250701.mbx

250701.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, July 1, 2025, Vol. 26, No. 130 Headlines B A H A M A S BAHAMAS: Fitch Rates USD1.067 Billion Notes Due 2036 'BB-' FTX GROUP: Injunction OK'd in Ex-FTX Exec Ch. 11 Clawback Case B E R M U D A RLGH FINANCE: Fitch Rates Fixed-Rate Subordinated Notes 'BB+' B O L I V I A BOLIVIA: Crypto Gains Foothold as Small Firms Seek Alternatives BOLIVIA: Crypto Transactions Up over 530% Amid Currency Woes B R A Z I L BRAZIL: IDB OKs $2BB Credit Line to Strengthen Fiscal Management C A Y M A N I S L A N D S PHOENIX AVIATION: Fitch Assigns 'B' Final IDR, Outlook Stable C H I L E LATAM AIRLINES: Fitch Rates New Secured Notes Due 2031 'BB+' M E X I C O IH 35 TRUCKING: Melissa Haselden Named Subchapter V Trustee SU CASITA 2007: Fitch Affirms 'CCsf' Rating on Class A Debt T R I N I D A D A N D T O B A G O ROCK HARD: Lower Cement Prices Anticipated as Firm Set to Return X X X X X X X X LATAM: Institutional Weaknesses Delaying Development Projects - - - - - ============= B A H A M A S ============= BAHAMAS: Fitch Rates USD1.067 Billion Notes Due 2036 'BB-' ---------------------------------------------------------- Fitch Ratings has assigned The Commonwealth of the Bahamas' (The Bahamas) USD1.067 billion notes maturing June 2036 a 'BB-' rating. The notes have a coupon rate of 8.25% and principal payments will be paid in three equal installments in June 2034, June 2035, and June 2036. Proceeds from this issuance will be used to fund a tender offer of the 6% 2028 notes, 9% 2029 notes, 6.95% 2029 notes, 8.95% 2032 notes, 6.625% 2033 notes and the 7.125% 2038 notes. Any remaining net proceeds will be used to fund national development objectives, including infrastructure projects. Key Rating Drivers The rating is in line with The Bahamas's Long-Term Foreign-Currency Issuer Default Rating (IDR). On 9 April 2025, Fitch assigned a 'BB-' Long-Term Foreign-Currency IDR, with a Stable Outlook, to The Bahamas. The following ESG issues represent Key Rating Drivers for the bonds. Other Key Rating Drivers can be found in the issuer Rating Action Commentary dated 9 April 2025. ESG - Governance: The Bahamas has an ESG Relevance Score (RS) of '5' [+] for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in its proprietary Sovereign Rating Model (SRM). The Bahamas has a high WBGI ranking at 69.4, reflecting its long track record of stable and peaceful political transitions, well established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption. The rating on the bonds is sensitive to any changes in the Long-Term Foreign-Currency IDR, which has the following rating sensitivities (as per the aforementioned Rating Action Commentary). RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Public Finances: A renewed rise in debt and interest burdens, for example driven by an economic shock or a reversal in ongoing fiscal consolidation; evidence of fiscal financing challenges; - External Finances: An adverse tourism or weather shock that undermines foreign reserve levels and the external position. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Public Finances: Strong fiscal consolidation that delivers a substantial reduction in debt and interest burdens; - External Finances: Policies that allow for accumulation of substantial buffers against external shocks, such as hurricanes. - Macro: Improved investment and growth prospects and evidence of greater economic diversification. Date of Relevant Committee 31 March 2025 ESG Considerations The ESG profile is in line with that of The Bahamas. Entity/Debt Rating ----------- ------ The Commonwealth of the Bahamas senior unsecured LT BB- New Rating FTX GROUP: Injunction OK'd in Ex-FTX Exec Ch. 11 Clawback Case -------------------------------------------------------------- Vince Sullivan at law360.com reports that a Delaware bankruptcy judge approved a preliminary injunction against former FTX executive Ryan Salame to prevent him from dissipating as much as $6 million in assets he is accused of taking from the cryptocurrency exchange prior to its 2022 collapse. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9, 2022, struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. SBF agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 billion in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. ============= B E R M U D A ============= RLGH FINANCE: Fitch Rates Fixed-Rate Subordinated Notes 'BB+' ------------------------------------------------------------- Fitch Ratings has assigned to RLGH Finance Bermuda Ltd's (RLGH FB) fixed-rate subordinated notes a 'BB+' rating. Fitch placed the notes on Rating Watch Positive, consistent with RLGH FB's debt ratings, reflecting its pending acquisition by Nippon Life. The issuance will constitute Tier 2 Capital under the Bermuda Monetary Authority's regulatory framework. Key Rating Drivers The notes are rated two notches below RLGH FB's long-term IDR of 'BBB', reflecting two notches for Fitch's baseline assumption of 'Poor' recovery expectations and zero additional notches for 'Minimal' non-performance risk. The 'Minimal' non-performance risk assessment reflects the fact that the notes' interest deferral feature only triggers if the company's Enhanced Capital Ratio (ECR) declines below 100%. This trigger level is low, as a 100% ECR breach implies an insurer is already in severe financial difficulties. Fitch does not expect pressure by the regulator to exercise this feature unless an ECR breach occurs. The notes are treated as 100% debt in Fitch's calculation of financial leverage. Fitch expects to give 100% capital treatment to the notes in its Prism Capital Model, consistent with the regulatory capital credit. Financial leverage will increase pro forma for the issuance, but is expected to remain below 30% over the rating horizon. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Fitch could affirm Resolution Life's and its subsidiary's ratings at current levels if the transaction does not close or if Fitch concludes that Resolution Life lacks sufficient strategic importance within the Nippon Life enterprise to support uplift from their standalone credit quality; - RLGH FB's hybrid securities ratings could be lowered by one notch to reflect higher non-performance risk if Bermuda's regulatory environment becomes more controlling in its supervision of (re)insurers, in Fitch's view; - Deterioration in business profile stemming from increased risk through acquisitions or adverse experience with the existing run-off liabilities; - Deterioration in Fitch's assessment of the operating companies' capitalization, including a consolidated Prism score below 'Very Strong', capital declining below target levels or financial leverage maintained over the long term above 30%; - Material increase in investment risk or investment losses that affect Fitch's view of capital. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Fitch could upgrade Resolution Life's and its subsidiary ratings following the close of the transaction based on a review of integration plans, financial projections, strategic fit within the Nippon Life enterprise, and degree of support provided by Nippon Life to Resolution Life; - An improved view of business profile, driven by continued success in managing existing run-off liabilities while successfully executing future run-off transactions; - Maintaining or improving capitalization at operating companies, along with financial leverage below 25%; - Fixed-charge coverage ratio maintained above 7x; - Return on equity above 10%. 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 ----------- ------ RLGH Finance Bermuda Ltd Subordinated LT BB+ New Rating ============= B O L I V I A ============= BOLIVIA: Crypto Gains Foothold as Small Firms Seek Alternatives --------------------------------------------------------------- globalinsolvency.com, citing Reuters, reports that in the busy shopping district of the Bolivian city of Cochabamba, ATMs let shoppers swap coins for cryptocurrency, beauty salons offer cut-price deals if you pay in Bitcoin, and people use Binance accounts to buy fried chicken. Bolivians are facing a rising economic crisis, with reserves of dollars near zero, inflation at 40-year highs and fuel shortages causing long lines at the pump, according to globalinsolvency.com. The country's currency has lost half its value on the black market this year, even as the official exchange rate has been held artificially steady by government intervention, the report notes. BOLIVIA: Crypto Transactions Up over 530% Amid Currency Woes ------------------------------------------------------------ globalinsolvency.com reports that Bolivia's central bank reiterated a dramatic uptick in transactions of digital assets, following a Reuters report that showed how more Bolivians were turning to crypto exchanges like Binance and stablecoins like Tether as a hedge against the depreciation of the local boliviano currency. According to new figures published by the Bolivian central bank, transactions using Electronic Payment Channels and Instruments for Virtual Assets (VA) soared more than 530%, from $46.5 million in the first half of 2024, to $294 million in the same period of 2025, the report notes. =========== B R A Z I L =========== BRAZIL: IDB OKs $2BB Credit Line to Strengthen Fiscal Management ---------------------------------------------------------------- The Inter-American Development Bank (IDB) approved a conditional credit line of $2 billion to support the third phase of the Fiscal Management Modernization Program in Brazil, known as PROFISCO III. This initiative seeks to facilitate and strengthen tax compliance and enhance fiscal sustainability of states and the business environment. The program financed by the IDB supports the Federal Government, states, and municipalities to modernize their tax management processes and systems, focusing on the implementation of the new value-added tax (VAT), which was approved in the recent tax reform. Additionally, PROFISCO III will promote measures to improve public spending management, including the incorporation of environmental and climate criteria, to reduce inefficiencies and increase the impact of public policies. The state of Amazonas will be the first to benefit from this new phase of PROFISCO with a US$30 million sovereign guaranteed loan from the IDB. The individual loan and the credit line were approved by the IDB's Board of Executive Directors. In the case of Amazonas, the program will support the modernization and digital transformation of the state's fiscal management bodies to adapt them to the new tax code. The initiative includes updating processes, systems, and institutional capacities, using technologies to improve decision-making, reduce litigation, and simplify bureaucracy. To reduce waste, the state will also strengthen its budget planning, financial management, and public expenditure execution processes, using automation and artificial intelligence. Moreover, the state will restructure procedures and employ digital tools to reduce tax litigation, which currently hampers revenue collection and distorts economic incentives. The program will directly benefit fiscal management bodies by providing resources to improve the management of public revenues and expenditures, as well as offering enhanced training tools. Indirectly, it will also benefit taxpayers and the private sector through more efficient services, lower compliance costs, and improvements in the business environment. The general population will also benefit from greater transparency in public accounts and higher-quality public policies enabled by more efficient spending. The loan to the state of Amazonas will have a repayment term of up to 20 years, with a six-year grace period and an interest rate tied to the Secured Overnight Financing Rate (SOFR). 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. =========================== C A Y M A N I S L A N D S =========================== PHOENIX AVIATION: Fitch Assigns 'B' Final IDR, Outlook Stable ------------------------------------------------------------- Fitch Ratings has assigned a final Long-Term Issuer Default Rating (IDR) of 'B' to Phoenix Aviation Capital, LLC (PAC). The Rating Outlook is Stable. Concurrently, Fitch has assigned a final rating of 'B' with a Recovery Rating of 'RR4' to PAC's $550 million of 9.25% senior unsecured notes due July 2030. The assignment of the final ratings follows the receipt of documentation conforming to information already received and the completion of the debt issue, the proceeds of which are being used to partially pay down outstanding secured debt and provide cash to fund near- and medium-term aircraft acquisitions. The final ratings are the same as the expected ratings assigned on June 17, 2025. Key Rating Drivers Full-Service Lessor of New Technology Aircraft: The ratings reflect PAC's nominal, but growing, franchise as a global, full-service lessor of new tech narrowbody aircraft, appropriate current and target leverage, lack of meaningful near-term debt maturities and sound profitability metrics. Ambitious Growth Targets: Rating constraints include execution risk associated with the company's ambitious growth targets and short operating track record as a standalone lessor; reliance on wholesale secured funding; a smaller and significantly concentrated portfolio by customer and geography; and funding and placement risks with the firm's sizeable orderbook. There are potential governance weaknesses and conflicts of interest associated with PAC's externally managed business model, limited number of board members, and ownership by fixed life funds. Sector Constraints: Rating constraints applicable to the aircraft leasing industry more broadly include the monoline nature of the business, vulnerability to exogenous shocks, sensitivity to higher oil prices, inflation and unemployment, which negatively impact travel demand, potential exposure to residual value risks, reliance on wholesale funding sources, and meaningful competition. These constraints are further influenced by Fitch's expectation for a less favorable operating environment, including a moderation in travel demand due to dampening global economic growth. Nominal Franchise: As of March 31, 2025, PAC had a small, and highly concentrated portfolio of 17 owned aircraft leased to seven airlines across six countries. The portfolio, which includes a 72% stake in three A330-300s, had a net book value (NBV) of approximately $878 million as of March 31, 2025. PAC possesses a committed orderbook for 30 Boeing B737-8 aircraft scheduled for delivery through 2028, along with purchase rights for an additional 30 B737-8 aircraft that, if exercised, could be delivered in 2029 and 2030. Sale-leaseback and secondary market opportunities could supplement portfolio growth in the medium term. Attractive but Concentrated Portfolio: PAC's portfolio comprises highly liquid tier 1 (87% of NBV) and tier 2 aircraft (13%), as categorized by Fitch, with a weighted average age of the owned portfolio of 4.7 years, and average remaining lease term of 7.3 years, as of March 31, 2025. This represents a young portfolio with long remaining lease terms, which could translate to strong asset quality performance over time. Modest Earnings: Fitch anticipates the firm's lack of scale and ambitious growth strategy amid increased competition will have a negative impact on near-term profitability. Net spreads (lease yields - funding costs) were 2.0% in 2024. Fitch expects net spreads to stay within the 'bb' benchmark range of 1%-5% for aircraft lessors with a sector risk operating environment (SROE) score in the 'bbb' category over the medium term. Adequate Leverage: Management articulated a leverage target of 3.0x on a net debt to equity basis. Fitch's calculated leverage (gross debt to tangible equity), which treats PAC's preferred shares as 100% equity, was 1.6x as of Dec. 31, 2024, but is expected to rise to 2.6x following the close of PAC's inaugural unsecured debt issuance. Fitch believes PAC's leverage is appropriate in the context of current concentrations as well as the liquidity of the fleet profile, as the majority of the portfolio is expected to remain tier 1. Evolving Funding Mix: PAC's current funding profile is 100% secured, which Fitch views as a rating constraint. Current funding is comprised of secured term loans and financings backed by aircraft. Following the $550 million senior unsecured issuance, unsecured debt will increase to 38% of total debt as the proceeds of which are expected to repay outstanding amounts under existing term loans. Fitch anticipates that the unsecured funding mix will decrease in upcoming periods as the company seeks more secured debt to support order book deliveries. However, it is expected to stay within the 'bb' benchmark range of 10%-35% for aircraft lessors with a sector risk operating environment (SROE) score in the 'bbb' category over the medium term. Fitch would positively view a sustained increase in the proportion of unsecured debt in the capital structure, as it enhances funding flexibility during times of stress. Liquidity in Focus: PAC faces heightened funding, and placement risks due to its substantial order book commitments, which were 100% placed in 2025, 14% placed in 2026 and 24% placed in 2027. Although liquidity from existing facilities is limited, the company finalized a $300 million committed warehouse facility in June 2025, and anticipates increasing it further, which will significantly bolster its current liquidity position. As of Dec. 31, 2024, pro forma for the anticipated future increase in the warehouse facility, liquidity resources for the next 12 months would be $562 million. This includes $6 million in unrestricted cash, $500 million from the committed warehouse facility, $37 million in operating cash flow, and $20 million from aircraft sales. This provides liquidity coverage of 1.4x relative to next 12-month order purchase commitments of $407 million. PAC also benefits from $425 million of additional commitments from BC Partners Credit (BCP) ($100 million debt financing and $325 million equity financing), which Fitch views positively. Additionally, Fitch believes that refinancing risk will be manageable due to the lack of near-term debt maturities. Stable Outlook: The Stable Outlook reflects Fitch's expectation that PAC will manage its balance sheet growth to maintain sufficient headroom relative to its targeted leverage range. It also reflects Fitch's negative rating sensitivities for liquidity coverage over the Outlook horizon, despite the likelihood of increased macro challenges including elevated market volatility, higher interest rates relative to recent years and growing inflation. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Weakening of the company's projected long-term cash flow generation, net spreads sustained below 1%, liquidity coverage dropping below 1.0x, and/or a sustained increase in gross leverage above 3.0x. - Macroeconomic and/or geopolitical headwinds that lead to lease restructurings rejections, lessee defaults, and increase losses, or a material deterioration in fleet quality, particularly concerning the proportion of tier 1 aircraft, average fleet age, and average lease terms, could also negatively impact ratings. - PAC's ownership by private funds could lead to negative rating actions if it results in elevated capital extractions or if a forced sale of the company at fund maturity undermines its financial profile, franchise, or long-term strategic direction. - Shortcomings in corporate governance or conflicts of interest that weaken PAC's franchise position, limiting its ability to pursue new business opportunities. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Strong execution of its planned growth targets and long-term strategic financial objectives, including maintaining leverage within the targeted range. - The ratings could also benefit from increased scale, greater lessee diversification with no airline exceeding 10% of NBV, enhanced geographic diversification of the fleet, maintenance of low impairment ratios, and demonstrated track record of funding and placement of orderbook deliveries. - An upgrade could also be contingent upon sustained net spreads above 2%, while maintaining liquidity coverage above 1.2x and an unsecured funding mix of 20% on a sustained basis. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS The senior unsecured debt rating is equalized with the Long-Term IDR, reflecting average recovery prospects under a stress scenario. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES The senior unsecured debt rating is primarily sensitive to changes in PAC's Long-Term IDR and secondarily to the relative recovery prospects of the instruments. A decline in projected unencumbered asset coverage, combined with a material increase in secured debt, could result in the notching of the unsecured debt down from the IDR. ADJUSTMENTS The Standalone Credit Profile (SCP) has been assigned in line with the implied SCP. The Asset Quality score has been assigned below the implied score due to the following adjustment reason(s): Concentrations; asset performance (negative), Risk profile and business model(negative). The Earnings & Profitability score has been assigned below the implied score due to the following adjustment reason(s): Historical and future metrics (negative). The Capitalization & Leverage score has been assigned below the implied score due to the following adjustment reason(s): Risk profile and business model (negative), Historical and future metrics (negative). Date of Relevant Committee 30 May 2025 ESG Considerations PAC has an ESG Relevance Score of '4' for Management Strategy due to execution risk associated with the operational implementation of the company's outlined business plan, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. PAC has an ESG Relevance Score of '4' for Governance Structure due to potential governance and conflicts of interest risks associated with PAC's limited number of independent board members and ownership by a fixed-life fund structure and external management. Shortcomings in corporate governance or conflicts of interest could weaken PAC's franchise position and limit its ability to pursue new business opportunities. This 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 Recovery Prior ----------- ------ -------- ----- Phoenix Aviation Capital Limited LT IDR B New Rating B(EXP) senior unsecured LT B New Rating RR4 B(EXP) ========= C H I L E ========= LATAM AIRLINES: Fitch Rates New Secured Notes Due 2031 'BB+' ------------------------------------------------------------ Fitch Ratings has assigned to LATAM Airlines Group S.A. (LATAM) a 'BB+' with a Recovery Rating of 'RR3' to its proposed benchmark-size senior secured notes due 2031, which will be secured by certain Equity Interests, the Airline Loyalty Program Business and Intellectual Property. Proceeds will be used to redeem its 2029 Notes, which is expected by Fitch to facilitate the release of supplemental collateral initially pledged to the 2030 notes. Fitch has also assigned a 'BB+'/'RR3' to LATAM's outstanding USD1.4 billion senior secured notes due 2030. Fitch currently rates LATAM's Long-Term Foreign and Local Currency Issuer Default Rating (IDR) a 'BB' with a Positive Rating Outlook. LATAM's ratings reflect its strong business position in Latin America, with solid market-share and geographic and product diversification. LATAM's credit metrics and liquidity profile are strong for its rating and its ability to maintain it navigating different economic cycles should benefit its ratings, supporting the Positive Outlook. Key Rating Drivers Robust Cash Flow: Fitch expects LATAM's operating cash flow (CFFO) to continue to improve during 2025 underpinned by solid traffic level, cost efficiencies, including fleet cost, and capacity addition. Fitch forecasts LATAM's adjusted EBITDAR to reach around USD3.5 billion in 2025 and USD3.6 billion in 2026. The most efficient cost base led to higher EBITDAR margins of 23.8% during 2024, an important expansion from 21% in 2019. For 2025 EBITDAR margins is forecasted at around 25% and to range from 23%-24% in a scenario of less favorable fuel prices, lower demand growth and a more competitive environment that weakens yields in following years. Positive FCF Generation: LATAM's commitment to manage cautiously its growth opportunities in order to not deteriorate its credit metrics remains key. Upcoming capital expenditures related to fleet modernization and modest growth and dividends are well covered by LATAM's CFFO generation. Fitch forecasts LATAM's FCF generation to be positive during 2025 and 2026 around USD424 million on average after increasing capex. Fitch considered capex of USD1.65 billion in 2025 and in 2026 and dividends around USD225 million. Fitch considers that LATAM has some flexibility to defer those elevated capex levels in a scenario of downturn of the industry. Deleveraging Trend: Fitch expects LATAM's leverage to continue to decline in 2025, despite higher capex and dividends. Fitch's base case scenario forecasts the company's respective total and net adjusted leverage/EBITDAR ratios at around 2.1x and 1.4x during 2025 and 2026, a continued improvement from the respective 2023 levels of 2.7x and 2.1x and 2.3x and 1.7x in 2024. Those metrics are considered strong for the rating category. As of March 31, 2025 LATAM's total debt was USD7.1 billion and it is expected by Fitch to rise to USD7.5 billion in 2025, but still much lower than USD10.4 billion of debt as of 2019. During the Chapter 11, LATAM was able to reduce around 35% of its debt. Improving Financial Flexibility: LATAM has a record of maintaining strong cash balances, a key rating consideration. The company's financial flexibility is enhanced by revolving credit facilities (RCFs) of USD1.575 billion that are fully undrawn, as well as a pool of unencumbered asset base of USD1.5 billion, including aircraft and additional engines. Fitch expects LATAM to maintain solid cash balances, with cash plus RCF to LTM revenues on average above 25%. LATAM is likely to remain proactive on its liability management strategy, seeking to reduce financial costs and to improve financial flexibility, reducing covenants and improving its secured/unsecured debt profile basis. Market Position and Diversification: Fitch views LATAM's strong business position as sustainable in the medium term, based on its diversification within Latin America and the international routes between Latin America and either North America, Europe, Africa or Oceania. The analysis also incorporates the company's strong market position in Brazil's domestic market and its position as the leader among Brazilian companies in international markets, strong market share in other key markets, and its joint venture with Delta Air Lines, Inc. (BBB-/Stable). LATAM's cargo business is also solid and has demonstrated important business resilience in recent years. Above-Average Industry Risks: The airline industry is inherently a high-risk sector given that it is a cyclical, capital-intensive business with various structural challenges and prone to exogenous shocks. High fixed costs combined with swings in demand and fuel prices typically translate into volatile profitability and cash flows. The exposure to foreign exchange fluctuations for the Latin American players constitutes an additional risk, as most of its costs are dollar denominated and large part of their operating cash flow is generally in local currency. The history of several debt restructurings within the airline sector in the region over the past years highlights the risks. Peer Analysis LATAM's 'BB' ratings reflect its diversified business model, in terms of product and geographic footprint, significant regional market position, strong capital structure, robust liquidity and financial flexibility. These positive factors are tempered by the industry's high business risks and exposure to exogenous shocks. LATAM is rated lower than global player Delta Air Lines (BBB-/Stable) primarily due to the company's lower business scale, diversification and financial flexibility. LATAM is rated at same level of United Airlines Holdings, Inc. (BB/Positive) and two notches above American Airlines Group, Inc. (B+/Stable) due to better capital structure. In terms of the Latin American players, LATAM's rating is above Avianca Group International Limited (B/Stable) and AZUL S.A. (D) due to greater business diversification, stronger capital structure and higher liquidity and financial flexibility. Key Assumptions - Fitch's base case during 2025 and 2026 includes an increase in ASK by 8% and 5%, respectively; - Load factors around 82%-83% during 2025-2026; - Jet fuel ranging around USD2.65-2.75 in 2025- 2026; - Capex of USD1.65 billion in 2025 and 2026. Recovery Analysis The recovery analysis assumes that LATAM would be considered a going concern in bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. Going Concern Approach LATAM's going concern EBITDA is USD1.65 billion, which incorporates the low-end expectations of LATAM's EBITDA post-pandemic, adjusted by lease expenses, and a discount of 20%. The going concern EBITDA estimate reflects its view of a sustainable, post-reorganization EBITDA level on which Fitch bases the valuation of the company. The enterprise value (EV)/EBITDA multiple applied is 5.5x, reflecting LATAM's strong market position in Latin America. Fitch applies a waterfall analysis to the post-default enterprise valuation (EV), based on the relative claims of the debt in the capital structure. The debt waterfall assumptions consider the company's total debt as of March 31, 2025. These assumptions result in a recovery rate for the first-lien and secured bonds within the 'RR1' range and unsecured notes within the 'RR3' range. However, LATAM is exposed to different operating environments and its operations are spread over different jurisdictions. Per Fitch's Criteria, LATAM's recovery rating is limited by the soft cap of 'RR3', which represents the weighted average of its recovery rating considering its diversified operating cash flow generation. LATAM is based in Chile (recovery cap at RR2) but has a large operation in Brazil (recovery cap at RR4), as well as operations in Peru (recovery cap at RR4), Colombia (recovery cap at RR4), US (recovery cap RR1), Europe and others. As a result, LATAM's senior secured note is rated at 'BB+' with 'RR3', one notch higher than its corporate IDR. LATAM's senior secured notes are secured by permanent collateral that includes equity interests, intercompany and third-party loans, third party receivables of the airline loyalty program assets with payment terms that are more than 120 days, intercompany receivables of a Loan Party in respect of the airline loyalty program assets and brand and intellectual property. Upon the redemption of USD700 million secured notes due 2029, a supplemental collateral package is expected to be release that includes: third-party and intercompany receivables in respect of the Cargo Business assets, certain slots, gates and routes and Intellectual Property to be specifically identified that is to be agreed and is required or necessary to operate the Cargo Business assets. RATING SENSITIVITIES RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Liquidity deterioration or difficulties continuing to access credit lines; - Gross and net leverage ratios consistently above 3.0x and 2.5x, respectively; - EBITDAR fixed-charge coverage sustained at or below 2.0x; - Competitive pressures leading to a severe loss in market share or yield deterioration; - Aggressive growth strategy or M&A seeking industry consolidation financed with debt; - Shareholder-friendly dividend distribution. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Gross and net leverage below 2.0x and 1.5x, respectively, on a sustainable basis; - Sustainable positive FCF generation across different economic cycles; - Ability to maintain strong cost structure, with adjusted EBITDAR margins above 26% on a sustainable basis; - Continued ability to refinance its high-cost debt at more attractive terms and improvements on a secured and unsecured mix; - Maintenance of strong liquidity position (cash above 20% LTM revenues, besides RCF) and well-spread debt amortization profile with no major refinancing risks in the medium term; - EBITDAR fixed-charge coverage sustained above 3.5x. Liquidity and Debt Structure LATAM's robust liquidity position is a key rating factor and Fitch expects the company to remain proactive on its liability management strategy in order to continue to reduce financial costs, improve its debt profile mix and, ultimately, avoid refinancing risks. LATAM held cash close to USD2.1 billion as of March 31, 2025, compared with short-term debt of USD689 million, including USD381 million of lease obligations. LATAM has two senior secured RCFs, fully undrawn, of USD1.575 billion. Including the RCF, the company's level of liquidity, measured as total cash and marketable securities plus unused committed credit lines over LTM revenue, was 28.4% as of March 31, 2025. The majority of LATAM's USD 7.1 billion of debt is fleet related, with lease liability representing 46% of the total amount. Non-fleet debt is USD2.5 billion, with no amortizations in the next three years. The company remains focus on its liability management strategy to reduce financial cost and improve its debt profile. Considering the current transaction, LATAM completes the full refinancing of its Chapter 11 process exit-debt financing with the last refinancing of the senior secured notes due 2029 (USD700 million). Issuer Profile LATAM is the largest airline group in Latin America, with expansive passenger and cargo operations and the largest loyalty program. At March 31 2025, the company`s fleet of 348 aircraft mix was concentrated in Airbus (78%) and Boeing (22%). MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery ----------- ------ -------- LATAM Airlines Group S.A. senior secured LT BB+ New Rating RR3 =========== M E X I C O =========== IH 35 TRUCKING: Melissa Haselden Named Subchapter V Trustee ----------------------------------------------------------- The U.S. Trustee for Region 7 appointed Melissa Haselden, Esq., at Haselden Farrow, PLLC as Subchapter V trustee for IH 35 Trucking, LLC. Ms. Haselden will be paid an hourly fee of $595 for her services as Subchapter V trustee and will be reimbursed for work-related expenses incurred. Meanwhile, the support staff working under her direct supervision will be paid $175 per hour. Ms. Haselden declared that she is a disinterested person according to Section 101(14) of the Bankruptcy Code. The Subchapter V trustee can be reached at: Melissa A. Haselden, Esq. Haselden Farrow, PLLC 700 Milam, Suite 1300 Pennzoil Place Houston, TX 77002 Telephone: (832) 819-1149 Facsimile: (866) 405-6038 mhaselden@haseldenfarrow.com About IH 35 Trucking IH 35 Trucking, LLC is a family-owned logistics provider based in Laredo, Texas, offering temperature-controlled and flatbed freight services across North America. It 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. IH 35 Trucking sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Case No. 25-50057) on June 6, 2025, with $1 million to $10 million in assets and liabilities. Jorge Pablo Munoz, managing member, signed the petition. Judge Jeffrey P. Norman presides over the case. Carl M. Barto, Esq., at the Law Office of Carl M. Barto represents the Debtor as bankruptcy counsel. SU CASITA 2007: Fitch Affirms 'CCsf' Rating on Class A Debt ----------------------------------------------------------- Fitch Ratings has affirmed the ratings of Su Casita Trust 2007's class A and class B residential mortgage-backed securities (RMBS) as follows: - Su Casita Trust Class A International Scale Rating at 'CCsf'; - Su Casita Trust Class A National Scale Rating at 'CC(mex)vra'; - Su Casita Trust Class B at 'D(mex)vra'. Entity/Debt Rating Prior ----------- ------ ----- Su Casita Trust 2007 Class A 864248AA7 LT CCsf Affirmed CCsf Class A 864248AA7 Natl ULT CC(mex)vra Affirmed CC(mex)vra Class B XS0293753058 Natl LT D(mex)vra Affirmed D(mex)vra KEY RATING DRIVERS Continued Dependency on REO Recoveries: As of April 2025, the securitized portfolio had a total of 1,733 loans divided by the following: 879 original loans with a total value of 62.12 million UDI and 854 restructured loans with a value of MXN209.41 equivalent to 24.78 million UDI. The portfolio over 180 days due represents 7.9% of the original balance, below the 8.5% as of June 2024. Although servicer continues with restructuring activities, portfolio remains deteriorated with 66.3% of the total current balance with more than 180 days due, comparable to its previous review of 64.1% as of June 2024. Due to the highly deteriorated status of the portfolio, the transaction payment obligations will continue increasing its dependency on the sale of repossessed assets. As of April 2025, the transaction had an inventory of 812 foreclosed available properties with a value of MXN58.94 million. Senior Class Amortization Increased: As of May 2025, the outstanding balance of Class A was 86.70 million UDI equivalent to 13% of the balance at issuance of 668.39 million UDI, amortizing 3.1% of the initial balance on the LTM compared to 1.7% in its previous review as of June 2024. Subordinated tranche's bond balance remains at 82.4% of its issuance amount, same as in its previous review as the transaction continues with no principal payments since 2009. Transaction structure considers a dual waterfall mechanism, where interest collections are used after expenses to pay interest while principal collections are used for amortization. Incomplete interest payments for Class A are made by the guarantor (MBIA, not rated by Fitch; hence no credit is given to the guarantee). As of May 2025, OC level (excluding loans over 180 days due) was -195.7% and -361.65% compared to -210.1% and -348.3% for Class A and Class B respectively June 2024. Adequate Servicing: The portfolio is currently serviced by Adamantine Servicios S.A. de C.V. (Adamantine; 'AAAF3+[mex]/Stable). Adamantine has proven adequate servicing capabilities mitigating exposure to operational risks. Servicing activities have remained stable, uninterrupted and active in terms of restructuring loans and sale of assets. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Class A - The rating may be downgraded if available liquidity keeps declining without significant recovery improvements and if the available guarantee fails to cover missed payments, resulting in a scenario where default seems imminent or unavoidable. Class B - Since the transaction is rated at 'D(mex)', a further downgrade could not be possible. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Class A - While a rating upgrade is viewed as unlikely considering the deteriorated asset quality and decreasing OC, the rating could be increased if recoveries through sold properties increased, improving consistently its credit enhancement levels. Class B An upgrade is viewed as unlikely, due to the current rating reflects Fitch's view of the interest default of the notes. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. 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. ===================================== T R I N I D A D A N D T O B A G O ===================================== ROCK HARD: Lower Cement Prices Anticipated as Firm Set to Return ---------------------------------------------------------------- Mya Quamie at Trinidad and Tobago Newsday reports that after a four-year absence, cement company Rock Hard Distribution Inc is poised to return to the local market. Rock Hard cement initially withdrew in September 2021 after legal disputes with the then PNM government which stemmed from the administration's policies which the company described as discrimination, according to Trinidad and Tobago Newsday. In an interview with Newsday in February 2024, managing director Ryan Ramhit said a major issue was that despite his cement being "hydraulic," it was classified as "portland" or building-grade, resulting in higher tariffs (import taxes), the report notes. Instead of a zero-five per cent tariff, Ramhit said the company was subject to a duty of 15 per cent, and despite a successful legal challenge against this move, the tariff on hydraulic cement was later increased to 35 per cent, the report relays. The Trade Ministry's decision in early April to reduce the duty rate on hydraulic cement to zero per cent, in response to Trinidad Cement Ltd's (TCL) decision to raise the price of its cement by seven per cent in February, made the company's return more feasible, the report discloses. In an interview on June 24, Ramhit said as soon as testing and evaluations are completed by the TT Bureau of Standards, Rock Hard Cement will be back in hardwares, in the coming weeks, at a competitive rate, the report says. This decision, he added, has been welcomed by hardwares across the country in light of TCL's consistent price increases since Rock Hard's departure, the report relays. TCL increased its price by 15.6 per cent in December 2021, seven per cent in August 2022, five per cent in March 2023, 7.6 per cent in February 2024, and seven per cent in February of this year, the report notes. CEO of Built to Last Roofing and Hardware in Freeport, Terrence Kalloo is welcoming Rock Hard's return to the local market. "It's a brilliant move for the people of this country," he said, the report discloses. In an interview with Newsday in February 2024, Kalloo said Rock Hard was the perfect competitor to TCL and its presence would help keep prices down, the report says. "I welcome this return because TCL had increased (the price of its cement) five times and the government could not have done anything about it. And it's the small man who would have suffered during that time. The contractors and the companies that do construction could bear the costs easily, but the man on the street who is just fixing outside by him and wants to buy two bags of cement, those are the people I felt sorry for," Kalloo said, the report relays He claimed that Rock Hard cement also presents a higher quality product, the report discloses. "Rock Hard is an excellent brand of cement, even better than TCL, in my opinion. It's a cement that binds quicker and lasts longer," Kalloo said, the report relays. He also noted that even though the brand has been absent from the market since 2021, many hardwares still have the brand's signage in-store, the report notes. G3 Hardware & Home Centre Ltd's general manager Kelvin Ghany said while not in favour of either brand, he welcomed the positive business impacts he expects from the return of Rock Hard cement, the report relays. "I'm happy to hear there's now another player in the market. Competition is good and the net beneficiary will be the consumer, the report notes. "This will force the price of cement down which will stimulate some activity in the sector. Once that is stimulated, the rest of ancillary products will be sold so it will add to the activity and definitely boost sales," Ghany said, the report disclsoes. Managing director of Endeavour Hardware Supplies Ltd Richard Ramsubhag also supported Rock Hard's re-entry into the local market noting recent attempts by TCL to appeal to consumers by offering discounts on bulk purchases as it anticipated the return of Rock Hard, the report adds. =============== X X X X X X X X =============== LATAM: Institutional Weaknesses Delaying Development Projects ------------------------------------------------------------- RJR News reports that a baseline assessment commissioned by the Caribbean Development Bank has revealed that persistent institutional weaknesses and procedural inefficiencies are significantly delaying development projects across the Caribbean. The study, which reviewed 35 CDB funded projects in 10 countries, found issues such as procurement delays, limited institutional capacity, poor communication and weak oversight, according to RJR News. CDB President Daniel Best stressed that ineffective implementation is preventing life-changing development, the report notes. Portfolio Manager Cavon C.J. White noted progress in some areas but highlighted ongoing problems with staffing, risk management and financial oversight, the report relays. Despite the challenges, the CDB views the report as a critical tool to refine its support strategies and improve development outcomes through better product design and implementation systems, the report adds. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2025. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *