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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, August 5, 2025, Vol. 26, No. 155
Headlines
A R G E N T I N A
ARGENTINA: IMF Says New Phase of Program Under EFF Has Strong Start
PROVINCE OF CORDOBA: Fitch Hikes IDR to 'B-', Outlook Stable
B R A Z I L
AZUL S.A.: Creditors Back $1.57 Billion DIP Financing Deal
ENTREVIAS CONCESSIONARIA: Fitch Affirms 'BB' Rating on BRL1BB Debt
GOL LINHAS: Fitch Publishes 'CCC+' Long-Term IDRs, Outlook Positive
OI SA: Preparing a Chapter 11 Filing
J A M A I C A
MONTEGO BAY AIRPORT: Fitch Rates $400MM Sr. Secured Notes 'BB+'
P U E R T O R I C O
NEOLPHARMA INC: Unsecured Creditors Will Get 10% of Claims in Plan
PUERTO RICO: Funds' Shareholders to Hold Liquidation Vote
V I R G I N I S L A N D S
IDC OVERSEAS: Fitch Assigns 'B' Long-Term IDR, Outlook Stable
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A R G E N T I N A
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ARGENTINA: IMF Says New Phase of Program Under EFF Has Strong Start
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The Executive Board of the International Monetary Fund (IMF)
completed the first review of the extended arrangement under the
Extended Fund Facility (EFF) for Argentina. This marks an important
early milestone under the program, which aims to further bolster
public finances, reduce inflation, rebuild reserves, and lay the
foundation for stronger and more sustainable private sector-led
growth.
Despite a more challenging global backdrop, the Executive Board
assessed that program implementation has been strong, reflecting
appropriately tight policies. While the mid-June quantitative
target for net international reserves (NIR) accumulation was
missed, other key performance criteria and indicative targets were
met, and corrective measures have been implemented to bring
reserves closer to the NIR target. The Executive Board welcomed the
authorities' commitment to implement policies consistent with the
program's objectives.
The Board's decision enables an immediate disbursement of SDR 1.529
billion (about US$2 billion), bringing total disbursements under
the arrangement to SDR 10.729 billion (about US$14 billion).
Argentina's 48-month EFF arrangement, with access of SDR 15.267
billion (equivalent to US$20 billion, or 479 percent of quota), was
approved on April 11, 2025 (see Press Release No. 25/101).
Following the Executive Board discussion on Argentina, Ms.
Kristalina Georgieva, Managing Director, issued the following
statement:
"The new phase of Argentina's stabilization program, supported by
the Extended Fund Facility arrangement, has had a strong start,
despite a challenging external environment. Appropriately tight
macroeconomic policies have facilitated a smooth transition to a
more flexible exchange rate regime and the easing of most foreign
exchange restrictions and controls. Disinflation has resumed, the
economy has continued to expand, and poverty has fallen further.
Notably, Argentina has re-accessed international capital markets
earlier than anticipated, although spreads remain high.
"The zero-overall deficit target remains the key policy anchor.
Spending discipline and controls are ensuring adherence to the
authorities' objective of a 1.6 percent of GDP primary surplus for
this year, while providing space for adequate social assistance to
the most vulnerable. Looking ahead, fiscal consolidation should
continue, underpinned by well-sequenced fiscal reforms, including
in the tax area. Efforts to ensure any new tax or spending
initiatives are fully funded remain important.
"Tight monetary conditions should continue to support disinflation
and the re-monetization process underway. Refinements to the
monetary framework should continue to improve liquidity management
and mitigate interest rate volatility. Meanwhile, greater clarity
regarding the medium-term monetary regime remains essential to
further anchor disinflation.
"Exchange rate flexibility should be preserved, while sustained
efforts continue to rebuild reserves buffers. This is critical to
allow Argentina to better manage shocks and durably access
international capital markets at more favorable terms.
"Ongoing efforts to deregulate the economy, reduce barriers to
entry, and improve the governance and efficiency of the state
should be deepened. Greater focus should be given to implementing
well-sequenced reforms aimed at: (i) enhancing the labor market to
promote formal employment and facilitate mobility; (ii) boosting
foreign direct investment through the consistent and even-handed
implementation of the large investment incentive scheme; and (iii)
strengthening trade openness, including by further reducing
distortive export taxes, as fiscal conditions permit.
"In the face of still-elevated risks, agile policy making and
contingency planning remain essential to protect program
objectives. Continued preparation and clear communication of
policies, as well as well-targeted social support will be key to
broadening the social and political consensus around the program."
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.
Moody's Ratings on July 17, 2025, upgraded Argentina's
long-term foreign currency and local currency issuer ratings to
Caa1 from Caa3 and changed the outlook to stable from positive.
The upgrade reflects Moody's views that the extensive
liberalization of exchange and (to a lesser extent) capital
controls, alongside a new International Monetary Fund (IMF)
program, support the availability of hard currency liquidity and
ease pressure on external finances. This reduces the likelihood of
a credit event. In January 2025, Moody's raised Argentina's local
currency ceiling to B3 from Caa1 and the foreign currency ceiling
to Caa1 from Caa3.
Fitch Ratings, on May 12, 2025, upgraded Argentina's Long-Term
Foreign-Currency and Local-Currency Issuer Default Rating (IDR) to
'CCC+' from 'CCC'. 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+'. DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency Issuer Ratings to B (low) from CCC in November 2024.
PROVINCE OF CORDOBA: Fitch Hikes IDR to 'B-', Outlook Stable
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Fitch Ratings has upgraded Province of Cordoba's Long-Term Foreign
and Local Currency Issuer Default Ratings (IDRs) to 'B-' from
'CCC+'. Following the upgrade, Fitch has assigned a Stable Rating
Outlook.
The upgrade reflects Fitch's upward revision of the province's
Standalone Credit Profile (SCP) to 'b-' from 'ccc+'. This considers
the removal of the asymmetric risk underpinned by Cordoba's recent
issuance in the international market of USD725 million (senior
unsecured) notes. The successful tender offer process, completed on
July 1, 2025, lessens refinancing risks and partially eases debt
servicing over the next 12 to 24 months. Cordoba is the first
Argentine local and regional government to regain access to the
international market since 2017.
The revision of the SCP also considers an improved debt service
coverage ratio (DSCR) in its updated rating-case scenario. Fitch
now expects the DSCR to be at 1.6x in 2026, compared to 1.0x in the
last revision. The 'b-' SCP also reflects that Cordoba continues to
meet Fitch's criteria for being rated above the sovereign rating.
This includes maintaining a strong budget, not needing to undertake
external debt refinancing, and having sufficient liquidity. As a
result, Cordoba can be rated at the same level as Argentina's 'B-'
Country Ceiling, which results in an IDR of 'B-'.
The Stable Outlook reflects its expectations that Cordoba's debt
metrics will remain commensurate with its ratings over the
2025-2026 rating case.
Key Rating Drivers
Standalone Credit Profile
Cordoba's SCP is now assessed at 'b-', a combination of a
'Vulnerable' risk profile and financial profile assessed in the
'aa' category under Fitch's rating case scenario. The SCP is
positioned in the low end of the category which reflects the peer
comparison.
Risk Profile: 'Vulnerable'
The 'Vulnerable' assessment weighs the sovereign IDR below the 'B'
category rather than Argentina's implied operating environment of
'bb'. The risk profile reflects the combination of six 'Weaker' key
risk factors, as outlined below.
Revenue Robustness: 'Weaker'
The assessment reflects the weak and complex nature of the national
fiscal framework, as well as Cordoba's dependence on a 'CCC+'
sovereign counterparty risk for 41.7% (three year-average) of its
total revenue. To date, federal co-participation transfers to
provinces have never been interrupted, in accordance with the law.
Cordoba's wealth metrics are moderately above the national average
but lag international peers.
Operating revenue is mostly made up of taxes including turnover tax
(impuesto sobre los ingresos brutos), which made up 28.5% of
operating revenue in 2024, and stamp duty, which made up 2.8%. At
YE 2024, federal non-earmarked transfers (coparticipaciones)
decrease 12.4% in real terms amid an average annual inflation rate
of 236.8%. As of June 2025, national transfers to Cordoba increased
127.4% yoy in nominal terms and 63.1% in real terms in a
macroeconomic context where annual inflation decreased to 39.4% at
the end of June 2025 from 275.9% at the of June 2024.
Revenue Adjustability: 'Weaker'
Cordoba's ability to generate additional revenue in response to
possible economic downturns is limited, like all Fitch-rated
Argentine local and regional governments (LRGs). Fitch considers
that local revenue adjustability is low and is challenged by the
country's large and distortive tax burden. The adverse
macroeconomic environment further limits the province's ability to
increase tax rates and expand tax bases to boost its local
operating revenues. Structurally high inflation has also constantly
eroded real-term revenue growth and affected affordability.
Expenditure Sustainability: 'Weaker'
Argentine LRGs have high expenditure responsibilities in the
context of structurally high inflation. The country's fiscal regime
is structurally imbalanced regarding revenue expenditure
decentralization which is further exacerbated by high spending
responsibilities transferred to the province.
At YE2024, the consolidated operating margin, including the Social
Security Institute, stood at 12.0%, underpinned by operating
revenue outpacing operating expenditure. The province managed to
contain spending despite an adverse macroeconomic context. Fitch
estimates that the operating margin will average around 5.8% in
2025 and 2026, taking into consideration the unfunded pension
burden.
Cordoba did not transfer its pension scheme to the nation. Federal
funding to mitigate provincial pension deficits is subject to
yearly budgetary allocation, which is unpredictable and
discretionary. Since 2019, no bilateral agreements have been
implemented. However, an agreement was recently reached with the
national government which stipulates that from May 2025, 12 monthly
installments will be transferred for a total of ARS60 billion,
although the discussion regarding the outstanding balance is still
pending. Since 2020, the province has also implemented reforms to
ease the pension burden through increased contributions and reduced
pension mobility. Fitch will continue to monitor these pension
spending policies.
Expenditure Adjustability: 'Weaker'
For Argentine subnationals, infrastructure needs and expenditure
responsibilities are deemed high, with leeway to cut expenses
viewed as low amid an adverse macroeconomic context. National
capital expenditure (capex) is low and insufficient, shifting capex
burdens to LRGs. Capex levels reached 15.4% in 2024 and continue to
reflect Cordoba's commitment to covering its infrastructure needs
and the province's capacity for some budgetary adjustments to
accommodate other opex pressures. Over the last five years, the
province is one of the few that has maintained an adequate level of
capex to total expenditure, despite the coronavirus pandemic, with
a five-year average of 15.6%. In 2024, the five-year average of
opex to total expenditure stood at 81.9%.
Cordoba is committed to aligning its capex projects with the United
Nations Sustainable Development Goals, focusing on four strategic
areas: (i) gender and employment, (ii) education for employment,
(iii) housing and access to essential services, and (iv) bridging
the digital divide. Part of the proceeds from recent local and
international issuances will be used to fund infrastructure
projects, while the remainder will support liability management
goals.
Liabilities and Liquidity Robustness: 'Weaker'
Capital market discipline is constrained by an adverse
macroeconomic environment and a 'CCC+' rated sovereign. Unhedged
foreign currency debt exposure represents a significant structural
weakness in this risk assessment. Limited local capital markets
have led LRGs to issue debt in foreign currency, creating a
structural reliance on external financing. This is because local
currency options typically entail higher financial costs and
shorter maturities due to the high-inflation environment. In
addition, financial obligations are characterized by medium-term
maturity of less than 10 years.
By YE 2024, direct debt increased 23.6% underpinned by a lower
inflation rate and currency appreciation, totaling ARS2,155.6
billion. Approximately 86.2% of Cordoba's direct debt is
denominated in foreign currency — primarily U.S. dollars — and
remains unhedged. This marks an improvement from 99.6% at YE2023.
However, the high level of unhedged foreign currency debt continues
to pose a rating risk, especially given the ongoing volatility in
the macroeconomic environment, despite some recent improvements.
However, 82.8% of its total debt has fixed interest rates. In July
2025, Cordoba issued USD725 million notes (senior unsecured) in the
international market. This transaction marks a milestone for
Cordoba.
In 2024, Cordoba issued Class 2 and Class 4 debt securities in the
local market for ARS240 billion under the Securities Issuance
Program for up to USD350 million (or its equivalent in other
currencies). This demonstrates the provincial authorities'
intention to diversify their debt portfolio, leaning toward local
currency instruments and reducing their exposure to exchange rate
risks.
Liabilities and Liquidity Flexibility: 'Weaker'
Fitch perceives the Argentine national framework in place for
liquidity support and funding available to subnationals as 'Weaker'
given that no formal emergency liquidity support or bailout
mechanisms have been established. Consolidated cash positions of
ARS603 billion in 2024 covered 8.8% of total revenue; as of March
2025, cash positions stood at ARS638 billion. Cordoba has shown
historically good liquidity coverage metrics (calculated as current
operating balance + previous year unrestricted cash over current
debt service) averaging 4.4x over the last five years (2024:
2.6x).
Financial Profile: 'aa' category
Fitch, considering the current sovereign 'CCC+' rating level, is
only projecting a rating case for YE 2026. Financial profile
metrics are analyzed to evaluate province of Cordoba-specific debt
repayment capacity and its liquidity position over the next 12
months.
Cordoba benefits from a resilient fiscal performance with a sound
operating margin averaging above 18.0% over the last five years,
supported by a dynamic and well-diversified tax base and economic
structure. Fitch's rating case envisages a progressive reduction of
the operating margin toward 6.2%-5.4%, incorporating tax collection
growth in tandem with inflation, against an operating expenditure
that increases above inflation.
Fitch classifies Cordoba as a Type B LRG and refers to a payback
ratio as a primary metric. Under Fitch's rating case scenario
(2025-2026), Fitch expects Cordoba's debt payback ratio (net
debt/operating balance; the primary financial profile metric) to be
close to 4x by 2026, which is consistent with a financial profile
assessment in the 'aaa' category. It is offset by a debt-servicing
coverage ratio at 1.6x, which is below the 'aaa' category
threshold. This results in an overall financial profile in the 'aa'
category.
Additional Risk Factors/Considerations
Fitch no longer applies any asymmetric risk or extraordinary
support from upper-tier government, as explained above.
Debt Ratings
Fitch has also upgraded Cordoba's step-up USD709.4 million senior
unsecured notes due 2025, step-up USD510.0 million senior unsecured
notes due 2027, step-up USD450.0 million senior unsecured notes due
2029, and USD725 million senior unsecured notes due 2032 to 'B-'
from 'CCC+'. These notes are rated at the same level as the
province's IDRs.
In July 2025, the province issued USD725 million 9.75% senior
unsecured notes due 2032 in the international market. The province
used the net proceeds from the sale of the notes for the repurchase
of the step-up international notes due 2027 validly tendered and
accepted in the tender offer, and the remainder to finance
infrastructure projects and/or repay existing liabilities.
This transaction marks a milestone for Cordoba — Argentina's
second-largest province by GDP — due to the broader context of
Argentine sub-sovereign issuers managing liabilities after years of
macroeconomic turbulence. 2017 was the last year in which Argentine
local and regional governments tapped the international market,
although challenges and uncertainties persist over the medium term
as captured in Argentina's 'CCC+' rating.
For more details, please see "Fitch Assigns Province of Cordoba's
USD Notes Final 'CCC+' Rating".
PEER ANALYSIS
Cordoba's 'B-' factors in national and international peer
comparison, in particular with the city of Buenos Aires, province
of Santa Fe, both rated at B-/Stable, and Lagos State (B/Stable).
Cordoba's SCP and IDRs compare well with that of peers rated above
the sovereign, the city of Buenos Aires and province of Santa Fe,
and other Argentine LRGs.
Issuer Profile
The Province of Cordoba is located in the central region of
Argentina; it is the second-most populated province, with around
3.8 million inhabitants in 2022. It has an unemployment rate of
7.6% in 2024, its GDP per capita is estimated as in line with
Argentina's at USD14,430 (2023), and it contributes approximately
8.0% of national GDP.
Cordoba's economy is diversified and is based on primary and
industrial goods, as well as services (66.9% of the province's
gross domestic product). The province produces agricultural
products such as soybean, corn, wheat and peanuts. The province is
home to one of Argentina's most industrialized regions, with its
industrial sector primarily focused on the automotive and auto
parts industries, as well as the agro-industrial sector.
Key Assumptions
Qualitative Assumptions
Risk Profile: 'Vulnerable'
Revenue Robustness: 'Weaker'
Revenue Adjustability: 'Weaker'
Expenditure Sustainability: 'Weaker'
Expenditure Adjustability: 'Weaker'
Liabilities and Liquidity Robustness: 'Weaker'
Liabilities and Liquidity Flexibility: 'Weaker'
Financial Profile: 'aa'
Asymmetric Risks (Notches): N/A, lowered from '-1'
Budget Loans (Notches): N/A
Ad-Hoc Support (Notches): N/A
Floor: N/A
Cap (FC IDR): 'B-'
Cap (LC IDR): 'B-'
Quantitative Assumptions — Issuer-Specific
Fitch's rating action is driven by the following assumptions for
reference metrics under its 2025-2026 rating case scenario:
- Payback ratio: 3.9x;
- Actual debt service coverage ratio: 1.6x;
- Fiscal debt burden: 21.1%.
Fitch's through-the-cycle rating case incorporates a combination of
revenue, cost and financial risk stresses. It is based on 2020-2024
published figures and its expectations for the next 12-24 months,
as follows:
- Tax revenue and current transfers average growth of 34.8% from
2025-2026. For 2025 both items increase in tandem with inflation
and for 2026 they grow above inflation, considering the historical
performance of the last five years;
- Operating revenue average growth of 32.3% for 2025-2026, mostly
driven by growth in taxes and transfers;
- Operating expenditure average growth of 37.2% for 2025-2026. For
2025 and 2026, opex growth rate equals inflation plus real GDP
growth assuming opex increases above operating revenue;
- Average operating margin of 5.8% for 2025-2026 based on operating
revenue increasing at a slower pace in comparison to opex;
- Average net capital balance of around minus ARS2.0 billion during
2025-2026 to be financed with operating margins, capital grants and
financing from recent issuances in the local and international
market, multilateral official creditors, national agencies, and
foreign commercial banks, considering the five-year average of
capex to total expenditure of 15.6%
- Cost of debt considers non-cash debt movements due to currency
depreciation with an average exchange rate of ARS1,191 per U.S.
dollar for 2025 and ARS1,458 per U.S. dollar for 2026 based on
Cordoba's debt service profile and Fitch's sovereign team
assumptions for exchange rate;
- Consumer price inflation (annual average percent change) of 43.8%
for 2025 and 22.6% for 2026 based on Fitch's sovereign team
macroeconomic assumptions.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- A downgrade of Argentina's Country Ceiling, as well as any
regulatory restrictions to access foreign exchange that heightens
refinancing risks;
- The IDRs could be downgraded if the estimated actual DSCR drops
below 1.0x in tandem with a liquidity coverage ratio below 1.0x
underpinned by lower operating margins and unrestricted cash,
regardless of whether the payback ratio remains below 5x, resulting
in the rating being guided directly by rating definitions.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- An upgrade of Argentina's Country Ceiling could positively
benefit Cordoba's IDRs if the financial profile remains in line
with projections of a payback ratio below 5.0x and actual debt
service coverage ratio improves to above 2.0x, under Fitch's rating
case, which could raise Cordoba's SCP to 'b-'.
DISCUSSION NOTE
July 29, 2025
There was an appropriate quorum at the committee and the members
confirmed that they were free from recusal. It was agreed that the
data was sufficiently robust relative to its materiality. During
the committee no material issues were raised that were not in the
original committee package. The main rating factors under the
relevant criteria were discussed by the committee members. The
rating decision as discussed in this rating action commentary
reflects the committee discussion.
Public Ratings with Credit Linkage to other ratings
Province of Cordoba's ratings are aligned with Argentina's Country
Ceiling and are above the sovereign's ratings.
ESG Considerations
Cordoba's ESG Relevance Score for Creditor Rights was revised to
'4' from '5' as the province's 2021 DDE remains relevant to the
rating in conjunction with other factors.
The province's ESG Relevance Score for Rule of Law, Institutional
and Regulatory Quality, Control of Corruption was revised to '3'
from '4' as government effectiveness, such as the quality of policy
formulation and implementation and the credibility of the
government's commitment to such policies, is now being managed in a
way that results in low impact on Cordoba's rating.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
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Cordoba, Province of LT IDR B- Upgrade CCC+
LC LT IDR B- Upgrade CCC+
senior unsecured LT B- Upgrade CCC+
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B R A Z I L
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AZUL S.A.: Creditors Back $1.57 Billion DIP Financing Deal
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Yun Park of Law360 Bankruptcy Authority reports that the creditors
committee for Azul SA endorsed the bankrupt Brazilian airline's
$1.57 billion debtor-in-possession financing after securing key
concessions from DIP lenders, including a boost in immediate
funding.
About Azul S.A.
Azul S.A. (B3: AZUL4, NYSE: AZUL), the largest airline in Brazil
by number of flight departures and cities served, offers 900 daily
flights to over 150 destinations. With an operating fleet of over
200 aircrafts and more than 15,000 Crewmembers, the Company has a
network of 300 non-stop routes. Azul was named by Cirium (leading
aviation data analysis company) as the most on-time airline in the
world in 2023. In 2020, Azul was awarded best airline in the world
by TripAdvisor, the first time a Brazilian flag carrier earned the
number one ranking in the Traveler's Choice Awards. On the Web:
http://www.voeazul.com.br/imprensa
On May 28, 2025, Azul S.A. and 19 affiliated debtors filed
voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 25-11176).
The cases are pending before Judge Sean H. Lane.
The Company is supported by Davis Polk & Wardwell LLP, White &
Case LLP, and Pinheiro Neto Advogados as legal counsel; FTI
Consulting as financial advisor; Guggenheim Securities, LLC as
investment banker; SkyWorks Capital LLC as fleet advisor; and
FTI Consulting, C Street Advisory Group, and MassMedia as
strategic communications advisors. Stretto is the claims agent.
The Participating Lenders are supported by Cleary Gottlieb Steen &
Hamilton LLP and Mattos Filho as legal counsel and PJT Partners as
investment banker.
United Airlines is supported by Hughes Hubbard & Reed LLP and
Sidley Austin LLP as legal counsel and Barclays Investment Bank as
investment banker.
American Airlines is supported by Latham & Watkins LLP as legal
counsel.
AerCap is supported by Pillsbury Winthrop Shaw Pittman LLP as legal
Counsel.
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Azul S.A.
and its affiliates.
ENTREVIAS CONCESSIONARIA: Fitch Affirms 'BB' Rating on BRL1BB Debt
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Fitch Ratings has affirmed Entrevias Concessionaria de Rodovias
S.A. (Entrevias)'s BRL1.0 billion second debentures issuance due in
2030 at 'BB' and the National Long-Term Rating at 'AA+(bra)'. The
Rating Outlook remains Stable.
RATING RATIONALE
The ratings reflect the concessionaire's operational profile, with
heavy vehicles accounting for about 60% of paying axles. The North
Section of the road, which crosses Ribeirão Preto in the State of
São Paulo, has a proven traffic base, moderate volatility and
generates about 70% of the project's traffic. The more recently
opened South Section is crucial for the region's agricultural and
food production flow.
The ratings also consider the extensive but not complex mandatory
capex plan through 2026, which is already mostly contracted. The
concession contract provides for annual tariff adjustments based on
inflation. The concessionaire can charge an additional tariff after
completing the main duplication works (expanding the road from a
single to a dual carriageway by adding lanes in each direction).
The second debentures issuance is senior secured, and the expected
third issuance will be pari passu. Both are indexed to inflation
and include a six-month debt service reserve account (DSRA). The
debt structure prohibits any payments to shareholders until 2029.
From 2030 onwards, payments to shareholders are allowed subject to
a minimum debt service coverage ratio (DSCR) without cash equal or
above 1.2x and net debt/EBITDA equal to or below 4.25x in 2030 and
equal to or below 4.75x from 2031 onwards (if the third issuance
occurs). The issuer can raise additional debt if leverage is below
4.0x, average DSCR through third issuance maturity is at least at
1.2x, and the new debt's duration exceed the remaining duration of
the third issuance debentures.
Fitch incorporates the third issuance disbursement in its cases as
the debenture holders of the second issuance have already approved
it. In the rating case, the DSCR is below or near 1.0x until 2028.
This is mitigated by projected cash positions, supported by the
proceeds from the third debenture issuance and a debt structure
that prohibits dividend distributions until 2029. From 2030 to
2035, average DSCR is 1.6x, which is strong and commensurate with a
higher rating. However, the rating is constrained by liquidity risk
until 2028. While the debt structure allows new debt issuances,
limitations exist to preserve payment capacity for the second and
third issuances at adequate levels for the rating.
If third issuance does not occur, DSCRs remain below or near 1.0x
through 2027 but improve from 2028 to 2030, consistent with the
current rating. Lower DSCRs until 2027 are not a rating constraint
because Entrevias cannot distribute dividends due to debt structure
and can use its cash balance to meet its obligations. The company
also has some capex flexibility and its debt structure allows for
new working capital loans, which mitigates liquidity risk.
KEY RATING DRIVERS
Revenue Risk - Volume - High Midrange
Volume Strongly Linked to Economy
Entrevias' concession is divided into the North and South Sections
in the State of São Paulo. The North Section is in a wealthy
region and crosses Ribeirao Preto. It has a long traffic track
record of operations. The south section, which crosses Marília,
connects the states of São Paulo and Paraná and is crucial for
agricultural production flow, such as horticulture, sugar, sugar
cane and temporary crops. There is some competition from other
roads, but they do not connect the same municipalities as
Entrevias. Historical traffic volatility is moderate.
Revenue Risk - Price - Midrange
Tariffs Adjusted for Inflation
Entrevias is a state concession regulated by Agência Reguladora de
Serviços Públicos Delegados de Transporte do Estado de São Paulo
(ARTESP). The concession contract stipulates annual tariffs
readjustments based on accumulated inflation. Historically, ARTESP
has either granted the tariff adjustments or compensated for the
lack of full pass-through per the concession contract's financial
rebalancing mechanisms. The concessionaire also has the right to
receive extra readjustments if the duplication of the South
segments is completed.
Infrastructure Dev. & Renewal - Midrange
Extensive Capex Plan for the Next Few Years
Entrevias has an extensive capex plan in the South Section to meet
the concession agreement, mainly the duplication of lanes and of a
bridge in Borborema over the Tietê River. Most of these projects
have low execution complexity. The concessionaire has contracted
most of the expansion investments, but is exposed to price
volatility because asphalt costs are not passed through to the
contractor. At the end of 2024, ARTESP added BRL212 million of new
capex for Entrevias to complete special conservation maintenance
because Via Norte was transferred in 2018 in worse condition than
allowed by the concession agreement. Entrevias was compensated for
this capex by mechanisms in the concession agreement.
Debt Structure - 1 - Midrange
Possible New Indebtedness
The second debentures issuance is senior secured, and the expected
third debentures will be pari-passu. Both amortize until maturity.
Debts are indexed to IPCA, which also readjusts tariffs, and
benefit from a six-month DSRA funded by project cash generation for
the third issuance. The debt structure restricts shareholder
payments until 2029; from 2030 onwards, payments are allowed if to
distribution tests are met. From 2030 onwards, after maturity of
the second debentures issuance, the issuer could also raise
additional debt if leverage (including only senior debt) remains
below 4.0x, projected average DSCR from new issuance date until
maturity of third issuance remains at least at 1.2x, and the new
debt's duration is longer than the remaining duration of the third
issuance.
Financial Profile
Fitch incorporated the third issuance disbursement in 2025. The
debenture holders of the second issuance have already approved it,
and Entrevias is waiting on the grantor's approval to move forward
with the bookbuilding process.
Liquidity from the third issuance will boost the project's cash
reserves and provide a cushion for Entrevias to cover its
obligations until 2028. Fitch included the new Via Norte capex plan
in its base and rating cases, mostly funded by a cash payment by
the grantor of BRL60 million in 2025 as compensation. Fitch
conducted some breakeven scenarios to test the resilience of this
liquidity. In this context, the project could withstand, from the
base case, an annual capex increase of 32% from 2025 onwards, a
traffic reduction of 2.4% every year from 2026 onwards or a traffic
shock of 22% in 2026, which are considered consistent with the
rating.
Until 2028, coverage is tighter in the rating case, which is
mitigated by liquidity retained in the project. From 2030 to 2035,
the average DSCR is 1.6x, which is strong for the rating. During
this period, the issuer may distribute dividends and issue new
debt, which could affect future DSCRs. However, conditions exist
that preserve Entrevias' debt repayment capacity at levels
appropriate for the rating. The liquidity risk until 2028 limits
the rating.
If third issuance does not occur, DSCRs are lower or close to 1.0x
until 2027. From 2028 to 2030, DSCRs are more robust. The DSCRs
until 2027 are mitigated by the debt structure that does not permit
dividend distribution if DSCR is lower than 1.2x. Fitch considers
the issuer has flexibility in capex execution and allowance to hire
new working capital facilities which mitigates the liquidity risk.
PEER GROUP
In the international scale, the closest peers of Entrevias in the
region are Transjamaican Highway Limited's (TJH, senior secured
notes rated BB with a Positive Outlook) and Concesionaria
Mexiquense, S.A. de C.V. (Conmex, senior secured notes rated BBB
and AAA(mex) with Stable Outlook).
Although volume risk is assessed as Midrange, while Entrevias' is
scored as High-Midrange, TJH presents average and minimum DSCRs of
2.4x and 2.0x, which are strong for the rating according to the
applicable criteria. However, the rating is capped at Jamaica's
Country Ceiling of 'BB' because of transfer and convertibility
risk. Its positive outlook mirrors the Positive Outlook of
Jamaica's 'BB-', as a reflection of potential for reduced concerns
of higher risk of controls on convertibility and the transfer of
foreign currency to serve the USD-denominated debt.
Conmex has stronger volume risk and more robust metrics than
Entrevias. Its average and minimum DSCRs are 3.5x and 2.2x
respectively, which justifies its higher rating. Conmex's
resilience, along with robust financial profile, supports one notch
above Mexico's 'BBB-' Long-Term Foreign and Local Currency Issuer
Default Ratings (IDRs).
In national scale, Entrevias's closest peers are Concessionaria
Rota das Bandeiras S.A. (Rota das Bandeiras, first and second
debentures issuances National LT rating of AAA(bra), Stable
Outlook) and Concessionaria Ponte Rio-Niteroi S.A. - ECOPONTE
(Ecoponte, first debentures issuance's National LT rating AA(bra),
Positive Outlook). These three concessionaires have similar volume
risk assessments. Rota das Bandeiras presents the highest average
DSCR, and minimum at 1.25x, which supports its higher rating.
Ecoponte has lower average DSCR than Entrevias, although it has a
simpler capex plan and stronger debt structure. Its Positive
Outlook reflects the expectation of tariff readjustment according
to inflation, which combined with projected capex performance,
would lead to a higher rating.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- If total liquidity of the project (cash balance + DSRA) is lower
than BRL250 million in 2025;
- Traffic performance in 2025 and 2026 below 73 and 74 million
axles, respectively;
- New indebtedness that lead to future DSCRs below 1.2x in Fitch's
rating case.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Traffic performance in 2025 and 2026 above 76 and 78 million
axles, respectively, coupled with the execution of the mandatory
expansion capex according to issuer's schedule and budget;
- Demonstrated financial strategy that sustains DSCR at 1.2x in a
consistent manner.
SECURITY
Entrevias Concessionaria de Rodovias S.A. is a special purpose
vehicle that owns the concession rights to explore, invest and
maintain 570 km of roads in the State of São Paulo. The roads are
divided into seven highways and two stretches that connect the
north of the state of Parana and the southeast of the State of
Minas Gerais. The concession was granted by the State Government of
São Paulo in 2017 and is intermediated by ARTESP for a term of 30
years (maturity in June 2047).
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Entrevias Concessionaria
de Rodovias S.A.
Entrevias Concessionaria
de Rodovias S.A./Toll
Revenues - First
Lien/1 LT LT BB Affirmed BB
Entrevias Concessionaria
de Rodovias S.A./Toll
Revenues - First
Lien/1 Natl LT Natl LT AA+(bra)Affirmed AA+(bra)
GOL LINHAS: Fitch Publishes 'CCC+' Long-Term IDRs, Outlook Positive
-------------------------------------------------------------------
Fitch Ratings has published GOL Linhas Aereas Inteligentes S.A.
(GOL)'s 'CCC+' Long-Term Foreign and Local Currency Issuer Default
Ratings (IDRs) and its 'CCC+(bra) National Scale Rating. Fitch has
also assigned a 'CCC+' rating with a Recovery Rating of 'RR4' to
GOL Finance's exit note due 2030. Fitch has assigned a Positive
Rating Outlook to the corporate ratings.
GOL's 'CCC+' ratings reflect its post-restructuring credit profile,
which includes still high leverage, good liquidity yet limited
financial flexibility, as well as its solid market position in the
Brazilian airline sector and the industry's high business risks and
exposure to exogenous shock.
The Positive Outlook reflects expected improvement in operating
cash flow generation over the next few quarters as a result of the
several contract renegotiations as per the Chapter 11 Process,
including fleet rationalization. These developments will benefit
costs, profitability and credit metrics.
Key Rating Drivers
Exit from Chapter 11: On June 6, 2025 GOL completed its financial
restructuring in accordance with Chapter 11 of the U.S. Bankruptcy
Code. The exit plan involved raising approximately USD 2.1 billion
in exit financing, with funds used to repay the outstanding DIP
loan (about USD 1.32 billion) and to provide around USD 500 million
in on-balance-sheet liquidity. The exit note is secured by
first-priority liens on GOL's most strategic and valuable assets.
These include the Smiles loyalty program's brand and intellectual
property, the GOL brand and IP, restricted airport slots at major
Brazilian hubs, and a pool of aircraft spare parts.
Effective Deleveraging Only by 2027: Fitch expects GOL's leverage
to remain high during 2025 at 5.4x and to decline to 4.1x in 2026
and 3.5x by 2027. Fitch projects interest coverage ratios to
gradually improve over the rating horizon, with EBITDAR fixed
charge coverage ratio improving from 0.9x in 2025 to 1.3x in 2027.
GOL's deleveraging will be supported by its ongoing improvements in
operating cash flow generations resulted from several
renegotiations in contracts, including leasing and its
maintenance/fleet contracts. GOL's ability to improve its credit
metrics within the rating case by 2026 should benefit the ratings,
and it is reflected in the Positive Outlook.
Good Liquidity, Limited Financial Flexibility: GOL's ability to
reorganize its business post-Chapter 11, resulting in improving
liquidity, and with no material refinancing risk in the short to
medium term, is a key factor supporting the ratings. The company's
weak unencumbered asset base and high proportion of secured debt
constrain financial flexibility. Fitch expects the GOL to maintain
good cash balances, with cash/LTM revenue at 14% at YE2025 and not
falling below 10% within the next three years, as it operates in a
highly volatile industry.
Increasing Operations, Improving Cost Structure: Fitch expects
GOL's operating cash flow to improve during 2025 due to the solid
domestic traffic level, relatively lower fuel prices, cost
efficiencies and capacity expansion. Fitch forecasts GOL's adjusted
EBITDA to reach around BRL5.1 billion in 2025 and BRL6.7 billion in
2026, an increase from BRL1.7 billion in 2024 and BRL2.4 billion
during 2019 (pre-pandemic). The most efficient cost base is driving
to higher EBITDA margins, with Fitch's base case reaching 23.4%
during 2025, an important expansion from 8.9% in 2024. For 2026 and
2027, Fitch expects adjusted EBITDA margins to range from 26%-28%.
Growth Appetite to Drive FCF: GOL's operating cash flow generation
is likely to be consumed by fleet modernization and ongoing
business growth despite the high interest burden due to high
financial costs. Fitch forecasts FCF generation to be remain
negative at BRL1.3 billion in 2025 and BRL235 million in 2026 after
lower capex, which Fitch estimated at BRL2.4 billion in 2025 and
BRL1.8 billion in 2026. Its expectation is that GOL will remain
cautious regarding its inorganic growth strategy, as any M&A
opportunities should be led by its parent company, ABRA Group
Limited.
Strong Local Market Position: Fitch views GOL's business position
as sustainable in the medium term, based on its solid market
position in Brazil, with an average market of share of 33.6% over
the past five years. The company has a strong presence in Brazil's
busiest airports. GOL's cargo business operations are also solid
and have demonstrated important business resilience during the past
quarters.
Above-Average Industry Risks: The airline industry is inherently a
high-risk sector because 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
Compared to regional peers LATAM Airlines Group S.A. (LATAM)
(BB/Positive) and Avianca Group International Limited (Avianca)
(B/Stable), GOL presents lower geographic diversification, given
its higher domestic market exposure, higher leverage and weaker
financial flexibility. LATAM's broader international reach and
revenue base supports higher business resilience as well as in
lower scale Avianca. LATAM stronger credit profile reflects its low
leverage profile, positive free cash flow generation and robust
liquidity further enhanced by stand-by credit facilities. Azul
S.A.'s rating (D) reflects its Chapter 11 Process.
GOL's leverage is expected to remain high during 2025 at 5.4x and
to decline to 4.1x in 2026 and 3.5x by 2027, and liquidity
(cash/LTM revenue) to be around 14% in 2025 and in the range of
10%-12% in the next two years. Fitch forecasts LATAM's total and
net adjusted leverage/EBITDAR ratios is forecasted at around 2.1x
and 1.4x during 2025 and 2026, with robust cash balances (cash plus
RCF to LTM revenues on average above 25%). In case of Avianca,
Fitch expects total and net leverage should remain near 4.0x and
3.0x, and cash/LTM revenue not below 15%-20%, GOL's figures current
stand quite below peers,
Relative to North American peers, GOL's rating is lower due to
structural and financial factors. American Airlines (B+/Stable),
United Airlines (BB/Positive), and Air Canada (BB/Stable) all
benefit from significant scale, global route networks, relatively
lower leverage, stronger liquidity, and greater access to capital
markets.
Key Assumptions
- Fitch's base case during 2025 and 2026 includes an increase in
ASK around 14%;
- Load factors around 81% during 2025-2026;
- Jet fuel ranging around USD2.65-2.75 in 2025- 2026;
- Capex of BRL2.4 billion in 2025 and BRL1.8 billion in 2026.
- Cash to LTM revenues at around 14% in 2025 and 12% in 2026
- No dividends payments during 2025 and 2026.
Recovery Analysis
The recovery analysis assumes that GOL 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: GOL's going concern EBITDA is BRL2.2
billion which incorporates the company's EBITDA post-restructuring,
adjusted by lease expenses, plus a discount of 20%. The
going-concern EBITDA estimate reflects Fitch's view of a
sustainable, post reorganization EBITDA level, upon which Fitch
bases the valuation of the company. The enterprise value
(EV)/EBITDA multiple applied is 5.5x, reflecting GOL's strong
market position in Brazil.
Fitch applies a waterfall analysis to the post-default EV based on
the relative claims of the debt in the capital structure. The debt
waterfall assumptions consider the company's total debt. These
assumptions result in a recovery rate for the first lien secured
debt within the 'RR1' range, but due to the soft cap of Brazil at
'RR4', GOL's senior secured are rated at 'CCC+'/'RR4'. For an
unsecured debt, the recovery would likely be within the 'RR6'
range, resulting in a two notches rating downgrade from the IDR
given the high level of secured debt.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Liquidity deterioration, with Cash to LTM Revenue below 10%;
- Gross and net leverage ratios consistently above 6.5 and 5.5x,
respectively;
- EBITDAR fixed-charge coverage sustained at or below 1.0x;
- Competitive pressures leading to a severe loss in market share or
yield deterioration
- Aggressive growth strategy leading to a consolidation movement
financed with debt.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Gross and net leverage consistently below 5.5 and 4.5x,
respectively
- Sustainable neutral FCF;
- 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 10% LTM
revenues) and prolonged debt amortization profile with no major
refinancing risks in the medium term;
- EBITDAR fixed-charge coverage sustained above 1.2x.
Liquidity and Debt Structure
GOL's liquidity position has improved following its restructuring,
with approximately USD900 million in liquidity at exit. GOL's
financial flexibility is limited, as it does not have a relevant
unencumbered asset base. Its most valuable assets (loyalty
programs, airport slots, and spare parts) are now encumbered to
secure exit financing and take-back debt. This limits financial
flexibility and its ability to raise additional funds through
asset-backed borrowing.
On a proforma basis, incorporating the exit financing transaction,
Fitch forecasts GOL's total debt at around BRL30 billion, with
BRL19 billion of financial debt and BRL11 billion of leases
obligations. Fitch estimates around 99% of GOL's debt is secured.
Cash balance is estimated around BRL4 billion, which represents an
important improvement from BRL1.9 billion reported as of March 31,
2025.
GOL's debt maturity profile has significantly improved as a result
of the Chapter 11 process. Debt maturities during 2025-2026 average
around BRL250 million per year during this period. Next relevant
maturity is in 2029 with BRL776 million and the remaining debt
maturating in 2030 with around BRL17 billion (including BRL11.6
billion of the exit notes and BRL4.9 billion of the take-back
notes.
Issuer Profile
GOL is a leading Brazilian airline, with around 31% market share in
the domestic market, per revenue per RPK in 2024. Domestic and
international operations mix is around 86% and 14%, respectively.
As of MAR 31 2025, GOL's fleet included 139 Boeing 737 aircraft,
with 54 737-MAX, 78 NGs and 7 737-800BCF.
Date of Relevant Committee
25-Jul-2025
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
Gol Linhas Aereas Inteligentes S.A has an ESG Relevance Score of
'4' for Management Strategy due to the recent track record of
several debt restructurings. This has a negative impact on the
credit profile and is relevant to the rating in conjunction with
other factors.
GOL has an ESG Relevance Score of '4' for Group Structure due to
its relatively new and larger airline operational group (ABRA).
This has a negative impact on the credit profile, and is relevant
to the rating in conjunction with other factors.
GOL has an ESG Relevance Score of '4' for Governance Structure due
to the relatively new operational group (ABRA) that has lately
demonstrated aggressive financial policies, which has a negative
impact on the credit profile, and is relevant to the rating 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
----------- ------ -------- -----
GOL Linhas Aereas
Inteligentes S.A. LT IDR CCC+ Publish WD
LC LT IDR CCC+ Publish WD
Natl LT CCC+(bra) Publish WD(bra)
Gol Finance
senior secured LT CCC+ Publish RR4
OI SA: Preparing a Chapter 11 Filing
------------------------------------
Bloomberg News reports that distressed Brazilian telecom operator
Oi SA is preparing a chapter 11 bankruptcy filing in a US court.
The company is working with law firm White & Case LLP, the people
said, asking not to be named discussing private details, according
to the report.
The company will probably file as soon as its ongoing chapter 15
process is canceled, the report notes.
Oi filed for bankruptcy protection in a Rio de Janeiro court in
early 2023, shortly after exiting one of Brazil's largest-ever debt
restructurings, recalls Bloomberg News. That process is still
ongoing.
At the time, it also took similar measures in the US, where it
filed for Chapter 15, Bloomberg relates. Last month, it requested
ending that process after various restructuring measures, saying in
a filing that it was still studying options to address its
financial situation -- which could involve additional measures
including filing restructuring proceedings under the Chapter 11 of
the US Bankruptcy Code.
Oi, formerly known as Telemar, is the largest fixed telephone
operator and the fourth mobile telephone operator in Brazil, being
the third largest telecommunication company in Latin America. It is
headquartered in Rio de Janeiro.
As reported by the Troubled Company Reporter-Latin America on
June 5, 2025, Fitch Ratings has downgraded Oi S.A.'s Foreign and
Local Currency Long-Term Issuer Default Rating (IDR) to 'C'
from 'CCC-' and its National Long-Term rating to 'C(bra)'
from 'CCC-(bra)'. Fitch has also downgraded Oi's USD655 million
super senior secured notes due in June 2027 and USD1.4 billion
subordinated secured debt PIK notes due in December 2028 to 'C'
with a Recovery Rating of 'RR4' from 'CCC-'/'RR4'.
The downgrade reflects Oi's worsening financial situation,
highlighted by intensified cash burn beyond Fitch's expectations,
according to the report.
=============
J A M A I C A
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MONTEGO BAY AIRPORT: Fitch Rates $400MM Sr. Secured Notes 'BB+'
---------------------------------------------------------------
Fitch Ratings has assigned Montego Bay Airport Revenue Finance
Ltd.'s (MoAir) USD400 million notes due 2035 a final rating of
'BB+'. The Rating Outlook is Stable. The issued amount exceeded the
quantum considered at the time the expected rating was assigned,
while the 6.60% coupon was lower than anticipated. The combined new
debt amount and interest rate level resulted in projected metrics
that continue to be in line with the assigned rating. The final
debt structure's features remain consistent with those previously
reviewed by Fitch.
RATING RATIONALE
The rating reflects the revenue risk related to Sangster
International Airport (SIA, or Montego Bay Airport [MoAir]) in
Jamaica, the main airport and gateway for tourism in the country.
It serves one of the most important leisure destinations in the
Caribbean. The airport is a strategic asset for the country, given
the importance of the tourism industry to the country's economy.
Despite competition from other Caribbean destinations, traffic at
MoAir is resilient with low volatility. Almost all traffic is from
international passengers, mainly from North America, but is
adequately diversified in terms of carriers and origins. A
hybrid-till regulatory regime governs maximum aeronautical tariffs,
subject to reviews every five years incorporating inflation
indexation among other factors.
The issuer is a special-purpose vehicle (SPV) entitled to receive
concession fees directly from the concessionaire into offshore
accounts. Therefore, the transaction structure isolates the
airport's cost and operating risks.
The debt is senior, U.S. dollar-denominated, with a fixed interest
rate and a bullet maturity in 2035. The debt benefits from a
six-month offshore debt service reserve account (DSRA) and an
adequate covenant package that includes limitations on additional
indebtedness and restricted payments. It also benefits from a
top-up payment mechanism from the Government of Jamaica (GoJ;
Long-Term Foreign- and Local-Currency Issuer Default Ratings
[IDRs]: BB-/Positive).
The refinancing risk is considered manageable and mitigated by the
perpetual ownership and the strategic and essential nature of the
asset for the country. Besides, Fitch considers the sponsor's
adequate market access positive, as notes refinancing will rely on
international capital markets due to the limited size of Jamaica's
domestic credit market.
Under Fitch's rating case, maximum leverage, measured as net debt
to cash flow available for debt service (CFADS), is projected to be
8.1x in 2026, with expected deleveraging to around 5.9x at
refinancing in 2035. These metrics are considered adequate for the
rating, according to Fitch's applicable criteria.
Although MoAir's revenues are U.S. dollar-denominated and collected
offshore, payments are made by the concessionaire. This exposes the
transaction to transfer and convertibility (T&C) risk. However,
this risk is mitigated as most of the concessionaire's revenue is
collected offshore, and Fitch expects MoAir to have sufficient
access to U.S. dollar liquidity to preserve debt service if
short-lived capital controls are imposed. The top-up payment
provision from the GoJ, as well as the possibility for excess cash
from MoAir to be distributed to the government, create incentives
to prevent capital controls from affecting debt repayment. The
aforementioned factors, including supportive financial metrics,
justifies a one-notch uplift from Jamaica's Country Ceiling of
'BB'.
KEY RATING DRIVERS
Leisure-Dedicated Airport (Revenue Risk - Volume: Midrange)
Montego Bay Airport is the main international gateway to Jamaica,
characterized by stable demand and low volatility, as air travel is
the most relevant means of transportation to visit the country,
followed by cruise ships. As a result, almost all traffic is from
international passengers. The airport serves about 78% of visitors
to the Northwest region of the island, which reflects the relevance
of the asset for a tourism-reliant country. It faces low
competition from domestic airports but competes with other leisure
destinations in the Caribbean.
However, it is the fifth-largest airport in the Caribbean in terms
of seats offered and has historically maintained a stable market
share. Around 90% of traffic is from the U.S. and Canada.
Additionally, it has more than 45 routes from the main cities in
North America and Europe, surpassing Nassau but lagging behind
Punta Cana. The airport serves mainly international airlines and is
adequately diversified, with no single carrier representing over
20% of seat capacity.
Hybrid-Till Tariff -Setting (Revenue Risk - Price: Midrange)
The airport's tariffs are regulated by the authority using a price
cap mechanism based on a Regulated Asset Base (RAB) model. The
model, in addition to tracking inflation, considers variables such
as expected capex, opex, and a target return, as well as a portion
of commercial revenues. Regulated aeronautical charges are reviewed
every five years.
Adequately Maintained Airport (Infrastructure Development and
Renewal: Midrange)
The airport is adequately maintained and is currently undergoing
expansion works to better serve its users. Short-term and long-term
maintenance needs are well defined in the Airport Master Plan,
which is updated every five years and considers traffic projections
and the required expansions, refurbishments, and improvements. The
operator is responsible for the maintenance of the airport.
Concession fees are senior to concessionaire's opex and capex, and
the operator has a track record of properly funding the required
works.
Manageable Refinancing Risk and Adequate Covenants (Debt Structure:
Midrange)
The debt is U.S. dollar-denominated, senior secured, and has a
fixed rate. The debt has a bullet maturity, but refinancing risk is
mitigated by the perpetual ownership of the airport by the GoJ, the
strategic and essential nature of the asset for the country, and
the demonstrated government support for airport profitability.
The structure benefits from a six-month offshore DSRA and a
covenant package that includes provisions such as limitations on
additional indebtedness and distribution triggers. The security
package is typical of project finance structures and includes a
top-up agreement. Under the agreement, the GoJ has agreed to cover
any shortfall if the issuer receives less than the full payment
from the operator during a payment period. The top-up agreement can
also be used to provide compensation related to an alternate
airport, if applicable.
Financial Profile
Under Fitch's rating case, maximum leverage, measured as Net Debt
to CFADS, is projected to reach 8.1x in 2026, and is expected to
decrease to around 5.9x at debt maturity. These metrics align with
the assigned rating based on the Volume and Price Risk assessments
as per Fitch's applicable criteria.
PEER GROUP
SIA's closest regional peer is Aeropuertos Dominicanos Siglo XXI,
S.A. (Aerodom; notes: BB+/Stable). Both issuers are related to the
main airports in their respective countries as they are the main
gateways for international visitors. They also have a concentration
in leisure travelers and have low demand volatility. As a result,
they have the Volume Risk assessed as Midrange. In addition, they
share similar assessments for price risk, infrastructure, and debt
structure.
Under the rating case, Aerodom's maximum leverage, measured as net
debt to EBITDA, is projected to be 4.3x and is expected to decrease
to around 3x in 2029. These metrics are strong for the rating.
Similar to MoAir, Aerodom's notes are subject to T&C risk. This
risk is mitigated by the fact that Aerodom directly collects
approximately 75% of its revenues in offshore accounts, which,
together with robust financial metrics, a strong ultimate parent,
and a concession clause protecting the concession from existing or
future exchange controls or funds transfers measures, supports a
two-notch uplift from the Dominican Republic's Country Ceiling of
'BB-'.
Fitch considers the fact that MoAir also presents mitigants to T&C
risk. However, its metrics are in line with the assigned rating,
justifying a one-notch uplift from Jamaica's country ceiling.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Deterioration in Jamaica's sovereign credit profile, particularly
the risk of imposition of capital controls;
- Traffic growth or overall financial performance consistently
below Fitch's rating case assumptions, which could lead to a
sustained leverage above 7x.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Traffic growth or overall financial performance consistently
above Fitch's base case assumptions, which could lead to a
sustained leverage around 6x, while continuing to deleverage;
- Strengthening of the credit profile of Jamaica, particularly the
risk of imposition of capital controls, as long as MoAir presents
metrics commensurate with a higher rating.
TRANSACTION SUMMARY
SIA is Jamaica's largest and most important airport, located in the
country's main tourism region. It serves as the primary gateway for
international visitors, handling about 78% of annual arrivals to
the northwest region of the island, most of whom are tourists from
North America and the UK. The airport is owned by the Airports
Authority of Jamaica (AAJ) and operated by MBJ Airports Limited, a
joint venture between Grupo Aeroportuario del Pacifico and Vantage
Airport Group, under a 30-year concession, which was extended by
one year and now expires in 2034.
SIA is essential to Jamaica's tourism and economy, offering stable,
U.S. dollar-denominated revenues and benefiting from a strong legal
and regulatory framework. It has a history of robust passenger
growth and resilience to economic shocks, with recent traffic
exceeding pre-pandemic levels. The airport is currently undergoing
a significant expansion and modernization program to support
continued growth, with investments focused on terminal upgrades.
Most of SIA's revenues come from regulated aeronautical charges,
and it faces little to no domestic competition. Its location near
top tourist attractions further strengthens its position as a key
infrastructure asset for Jamaica's tourism sector.
SIA's historical performance has been positive and resilient with
low volatility. It handles the majority of Jamaica's visitors.
SIA's total traffic grew by a compounded annual growth rate (CAGR)
of 2.8% between 2007 and 2024 (even considering the decreases
linked to the pandemic of 2020), with international passenger
representing almost all traffic.
FINANCIAL ANALYSIS
The most relevant financial metric for this project is leverage,
given the transaction's structure of non-amortizing debt. Fitch
also considers hard-currency availability against total debt
service to support the notching above Jamaica's Country Ceiling.
Fitch Cases
Fitch's base case assumes traffic growth of 0.9% in 2025,
reflecting an expected increase in the available seat capacity in
2H25. For 2026 and onward, a CAGR of 3.3% is assumed. U.S. GDP
growth aligns with Fitch's projections of 1.5% for 2025 and 2026,
2.1% for 2027, and 1.9% thereafter. Tariffs are assumed to be
adjusted in line with Fitch's U.S. inflation forecasts of 3.8% for
2025, 3.4% for 2026, 2.4% for 2027, and 2.2% onward, subject to the
yield caps agreed with the AAJ for the 2026-2030 period. Opex is
based on the issuer's budget and stressed by 5%.
Under Fitch's base case, maximum leverage, measured as Net Debt to
CFADS, reaches 8.1x in 2026. The issuer is expected to achieve
leverage of around 5.3x only close to maturity, considering last 12
months' CFADS from July 2024 to June 2035 and net debt.
Fitch rating case also assumes traffic growth of 0.9% in 2025. From
2026 onward, a CAGR of 2.3% is assumed. U.S. GDP growth and tariff
adjustments are consistent with the base case. Opex is based on the
issuer's budget and stressed by 7.5%.
Under Fitch's rating case, maximum leverage, measured as Net Debt
to CFADS, is 8.1x in 2026. The issuer is expected to achieve
leverage of around 5.9x only close to maturity, considering last 12
months' CFADS from July 2024 to June 2035 and net debt.
Additional scenarios were run to measure cash flow sensitivity to
passenger volumes. According to Fitch's projections, the structure
can withstand various breakeven scenarios, such as a constant
annual traffic decline of 4.6% from 2025 to 2035 or a single
traffic drop of 30.5% in 2026 without substantial recovery. All
breakeven points assume a full drawdown of the DSRA.
SECURITY
The security package for the notes includes:
- Pledge/charge over all shares of the issuer;
- Pledge/charge over all assets of the issuer, including rights
over the issuer's revenues;
- Security assignment/charge over the concession fees or the 28% of
the airport's gross revenues prior to its "true sale" to the
issuer;
- Lien over offshore accounts, including a Revenue Account, DSRA
and Accrual Account.
Date of Relevant Committee
03-Jul-2025
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Montego Bay Airport
Revenue Finance Ltd.
Montego Bay Airport
Revenue Finance Ltd./
Airport Revenues –
Senior Secured Debt/1 LT LT BB+ New Rating BB+(EXP)
=====================
P U E R T O R I C O
=====================
NEOLPHARMA INC: Unsecured Creditors Will Get 10% of Claims in Plan
------------------------------------------------------------------
Neolpharma, Inc., filed with the U.S. Bankruptcy Court for the
District of Puerto Rico a Disclosure Statement describing its
Plan of Reorganization dated July 1, 2025.
The Debtor is a wholly owned subsidiary of Neolpharma
International, S.A. de C.V. The company was organized under the
laws of the Commonwealth of Puerto Rico on June 7, 2012.
The Debtor is engaged in research, development, manufacturing,
commercialization, marketing, distribution and sale of
pharmaceutical products and other chemical, medical or
pharmaceutical preparations. The main offices of the Debtor are
located at 99 Jardines St. Caguas Puerto Rico.
The Debtor filed the bankruptcy petition to safeguard and maintain
operations, against the garnishments of David Kivett, and provide
an orderly payment, through a plan of reorganization, to all of its
creditors.
Class 6 shall consist of the allowed general unsecured claims of
governmental entities. The Debtor listed as governmental unsecured
claims in this class; PR para la Diffusion Publica, CRIM, Autoridad
de Acueductos y Alcantarillados and LUMA Energy. This class will
pay 10% of the allowed claim under the terms of the plan, i.e., 84
monthly payments from effective date. This class is impaired.
Class 7 will include relatively minor general unsecured creditors
with allowed claims of $5,000.00 or less which provides that
similar claims may sometimes be classified separately, for
administrative convenience. This amount includes trade claims and
other claims which have been classified separately under the Plan,
due to the amount of their claim not over the $5,000.00 dollar
value. This Class will be paid 10% of the allowed claim under
within the first year of the Plan. This class is impaired.
Claass 8 shall consist of All Other General Unsecured Claims.
General unsecured creditors were listed in the Debtor's Schedules
in the total amount of $10,627,233.68. This class will be paid 10%
of the allowed claim under the terms of the plan, i.e., 84 monthly
payments from the effective date. This class is impaired.
The Debtor will fund the plan with the income generated from (i)
any present distribution agreements, (ii) collection of accounts
receivables (iii) government incentive tax credits received during
the term of the Plan, (iv) the distribution of new products, (v)
funds received from third parties of claims including but not
limited to, any payments made by Mr. Efren Ocampo or related
entities, (vi) any capital contribution or loans, if needed, to be
made by its shareholder, any related parties or new shareholders,
and an exit financing facility from a related party, which will be
fully disclosed and submitted prior to confirmation.
A full-text copy of the Disclosure Statement dated July 1, 2025 is
available at https://urlcurt.com/u?l=Wk7NE6 from PacerMonitor.com
at no charge.
Neolpharma Inc. is represented by:
Carmen D. Conde Torres, Esq.
C. Conde & Assoc.
254 De San Jose Street, Suite 5
Old San Juan, PR 00901
Telephone: (787) 729-2900
Facsimile: (787) 729-2203
Email: condecarmen@condelaw.com
About Neolpharma Inc.
Neolpharma Inc. is a privately-held company that specializes in the
manufacturing of pharmaceutical products.
Neolpharma Inc. sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.P.R. Case No.: 25-00188) on Jan. 22,
2025. In its petition, the Debtor reports total assets of
$29,049,165 and total liabilities of $21,068,886.
The Debtor tapped Carmen D. Conde Torres, at C. Conde & Assoc. as
counsel, and RSM Puerto Rico as accountant.
PUERTO RICO: Funds' Shareholders to Hold Liquidation Vote
---------------------------------------------------------
Robert Slavin of Fidelity reports that the shareholders of four
Puerto Rico tax-exempt closed-end funds -- holding a combined $187
million in net assets -- are set to vote on whether to liquidate
the funds, following a prolonged legal dispute involving UBS.
Notices filed on the U.S. Securities and Exchange
Commission's EDGAR system indicate that the boards of the funds
are recommending liquidation. The funds in question are:
* Tax Free Fund for Puerto Rico Residents, Inc.
* Puerto Rico Residents Tax-Free Fund, Inc.
* Puerto Rico Residents Tax-Free Fund IV, Inc.
* Puerto Rico Residents Tax-Free Fund VI
According to Fidelity,the SEC posting referenced only the first
three by name. UBS Asset Managers of Puerto Rico managed the funds
until July 19, 2025 when Atlas Asset Management assumed control.
Atlas did not immediately respond to requests for comment. UBS
also declined to comment. A majority shareholder vote is required
to approve liquidation of each fund.
Ocean Capital, a Puerto Rico-based investment firm, has spent
several years in litigation seeking changes to the funds' boards.
In May 2025, the U.S. Court of Appeals for the First Circuit ruled
in Ocean Capital's favor in one of the cases, the report states.
As of their latest reported asset values:
* Tax Free Fund for Puerto Rico Residents held $50.4 million in
net assets as of Dec. 31, 2024, with 30.4% in Puerto Rico COFINA
bonds and 12.4% in U.S. municipal bonds.
* Puerto Rico Residents Tax-Free Fund had $26 million as of Aug.
31, 2024, with 57% in COFINA bonds, 13% in other U.S. municipal
bonds, and 0.3% in other Puerto Rico municipal bonds.
* Puerto Rico Residents Tax-Free Fund IV reported $106.6 million,
with 36% in Puerto Rico municipal bonds and 5.4% in U.S. municipal
bonds.
* Puerto Rico Residents Tax-Free Fund VI had $4 million as of
Sept. 30, 2024, with 42% in COFINA bonds and 30% in U.S. municipal
bonds.
Many Puerto Rican investors use closed-end funds to access the
island's municipal bond market. UBS still manages several other
Puerto Rico-based closed- and open-end municipal bond funds,
according to report.
Ocean Capital currently has directors in place for three of the
four funds, excluding Tax-Free Fund VI, according to a financial
industry source. The timeline for shareholder votes has not been
disclosed. Ocean Capital did not immediately comment on the
developments, the report states.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States. The chief of state is the President of the
United States of America. The head of government is an elected
Governor. There are two legislative chambers: the House of
Representatives, 51 seats, and the Senate, 27 seats. The
governor-elect is Ricardo Antonio Rossello Nevares, the son of
former governor Pedro Rossello.
In 2016, the U.S. Congress passed PROMESA, which, among other
things, created the Financial Oversight and Management Board and
imposed an automatic stay on creditor lawsuits against the
government, which expired May 1, 2017.
The members of the oversight board are: (i) Andrew G. Biggs, (ii)
Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J.
Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii)
David A. Skeel Jr.
On May 3, 2017, the Commonwealth of Puerto Rico filed a petition
for relief under Title III of the Puerto Rico Oversight,
Management, and Economic Stability Act (PROMESA). The case is
pending in the United States District Court for the District of
Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico
PROMESA petition is available at
http://bankrupt.com/misc/1701578-00001.pdf
On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation
(COFINA) commenced a case under Title III of PROMESA (D.P.R. Case
No. 17-01599). Joint administration has been sought for the Title
III cases.
On May 21, 2017, two more agencies‚ Employees
Retirement
System of the Government of the Commonwealth of Puerto Rico and
Puerto Rico Highways and Transportation Authority (Case Nos.
17-01685 and 17-01686) commenced Title III cases.
U.S. Chief Justice John Roberts named U.S. District Judge Laura
Taylor Swain to preside over the Title III cases.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose LLP; and Hermann D. Bauer, Esq.,
at O'Neill & Borges LLC are onboard as attorneys.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains the case Web site
https://cases.primeclerk.com/puertorico
Jones Day is serving as counsel to certain ERS bondholders.
Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General
Obligation Bondholders.
===========================
V I R G I N I S L A N D S
===========================
IDC OVERSEAS: Fitch Assigns 'B' Long-Term IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has assigned IDC Overseas, Ltd. (IDC) a first-time
Long-Term (LT) Issuer Default Rating (IDR) of 'B' and a Short-Term
(ST) IDR of 'B'. The Rating Outlook for the LT IDR is Stable.
Key Rating Drivers
Ratings Based on Standalone Credit Profile: IDC's ratings are based
on its Standalone Credit Profile (SCP), which reflects moderate
geographic diversification, small franchise, and diversified
business verticals. The ratings also consider IDC's adequate
financial performance with consistent positive earnings. Fitch also
notes there is limited visibility in the financial statements
regarding the level of detail in the company's disclosure of the
amount of management fees and revenues as an Alternative Investment
Manager.
Multi-Jurisdictional SROE: Fitch captures the company's geographic
diversification and international operations in a
multijurisdictional Sector Risk Operating Environment (SROE) score
of 'bb+'. Fitch's blended approach to the SROE considers the
weighted average of the operating environments to which the
entity's funds are exposed, including the concentration in
countries with operating environments that have challenging
economic outlooks. As of December 2024, approximately 60% of IDC's
assets under management (AUM) were concentrated in Latin America,
mainly in Guatemala, with the remainder split between the U.S. and
a smaller portion in Europe.
Small Franchise Limits Business Profile Assessment: Fitch has
assigned a Business Profile (BP) score of 'b-', above the implicit
score, to reflect the company's reasonable performance and moderate
growth in recent years. As of YE 2024, IDC reported total AUM of
USD2.7 billion, according to Fitch, IDC's relative size is small
compared to regional and global alternative investment manager
peers. Fitch expects IDC to gradually continue to enhance its
operations as it continues to consolidate its business model as an
alternative investment manager but still remain aligned with the
assigned score of 'b-'.
Corporate Governance Constrained by Key Person Risk: Fitch's
management and strategy assessment is constrained by Fitch's
perceived key person risk in the CEO and founder and the lack of
independent members in the company's governance bodies. Fitch
believes this to be below international standards and may pose
potential risks to creditor interests. In the agency's view there
is room for improvement in the level of details and disclosures in
the company's financial information. Fitch considers IDC's
management to have adequate experience in the financial sector,
with senior executives possessing relevant expertise in its
operating sectors.
Risk Profile Aligned with Business Model: Fitch believes IDC has
reasonable controls over its main risks. Client concentration is
low, with the top 20 clients accounting for only 0.12x of FAUM as
of YE 2024. IDC's growth over recent years has been moderate and
organic, a trend Fitch expects to continue. Fitch assigned a risk
profile score of 'b-', aligned with the BP score.
Asset Performance is a Credit Strength: Fitch assesses asset
quality using net client flows as a percentage of beginning FAUM.
This metric slows down as FAUM increases. At YE 2024, this metric
was 3.5%, below the three-year average of 5.2%. Fitch has assigned
a 'bb' Asset Performance score to IDC and expects it to remain
within this category despite the decline. This factor is rated one
notch below the implied score due to the market risk to which the
assets are exposed, specifically their sensitivity to market
valuations.
Stable Profitability offset by Weak Core FEBITDA: IDC has
maintained stable and positive net profits in recent years.
However, Fitch's core metric, calculated as adjusted fee-based
EBITDA (FEBITDA) to core fees, is negative, because the company
relies primarily on the performance of its funds for most of its
revenue. While this has delivered favorable outcomes in recent
years, Fitch notes the contributions from more stable revenue
sources, such as management fees, remain limited. Fitch assigned a
'b' score for earnings and profitability, which is above the
implied category due to earnings stability. As a complementary
metric, Fitch considers net income to average equity, which was
21.8% as of December 2024 (2021-2023 average: 33.3%).
Hybrid Approach in Leverage: Fitch took a hybrid approach for the
Capitalization and Leverage assessment, given the company's high
use of its balance sheet for investments and low cash flow
generation (as shown by its negative FEBITDA) resulting from its
income distribution, which resulted in a negative core metric of
gross debt to adjusted FEBITDA. However, the current debt level
relative to the company's tangible equity was considered moderate
at 1.1x at YE 2024. This factor was assigned a 'b' score, above its
implied score.
Low Short-Term Liquidity Needs: The funding and liquidity factor is
assigned at 'b-', above its implied score, reflecting the company's
long-term debt maturity profile, which reduces its short-term
liquidity needs, despite the low FEBITDA relative to interest
expenses. On balance-sheet liquidity is low, with cash and
equivalents representing less than 2% of total assets as of
December 2024. However, near-term financial commitments are also
limited. Fitch also considers the company's demonstrated access to
international debt markets, as evidenced by the recent exchange
offer.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- A deterioration of its financial profile reflected in significant
and sustained impacts in profitability or sustained losses;
- A higher proportion of debt relative to its tangible leverage
consistently above 1.5x;
- Significant pressures in its funding profile that increases
liquidity and refinancing risks.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- A significant strengthening of its business profile, reflected in
a consistently and significantly higher volume of FAUMs,
accompanied by a strengthening of its corporate governance;
- A higher proportion of management fees relative to total
revenues, which enhances the stability of income and raises the
FEBITDA/Core Fees metric above 10%;
- Strengthened leverage metrics, with gross debt/FEBITDA below 6x
and the FEBITDA/Interest expense ratio above 2x, in line with
Fitch's criteria.
Date of Relevant Committee
21 July 2025
ESG Considerations
IDC Overseas, Ltd. has an ESG Relevance Score of '4' for Governance
Structure due to the key person risk in the CEO and founder as well
as the lack of independent members in its governance bodies, which
Fitch views as below international standards and may pose potential
risks to creditor interests. It also 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
----------- ------
IDC Overseas, Ltd. LT IDR B New Rating
ST IDR B New Rating
*********
S U B S C R I P T I O N I N F O R M A T I O N
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