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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
Tuesday, June 17, 2025, Vol. 26, No. 120
Headlines
A R G E N T I N A
ARGENTINA: World Bank Lifts Country 2025 Growth Forecast to 5.5%
B R A Z I L
SANTA CATARINA: S&P Upgrades ICR to 'BB', Outlook Stable
J A M A I C A
DIGICEL GROUP: Projects to Rack up US$800 Million in Revenues
JAMAICA: BOJ Pumps Another US$30 Million Into Forex Market
M E X I C O
IH 35 TRUCKING: Voluntary Chapter 11 Case Summary
P A N A M A
PROMERICA FINANCIAL: Fitch Affirms B+ LongTerm IDR, Outlook Stable
P E R U
PERU: Recovers From Consecutive Natural Disaster Shocks, IMF Says
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Manufacturers Receive Over US$1BB in Support
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A R G E N T I N A
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ARGENTINA: World Bank Lifts Country 2025 Growth Forecast to 5.5%
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AFP News reports that Argentina is set to lead Latin America in
economic growth next year, according to the World Bank, which has
raised the nation's 2025 forecast to 5.5 percent - the highest in
the region.
President Javier Milei's government will welcome the news, which
came as the World Bank downgraded projections for most of the world
due to rising trade barriers and weakening exports, according to
AFP News.
In its latest economic prospects report, published, the
multilateral institution trimmed its 2025 global GDP outlook to 2.3
percent, down 0.4 percentage points from its January forecast, the
report relays.
Latin America and the Caribbean are also expected to grow 2.3
percent, 0.2 points less than previously projected, the report
discloses.
"Just six months ago, the world economy seemed headed for a soft
landing," said Indermit Gill, the Bank's chief economist. "Now it
appears to be running into fresh turbulence," she added.
The report blames higher US tariffs – particularly those
affecting Mexican exports – and sustained uncertainty in global
trade for the downturn, AFP News relays. Weaker commodity prices
and rising protectionism are expected to further weigh on regional
economies, AFP News discloses.
Argentina is a rare bright spot. After two consecutive years of
recession, the World Bank predicts a strong rebound fuelled by
agriculture, energy and mining, AFP News notes. It credits recent
reforms, the easing of currency controls, and steps toward
macroeconomic stability with restoring investor and consumer
confidence, AFP News relaus.
Growth is projected to continue at 4.5 percent in 2026, the report
notes.
Mexico faces the sharpest downgrade, with growth expected to reach
just 0.2 percent in 2025 following new 25 percent US tariffs on
exports outside the North American trade deal, the report says.
Brazil is also set to slow in 2026 due to softer consumption and
sluggish investment, the report notes.
The World Bank warned that persistent inflation in countries like
Brazil and Colombia will leave little room for interest rate cuts,
limiting space to stimulate growth, the report discloses.
Additional risks include a US or Chinese slowdown and a drop in
remittances, which account for about 20 percent of GDP in several
Central American and Caribbean economies, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
In March 2022, the International Monetary Fund (IMF) approved a
30-month arrangement under an Extended Fund Facility for Argentina
in the amount of SDR 31.914 billion (equivalent to US$44 billion,
or 1000 percent of quota) -- with an approved immediate
disbursement of an equivalent of US$9.65 billion. Argentina's
IMF-supported program sought to improve public finances and start
to reduce persistent high inflation through a multi-pronged
strategy.
On April 11, 2025, the IMF further approved a 48-month Extended
Fund Facility (EFF) arrangement for Argentina totaling US$20
billion (or 479 percent of quota), with an immediate disbursement
of US$12 billion, and a first review planned for June
2025 with an associated disbursement of about US$2 billion. The
program is expected to help catalyze additional official
multilateral and bilateral support, and a timely re-access to
international capital markets.
Fitch Ratings, on May 12, 2025, upgraded Argentina's Long-Term
Foreign-Currency and Local-Currency Issuer Default Rating (IDR) to
'CCC+' from 'CCC'. The upgrade reflects the launch of a new IMF
program, among other things. S&P Global Ratings, in February 2025
lowered its local currency sovereign credit ratings on Argentina to
'SD/SD' from 'CCC/C' and its national scale rating to 'SD' from
'raB+'. Moody's Ratings, in January 2025, raised Argentina's local
currency ceiling to B3 from Caa1 and the foreign currency ceiling
to Caa1 from Caa3. DBRS, Inc. upgraded Argentina's Long-Term
Foreign and Local Currency Issuer Ratings to B (low) from CCC in
November 2024.
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B R A Z I L
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SANTA CATARINA: S&P Upgrades ICR to 'BB', Outlook Stable
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S&P Global Ratings, on June 12, 2025, raised its global scale
issuer credit rating on the State of Santa Catarina to 'BB' from
'BB-' and its national scale issuer credit rating to 'brAAA' from
'brAA+'. The outlook on both rating scales is stable.
Outlook
The stable outlook reflects S&P's expectation that Santa Catarina
will maintain a solid fiscal profile while delivering on its
ambitious infrastructure plans in the next 12 months. Accumulated
cash buffers should provide policy room to maneuver amid the
expected slowdown in Brazil's economy in the context of tight
monetary policy and high global uncertainty.
Upside scenario
Brazilian local and regional governments (LRGs) do not meet the
conditions for us to rate them above the sovereign. As a result,
S&P could only upgrade Santa Catarina in the next 12 months if it
raise its sovereign rating on Brazil. This would be accompanied by
a longer track record of prudent fiscal and liquidity policies by
the state.
Downside scenario
S&P said, "We could lower the ratings on the state of Santa
Catarina in the next 12 months if we were to lower the sovereign
local and foreign currency ratings. We could also lower the ratings
on Santa Catarina in the next 12 months if aggressive expenditure
priorities or weaker-than-expected economic growth lead to fiscal
deterioration and an erosion of cash buffers."
Rationale
The upgrade to 'BB' reflects continued improvement in Santa
Catarina's financial performance and liquidity buffers. Broad
political consensus on pro-business policies and fiscal prudence as
key anchors to promote investment have bolstered local economic
activity and strengthened the state's revenue base.
S&P said, "In our view, the state's stronger socioeconomic profile,
more developed infrastructure and accumulated cash reserves
constitute key buffers to counterbalance rigidities imposed by the
Brazilian fiscal framework and slowdown we expect in Brazil's
economic growth. We also note the state's debt burden has
significantly reduced in the last five years."
Comparably better socioeconomic profile than Brazilian peers and
long-term policies to foster investment support the state's
economic growth
S&P said, "We expect Santa Catarina to grow 2% in 2025, and GDP per
capita to reach $12,400, a level above Brazil's expected $10,200.
The sovereign's expansionary fiscal policy has backed
stronger-than-expected growth in Brazil over the last two years.
However, efforts to consolidate fiscal accounts and high interest
rates will likely slow growth in the coming months.
"That said, we note Santa Catarina's performance could have some
upside potential, as evidenced by the recent past. Stronger
population growth than the Brazilian average and a strong labor
market have supported the state's economic growth. Santa Catarina
enjoys better infrastructure and overall socioeconomic indicators
than its local peers.
Over the last few years, Santa Catarina has prioritized fiscal and
other policies to maintain a friendlier investment environment.
Efforts to offer higher-quality infrastructure--including better
public safety than neighboring states--and sustain investment and
labor incentives, while maintaining a stable tax burden, have been
a shared strategy across multiple administrations. In S&P's view,
this strategy has bolstered and diversified the state's economy.
Accordingly, the state's economic matrix has evolved. Productivity
of agricultural-related industries has improved, while at the same
time, a competitive technology sector has been growing. S&P also
thinks the contribution from tourism and logistics will continue to
increase, considering the notable efforts to increase the state's
transportation connectivity.
That said, the complexities of a myriad of regulations included in
the Brazilian federal system have limited the state's capacity to
balance revenues and expenses and created some pressures on
liquidity in the past, despite proactive local policies that aimed
to improve fiscal balance. The Brazilian fiscal framework
establishes heavy mandatory spending rules for states and narrows
the financing options. In S&P's view, these factors could challenge
states' capacity to implement sustainable fiscal policies, despite
good predictability and oversight of the system.
However, S&P highlights that the strong economic recovery after the
pandemic, coupled with Santa Catarina's efforts to curb operating
expenditures (including pension reform), have recently improved the
state's fiscal fundamentals.
Low dependence on federal transfers supports strong revenue and
should sustain a balanced fiscal position and continue
strengthening liquidity buffers
S&P expects Santa Catarina's operating surplus to hover around 12%
of operating revenues in 2025-2027, a slight erosion from
2023-2024. Revenues have remained strong over the last few years,
benefiting from the state's robust economic performance.
Operating revenues grew 10% as of April 2025, after 12% growth in
2024, even though Santa Catarina was one of the few states that
kept the ICMS (Brazil sales tax) general rate unchanged in the last
two years. This stance was unlike Brazilian peers that increased it
ahead of the VAT tax reform implementation. The locally collected
ICMS generates 50% of the state's operating revenues, and the
gradual conversion to VAT would generate important efficiency gains
for local companies. Still, S&P thinks the state's full
appropriation of the revenue base growth will depend on
distribution rules yet to be defined.
The state's fiscal adjustment program, implemented since 2023, has
improved budget composition and generated some fiscal buffers. S&P
said, "We expect the state to partially use these buffers as Gov.
Jorginho Mello delivers on his landmark programs ahead of the state
elections in 2026. We expect capital expenditures (capex) to grow
to R$6.4 billion by 2026 (12% of expenditures), from R$3.0 billion
(7.6% of expenditures) in 2023. This will erode after capex
surpluss to less than 1% of total revenues, from 5% in 2023-2024."
To finance roadway and transportation projects, Santa Catarina has
been actively working with local banks and multilateral lending
institutions since 2021 (when CAPAG, a capacity of payment rating
used by the Brazilian government to approve guarantees, improved).
S&P expects annual borrowings to rise to R$500 million per year,
from less than R$100 million in 2022-2023, as loan contracts
progress through Brazil's lenghtly approval process.
Nonetheless, S&P expects net borrowing to remain negative and Santa
Catarina's debt burden to decrease to 42% of operating revenue by
2027, from an average of 100% in 2016-2018. The state's main
creditor is the federal government (50% of total debt), and
potential adherence to the sovereign's recently launched PROPAG
program to improve the sustainability of states' debt (Programa de
Pleno Pagamento de Dividas dos Estados) could lower the debt burden
to 38% by 2027.
In S&P's opinion, high cash savings partially counterbalance
limited access to borrowing. Cash reserves cover more than 100% of
Santa Catarina's debt service over the next two years. That said,
in the absence of a target for maintaining cash reserves, it
believes the coverage ratio could fluctuate.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
Upgraded
To From
Santa Catarina (State of)
Issuer Credit Rating BB/Stable/-- BB-/Stable/--
Brazil National Scale brAAA/Stable/-- brAA+/Stable/--
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J A M A I C A
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DIGICEL GROUP: Projects to Rack up US$800 Million in Revenues
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RJR News reports that S&P Global Ratings says telecommunications
provider Digicel Group is projecting a jump in its revenues to $800
million by the end of this financial year and further increases
during the year 2027.
The world's number one credit ratings agency says the projection is
based on revenues which will flow from the US$216 million the
company will be spending on its infrastructure this year, according
to RJR News.
The company also plans to spend a further US$240 million on
infrastructure next year, the report notes.
S&P Global Ratings says this is why it assigned a 'B' rating to the
company's US$1-billion debt load, the report disloses.
About Digicel Group
Digicel Group is a mobile phone network provider operating in 33
markets across the Caribbean, Central America, and Oceania
regions.
The company is owned by the Irish billionaire Denis O'Brien, is
incorporated in Bermuda, and based in Jamaica.
As reported in the Troubled Company Reporter-Latin America in
April 2020, Moody's Investors Service downgraded Digicel Group
Limited's probability of default rating to Caa3-PD from Caa2-PD. At
the same time, Moody's downgraded the senior secured rating of
Digicel International Finance Limited to Caa1 from B3. All other
ratings within the group remain unchanged. The outlook is
negative.
Also in April 2020, the TCR-LA reported that Fitch Ratings has
downgraded Digicel Limited to 'C' from 'CCC', and its outstanding
debt instruments, including the 2021 and 2023 notes to 'C'/'RR4'
from 'CCC'/'RR4'. Fitch has also downgraded Digicel International
Finance Limited to 'CCC+' from 'B-'/Negative, and its outstanding
debt instruments, including the 2024 notes and the 2025 credit
facility, to 'CCC+'/'RR4' from 'B-'/'RR4'. Fitch has removed the
Negative Rating Outlook from DIFL.
JAMAICA: BOJ Pumps Another US$30 Million Into Forex Market
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RJR News reports that the Bank of Jamaica (BOJ) intervened in the
foreign exchange market with another US$30 million on June 11 due
to the high demand in response to a similar intervention.
National Commercial Bank Jamaica bought US$5.5 million, followed by
GraceKennedy Trading with US$3.8 million and VM Group US$3.5
million, according to RJR News.
First Global Bank, Sagicor Bank Jamaica, Citibank Jamaica, Bank of
Nova Scotia and Mayberry Group each purchased US$2 million, the
report notes.
JMMB Bank snapped up US$1.5 million, the report relays.
Meanwhile, the central bank is also reporting that 218 bids valued
at almost US$27 billion were submitted for the US$15 billion it
wanted to take out of circulation on June 11, the report notes.
The bank, however, says it accepted only US$147 bids for its 30-day
instrument issued to help stabilise the dollar, the report
discloses.
The institutions and individuals who provided this money will be
given a certificate of deposit which will attract an interest rate
of 6% per year, to be taxed at 25%, 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.
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M E X I C O
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IH 35 TRUCKING: Voluntary Chapter 11 Case Summary
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Debtor: IH 35 Trucking, LLC
2815 Piedmont St.
Laredo, TX 78045
Business Description: IH 35 Trucking, LLC is a family-owned
logistics provider based in Laredo, Texas,
offering temperature-controlled and flatbed
freight services across North America. The
Company specializes in full truckload,
intermodal, and cross-border transportation,
with operations extending into Mexico and
Canada. Leveraging satellite tracking,
Qualcomm communications, and route
optimization systems, it delivers tailored
long-haul and short-haul logistics solutions
for temperature-sensitive goods.
Chapter 11 Petition Date: June 6, 2025
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 25-50057
Judge: Hon. Jeffrey P Norman
Debtor's Counsel: Carl M. Barto, Esq.
LAW OFFICE OF CARL M. BARTO
817 Guadalupe
Laredo TX 78040-5251
Tel: (956) 999-5163
E-mail: cmblaw@netscorp.net
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Jorge Pablo Munoz as managing member.
The petition was filed without the Debtor's list of its 20 largest
unsecured creditors.
A full-text copy of the petition is available for free on
PacerMonitor at:
https://www.pacermonitor.com/view/RL5EG3I/IH_35_TRUCKING_LLC__txsbke-25-50057__0001.0.pdf?mcid=tGE4TAMA
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P A N A M A
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PROMERICA FINANCIAL: Fitch Affirms B+ LongTerm IDR, Outlook Stable
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Fitch Ratings has affirmed Promerica Financial Corporation's (PFC)
Long-Term Issuer Default Rating (IDR) at 'B+' and Short-Term IDR at
'B'. Fitch has also affirmed PFC's Viability Rating (VR) at 'b+',
Government Support Rating (GSR) at 'No Support' (ns) and senior
secured debt rating at 'B+' with a Recovery Rating of 'RR4'. The
Rating Outlook for the Long-Term IDR is Stable.
Key Rating Drivers
Ratings Driven by Intrinsic Creditworthiness: PFC's Long-Term IDR
is driven by its 'b+' VR, which reflects the strength of its
business profile. The bank holding company holds solid market
positions in most of the countries in which it operates. The
ratings also factor in PFC's exposure to low-rated economies in
Latin American markets and its efficient management of its
consolidated risk profile. This has resulted in moderate but
resilient earnings generation.
Improving but Still Challenging Blended Operating Environment:
PFC's combined operating environment (OE) score of 'b+' is one
notch above the level that resulted from the weighted average of
its assets in each of the nine Latin American countries where it
operates. This accounts for the benefits of geographical
diversification and the stronger regulatory framework in Panama,
PFC's legal domicile. Guatemala and Costa Rica have Positive
Outlooks, which could potentially benefit the banking systems' OE
scores if the countries' sovereign ratings are eventually upgraded.
However, PFC's high exposure in Ecuador (33% of total assets as of
th 1Q25) and other riskier OEs still weighs heavily on Fitch's
blended OE assessment. In Fitch's view, the bank's business volume
growth in higher-rated jurisdictions effectively mitigated
pressures in more challenging OEs and helped maintain a resilient
credit profile.
Business Profile Key Strength: PFC's business profile score of 'bb'
reflects its competitive position and strong local franchise across
the countries in which it has presence. As a banking network, it is
one of the three largest financial conglomerates in the region. It
owns the third-largest private sector bank in Ecuador, which is its
largest subsidiary and main income and risk generator. In
Nicaragua, PFC controls the largest bank, and recently enhanced its
market position through the merger with Banco de Finanzas and in
Guatemala is the leader in credit cards.
The group's diversified and consistent business model, along with
growth in less risky operating environments, mainly Guatemala and
Costa Rica, offset various risks and support sustained earnings
generation. At year-end 2024, PFC's total operating income was
USD1,684 million, a 17.7% increase from year-end 2023.
Resilient Asset Quality: Effective risk controls underpin PFC's
resilient consolidated asset quality, despite the group's presence
in more volatile jurisdictions than Panama. As of 1Q25, the Stage 3
ratio (including interest receivables) improved to 2.1%, down from
the four-year average of 2.5%, although it remains slightly higher
than some of its closest bank peers in the region. Fitch expects
this metric to remain close to 2.0% during the rating horizon,
despite anticipated asset quality pressure in certain geographies,
particularly Ecuador and Guatemala.
This is mitigated by loan diversification and consistently strong
loss allowance coverage above 120% since 2022. Individual borrower
concentrations remain moderate; at 1Q25, the top 20 borrowers
represented 0.9 times the bank's common equity Tier 1 (CET1).
Moderate Profitability: PFC's operating profit to risk-weighted
assets (RWA) ratio decreased to 1.0% in 1Q25 and 2024 (2023:1.4%),
largely due to higher credit costs. Fitch expects profitability to
remain reasonable in 2025 as the net interest margin (NIM) is
supported by business volume growth, along with further operational
efficiencies, although potentially higher loan impairment charges
could impact it. Fitch anticipates the operating profit to RWA
ratio will be below 2% by end-2025. While this metric aligns with
PFC's current credit profile, it remains below nearly all its
peers. Profitability continues to be sensitive to asset-quality
risks and macroeconomic developments.
Adequate Capital for Risk Profile: PFC's CET1 to RWA ratio was 9.1%
and 9.0% in 1Q25 and 2024, respectively, which are both lower than
pre-2023 levels but appropriate for its business model and rating
level. PFC's capital adequacy is supported by moderate earnings,
low dividend payments (USD6.4 million in 1Q25 and USD12 million in
2024) and full reserves coverage of impaired loans, though it was
pressured by RWA growth of 14.9% in 2024. Fitch expects the CET1
ratio to remain at similar levels of 9% by end-2025.
Good Funding Profile: PFC is primarily funded by customer deposits,
which comprised 82.3% of total non-equity funding as of 1Q25. The
loans-to-deposits ratio remains below 100%, at 95% in 1Q25, and
Fitch expects this metric to remain stable in the foreseeable
future, as deposits continue to be the main source of funding. The
mix of total deposits is well balanced, split almost equally
between demand and term deposits. Concentrations are low, with the
top 20 depositors accounting for 8.4% of total deposits as of 1Q25.
At the same time, 26.6% of the balance sheet was comprised of
liquid assets.
Government Support Rating (GSR)
The 'ns' GSRs reflect that external support is possible but cannot
be relied upon due to the banking system's large size relative to
Panama's economy and the country's weak support stance because it
does not have a lender of last resort.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The VR and IDR could be negatively affected by a sustained
decline in the CET1 ratio below 8%, and a reduction in subsidiary
dividends to PFC that pressures its debt service capacity.
- The ratings could also be pressured by a materially weaker
assessment of PFC's multijurisdictional OEs, especially in its
largest markets, although this is not reflected in Fitch's baseline
scenario.
- Because the GSR is already at the lowest level of its scale,
there is no downside potential for the GSR.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The ratings could be upgraded if there is a relevant and
consistent improvement in the OEs score, while PFC maintains strong
business profile.
- An upgrade of the GSR is unlikely because Panama is a dollarized
country with no lender of last resort.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
The rating for PFC's USD225 senior notes is in line with its
Long-Term IDR, as the likelihood of a default on the notes is the
same as a default by the bank. Despite the notes being senior
secured and comprising unsubordinated obligations, Fitch believes
the collateral mechanism would not have a significant impact on
recovery rates. In accordance with Fitch's rating criteria,
recovery prospects for the notes are average, as reflected in their
Recovery Rating of 'RR4'.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- PFC's senior debt ratings would be downgraded if its Long-Term
IDR is downgraded.
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- PFC's senior debt ratings would be upgraded if its Long-Term IDR
is upgraded.
VR ADJUSTMENTS
The OE score has been assigned below the implied score due to the
following adjustment reason: Geographical Scope (negative).
The Business Profile score has been assigned above the implied
score due to the following adjustments: Business Model (positive)
and Market Position (positive).
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Promerica
Financial
Corporation LT IDR B+ Affirmed B+
ST IDR B Affirmed B
Viability b+ Affirmed b+
Government Support ns Affirmed ns
senior
secured LT B+ Affirmed RR4 B+
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P E R U
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PERU: Recovers From Consecutive Natural Disaster Shocks, IMF Says
-----------------------------------------------------------------
The Executive Board of the International Monetary Fund (IMF)
concluded on June 5, 2025, the 2025 Article IV consultation[1] with
Peru and endorsed the staff appraisal without a meeting on a
lapse-of-time basis.
IMF notes that the economy has recovered from consecutive natural
disaster shocks and social turmoil. Inflation is firmly within the
target band, owing to the central bank's early and decisive
monetary tightening followed by cautious easing. The financial
sector remained sound and profitable. The current account surplus
further improved, underpinned by strong terms of trade. However,
the fiscal position weakened. A relative political stability
persists but pre-election tensions are rising. Lingering political
uncertainty weighs on economic prospects and dents the appetite for
structural reforms to boost potential growth.
Growth is expected to moderate to 2.8 percent in 2025. A favorable
momentum in private consumption and elevated public investment
would support continued growth, but pre-election tensions would
weigh on the private investment recovery while the impact of the
first-round effects of the tariffs and global growth slowdown would
be negative, although relatively moderate. Inflation is expected to
remain within the target band of 1-3 percent. The current account
balance is envisaged to remain in a surplus of 1.7 percent of GDP
in 2025, with low external financing and debt rollover risks.
Evolving risks are dominated by the potential for larger adverse
impacts on global growth and commodity prices, due to prolonged
trade policy uncertainty and financial market volatility, but Peru
has ample buffers to cope with shocks. In the short term, key
domestic risks include an intensification of political uncertainty,
social unrest over security concerns, and weather-related shocks.
Key external risks include trade policy uncertainty, tighter
financial conditions, and commodity price volatility. Recent
government initiatives to accelerate private sector involvement in
public investment projects and streamline burdensome regulations
could help revive private investment. Peru's macroeconomic
resilience is reinforced by very strong buffers including low
public debt, abundant international reserves, and access to
international capital markets on favorable terms.
Executive Board Assessment
After a strong recovery, growth is expected to moderate, amid
global policy uncertainty and pre-election tensions, and thereafter
to remain close to potential. With a closed output gap and firmly
anchored inflation expectations, headline inflation would remain
within the target band. The current account balance is envisaged to
remain in a surplus, only gradually returning to a deficit in the
medium term - stabilizing at its norm, of about 1.5 percent of GDP
- as private investment recovers and terms of trade normalize. The
external position in 2024 was stronger than the level implied by
medium-term fundamentals and desirable policies, due to strong
terms of trade and a recovery in traditional exports. Risks are
tilted to the downside given elevated external uncertainty, but
Peru has ample buffers to cope with shocks. Very strong
macroeconomic policies and institutional policy frameworks remain
in place.
A broadly neutral monetary policy stance is appropriate. Inflation
expectations are approaching 2 percent, and the output gap is
closed. However, given heightened external uncertainty, monetary
policy should remain data dependent. Continued exchange rate
flexibility should be allowed to help cushion the impact of
external shocks.
Meeting the 2025 fiscal deficit target will require additional
efforts in a pre-election year. The 2025 budget envisages a deficit
of 2.2 percent of GDP, consistent with the revised fiscal rule
target. A tax revenue rebound from the economic recovery and
one-off factors will help reduce the deficit in 2025, but
additional efforts of about 0.4 percent of GDP will be needed to
secure fiscal rule compliance. Additional spending control measures
would make this year's consolidation plans more credible and
balanced. In May 2025, the authorities announced initiatives to
improve spending efficiency, but further efforts will be needed to
comply with this year's target.
A combination of spending restraint and revenue-raising measures
would be needed to comply with the medium-term fiscal targets. To
comply with the fiscal rule deficit target of 1 percent of GDP by
2028 and the debt ceiling of 30 percent of GDP by 2035, the
authorities' medium-term consolidation plan envisages a reduction
of current spending by about 0.4 percent of GDP per year between
2026 and 2028. Identifying both revenue and spending
measures—including efforts to streamline tax expenditures;
strengthen tax administration; and control wages, discretionary
transfers, and inefficient public investment—would secure a
balanced and gradual consolidation. In the absence of measures,
public debt would gradually rise over the medium term, while
remaining relatively low compared to peers. Legislative initiatives
bearing fiscal costs, proposals that erode the tax base, and
excessive reliance on private participation schemes would
complicate the attainment of fiscal targets. Reforms to
significantly reduce Petroperú's costs and enhance its
transparency and governance are also needed to safeguard fiscal
credibility.
Systemic risks are limited, but authorities should continue to
proactively contain financial vulnerabilities. Banks are
profitable, with ample liquidity and capital buffers. While
elevated for small- and medium-sized firms, NPLs are expected to
continue improving and would support the growth of credit. The
authorities should continue to be vigilant of pockets of
vulnerability, particularly in corporate loans.
Focused macroprudential policies could reduce financial
vulnerabilities from remaining dollarized credit. While the
aggregate value of unhedged dollar credit is low, unhedged dollar
credit tends to be riskier and concentrated in large- and
medium-sized companies in the construction, commerce, and
manufacturing sectors. The authorities' regulation to introduce
higher risk weighting in 2026 will help alleviate vulnerabilities
from unhedged dollar credit. To ensure the stability of dollar
funding for financial institutions, the authorities could consider
introducing currency-specific NSFR requirements to complement the
existing currency-specific LCR limits.
Policy efforts are needed to revive the domestic capital market. It
is critical to maintain the prohibition of future pension
withdrawals, as approved in the recent pension reform, to protect
the functioning of the domestic capital market, decrease financing
costs, and lower the risks of old-age poverty. Measures to broaden
the investor base through retail investment products could play a
significant role in attracting funds back into the securities
market.
Financial resilience would be strengthened by addressing remaining
regulatory gaps. The revised Basel III risk-weight framework and
improving the activation criteria for the countercyclical capital
buffer (CCyB) will help enhance the effectiveness of the entire
regulatory framework. Completing the evaluation of recovery plans
for domestic systemically important banks and expanding to the
financial group level and their resolution planning will eliminate
uncertainty under potential systemic events by facilitating orderly
crisis management.
Updating the fiscal decentralization framework, along other needed
structural reforms, could help boost investments in the critical
mineral sector and increase potential growth. A US$64 billion
pipeline of mining investment projects has been mostly stalled for
many years due to bureaucratic complexity and social conflicts.
Unlocking these projects and channeling the additional fiscal
revenues could permanently boost potential growth. Updating the
fiscal decentralization framework, including redesigning natural
resource revenue-sharing formulas, to improve public spending
efficiency and generate high-impact public investments could help
ensure that mining dividends translate into greater development.
Enhanced efforts are also needed to curb the low but rising level
of insecurity, reform labor and tax regulations that impose
excessive costs for formalizing or growing a business, enhance the
independence and integrity of judicial bodies and tools to combat
corruption impunity, build resilience to natural disasters, and
embrace the opportunities of digital technologies and artificial
intelligence. The OECD accession process provides a clear roadmap
for other critical reforms to boost the business climate, reduce
informality, and reform the civil service.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: Manufacturers Receive Over US$1BB in Support
---------------------------------------------------------------
Vishanna Phagoo at Trinidad Express reports that since the launch
of Exim Bank Trinidad and Tobago Ltd's manufacturing foreign
exchange facility in 2018, US$1.1 billion has been disbursed to
support local manufacturers, the bank's marketing and business
development manager Sheldon Thomas said.
He was speaking at the opening of the nomination period for the T&T
Chamber of Industry and Commerce's Champions of Business Awards,
according to Trinidad Express.
It was held at the Chamber's headquarters in Westmoorings, the
report notes.
"Since the launch of the Manufacturing Forex Facility in mid-2018
we have served 190 manufacturers by providing a total of US$1.102
billion forex support since inception and provided over TT$169
million in funding over the last two years for equipment to
facilitate and support private sector capital investments. Note
that 87% of the companies served via the manufacturing forex
facility were SME manufacturers," said Thomas during his company's
sponsor remarks the report relays.
He also referenced the Essentials Forex Window, noting that in
2020—when the window was introduced—over 110 companies accessed
funds the report discloses.
That facility was allocated US$1.18 billion by the Government the
report says.
Thomas further recalled that with regard to the Forex Allocation
System for Essential Items which was initiated in early 2020, to
date over 110 companies have accessed a total of US$1.249 billion
to supply and address basic needs within the country (food,
pharmaceuticals, agriculture, hygiene products, etc) the report
says.
"This facility is open to corporate clients of any size, and it was
revised in October 2024," he said. "We have expanded our service
offerings to more SMEs in a variety of sectors following the launch
of the Catalytic Fund in February 2025 at the T&T Chamber Catalyst
SME Conference and the SME Forex Window Pilot Programme in April
2025. The fund is a lending facility which provides a customisable
financing solution designed to support SMEs at various stages of
growth and it is executed in collaboration with our partners:
Development Finance, JMMB and Term Finance. Whereas the SME Forex
Window Pilot Programme provides much needed access to foreign
exchange through our clientele primary bankers (either RBL or FCB)
to transact business-related international purchases," the report
notes.
Exim Bank will also be sponsoring the Chamber's Breakthrough
Exporter of the Year Award the report relays.
The theme of this year's awards is "Building Legacies", according
to Chamber president Sonji Pierre-Chase, who also delivered remarks
during the media launch the report discloses.
'Heartbeat of Our Economy'
Also speaking at the launch, Republic Bank vice-president Karen Yip
Chuck said the bank was proud to support the Entrepreneurship and
SME Awards, the report relays.
"These speak to the heartbeat of our economy. Trinidad and Tobago
has approximately 20,000 to 25,000 SMEs, representing 85% of
registered businesses. Collectively, they contribute more than 30%
to GDP. From micro enterprises to fast-scaling innovators, these
businesses are quiet revolutionaries pushing our country forward,"
she added.
She continued: "It's a promise that, beyond sponsoring the
Champions of Business' Entrepreneurship and SME awards, has driven
us to disburse approximately $105 million in financing with
flexible concessionary terms to over 1,300 micro, small and medium
enterprises through our MSME micro loan."
She added that the bank has lent approximately $300 million through
this facility to benefit SMEs.
Meanwhile, deputy permanent secretary at the Ministry of Trade,
Investment and Tourism Ava Mahabir-Dass reaffirmed the Government's
commitment to advancing trade, attracting investment, deepening
private sector involvement, creating jobs, and boosting tourism,
the report relays.
"We will be doing this by expanding market access and global trade
through strategic trade missions, expanding trade agreements with
countries within and outside the region, attracting domestic and
foreign investment, and building economic growth hubs in key areas
to support commerce and growth," she added.
She added that the Government also aims to improve the ease of
doing business through measures such as the community system, which
will promote increased trade facilitation, automation, and supply
chain optimization, the report discloses.
Other priorities include facilitating investments in new and
emerging sectors as sources of commercial activity, foreign
exchange, and government revenue, and fostering the growth of local
sport and ecotourism niche industries through targeted policies and
collaborations, the report relays.
Mahabir-Dass announced that the ministry will be sponsoring the
Internationally Known T&T-Owned Company of the Year Award, the
report notes.
Chief executive officer of the Chamber Vashti Guyadeen also
confirmed that Proman will sponsor the Green Agenda Award, the
report discloses.
Kiran Maharaj, the chair of the Champions of Business Award
Committee and immediate past president of the Chamber, encouraged
members of the public to participate in the nomination process, the
report adds.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
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Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2025. All rights reserved. ISSN 1529-2746.
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