal 2024 total debt to 1P was $2.8/boe.
Key Assumptions
- Average Brent prices from 2024 to 2027 (USD/bbl): 65, 65, 65,
60;
- Average daily production from 2025 (kboe/d): 125;
- Oil sales consider discount to Brent of $8/bbl;
- Lifting cost in 2025 of $5/boe between 2025 and 2027;
- Royalties of $8/boe in between 2025 and 2027;
- Selling expenses of $4.5/boe between 2025 and 2027;
- G&A of $2.5/boe between 2025 and 2027;
- EBITDA leverage at or below 3.0x over the rating horizon;
- 1P Reserve replacement ratio of 125% in 2024;
- No dividend payments.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Downgrade of the Country Ceiling of Argentina;
- Hard currency cash flows from operations outside Argentina not
covering hard currency gross interest expense in excess of 1.5x for
24 months;
- Vista Argentina's ratings could be negatively affected if hard
currency liquidity is weakened by capital controls;
- Debt/EBITDA and net debt/EBITDA ratios above 3.5x and 2.5x,
respectively, on a sustained basis;
- Major operational disruptions at key assets, resulting in a
significant reduction in production.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Upgrade of Argentina's Country Ceiling;
- Sustained access to hard currency committed credit lines from
highly rated international banks;
- Increasing production to more than 125 kboe/d, while maintaining
1P reserve life of at least seven years.
Liquidity and Debt Structure
Vista Argentina had around USD598 million in cash and equivalents
and USD182 million in short-term debt as of 1Q25. Vista Argentina,
like other E&Ps in Argentina, has taken advantage of local capital
markets to access cheap financing to fund its operations. As of
1Q25, 36% of the company's debt was denominated in hard currency.
Fitch believes Vista Argentina can comfortably service debt with
cash on hand and cash flows through the rating horizon in the event
the company faces a challenging financing environment due to
Argentina's capital controls.
Issuer Profile
Vista Argentina is a midsize O&G producer with average proforma
production of 114,090 boe/d as of 1Q25. Its main assets located in
the Neuquina basin (Vaca Muerta) in Argentina. Vista is the
second-largest unconventional oil producer in Argentina.
Date of Relevant Committee
25-Nov-2024
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
Vista Energy Argentina S.A.U. has an ESG Relevance Score of '4' for
GHG Emissions & Air Quality due to the growing importance of
policies designed to limit the greenhouse gas (GHG) emissions from
the production of oil and gas and potentially lessening demand,
which has a negative impact on the credit profile, and is relevant
to the rating[s] in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating
----------- ------
Vista Energy
Argentina S.A.U.
senior unsecured LT BB- New Rating
===========
B R A Z I L
===========
AZUL SA: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------
Lead Debtor: Azul S.A.
No. 939, Avenida Marcos Penteado de Ulhoa Rodrigues
8th floor, Edificio Jatoba, Condominio Castelo Branco
Barueri, Sao Paulo 06460-040 Brazil
Business Description: Azul is a Brazilian airline that provides
scheduled passenger air transportation
across Brazil and select international
destinations. It operates about 900 daily
departures to 137 locations and is the
largest airline in Brazil by number of
departures and cities served. Founded in
2008, the Company maintains a fleet of 226
aircraft and employs over 16,000 people.
Chapter 11 Petition Date: May 28, 2025
Court: United States Bankruptcy Court
Southern District of New York
Twenty affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Azul S.A. (Lead Case) 25-11176
Azul Linhas Aereas Brasileiras S.A. 25-11175
IntelAzul S.A. 25-11177
ATS Viagens e Turismo Ltda. 25-11178
Canela Turbo Three LLC 25-11179
Canela 336 LLC 25-11180
Azul Secured Finance II LLP 25-11181
Azul IP Cayman Ltd. 25-11182
Azul IP Cayman Holdco Ltd. 25-11183
ATSVP – Viagens Portugal, Unipessoal LDA
25-11184
Cruzeiro Participacoes S.A. 25-11185
Azul Conecta Ltda. 25-11186
Azul Saira LLC 25-11187
Azul SOL LLC 25-11188
Azul Secured Finance LLP 25-11189
Azul Investments LLP 25-11190
Canela Investments 25-11191
Azul Finance LLC 25-11192
Azul Finance 2 LLC 25-11194
Blue Sabia LLC 25-11195
Judge: Hon. Sean H Lane
Debtors'
Bankruptcy
Counsel: Timothy Graulich, Esq.
Marshall S. Huebner, Esq.
Joshua Y. Sturm, Esq.
Jarret Erickson, Esq.
Richard J. Steinberg, Esq.
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, New York 10017
Tel: (212) 450-4639
Email: timothy.graulich@davispolk.com
marshall.huebner@davispolk.com
joshua.sturm@davispolk.com
jarret.erickson@davispolk.com
richard.steinberg@davispolk.com
Debtors'
Restructuring
Advisor: FTI CONSULTING, INC
Debtors'
Claims &
Noticing
Agent: STRETTO, INC.
Total Assets as of March 31, 2025: $4,541,000,000
Total Debts as of March 31, 2025: $9,575,000,000
Samuel Aguirre signed the petition as chief restructuring officer.
A full-text copy of the Lead Debtor's petition is available for
free on PacerMonitor at:
https://www.pacermonitor.com/view/PAURHWQ/Azul_SA__nysbke-25-11176__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. UMB Bank, N.A. Bonds $354,826,834
5910 N Central Expwy, Suite 1900
Dallas, TX 75206
Attn: Israel Lugo
Phone: +1 (214) 389-5947
Fax: +1 (214) 336-0526
Email: israel.lugo@umb.com
2. Comando Da Aeronautica Trade Debt $189,887,069
Avenida General Justo, 160
Predio E 009
Rio de Janeiro, RJ 20021-130
Brasil
Attn: President Or General Counsel
Phone: +55 (11) 5098-2000
Fax: +55 (21) 2101-4900
3. GE Engine Services Trade Debt $141,717,246
Distribution LLC
1 Neumann Way, Room 111
Customer Product Support
Cincinnati, OH 45215
Attn: Lais Antunes
Phone: +55 (11) 95078-1524
Email: lais.antunes@geaerospace.com
4. Raizen S.A. Trade Debt $72,054,935
Av Afonso Arinos De Melo Franco
222, Blc 2 Sal 321
Rio de Janeiro, RJ 22640-100
Brasil
Attn: Frederico Suano Pacheco De Araujo
Phone: +55 0300 777 5656
Email: shellaviation@raizen.com
5. Citibank, N.A. Line of Credit $60,338,789
Av. Paulista, 1111
Sao Paulo, SP 01311-920
Brasil
Attn: Geny Zhao
Phone: +55 (11) 4009-0069
Email: geny.zhao@citi.com
6. Wilmington Trust SP Services Aircraft $38,824,255
(Dublin) Limited Notes
3 St. George's Dock, 4th Floor
Dublin, D01 X5X0
Ireland
Attn: Aercap C/O Breeda Cunningham
Phone: +353 1 612 5555
Email: aercap@wilmingtontrust.com
7. Air BP Brasil Ltda. Trade Debt $36,276,447
Avenida Das Nacoes Unidas, 12399
Andar 4 Sala43 E 44 Parte Lado a
Sao Paulo, SP 04578-000
Brasil
Attn: Juliana Lamberth
(Account Manager)
Phone: +55 (11) 93308-0693
Email: juliana.lamberth@bp.com
8. ATR Americas Inc Trade Debt $32,750,931
1715 NW 84th Ave
Doral, FL 33126
Attn: Christopher Jones
Phone: +1 (571) 203-6900
Email: christopher.jones@atr-aircraft.com
9. Ministerio Da Fazenda Taxes $22,947,031
Esplanada Dos Ministerios
Bloco P 5.andar
Brasilia, DF 70048-900
Brasil
Attn: President Or General Counsel
Phone: +55 (21) 2334â€4300
Email: gabinete.ministro@fazenda.gov.br
10. GE Celma Ltda. Trade Debt $21,690,792
Rua Luiz Winter, 381, #393
Petropolis, RJ 25665-431
Brasil
Attn: Ricardo Amaro
Phone: + 55 (24) 98136 1942
Email: ricardo.amaro@geaerospace.com
11. CFM International Inc Trade Debt $19,731,683
1 Neumann Way
Cincinnati, OH 45215
Attn: Armand Luzi
Phone: +1 (513) 552-3272
Email: armand.luzi@ge.com
12. Embraer Aircraft Customer Trade Debt $18,990,362
Services
276 SW 34th St
Fort Lauderdale, FL 33315
Attn: President Or General Counsel
Phone: +1 (954) 359-3700
13. RRPF Engine Leasing Limited Engine $17,348,780
1 Brewer's Green Financing
London, SW1H 0RH
United Kingdom
Attn: Bobby Janagan
Phone: +44(0)7966 878224
Email: bobby.janagan@rolls-royce.com
14. Embraer S.A. Trade Debt $17,313,221
Rod. Floriano Rodrigues Pinheiro
333, Galpao F 41
Taubate, SP 12045-000
Brasil
Attn: Denis Esteves
Phone: +55 (12) 98157-0609
Email: denis.esteves@embraer.com.br
15. PK AirFinance S.a.r.l. Engine $14,838,171
1370 Avenue of the Americas Financing
32nd Floor
New York, NY 10019
Attn: Guillaume Degemard
Email: gdegemard@apollo.com
16. NAC Aviation 17 Limited Promissory $13,875,189
Bedford Place - Henry St, Notes
5th Floor
Limerick, V94 K6YY
United Kingdom
Attn: President Or General Counsel
Phone: +353 61 432 400
17. Navitaire Inc Trade Debt $11,760,679
333 S Seventh St, Suite 1700
Minneapolis, MN 55402
Attn: Grody Evans
Phone: +1 (612) 317-7000
Email: gordy.evans@navitaire.com
18. Wells Fargo Bank Northwest, N.A. Equipment $11,325,838
260 N Charles Lindbergh Dr Leasing
Salt Lake City, UT 84116
Attn: Val Orton
Phone: +1 (801) 246-5053
Email: val.t.orton@wellsfargo.com
19. Sky High L Leasing Company Trade Debt $9,282,055
Limi
2 Grand Canal Sq
Dublin, D02 A342
Ireland
ttn: Icbc Aviation Leasing
C/O Catherine Kearns
Phone: +353 01 874-3050
Email: ckearns@skyleasing.com
20. Bank of Utah Trade Debt $7,347,921
200 E South Temple, Suite 210
Salt Lake City, UT 84111
Attn: President Or General Counsel
Phone: +1 801 924-3690
Email: aercap@bankofutah.com
21. Mapfre Seguros Gerais S.A. Trade Debt $6,838,103
Avenida Das Nacoes Unidas, 14261
Andar 17 Ao 21 Ala a
Sao Paulo, SP 04794-000
Brasil
Attn: President Or General Counsel
Phone: +55 0800 775 4545
22. Wilmington Trust Company Trade Debt $6,312,122
1100 N Market St
Wilmington, DE 19890
Attn: Azorra C/O Adam Vogelsong
Phone: +1 (302) 651-1000
Email: avogelsong@wilmingtontrust.com
23. Sky High Leasing Company Aircraft $6,041,768
Limited Notes
2 Grand Canal Square
Grand Canal Harbour
Dublin, D02 A342
Ireland
Attn: Catherine Kearns
Phone: +353 01 874-3050
Email: ckearns@skyleasing.com
24. Pratt E Whitney Engine Trade Debt $5,946,643
Leasing LLC
400 Main St
Hartford, CT 06118-3811
Attn: General Manager
Email: gppwengineleasing@prattwhitney.com
25. ATR Avions De Transport Trade Debt $5,328,366
Regional
1 Allee Pierre Nadot
Blagnac, Occitania 31700
France
Attn: Rahul Domergue
Phone: +33 (0)5 62 61 21
Email: rahul.domergue@atr-aircraft.com
26. Rolls Royce PLC Engine Overhaul Trade Debt $5,327,151
Services
Wilmore Rd, Gate 9
Derby, Leicestershire DE24 8DX
United Kingdom
Attn: Julio Grande
Phone: +55 (11) 99604-0759
Email: julio.grande@rolls-royce.com
27. SFV Aircraft Holdings Trade Debt $4,760,655
IRE 12 DAC
32 Molesworth St
Dublin, D02 Y512
Ireland
Attn: Catherine Kearns
Phone: +353 01 874-3050
Email: ckearns@skyleasing.com
28. Airbus Americas CUST Serv Inc Trade Debt $4,461,015
21780 Filigree Court
Ashburn, VA 20147
Attn: President Or General Counsel
Phone: +1 (703) 724-1836
29. SFV Aircraft Holdings Trade Debt $4,174,861
IRE 11 DAC
32 Molesworth St
Dublin, D02 Y512
Ireland
Attn: Catherine Kearns
Phone: +353 01 874-3050
Email: ckearns@skyleasing.com
30. Panasonic Avionics Corporation Trade Debt $3,530,597
3347 Michelson Dr, Suite 100
Irvine, CA 92612
Attn: Raphael Marinho
Phone: +1 (949) 672-2000
Email: raphael.marinho@panasonic.aero
AZUL SA: Moody's Downgrades CFR to 'Ca' on Chapter 11 Filing
------------------------------------------------------------
Moody's Ratings has downgraded Azul S.A.'s corporate family rating
to Ca from Caa2. At the same time, Moody's have downgraded to Ca
from Caa3 the rating of the backed senior secured first lien debt
due 2028 and the rating of the backed senior secured debts due 2029
and 2030 of Azul Secured Finance LLP (Delaware) and the backed
senior unsecured debt ratings of Azul Investments LLP. Moody's have
also downgraded to Ca from Caa1 Azul Secured Finance LLP's
superpriority notes due 2030 and the exchanged first-lien notes due
2028. The outlook for the issuers remain negative.
Subsequent to the actions, Azul's CFR, Azul Investments LLP's
Senior Unsecured and Azul Secured Finance LLP's Senior Secured
ratings will be withdrawn shortly following the filing for Chapter
11.
RATINGS RATIONALE
The downgrade of Azul's ratings to Ca follows the announcement that
the company has filed for voluntary protection under the US Chapter
11 financial reorganization process and Moody's views of some
prospect for recovery for existing secured and unsecured
creditors.
In order to implement the restructuring with its key stakeholders,
Azul expects a commitment of approximately $1.6 billion in
financing throughout the process, elimination of over $2.0 billion
of debt, and contemplate further equity financing of up to $950
million upon emergence. Azul's restructuring is also underlined by
a secured commitment for debtor-in-possession ("DIP") financing of
approximately $1.6 billion from certain of its key financial
partners, which will repay certain of the company's existing debt
and provide the company with approximately $670 million of new
capital to bolster liquidity during the restructuring process. Upon
emergence, Azul expects the DIP financing to be repaid with the
proceeds of an equity rights offering of up to $650 million,
backstopped by these financial partners and further supported by a
contemplated additional equity investment of up to $300 million
from United Airlines and American Airlines, subject to the
satisfaction of certain conditions.
The CFR, secured rating and unsecured rating were equalized at the
same level, reflecting the filing and Moody's views that recovery
prospects could vary among similar debt classes.
The negative outlook reflects Moody's views of a prolonged recovery
period to Azul as part of the reorganization and its limited
financial flexibility, which will lead to losses to secured and
unsecured creditors.
COMPANY PROFILE
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. The company also flies its aircraft to select international
destinations, including Fort Lauderdale, Orlando, Paris, Punta del
Este and Lisbon. Azul is the sole owner of the loyalty program Azul
Fidelidade, a strategic revenue-generating asset that has more than
17 million members. In 2024, Azul generated BRL19.5 billion ($3.2
billion) in net revenue.
The principal methodology used in these ratings was Passenger
Airlines published in August 2024.
BANCO SOFISA: Moody's Affirms Ba2 Deposit Ratings, Outlook Stable
-----------------------------------------------------------------
Moody's Ratings has affirmed all ratings assigned to Banco Sofisa
S.A. (Sofisa), including the bank's Ba2 long-term and Not Prime
short-term local and foreign currency deposit ratings.
Additionally, Moody's have affirmed Sofisa's ba2 baseline credit
assessment (BCA) and adjusted BCA, along with its Ba1(cr) long-term
and Not Prime(cr) short-term counterparty risk assessments. The Ba1
long-term and Not Prime short-term local and foreign currency
counterparty risk ratings were also affirmed. The outlook for the
long-term deposits remains stable.
RATINGS RATIONALE
Sofisa's ba2 BCA acknowledges its long-standing franchise in
collateralized lending to small and mid-sized companies (SME),
underpinned by a track record of agile controls on collaterals and
credit limits. This strength will contain credit losses in the next
12 to 18 months as SMEs face heightened risks from elevated
interest rates, which will weigh on the segment's borrowing costs
and sales volumes. In December 2024, Sofisa's loans classified
within the E to H risk categories comprised 3.2% of its credit
portfolio, higher than the 1.6% average reported in 2018-2022. This
deterioration occurred alongside a rise in the SME loan delinquency
ratio across the system and aligns with the bank's strategic shift
since 2021 to target smaller companies, which, although riskier,
offer higher-margin loans and add granularity to the loan book.
In addition to expanding its target market, Sofisa is investing to
broaden its product offerings within both its corporate and digital
banking retail clients. These upfront investments have pressured
operating expenses, which have grown by an average of 25% annually
since 2021. Combined with elevated credit costs and compressed
spreads, these pressures have reduced profitability over the last
two years, with Sofisa's net income to tangible assets ratio
remaining below 1%, compared to an average 1.6% in 2018 to 2022.
While Moody's expects profitability to improve as the bank meets
its strategic objective of boosting cross-selling among consumer
and corporate clients, intense competition in Sofisa's niche
markets, along with macroeconomic headwinds, should limit a
significant rebound in performance in the short term.
Despite the bank's higher reliance on more confidence- and
price-sensitive deposits compared to banks with brick-and-mortar
branch networks, Moody's assessments acknowledges its buildup of
liquidity buffers, which the bank has maintained throughout
economic cycles. Concurrently, the bank has been successful in
improving funding diversification by increasing the share of
granular, insured retail deposits sourced through its proprietary
digital platform, Sofisa Direto. In December 2024, the 20 largest
depositors accounted for 5% of total deposits, compared to 45% in
2019.
The stable outlook on Sofisa's Ba2 deposit ratings reflects Moody's
expectations that the bank will be able to manage the recent asset
risk deterioration, maintaining stringent credit underwriting
standards, particularly critical amid rising risks in its target
SME market. The stable outlook also incorporates Moody's
perspectives that the bank will sustain its diligent liquidity
management.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Positive pressure on Sofisa's standalone BCA and ratings could
result from a more diversified earnings base and a sustained
increase in capitalization levels. Conversely, Sofisa's ratings
could be downgraded if the bank loosens its traditionally strict
credit policies, materially denting asset quality. A significant
change in the competitive landscape or a consistent increase in
reliance on more expensive funding sources could negatively affect
long-term profitability and would also be a negative rating
driver.
The principal methodology used in these ratings was Banks published
in November 2024.
BRAZIL: Government to Back Bill Cutting Tax Breaks by 10%
---------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Brazil's
government is expected to back a bill proposing a 10% cut to
federal tax breaks, in a move that could allow it to scrap a
controversial increase in the tax on financial transactions (IOF)
proposed last month.
The bill, which was proposed by lower house lawmaker Mauro
Benevides, sets a 5% reduction in the value of tax benefits in 2025
and a further 5% cut in 2026, the proposal showed, according to
globalinsolvency.com. The legislation also applies to fiscal and
credit benefits, the report notes.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
In October 2024, Moody's Ratings upgraded the Government of
Brazil's long-term issuer and senior unsecured bond ratings to Ba1
from Ba2, the senior unsecured shelf rating to (P)Ba1 from (P)Ba2;
and maintained the positive outlook. S&P Global Ratings raised on
Dec. 19, 2023, its long-term global scale ratings on Brazil to
'BB' from 'BB-'. Fitch Ratings affirmed on Dec. 15, 2023, Brazil's
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with
a Stable Outlook. DBRS' credit rating for Brazil was last reported
at BB with stable outlook at July 2023.
BRAZIL: S&P Affirms 'BB/B' Sovereign Credit Ratings, Outlook Stable
-------------------------------------------------------------------
S&P Global Ratings, on June 5, 2025, affirmed its 'BB/B' long- and
short-term foreign and local currency sovereign credit ratings on
Brazil. The outlook on the long-term ratings remains stable. S&P
also affirmed its 'brAAA' national scale rating, and the outlook
remains stable. The transfer and convertibility assessment remains
'BBB-'.
Outlook
S&P said, "The stable outlook reflects our expectation that Brazil
will maintain a solid external position, thanks to strong commodity
exports and the status of the real as an actively traded currency
that mitigates external financing needs. We expect continued
elevated general government deficits amid widespread budgetary
rigidities, including an inflexible primary spending structure and
a high interest burden.
"We believe Brazil's institutional framework supports eventual
pragmatic policymaking based on extensive checks and balances
across the executive, legislative, and judicial branches of
government. Over time -- though not ahead of next year's
presidential elections -- this will likely lead to initiatives to
tackle its weak fiscal profile."
Downside scenario
S&P could lower its ratings within the next two years if policy
implementation fails to contain spending pressure, leading to a
faster-than-expected buildup of debt. A deterioration in policy
signaling could also hit net foreign direct investment inflows and,
thereby, weaken Brazil's external position.
Upside scenario
S&P said, "We could raise our ratings over the next two years if
policy initiatives increase general government primary surpluses
and reduce budgetary rigidities. This, in turn, could bolster
expectations for both lower debt and higher growth prospects. In
our opinion, policies aimed at fiscal consolidation would foster a
lower interest rate environment, further contributing to economic
growth."
Rationale
Brazil's creditworthiness is anchored by its strong external
position, and a flexible exchange-rate and monetary policy regime
based on an inflation-targeting framework. The central bank is both
statutory and operationally independent. Moreover, deep domestic
capital and debt markets enable the sovereign to predominately fund
itself locally and in Brazilian real.
On the other hand, Brazil faces large fiscal deficits and a high
debt burden. This stems from its slow and uneven progress in
addressing the factors that constrain the country's growth, as well
as its inflexible budgetary structure.
Institutional and economic profile: Policy signals do not entail
meaningful fiscal consolidation ahead of the 2026 elections
-- Slow and uneven policy implementation coupled with
constitutional budgetary rigidities weigh on public finances.
-- While its exposure to global trade is low, Brazil's economy
could still be vulnerable to persistently high global uncertainty
through its open capital account.
-- S&P expects growth to slow this year and next due to highly
restrictive monetary policy.
Brazil is a stable democracy with extensive checks and balances,
including an active judiciary. It enjoys broad political stability
and continuity in key economic policies. However, given the
complexities in Brazil's constitution, extensive consensus across
the political spectrum is needed to pass meaningful changes in
legislation. This tends to limit the pace of both progress and
backtracking on policies.
That said, over the last few years, the Brazilian authorities have
approved some legislation that should contribute to a more
resilient and predictable long-term economic profile. The latest
milestone was a revenue-neutral consumption tax reform approved in
late 2023, to be fully in place by 2033.
S&P said, "However, the Brazilian political system has, in our
view, made limited progress addressing its weak fiscal situation.
Over the last two years, the government has relied on measures to
increase revenue to partially mitigate the impact on its expansive
fiscal policy." As Brazil is already a high tax economy (general
government revenue at 36% of GDP in 2025 is one of the highest
levels among emerging markets), current and future efforts to raise
revenue are likely to face pushback across political and economic
sectors.
While the public and private sectors have actively debated
spending, there are no meaningful policy plans to redress
public-sector spending inertia. As Brazil approaches national
elections in October 2026, S&P does not expect passage of policies
to meaningfully strengthen Brazil's fiscal profile.
A perceived lack of urgency to reduce fiscal imbalances has
contributed to private-sector inflation expectations above the
central bank's target. As a result, the central bank has raised the
policy reference rate (SELIC), generating a highly restrictive
monetary stance in 2025.
S&P said, "We expect the economy to grow 2.2% in 2025, compared
with 3.4% last year. We expect GDP per capita in 2025 at US$10,200.
The combination of persistent inflation and more expensive credit
will likely result in lower available household income and
consumption. Investment is likely to slow down over the second half
of this year despite a record harvest and its spillover effects
across sectors.
"Real GDP growth has surprised on the upside since 2020, backed by
strong commodity output, strong labor dynamics, and expansionary
fiscal policy. As the transitory impact of these factors recedes
and the interest rate remains high, we expect Brazil's growth to
average 2% over 2025-2028. Similar to regional peers, where growth
has been spurred by a consistent increase in the labor force, an
aging population will constrain Brazil's growth potential over the
long term."
While Brazil exports are relatively low, with stronger commercial
ties to China than the U.S., weaker global economic growth has
lowered commodity prices, offsetting the positive effects of
surging commodity output. Moreover, with an open capital account,
as observed in December 2024, domestic and global uncertainty might
result in marked capital outflows, a weaker exchange rate,
persistent inflation, and a restrictive monetary stance.
"S&P Global Ratings believes there is a high degree of
unpredictability around policy implementation by the U.S.
administration and possible responses--specifically with regard to
tariffs--and the potential effect on economies, supply chains, and
credit conditions around the world. As a result, our baseline
forecasts carry a significant amount of uncertainty. As situations
evolve, S&P will gauge the macro and credit materiality of
potential and actual policy shifts and reassess our guidance
accordingly."
Flexibility and performance profile: Strong external position
compensates for Brazil's weak fiscal profile
-- S&P expects Brazil will post large fiscal deficits, with rising
debt over the next several years.
-- Low current account deficits (CADs), fully financed by foreign
direct investment (FDI), and deepening debt and capital markets
would support Brazil's strong external position.
-- S&P expects inflation to remain above the central bank's target
until mid-2026, limiting the prospect for less restrictive monetary
policy.
S&P said, "We expect Brazil to run small general government (GG)
primary deficits over the next few years. The government lowered
the GG primary deficits to 0.2% of GDP in 2024, from 2.2% in 2022,
based on higher revenue measures. We expect the government to
strive to maintain its tax base, with stable revenue to GDP.
However, it has no plans to structurally reduce spending ahead of
the 2026 elections.
"Without a higher primary surplus, the recent spike in interest
rates will worsen fiscal results in 2025. We expect Brazil to post
a GG fiscal deficit close to 7.2% of GDP, compared with 6.2% in
2024. As monetary policy gradually becomes less restrictive, we
expect GG deficits to ease but remain high, at an average of 6.3%
over 2026-2028 given modest primary surpluses. Accounting for the
impact of debt indexation and depreciation of the real, we expect
the change in net general government at 6.9% of GDP over
2025-2028.
"We view the risk of significant parafiscal spending from Brazil's
government-related entities as still contained.
"We expect Brazil's net general government debt to rise toward 73%
by 2028 from 61% of GDP in 2024. Higher debt and interest rates
would result in a significant increase in the general government
interest burden. We now estimate general government interest will
be close to 20% of general government revenue in 2025 and average
17% over 2025-2028."
The local currency composition of Brazil's debt mitigates the risks
of the high debt burden. Compared with most emerging markets, which
have a higher share of foreign currency-denominated debt, Brazil's
debt is mostly denominated in local currency, and the central
government's strong liquidity position mitigates rollover risk.
Lenders are captive, but the government has an adequate number of
debt instruments to satisfy investor demand. That said, due to the
domestic market concerns about inflation and the weak fiscal
position, the indexed debt instruments have continued to increase
as a share of total debt.
Contingent liabilities from the financial system are low,
considering the size of the financial sector, at around 135% of
GDP. In addition, our Banking Industry Country Risk Assessment on
Brazil is '6'. (BICRA scores are on a scale from '1' to '10', with
group '1' representing the lowest-risk banking systems and group
'10' the highest-risk ones.)
Debt issued by public-sector companies is less than 10% of GDP and
poses limited risk to the government. While the government has been
able to tackle significant legal claims, this amount is still above
15% of GDP, which S&P considers a significant contingent
liability.
As a relatively closed economy with current account receipts
accounting for only 20% of GDP in 2024, Brazil is likely to be less
vulnerable to global commercial policy volatility. Record-high
agricultural and energy commodity output is likely to result in
strong export sector performance in 2025, despite prices that are
not as supportive as in 2023. A slowdown in consumption should have
a similar effect on imports. As a result, S&P expects Brazil's CAD
to be -2.4% in 2025. S&P expects net FDI to fully finance
relatively low CADs.
S&P said, "In addition, we expect the domestic market to fund most
of the government and private-sector financing needs, which should
help shift Brazil back to a narrow net external debt creditor over
the next few years. Gross external financing needs are estimated to
remain stable, at an average of 78% of current account receipts
plus usable reserves.
"Persistent inflation, which started to pick up in May 2024, has
remained above the central bank's tolerance range of 3% +/- 1.5%
since September 2024. We expect inflation to reach 5.3% at year-end
2025 and fall back into the tolerance range by mid-2026."
Concerns about Brazil's fiscal trajectory and market uncertainty
about the policy stance of a new board at the central bank led it
to adopt a highly restrictive monetary stance. The central bank
raised the SELIC by 425 basis points to 14.75% since September 2024
over the course of six consecutive meetings.
S&P classifies the Brazilian real as an actively traded currency,
based on the Bank for International Settlements' 2022 Triennial
Survey. The survey showed that the real contributes at least 1% of
global foreign exchange market turnover. Amid high global and
domestic uncertainty and volatility, the central bank sold close to
US$21 billion in December 2024. That said, international reserves
of 16% of GDP help offset high gross external liabilities, with
Brazil's net international position still a credit rating
strength.
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
Ratings Affirmed
Brazil
Sovereign Credit Rating BB/Stable/B
Brazil National Scale brAAA/Stable/--
Transfer & Convertibility Assessment
Local Currency BBB-
Brazil
Senior Unsecured BB
Senior Unsecured brAAA
GOL LINHAS: Can Implement Ch. 11 Plan With Releases
---------------------------------------------------
Emily Lever at law360.com reports that a New York federal judge
allowed Brazilian airline Gol Linhas Aereas Inteligentes SA to put
its confirmed Chapter 11 plan into motion, finding the Office of
the U.S. Trustee's request for a partial stay on the plan's
third-party releases was unnecessary.
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.
[] Moody's Takes Action on Ambev, Petrobras & Vale
--------------------------------------------------
Moody's Ratings has taken rating actions on certain companies
operating in Brazil. The actions follow the affirmation of
Government of Brazil's (Brazil) long-term local and foreign
currency issuer rating and senior unsecured bond ratings at Ba1,
the senior unsecured shelf rating at (P)Ba1 and the change in
outlook to stable from positive.
The change in Government of Brazil's outlook to stable reflects a
tapering of upside credit risks in light of a pronounced
deterioration in debt affordability and slower-than-expected
progress in addressing spending rigidity and building credibility
around fiscal policy, despite adherence to primary balance targets.
The government's ability to materially reduce fiscal
vulnerabilities and stabilize debt burden in the short run remains
constrained by spending rigidity and rising borrowing costs. These
challenges offset upside investment and GDP growth potential and
continued economic reforms that are broadly supportive of Brazil's
credit quality. At Ba1, Moody's now assesses the credit risks to be
balanced.
The Entities involved are:
1. Ambev S.A.
2. Petroleo Brasileiro S.A.
3. Vale S.A.
Ambev S.A.'s (Ambev) issuer ratings were affirmed at Baa2. The
outlook changed to stable from positive.
Petroleo Brasileiro S.A. – PETROBRAS' (Petrobras) Ba1 corporate
family rating was affirmed. At the same time, Moody's affirmed
Petrobras' ba1 Baseline Credit Assessment (BCA) and the Ba1 rating
of the backed senior unsecured debt issuances of Petrobras Global
Finance B.V. and Petrobras International Finance Company. Moody's
also affirmed the (P)Ba2 backed subordinate shelf rating, the
(P)Ba1 backed senior unsecured shelf rating, and (P)Baa3 backed
senior secured shelf rating under Petrobras International Finance
Company. The outlook for all ratings changed to stable from
positive.
Vale S.A.'s (Vale) issuer rating and senior unsecured rating, and
the backed senior unsecured ratings on the debt issued by Vale
Overseas Limited (fully and unconditionally guaranteed by Vale)
were affirmed at Baa2. The outlook for Vale S.A. and Vale Overseas
Limited changed to stable from positive.
RATINGS RATIONALE
Moody's views that the ratings of these issuers are constrained by
the credit quality of the sovereign environment. The
creditworthiness of these companies cannot be completely de-linked
from the credit quality of the Brazilian government, and thus their
ratings need to closely reflect the risk that they share with the
sovereign.
Ambev S.A.
Ambev's Baa2 rating is supported by its scale as one of the world's
largest brewers; presence in 18 countries; leading positions in
most of its operating markets, including Brazil and Canada; and
vast portfolio of brands of alcoholic and nonalcoholic beverages.
The company benefits from its geographic diversification and brand
recognition while its scale translates into a higher bargaining
power with suppliers. Moreover, its geographic and product
diversification mitigates cash flow volatility arising from weather
events or market downturns in specific regions.
The company's dominant market position in Brazil, strong execution
capabilities and strict cost control allow it to withstand market
volatility and still maintain exceptionally strong profitability
and credit metrics. Ambev's limited reliance on the local banking
system for funding, its generation of a significant portion of
assets and cash outside Brazil, and its importance to the
controlling shareholder Anheuser-Busch InBev SA/NV (ABI, A3
positive) help offset the negative effect of the company's links to
the Brazilian economy.
Ambev's rating is constrained by the volatility in its
commodity-linked input costs and its reliance on effective hedging
strategies to make its costs more predictable. Also, there is a
likelihood of continued high dividend payouts to its controlling
shareholder ABI.
The stable outlook reflects Ambev's exceptionally strong credit
metrics, dominant market positions and operational stability, along
with its other characteristics, help outweigh the effects of its
links with the sovereign, where it generates more than 50% of its
EBITDA. Moody's expects Ambev to benefit from the diversification
of its portfolio and its geographic footprint, and to maintain
conservative financial management and strict cost control.
Petroleo Brasileiro S.A. - PETROBRAS
Petrobras Ba1 corporate family rating (CFR) and ba1 Baseline Credit
Assessment (BCA), a measure of a company's standalone credit risk
without government support, reflect the company's strong credit
metrics for its rating category, and its track record of
operational and financial improvement. Despite being a government
related entity, there is a low likelihood that the company will
default as a result of sovereign credit distress given Petrobras'
solid financial metrics and capital structure; its low reliance on
domestic funding sources; its limited exposure to foreign-currency
risk, given the low and declining share of the refining business;
and the fact that around 30% of its sales are related to exports.
In addition, Moody's expects Petrobras' operating and financial
discipline to continue to support cash generation, which will help
sustain its current capital structure. Conversely, Petrobras'
rating is constrained by the company's exposure to potential policy
shifts and risk of government influence in the company's business
decisions.
The stable outlook on Petrobras' ratings reflects Moody's views
that its credit profile will remain mostly unchanged over the next
12-18 months.
Vale S.A.
Vale is currently rated two notches above the rating of the
Government of Brazil, which is supported by Vale's strong business
profile and its leading position in iron ore and nickel production
globally, with cash flow and profitability showing minimal
correlation with domestic economic conditions. Vale is highly
unlikely to default as a consequence of sovereign credit stress or
default, since its large reliance on Government of China (China, A1
negative) and large developed countries provide reasonable
insulation from Brazil's macroeconomic and political environment.
About 90% of Vale's revenues are generated outside Brazil.
Moreover, cash generated outside Brazil covers debt service and
principal payment, therefore restrictions in capital flows are
unlikely to impact Vale's ability to service debt in case there are
restrictions in capital flows. However, Vale has about 73% of total
fixed assets located in Brazil, the majority of which is iron ore,
followed by Canada (Vale Canada) with about 20%. Given the large
cash flow reliance on iron ore assets located in Brazil, Moody's
are unlikely to widen the rating differential to the Government of
Brazil rating.
Even though Vale's business profile remains constrained by the
concentration in iron ore for cash flow generation (about 89% of
EBITDA in the twelve months ended in March 2025), focus on growth
in base metals (nickel and copper) will support some cash flow
diversification away in a more material way with the planned
capacity expansion in nickel and in particular in copper. The Baa2
rating is further supported by Vale's portfolio of long lived
assets (in iron ore, nickel and copper), relatively low cost
position and strong balance sheet, with leverage close to (or
below) 1x (total debt/EBITDA) since 2020.
The stable outlook reflects the expectation that Vale will maintain
its strong operating and financial performance over the next 12-18
months, keeping its financial discipline in capital allocation,
excellent liquidity and a conservative balance sheet and debt
protection metrics while it continues to invest in growth, with the
expansion in nickel and copper leading to a more balanced cash flow
contribution between iron ore and base metals. The stable outlook
also incorporates Moody's expectations that there will be no
significant increase in provisions and cash disbursements related
to Brumadinho or Samarco that could affect the company's liquidity
or leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ambev S.A.
A rating upgrade would depend on an upgrade of Brazil's sovereign
rating, and would require Ambev to maintain steady and strong
credit metrics.
Ambev's rating or outlook could face negative pressure if its
overall operating performance were to deteriorate because of
greater-than-expected volatility in any of its major markets, or if
the company's leverage were to increase significantly because of a
change in its capital structure or a debt-financed acquisition.
Quantitatively, a downgrade could be considered if credit metrics
deteriorates, such as EBITA margin below 22% coupled with
EBIT/interest below 5.5x or debt/EBITDA above 3.0x on a sustained
basis (all metrics are according to Moody's standard adjustments
and definitions).
Petroleo Brasileiro S.A. - PETROBRAS
The ratings could be upgraded if credit metrics are at least stable
and there is evidence of significant lower exposure to adverse
government influence. An upgrade of Petrobras' rating would also
require an upgrade of Brazil's sovereign rating.
Petrobras' ratings could be downgraded if its operating performance
deteriorates or there are external factors that increase liquidity
risk or debt leverage from the current levels on a sustained basis;
if the quality of the company's corporate governance declines,
increasing its vulnerability to adverse government interference; or
if Brazil's sovereign rating is downgraded.
Vale S.A.
An upward rating movement would require a sustainably strong
performance, supported by leading market positioning in its main
segments and low-cost operations, and positive free cash flow
generation through different industry cycles, with further
diversification coming from stronger contribution of the base
metals segments to cash flows. An upgrade would also depend on the
maintenance of an excellent liquidity and a continued disciplined
approach to capital allocation related to capex and shareholder
returns. Quantitatively, an upgrade would be considered if the
company can sustain Moody's-adjusted leverage (total debt/EBITDA)
below 2x and interest coverage, measured by (EBITDA- Capex) /
Interest Expense, stays at 8x and above, with RCF/debt consistently
above 40%. Moreover, an upward rating movement would be subject to
the relative position of Vale's rating to Brazil's sovereign
rating.
Conversely. Vale's ratings could be downgraded should the actual
costs related to the disasters in Brumadinho or disbursements
related to Samarco be materially above the amounts already
provisioned due to higher fines and settlements, litigations and
class actions, or if operations endure production disruptions,
higher costs or lower commodity prices, affecting profitability and
free cash flow generation, leading to a deterioration in
liquidity. Evidence that ESG initiatives, enhanced risk control and
governance oversight fail to progress as planned could also lead to
a negative rating action. Quantitatively, Moody's could downgrade
the rating if, on a sustained basis, with leverage rations (total
debt to EBITDA) trends towards at 2.5x and above, interest
coverage, measured by (EBITDA- Capex) / Interest Expense, falls
below 5.5x and RCF/debt stays below 35%. In addition, a downgrade
of the Government of Brazil rating would also trigger a downgrade.
AFFECTED RATINGS
Issuer: Ambev S.A
Affirmation:
Issuer Rating, Affirmed at Baa2
Outlook Actions:
Outlook, Changed to Stable from Positive
Issuer: Petroleo Brasileiro S.A. - PETROBRAS
Affirmations:
Corporate Family Rating, Affirmed at Ba1
Baseline Credit Assessment, Affirmed at ba1
Outlook Actions:
Outlook, Changed to Stable from Positive
Issuer: Petrobras Global Finance B.V.
Affirmations:
Backed Senior Unsecured Regular Bond/Debenture, Affirmed at Ba1
Outlook Actions:
Outlook, Changed to Stable from Positive
Issuer: Petrobras International Finance Company
Affirmations:
Backed Senior Unsecured Regular Bond/Debenture, Affirmed at Ba1
Backed Senior Unsecured Shelf, Affirmed at (P)Ba1
Backed Subordinate Shelf, Affirmed at (P)Ba2
Backed Senior Secured Shelf, Affirmed at (P)Baa3
Outlook Actions:
Outlook, Changed to Stable from Positive
Issuer: Vale S.A.
Affirmations:
Issuer Rating, Affirmed at Baa2
Senior Unsecured Regular Bond/Debenture, Affirmed at Baa2
Outlook Actions:
Outlook, Changed to Stable from Positive
Issuer: Vale Overseas Limited
Affirmations:
Backed Senior Unsecured Regular Bond/Debenture, Affirmed at Baa2
Outlook Actions:
Outlook, Changed to Stable from Positive
The principal methodology used in rating Ambev S.A. was Alcoholic
Beverages published in December 2021.
[] Moody's Takes Actions on 27 Brazilian Financial Institutions
---------------------------------------------------------------
Moody's Ratings, on June 2, 2025, revised the outlooks to stable
from positive on 21 Brazilian financial institutions' long-term
deposit ratings, their long-term senior unsecured debt ratings and
issuer ratings, where applicable. All ratings and assessments of
these issuers, including their associated entities, were affirmed.
The rating actions on these issuers follow the affirmation of the
Government of Brazil's (Brazil) Ba1 sovereign issuer rating and
change of the outlook on the sovereign rating to stable from
positive on May 30, 2025.
A List of the Affected Credit Ratings is available at
https://urlcurt.com/u?l=gGyXcu
RATINGS RATIONALE
The rating actions were driven by the change in outlook to stable,
from positive, on the Government of Brazil's Ba1 sovereign bond
rating. Sovereign credit quality can directly affect the credit
standing of other issuers domiciled within the country, and, more
generally, tends to be associated with macroeconomic and financial
market trends that affect all domestic issuers. Banks in particular
exhibit strong credit interlinkages with their sovereign. As such,
the change in Brazil's outlook to stable, from positive, reduced
the likelihood of these financial institutions being upgraded in
conjunction with a sovereign upgrade.
Specifically, Moody's affirmed 15 banks' baseline credit
assessments (BCAs). In addition, Moody's also affirmed the
long-term local- and foreign-currency deposit ratings (where
applicable), of 14 banks, the long-term foreign-currency unsecured
debt ratings of 7 financial institutions, as well as the long-term
Corporate Family Rating (CFR) and long-term local-currency issuer
ratings (where applicable), of 5 financial institutions. The
Counterparty Risk Ratings (CRR) and Counterparty Risk Assessments
(CRA) assigned to 15 banks were also affirmed. These actions also
included the respective rated holding companies and offshore
branches, where available, of these financial institutions.
The stable outlooks consider that the underlying fundamentals of
the affected issuers are stable and/or the affected ratings
continue to be constrained by Brazil's sovereign rating.
LIST OF AFFECTED BANKS AND OTHER FINANCIAL INSTITUTIONS:
1. BANCO DO BRASIL S.A. (BB)
2. BANCO DO BRASIL S.A. (CAYMAN)
3. BANCO NAC. DESENV. ECONOMICO E SOCIAL – BNDES (BNDES)
4. BNDES PARTICIPACOES S.A. – BNDESPAR
5. ITAU UNIBANCO S.A. (Itau Unibanco)
6.ITAU UNIBANCO S.A. (CAYMAN ISLANDS)
7. ITAU UNIBANCO HOLDING S.A.
8. ITAU UNIBANCO HOLDING S.A. (CAYMAN ISLANDS)
9. BANCO BRADESCO S.A. (Bradesco)
10. BANCO BRADESCO S.A., GRAND CAYMAN BRANCH
11. BANCO DA AMAZONIA S.A. (Banco da Amazonia)
12. BANCO DO NORDESTE DO BRASIL S.A. (BNB)
13. CAIXA ECONOMICA FEDERAL (Caixa)
14. BANCO SANTANDER (BRASIL) S.A. (SANBR)
15. BANCO SANTANDER (BRASIL) S.A. - CAYMAN BRANCH
16. BANCO BTG PACTUAL S.A. (BTG)
17. BANCO BTG PACTUAL S.A., CAYMAN BRANCH
18. BANCO BTG PACTUAL S.A., LUXEMBOURG BRANCH
19. BANCO COOPERATIVO SICREDI S.A. (Sicredi)
20. BANCO SAFRA S.A. (Safra)
21. BANCO SAFRA S.A. (CAYMAN BRANCH)
22. BANCO ABC BRASIL S.A. (BAB)
23. BANCO DAYCOVAL S.A. (Daycoval)
24. BANCO CITIBANK S.A. (Citibank Brazil)
25. B3 S.A. – BRASIL, BOLSA, BALCAO (B3)
26. XP INC. (XP)
27. BANCO MODAL S.A. (Modal)
(1) AFFIRMATION OF ALL RATINGS AND ASSESSMENTS ASSIGNED TO 15
BANKS
The affirmation of the Ba1 long-term local- and foreign-currency
deposit ratings assigned to BB, BNDES, Itau Unibanco and Bradesco,
reflects: (1) the affirmation of these banks' standalone BCAs at
ba1; (2) Moody's unchanged assumptions of the highest degree of
support from the federal government to BB and BNDES; and (3)
Moody's unchanged assumptions of high government support to Itau
Unibanco and Bradesco. Despite government support considerations,
these four banks' deposit ratings receive no uplift from their
standalone BCAs because they are capped at Brazil's sovereign
rating. Moody's also affirmed the Baa3 long-term local and foreign
currency CRRs and the Baa3(cr) long-term CRAs of the four banks.
Ratings and assessments assigned to Banco do Brasil S.A. (Cayman),
Itau Unibanco Holding S.A. (Cayman Islands), Itau Unibanco S.A.
(Cayman Islands), Banco Bradesco S.A., Grand Cayman Branch, and
BNDES Participacoes S.A. – BNDESPAR were also affirmed.
The affirmation of the Ba1 long-term local- and foreign-currency
deposit ratings assigned to Caixa, Banco da Amazonia and BNB
reflects Moody's unchanged assumptions of the highest degree of
government support to these banks because they are wholly-owned by
the federal government. As a result, their deposit ratings
incorporate one notch to Caixa, two notches to Banco da Amazonia,
and three notches to BNB, of uplift from their respective
standalone BCAs, which were affirmed. The affirmation of these
banks' respective BCAs (Caixa at ba2, Banco da Amazonia at ba3 and
BNB at b1) reflects Moody's views that they remain well positioned
at current levels. At the same time, Moody's also affirmed the Ba1
long-term local and foreign currency CRRs and the Ba1(cr) long-term
CRAs of the three banks.
The affirmation of SANBR's Baa3 long-term local- and
foreign-currency deposit ratings reflects: (1) the affirmation of
its standalone BCA at ba1; (2) Moody's unchanged assumptions of a
moderate probability of affiliate support from Banco Santander,
S.A. (Spain) (A2 positive, baa1 BCA) in Spain, that results in one
notch of uplift to an Adjusted BCA of baa3; and (3) Moody's
unchanged assumptions of a high probability of government support,
which, however, does not result in any uplift to deposit ratings
because SANBR's Adjusted BCA is already one notch above Brazil's
sovereign rating. In addition, Moody's affirmed SANBR's long-term
local and foreign currency CRRs at Baa2 and long-term CRA at
Baa2(cr). Ratings and assessments assigned to Banco Santander
(Brasil) S.A. - Cayman Branch were also affirmed.
The affirmation of Ba1 long-term local- and foreign-currency
deposit ratings assigned to BTG, Safra, BAB and Daycoval, as well
as the affirmation of both the long-term Corporate Family Rating
(CFR) and the local-currency issuer rating assigned to Sicredi at
Ba1, reflects: (1) the affirmation of their respective standalone
BCAs at ba1; (2) Moody's unchanged assumptions of moderate
government support to BTG and Safra; and (3) Moody's unchanged
assumptions of a low probability of government support to Sicredi,
BAB, and Daycoval, given the low participation of the banks in the
industry's total deposits. At the same time, Moody's affirmed these
five banks' long-term local- and foreign-currency CRRs at Baa3, and
long-term CRAs at Baa3(cr). Ratings and assessments assigned to
Banco BTG Pactual S.A., Cayman Branch, Banco BTG Pactual S.A.,
Luxembourg Branch and Banco Safra S.A. (Cayman Branch) were also
affirmed.
The affirmation of the Baa3 long-term foreign-currency deposit
rating assigned to Citibank Brazil reflects: (1) the affirmation of
its ba1 standalone BCA; (2) Moody's unchanged assumptions of a high
probability of affiliate support from Citibank, N.A. (Aa3 stable,
baa1 BCA) in the United States, resulting in one notch of uplift to
an Adjusted BCA of baa3; and (3) Moody's unchanged assumptions of a
low probability of government support considering the bank's
limited market share in the deposit industry in Brazil. At the same
date, Moody's affirmed Citibank Brazil's long-term local and
foreign currency CRRs at Baa2 and long-term CRA at Baa2(cr).
(2) AFFIRMATION OF ALL RATINGS AND ASSESSMENTS ASSIGNED TO B3 S.A.
– BRASIL, BOLSA, BALCAO (B3), XP INC. (XP) AND BANCO MODAL S.A.
(Modal)
Moody's affirmed all ratings assigned to B3, including its Baa3
local-currency issuer rating and Baa3 foreign-currency senior
unsecured debt rating. These ratings are positioned one notch above
Brazil's Ba1 sovereign rating because of B3's (1) proven track
record of strong financial performance through interest rate and
economic cycles, (2) systemically relevant role as Brazil's
financial market infrastructure company and (3) strong linkage with
the government, which stems from significant investment of its cash
position and most of its settlement funds, used for protection
against counterparty default risk, into Brazilian sovereign bonds.
Moody's also affirmed all ratings assigned to XP, including its Ba1
long-term CFR and foreign-currency backed senior unsecured debt
rating. The affirmation of XP's ratings incorporates the company's
robust creditworthiness, which points to a standalone financial
profile at the same level as Brazil's sovereign bond rating.
Moody's also cap XP's standalone assessment at the Ba1 sovereign
rating because of the strong link between the firm's
creditworthiness and the Brazilian sovereign risk, driven by the
concentration of XP's market-making activities in Brazilian debt
securities and the geographical concentration of its operations.
The affirmation of Modal's long-term local- and foreign-currency
deposit ratings at Ba1 considers: (1) the affirmation of its ba3
standalone BCA, which remains well positioned at its current level;
(2) Moody's unchanged assumptions of a high probability of
affiliate support from XP Inc., that results in a two-notch uplift
to an Adjusted BCA of ba1; and (3) Moody's unchanged assumptions of
a low probability of government support given the bank's limited
participation in the country's deposit market. Moody's also
affirmed Modal's Baa3 long-term local- and foreign-currency CRRs
and Baa3(cr) long-term CRA.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The long-term bank deposit and senior unsecured debt/issuer ratings
of affected issuers are unlikely to be upgraded unless the
sovereign rating is upgraded. Upward pressure to the standalone
BCAs that are below ba1 could also depend upon an improvement in
the individual issuers' credit fundamentals and sustainability of a
positive trend. For banks with BCAs already at ba1, the same level
as the government bond rating, the positive pressures are unlikely
to materialize in BCAs upgrade because these BCAs are capped by the
sovereign rating.
Conversely, downward pressure on all these financial institutions'
standalone credit assessments and/or ratings, including deposit,
senior unsecured debt and MTN program ratings, and issuer ratings
(where applicable), could derive from a downgrade of Brazil's
sovereign ratings, although unlikely at this point considering the
stable outlook on the rating. In the absence of a sovereign
downgrade, downward pressure on these banks' BCAs could arise from
sudden change in financial strategy that could result in an
unexpected drop of capital and profitability levels, or asset
quality disruptions.
PRINCIPAL METHODOLOGIES
The principal methodology used in rating Banco ABC Brasil S.A.,
Banco Bradesco S.A., Banco Bradesco S.A., Grand Cayman Branch,
Banco BTG Pactual S.A., Banco BTG Pactual S.A., Cayman Branch,
Banco Citibank S.A., Banco Cooperativo Sicredi S.A., Banco da
Amazonia S.A., Banco Daycoval S.A., Banco do Brasil S.A., Banco Do
Brasil S.A. (Cayman), Banco do Nordeste do Brasil S.A., Banco Modal
S.A., Banco Nac. Desenv. Economico e Social – BNDES, Banco Safra
S.A., Banco Santander (Brasil) S.A., BNDES Participacoes S.A. –
BNDESPAR, Caixa Economica Federal, Itau Unibanco Holding S.A., Itau
Unibanco Holding S.A. (Cayman Islands), Itau Unibanco S.A., Banco
BTG Pactual S.A., Luxembourg Branch, Banco Safra S.A. (Cayman
Branch), Banco Santander (Brasil) S.A. - Cayman Branch, and Itau
Unibanco S.A. (Cayman Islands) was Banks published in November
2024.
=============
J A M A I C A
=============
JAMAICA: Gov't, Private Must Develop Measures to Drive Investments
------------------------------------------------------------------
RJR News reports that Chief Executive Officer of of Barita
Investments, Ramon Small-Ferguson, says although the debt to GDP
ratio has fallen to 68%, the government and the private sector need
to collaborate to develop a set of policy measures to drive
investments in the real sectors of the economy.
He argues that it is the absence of these measures that is leading
to the steep fall in aggregate demand or total spending and by
extension corporate profits, according to RJR News.
Barita's profit tumbled by 55% to $625.7 million during the second
quarter of this year compared with a similar period last 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.
===========
M E X I C O
===========
CEMEX SAB: Fitch Rates USD1 Billion Perpetual Subordinated Notes
----------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to Cemex, S.A.B. de C.V.'s
(BBB-/Stable) benchmark-sized USD1 billion perpetual subordinated
notes. The proposed notes qualify for 50% equity credit. Proceeds
from the issuance will be used for general corporate purposes,
including to repay debt.
The proposed securities meet Fitch's criteria regarding
subordination, cross defaults, no material covenants, effective
maturity of at least five years, ability to defer coupons for at
least five years, and no look-back provisions. As a result, the
securities qualify for 50% equity credit.
The proposed issuance is rated two notches below Cemex's Issuer
Default Rating (IDR) to reflect higher loss severity and heightened
risk of non-performance relative to senior obligations. This
approach aligns with Fitch's "Corporate Hybrids Treatment and
Notching Criteria" dated April 8, 2025".
Key Rating Drivers
Equity Treatment Rationale: The hybrid notes are expected to be
subordinated, ranking senior only to Cemex's share capital. The
issuer can defer coupon payments at its discretion, with limited
default events and no significant covenants or look back
provisions. Deferred coupon payments are cumulative, and Cemex must
settle them if certain circumstances occur, such as declaring or
paying a cash dividend. The notes have no formal maturity date, and
the issuer has a call option to redeem them after five years of the
issue date. The call dates are not treated as effective maturity
dates under Fitch's criteria.
Use of Proceeds: Fitch expects the issuance proceeds will be used
to repay debt and strengthen its liquidity position, along with
other general corporate purposes. In April 2025, the company
redeemed a USD1 billion subordinated bond of similar
characteristics. With this transaction, the company will return to
the capital structure it had before the bond redemption.
Date of Relevant Committee
22-Apr-2025
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating
----------- ------
CEMEX, S.A.B. de C.V.
Subordinated LT BB New Rating
=====================
P U E R T O R I C O
=====================
STONEMOR INC: Moody's Upgrades CFR to 'B3', Outlook Stable
----------------------------------------------------------
Moody's Ratings upgraded StoneMor Inc. (StoneMor, dba Everstory
Partners) corporate family rating to B3 from Caa1 and probability
of default rating to B3-PD from Caa1-PD. Moody's also upgraded the
company's senior secured notes rating to B3 from Caa1. The outlook
is stable. StoneMor is a provider of funeral and cemetery products
and services in the US and Puerto Rico.
"The upgrade reflects StoneMor's significant improvement in credit
metrics and Moody's expectations that the company's leverage, based
on accrual EBITDA, will remain below 5.5x, along with Moody's
anticipations for steady organic growth, higher profitability rates
and increasing positive free cash flow generation," said Lana
Kulikova, Moody's Ratings Analyst. Kulikova continued: "StoneMor's
liquidity position has strengthened due to a substantial
enhancement in free cash flow, which turned positive in 2024.
Moody's anticipates continued improvement in StoneMor's operating
performance, owing in large part to changes implemented in 2023,
such as new executive leadership, the integration of a customer
relationship management (CRM) system, and the revamping of its
sales program."
ESG considerations were a key driver of the actions, notably
moderating governance risk due to the company's emphasis upon
financial leverage reduction and growing free cash flow
generation.
RATINGS RATIONALE
The B3 CFR reflects StoneMor's modest revenue size and high
financial leverage. Moody's expects debt/accrual EBITDA of 4.7x as
of March 31, 2025 to sustain around 5x over the next 12 to 18
months, supported by modest revenue growth and margin expansion,
presuming no further M&A. Without adjusting for deferrals, Moody's
expects financial leverage and profitability metrics to remain
weak. The company is advancing through a restructuring plan focused
on operational efficiency, as well as customer and employee
satisfaction. Due to the benefits of these organizational efforts
and cost reductions, Moody's expects StoneMor to continue to
generate positive free cash flow, maintaining free cash flow/debt
in a mid-single digit percentage range in 2025 and 2026. Moody's
also anticipates that StoneMor will seek growth through
acquisitions, using cash and debt proceeds for funding, which could
delay meaningful deleveraging.
All financial metrics reflect Moody's standard adjustments. Accrual
EBITDA adds the non-cash cost of cemetery lots sold and deferred
revenues, and deducts deferred expenses. Debt excludes
non-recourse, subsidiary debt (variable interest expense (VIE)
liabilities).
The credit profile benefits from StoneMor's national portfolio of
cemetery properties and a $1.2 billion backlog of pre-need cemetery
and funeral sales as of March 31, 2025. Moody's anticipates that
the aging baby boomer demographic will maintain demand, driving
revenue growth in a low single digit percentage range. Moody's
anticipations for steady demand alongside ongoing price increase
efforts and strategic management initiatives support Moody's
anticipations for expanded accrual EBITDA margins over the next 12
to 18 months.
The $365 million senior secured notes due in 2029 are rated B3,
which is in line with the B3 CFR and reflects their position as the
vast majority of the debt in the capital structure. The $45 million
super-priority revolver and $15 million senior secured first-in
last-out (FILO) term loan, expiring in August 2027 (not rated), are
ranked ahead of the senior secured notes.
Moody's expects that StoneMor will maintain an adequate liquidity
profile over the next 12 to 15 months. Liquidity is supported by
around $41 million in cash as of March 31, 2025, along with the
expectation of free cash flow/debt in a mid-single-digit percentage
range in 2025 and 2026. The company has about $32 million of
availability under its $45 million revolver, which expires in
August 2027.
As defined by the loan agreement, the revolver includes a fixed
charge coverage ratio, tested quarterly, that cannot fall below
1.05x, and a springing maximum total net leverage ratio covenant
that cannot exceed 6.5x, triggered when revolver utilization
reaches 87.5% ($39.375 million) or more. As of December 31, 2024,
StoneMor has a modest cushion above the fixed charge coverage ratio
and sufficient cushion above the total net leverage ratio, should
it be tested. Moody's expects the cushion for both financial
covenants to continue to improve over the next 12 months.
The stable outlook reflects Moody's expectations for
low-single-digit percentage range organic revenue growth, profit
margin improvements and sustained positive free cash flow
generation in the next 12 to 18 months, supported by steady demand
for StoneMor's services.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if StoneMor continues to demonstrate
growth in revenue and profitability, maintains debt/accrual EBITDA
below 3.5x, and sustains a good liquidity profile while generating
substantial free cash flow. Furthermore, an upgrade could result
from ongoing improvements in GAAP EBITDA, contributing to lasting
reductions in GAAP financial leverage, including a significant
reduction in VIE liabilities.
The ratings could be downgraded if StoneMor experiences a decline
in revenue or profitability rates, maintains debt/accrual EBITDA
above 5.5x, faces weakening free cash flow generation, or liquidity
deteriorates. Additionally, a downgrade could occur if there is a
fall in the value of StoneMor's assets, such as its preneed
cemetery sales backlog, or if the company adopts more aggressive
financial strategies, including debt-funded acquisitions or
shareholder returns.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
StoneMor, based in Altamonte Springs, FL, is a provider of funeral
and cemetery products and services in the United States and Puerto
Rico. StoneMor operated 374 cemeteries and 76 funeral homes and 13
crematories as of March 31, 2025. Of these, the company owned 271
cemeteries and managed the remaining 103 under long-term agreements
with non-profit cemetery corporations that own them. The company is
a majority-owned by affiliates of Axar Capital Management L.P.
Moody's expects StoneMor's GAAP revenues will approaching $360
million in 2025.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD GENERATION: Fitch Gives 'BB' LongTerm IDRs, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to Trinidad Generation
Unlimited's (TGU) expected USD500 million senior unsecured notes
due 2033. The notes will refinance and rank pari passu to the
company's existing USD600 million unsecured notes due 2027, which
Fitch affirms at 'BB' prior to refunding. Net proceeds will also
fund issuance costs and general corporate purposes. Fitch has also
published TGU's Long-Term Foreign Currency and Long-Term Local
Currency Issuer Default Ratings (IDRs) 'BB' with a Stable Rating
Outlook.
The rating reflects TGU's importance to Trinidad and Tobago's (T&T)
energy matrix and its operational ties to the government. TGU's
generation capacity is contracted under a power purchase agreement
(PPA) through 2041 with state-owned electricity transmission and
commercialization entity T&T Electricity Commission (T&TEC), with
payments unconditionally and irrevocably guaranteed by the
government. As the primary national energy provider, TGU benefits
from long-term cash stability with limited business, market, and
demand risk.
Key Rating Drivers
Refinancing in Process: Fitch assumes the company will refinance
its USD600 million unsecured notes during 2025. Failure to do so
will lead to material credit deterioration as the company's five
USD90 million semiannual principal installments, beginning May
2025, will deplete cash levels. Cash totaled USD130 million at
2H25, and the bond matures in November 2027.
Strong Government Linkage: Fitch considers TGU's credit quality as
materially linked to that of T&T, as it is owned by the government
via the National Investment Fund Holding Company. Fitch assigns TGU
a high score of 45 (out of 60) according to its "Government Related
Entity Criteria" due to the company's strategic importance to the
government as supplier of 55% of average electricity demand, and
based on the government's financial support via guarantees of
capacity payments (99% of TGU's revenues) and through indirect
government guarantees of fuel and water supply.
Toll Structure Underpins Stability: TGU maintains a 30-year PPA
through 2041 that requires sole off-taker T&TEC to purchase 100% of
the company's electricity generation capacity with payments backed
by a government guarantee. The PPA further provides for the
guaranteed supply and provision of fuel, and the supply of water,
with interruptions in either having no effect on TGU's receipt of
capacity revenue. Furthermore, the sovereign's natural gas policies
prioritize the power sector for delivery of natural gas should gas
supply be curtailed, supporting continuous operations of TGU's
720-megawatt combined cycle natural gas power plant.
Targeted Capex Improving Reliability: T&TEC's stable capacity
payments to TGU derive from the plant's average equivalent
availability (EA) of 93% of total plant capacity (100% less a 7%
allowance for downtime) per year. Noncompliance with the 93% EA
results in de minimus penalty payments not exceeding USD600,000 in
either of the past two fiscal years. An ongoing, multiyear
(2023-2026) increased capital and operational spending program has
so far yielded material corrective measures to improve plant
reliability and regain a stable 93% EA after several years of
weaker performance.
Deleveraging Expected: Fitch expects structural deleveraging to the
6x range attributable to a debt reduction as part of the current
pre-refinancing of the notes due in 2027, and to an improved and
sustained 93% EA. Leverage will stabilize above 6x amid relatively
flat revenues per the PPA and only modest EBITDA growth amid
increased opex costs. Leverage is subject to increase yoy due to EA
factor fluctuations (11.6x in 2022) and lower generation revenues,
underscoring the importance of the capital work underway. EBITDA to
interest coverage should approximate 2.0x and free cash flow will
be neutral to negative amid the higher capex and distribution
policy.
Key Assumptions
- The company successfully refinances its USD600 million senior
unsecured notes during the calendar year 2025;
- Following the successful issuance, cash will maintain above a
year-end annual policy level of USD40 million;
-The plant EA will sustain at 93% during the forecast period;
- Annual PPA price changes linked to U.S. inflation and 100%
guaranteed by T&TEC;
- USD89 million in total capex through 2028, frontloaded in
2025-2026 averaging 28% of revenues;
- Annual dividends of USD10 million through forecast.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Inability to refinance the company's USD600 million notes during
2025, prior to subsequent amortization deadlines;
- A deterioration of macroeconomic conditions, resulting in weaker
sovereign indicators;
- A material de-linkage from the government;
- A debt service coverage ratio sustained below 1.5x.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- A material improvement in the country's overall economic
condition.
Liquidity and Debt Structure
TGU holds ample liquidity, with management reporting USD130 million
in cash and short-term investments at 2H25, following the payment
of the first of two installments of the company's USD600 million
unsecured notes due 2027, made in May 2025. Fitch expects the
payment of dividends of USD10 million per year, below a projected
minimum USD40 million/year policy, post-refinancing.
Issuer Profile
TGU owns and operates a 720MW net capacity combined-cycle gas-fired
plant located in the Republic of T&T. TGU is controlled by the
government of the Republic of T&T through a holding company, the
National Investment Fund Holding Company Limited.
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
Trinidad Generation Unlimited has an ESG Relevance Score of '4' for
Governance Structure due to ownership concentration as a wholly
government-owned entity and the inherent governance risk that
arises with a dominant state shareholder, which has a negative
impact on the credit profile and is relevant to the 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
----------- ------ -----
Trinidad Generation
Unlimited LT IDR BB Publish
LC LT IDR BB Publish
senior unsecured LT BB New Rating
senior unsecured LT BB Affirmed BB
*********
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