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250821.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 Thursday, August 21, 2025, Vol. 26, No. 167 Headlines A R G E N T I N A ARGENTINA: Rolls Over 61% in Peso Debt Auction, Yields Soar B R A Z I L BRAZIL: DBRS Confirms 'BB' LongTerm FC/LC Issuer Ratings CITY OF RIO DE JANEIRO: Fitch Affirms 'BB' IDR, Outlook Stable STATE OF RIO DE JANEIRO: Fitch Affirms 'BB' IDR, Outlook Stable D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Deepen Bilateral Relations with Honduras J A M A I C A STATIONERY & OFFICE: Sees 51% Net Profit Drop M E X I C O GRUPO AEROMEXICO: DOJ Supports Delta Alliance Breakup MEXICO: IDB Lab Invests $1.5MM in Aviva to Expand Fin'l. Services P U E R T O R I C O VOYAGER DIGITAL: MCB Wins Bid to Dismiss Case Under Rule 12(b)(6) V E N E Z U E L A CITGO PETROLEUM: Court to Reschedule Final Sale Hearing in Auction - - - - - ================= A R G E N T I N A ================= ARGENTINA: Rolls Over 61% in Peso Debt Auction, Yields Soar ----------------------------------------------------------- Nicolle Yapur & Ignacio Olivera Doll at Bloomberg News report that Argentina's local debt auction fell short of market expectations as President Javier Milei's administration rolled over just 61 percent of maturities in a key auction that analysts said may prompt a drop in the peso. The Treasury rolled over 9.1 trillion pesos of the 15 trillion pesos in short-term papers maturing, while injecting nearly six trillion pesos into the economy to finance the rest, according to Bloomberg News. The total maturities represented about a third of all the money in circulation in the economy, the report notes. The authorities offered annualized yields of up to 69.2 percent, which even exceeded the record 65 percent they reached -- a reflection of a liquidity crunch in the local financial system after the Central Bank raised reserve requirements in a bid to contain inflation and ease pressure on the currency, the report relays. "Something clearly went wrong," said Juan Manuel Pazos, chief economist at local broker One618, notes Bloomberg. "They injected six trillion pesos at rates of up to 70 percent. I think it's self-explanatory," he added. Analysts had warned that a debt rollover rate below 90 percent could pressure the exchange rate, as it would force the government to inject fresh cash into the economy to repay the portion of the notes it wasn't able to refinance, the report notes. That could trigger price pressures -- economists already see July monthly inflation accelerating -- and potentially dent Milei's approval ratings ahead of elections in the key province of Buenos Aires next month as well as midterms in October, the report discloses. The government didn't validate the rates that the market, short of pesos, demanded to roll over the debt, said Ramiro Molina, an analyst at StoneX. "Most likely, tomorrow we will see some weakness in the peso," he said, the report relays. Argentina's currency weakened more than 13 percent in July, its worst performance since Milei devalued the peso at the start of his administration in 2023, the report discloses. Rising dollar demand ahead of the local votes coincided with a seasonal decline in agriculture export flows, a top source of greenbacks in South America's second-largest economy, the report notes. The peso has since recovered some of the losses amid a broad rally in risk assets, the report adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. In March 2022, the International Monetary Fund (IMF) approved a 30-month arrangement under an Extended Fund Facility for Argentina in the amount of SDR 31.914 billion (equivalent to US$44 billion, or 1000 percent of quota) -- with an approved immediate disbursement of an equivalent of US$9.65 billion. Argentina's IMF-supported program sought to improve public finances and start to reduce persistent high inflation through a multi-pronged strategy. On April 11, 2025, the IMF further approved a 48-month Extended Fund Facility (EFF) arrangement for Argentina totaling US$20 billion (or 479 percent of quota), with an immediate disbursement of US$12 billion, and a first review planned for June 2025 with an associated disbursement of about US$2 billion. The program is expected to help catalyze additional official multilateral and bilateral support, and a timely re-access to international capital markets. 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. =========== B R A Z I L =========== BRAZIL: DBRS Confirms 'BB' LongTerm FC/LC Issuer Ratings -------------------------------------------------------- DBRS, Inc. confirmed the Federative Republic of Brazil's Long-Term Foreign and Local Currency - Issuer Ratings at BB. At the same time, Morningstar DBRS confirmed the Federative Republic of Brazil's Short-term Foreign and Local Currency -Issuer Ratings at R-4. The trend on all ratings is Stable. KEY CREDIT RATING CONSIDERATIONS The Stable trend balances Brazil's resilient economic and labor market performance with long-standing fiscal challenges. After expanding 3.4% in 2024, GDP growth is forecast to slow to 2.0% in 2025 and 2026. A strong performance in the agricultural sector in the first quarter sustained solid economic momentum in early 2025, but Morningstar DBRS expects the delayed effects of tighter monetary policy and a less favorable global environment to weigh on activity in the second half of the year. Tariffs threats on Brazilian exports by the U.S. administration and potential retaliation by the Lula administration pose some downside risk to the outlook but the Brazilian economy's direct exposure to U.S. tariffs is relatively low. Overall, the economy is in decent shape. The domestic labor market continues to perform well, with a low unemployment rate, increasing formality, and strong real wage growth. Inflation is running above target but is set to gradually ease over the next two years. In addition, the current account deficit is moderate and largely financed by net FDI inflows. However, the fiscal outlook is a source of vulnerability. We expect the government will meet its primary balance target this year but structural spending reforms will be needed to underpin a durable fiscal adjustment. The BB credit ratings are supported by the country's strong external position, flexible exchange rate, and credible inflation-targeting monetary policy regime. These factors enhance the resilience of the Brazilian economy. The key challenge for the credit rating is putting public finances on a sustainable path. General government debt (IMF definition) is expected to increase to 92% of GDP this year. While the Lula administration has laid out a gradual deficit-reduction path, the debt-to-GDP ratio, according to IMF projections, is expected to increase until 2029. The vulnerability of public finances to shocks highlights the importance of pursuing a credible consolidation strategy that reinforces market confidence and sustains access to affordable borrowing. CREDIT RATING DRIVERS The credit ratings could be upgraded if the government advances a structural fiscal adjustment that improves public debt dynamics. Implementation of economic reforms that strengthen the growth outlook would facilitate this adjustment and be viewed as credit positive. The credit ratings could be downgraded if the commitment to fiscal consolidation weakens or there is a material deviation from the expected consolidation path. Additional shocks - either domestic or external - that exacerbate Brazil's growth challenges could make the necessary fiscal adjustment even more difficult to achieve. CREDIT RATING RATIONALE High and Rising Public Debt Leave Public Finances Vulnerable to Shocks Consolidating fiscal accounts presents the most significant challenge to sovereign credit profile. We expect the central government to achieve the 2025 primary deficit target of 0.6% of GDP (this is consistent with the lower bound of the official target of 0.0% plus exempted judicial payments) through a combination of spending control and extraordinary revenue, such as oil auction proceeds and dividends from state-owned enterprises. The primary surplus target of 0.25% of GDP in 2026 looks more challenging, as Congress may resist higher taxes and the Lula administration may be reluctant to curtail spending in an election year. Nevertheless, we think ongoing efforts to comply with the fiscal rules reduce downside risks to the near-term outlook and account for the uplift to the Fiscal Management and Policy building block. The public debt-to-GDP ratio is elevated and will continue to rise if fiscal consolidation efforts are not sustained. Assuming the government reaches a primary surplus of 0.25% of GDP in 2026, we estimate that the next administration will need to tighten fiscal policy by about 1.5-2.0% of GDP to stabilize debt dynamics. A durable fiscal adjustment will require spending reforms. Growth in mandatory spending, most of which is indexed to revenue or the minimum wage, is forcing the government to increasingly squeeze discretionary spending. Without reform, this dynamic runs the risk of being incompatible with the fiscal rules over time. The composition of Brazil's public debt provides some advantages. Almost all government debt is denominated in local currency and held by Brazilian residents. This, combined with the Treasury's sizable liquid holdings, reduce exchange rate and rollover risks. Nevertheless, the high level of debt and stressed fiscal accounts leave public finances vulnerable to shocks. Tighter financing conditions or rising risk premiums could worsen debt dynamics, especially as 48% of the debt is floating rate and the average maturity is relatively short (4.2 years). The vulnerability of public finances to shocks highlights the importance of pursuing a credible consolidation strategy. The Lula Administration is Constrained by a Powerful Congress President Luiz Inácio Lula da Silva's ability to advance his legislative agenda is checked by a right-of-center and increasingly assertive Congress. There have been areas of executive-legislative cooperation over the last three years, including passage of the new fiscal framework and VAT tax reform, but it has become increasingly difficult to bridge ideological differences between the President and Congress. This includes a dispute over the Lula administration's recent decision to increase some financial transaction taxes. In this context, major fiscal reforms are unlikely in the near term. President Lula is reluctant to press for politically-sensitive spending reforms (e.g. delinking minimum pensions from the minimum wage). At the same time, Congress has resisted some efforts to raise revenue. Overall, we expect modest and incremental progress on the fiscal front in 2025 and 2026, but prospects for spending reforms, which are needed to stabilize public finances over time, will likely depend on the political landscape following in October 2026 elections. Brazil's Medium-Term Growth Prospects are Modest but a Series of Reforms Present Upside Risk to the Outlook Brazil's subdued growth outlook partly reflects the country's aging population, which has led to a slowdown in the growth of the labor force. Interlinking structural constraints of low investment, high business costs and weak competitive forces also play a role. Low investment is especially evident in Brazil's underdeveloped infrastructure. In addition, high tariff barriers, elevated compliance costs, and inward-looking industrial policy impede Brazil from more fully benefiting from global trade and investment. The country's modest medium-term growth outlook has led us to make a negative adjustment in the "Economic Structure and Performance" building block assessment. We view the balance of risks to the growth outlook as symmetrical. On the upside, microeconomic reforms implemented over the last 8 years could have a positive impact on investment and productivity. Past reforms include changes to credit markets, labor regulations, infrastructure concessions, and the value-added tax. The latter, which is designed to be revenue-neutral, is unlikely to spur activity in the near term but given the substantial scope for efficiency gains it could have a meaningful impact on growth over time. On the downside, the unwillingness or inability of policymakers to address fiscal imbalances could end up dampening investment and weakening growth. Brazil's external accounts are in a relatively strong position. In the 12 months to May 2025, the current account posted a deficit of 3.3% of GDP. We expect the external gap to narrow over the second half of the year and remain in a moderate deficit position over the outlook period, with net FDI inflows providing a stable source of external financing. Brazil's flexible exchange rate should help external accounts adjust to evolving global conditions. Moderate external debt levels reduce risks to balance sheets across the economy stemming from potential currency fluctuations. In addition, sizable foreign exchange reserves (15% of GDP) provide the central bank with substantial resources to mitigate the impact of potential capital flow volatility, if necessary. Taken together, Brazil's solid external position and capacity to adjust to shocks has led us to make a positive adjustment in the "Balance of Payments" building block assessment. Brazil's Solid Monetary Policy Framework and a Well-Capitalized Banking System Bolster Economic Resilience Twelve-month headline and core inflation metrics are running above the upper bound of the central bank's tolerance interval (+/- 1.5 percentage point around 3%). Headline inflation was 5.4% in June. Convergence toward the point target of 3% will likely be slow due to ongoing tightness in the labor market as well as indexation mechanisms that propel inertial inflation, but price pressures should dissipate over the next two years as the momentum in domestic demand weakens. According to the July 18th FOCUS Survey, expectations for yearend inflation in 2025 and 2026 are 5.1% and 4.5%, respectively. To anchor expectations around the target, the central bank has raised the policy rate by a cumulative 450 basis points since mid-September 2024. This significant tightening of monetary policy has left the real policy rate (ex-ante) above 10%, which is near its highest level in two decades and well above the central bank's 5.0% estimate of the neutral real rate. The market believes the tightening cycle has come to an end and that policy will start to ease early next year. Brazil's large banks are well capitalized and have ample liquidity. Credit growth decelerated in the first half of the year after a robust expansion in 2024. Although the labor market has performed well, some households are experiencing financial stress amid sharply higher borrowing costs. Households' debt service-to-income ratio is at a historically high level. Overall, the share of non-performing loans remains low but it has increased over the first 5 months of 2025. However, banks appear well-provisioned and sufficiently capitalized to digest greater-than-expected credit losses, if necessary, particularly the larger banks with well-diversified loan portfolios. In addition, banks appear well-positioned to manage global market volatility. Their reliance on external funding is low and their direct exposure to exchange rate risk is minimal. Notes: All figures are in U.S. dollars unless otherwise noted. Public finance statistics reported on a general government basis unless specified. Fiscal balance and gross debt figures are reported for the non-financial public sector (NFPS) and based on the IMF definition. CITY OF RIO DE JANEIRO: Fitch Affirms 'BB' IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed the City of Rio de Janeiro's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB'. The Rating Outlook is Stable. Additionally, Fitch has affirmed Rio's Short-Term Foreign and Local Currency IDRs at 'B'. Fitch has also affirmed Rio's National Long-Term Rating at 'AA+(bra)'/Stable and National Short-Term Rating at 'F1+(bra)'. Rio's Standalone Credit Profile (SCP) is assessed at 'bb', with no other factors affecting the municipality's ratings. Fitch has affirmed the Rio's rating as the municipality's operating performance, liquidity position, and debt levels remain within Fitch's expectations. The affirmations reflect Fitch's view that the city remains prudent in its financial management, with operating results and debt metrics consistent with the current rating category. While operating performance remains adequate, Fitch notes some pressure from opex growth, which requires ongoing monitoring. Sustained expenditure control and maintaining adequate liquidity metrics are key factors supporting the rating's stability. KEY RATING DRIVERS Rio's SCP reflects its 'Low Midrange' risk profile and 'a' financial profile under Fitch's rating case. The SCP is assessed at 'bb' and factors a comparison with national and international peers. Risk Profile: 'Low Midrange' The assessment reflects Fitch's view of a moderately high risk that the issuer's ability to cover debt service weaken unexpectedly from 2025 to 2029. This risk arises from potential lower revenue, higher expenditure, or an unexpected increase in liabilities or debt-service requirements. Revenue Robustness: 'Midrange' Fitch evaluates Revenue Robustness as 'Midrange' due to the city's fiscal autonomy with relatively low dependency on transfers. The Brazilian tax collection framework transfers a large share of the responsibility to collect taxes to states and municipalities. Constitutional transfers exist as a mechanism to compensate poorer entities. Municipalities tend to report higher transfer dependency compared to states because they receive transfers from the state and federal governments. Fitch views a high dependency toward transfers from a speculative grade government as a weak feature for Brazilian local and regional governments (LRGs). The primary metric for Revenue Robustness is the transfers ratio (transfers to operating revenues). Fitch classifies LRGs with a transfer ratio 40% or more as 'Weaker' and those below 40% as 'Midrange'. Rio reports moderate fiscal autonomy, resulting in a 'Midrange' classification. Transfers averaged 34.5% of operating revenue from 2020 to 2024, and were 34.1% in 2024. Historically, Rio's operating revenue growth performed slightly above national GDP growth. From 2019 to 2024, CAGR was 2.3% in real terms for operating revenues, compared to average annual GDP growth of 2.2% for Brazil. Revenue Adjustability: 'Weaker' Fitch evaluates this factor as 'Weaker' due to Brazilian LRGs' reliance on a small number of taxpayers and the history of federal intervention in subnational tax policy. Fitch believes Brazilian states and municipalities have low capacity to increase revenue during a downturn. Tax tariffs are close to the constitutional national ceiling, and a small number of taxpayers contribute a large share of tax collection, making additional taxation challenging. Brazil also has a history of federal intervention in subnational taxation. In July 2022, the National Congress set a ceiling on the Imposto sobre Circulação de Mercadorias e Serviços (ICMS) tariff on fuels and electricity. This caused revenue losses for states and municipalities, which were only partially reversed later. The most important municipal tax is the ISS, a tax on services, which represented 48.8% of tax collection in 2024. Another important tax for municipalities is the Imposto Predial e Territorial Urbano, a tax on urban properties, which corresponded to 27.5% of the City of Rio's tax collection in 2024. Expenditure Sustainability: 'Midrange' Fitch evaluates this factor as 'Midrange' due to adequate operating margins during the last few years. Municipalities are mandated to provide basic healthcare and elementary education. They also handle urban infrastructure and social housing, though these responsibilities consume a smaller portion of the municipal budget compared to health and education. Subsidies to transport have also been on the rise. Expenditure in municipalities typically grows with revenue due to earmarked revenues. Municipalities must allocate a portion of revenue to health and education, leading to procyclical spending during good times. High revenue growth results in similar expenditure trends. However, because of the substantial personal expenditure and salary rigidity, downturns with lower revenue do not see a corresponding drop in expenditure. Rio reports moderate control over expenditure growth, with sound margins. Operating margins averaged 10.9% from 2020 to 2024 and 6.6% by the end of 2024. The city is current on its payroll bill and has no significant delays for the payment of suppliers. Operating expenditure CAGR was 2.2% in real terms between 2019-2024, marginally below operating revenues CAGR of 2.3%. Although Rio's operating margins have historically been sound, current levels indicate increasing expenditures above revenues could lead to a less favorable trend in the medium term. Expenditure Adjustability: 'Weaker' Brazilian local governments have a rigid cost structure, driving this 'Weaker' assessment. The Brazilian constitution limits the ability to reduce expenditures, especially for the payroll and pensions. Consequently, when revenues unexpectedly decline, operating expenditure do not automatically decrease in tandem. Rio's personal expenditures were 53.7% of total expenditures in 2024. This indicated limited flexibility for adjustments given salary rigidity and the limited ability to manage human resources or pensions. Other operating expenditures were 36.1% of total expenditures in 2024 and have some flexibility for adjustments, but remain limited by constitutional mandates on health and education. Capex was 8% of total expenditures in 2024 and averaged 5.9% between 2020 and 2024. Brazilian LRGs often rely on investment cuts in challenging economic scenarios. Liabilities and Liquidity Robustness: 'Midrange' The Brazilian credit market for subnational governments is limited and highly controlled by the federal government. Often, LRGs opt for new loans with federal guarantees, which are only granted to subnationals rated 'A' or 'B' under the National Treasury CAPAG - a classification system that assesses indebtedness, current savings and liquidity. Rio is currently rated 'B' under the CAPAG and is under a program for fiscal equilibrium by the National Treasury. Brazil has a moderate national framework for debt and liquidity management, featuring prudential borrowing limits and restrictions on loan types. Under the Fiscal Responsibility Law of 2000, Brazilian LRGs must comply with indebtedness limits. Consolidated net debt for municipalities cannot exceed 120% of net current revenue. Rio complies with the Fiscal Responsibility Law, reporting a debt ratio of 48.7% as of YE 2024. The Fiscal Responsibility Law also sets limits for guarantees, at 22% of net current revenue. Rio reported no guarantees as of YE 2024. As of YE 2024, external debt totaled BRL6.9 billion, corresponding to 36% of direct debt. Foreign debt amortization is expected to average BRL411 million annually until 2029, and there is no significant maturity concentration throughout the amortization period. External debt is largely owed to multilateral organizations and counts with federal government guarantee. Debt directly owed to the federal government was only 2.5% of total debt at YE 2024. Rio restructured its debt with the federal government years ago in exchange for an external loan with a multilateral organization. Rio faces some off-balance sheet risk from its pension system, which is more manageable than that of Brazilian states because municipalities do not bear the pension burden related to public security. The municipality annually transfers additional resources to cover the pension deficit. Rio does not have an accumulated stock of 'precatorios', which are claims on governments originated from judicial liabilities. Liabilities and Liquidity Flexibility: 'Midrange' Fitch assesses the entity's available liquidity, excluding sovereign support, to determine 'Weaker' or 'Midrange' assessments for liabilities and liquidity flexibility. Fitch's liquidity rate for Brazilian LRGs is defined as the ratio of short-term financial obligations to net cash, as established by the previous version of the CAPAG system by the Brazilian National Treasury. The CAPAG, or Capacidade de Pagamento, assesses which entities qualify for federal government guarantees. Fitch has set a threshold of 100% for the average of the last three years (2022-2024) and for the last year-end results available (December 2024), which would result in a 'Midrange' assessment for this factor. Rio reported a three-year average liquidity ratio of 76.5%. As of December 2024, the metric reached 74.3%, supporting the 'Midrange' assessment. Financial Profile: 'a category' The Financial Profile is assessed at 'a'. Fitch's rating case forward-looking scenario indicates that the payback ratio (net adjusted debt to operating balance), the primary metric of the financial profile, will reach an average of 6.3x for the 2027-2029 period, which is aligned with a 'aa' assessment. The actual debt service coverage ratio (ADSCR), the secondary metric, is projected at an average of 1.0x for 2027-2029, aligned with a 'bb' assessment. Fiscal debt burden is projected at 77% for the same period. Fitch applies an override to the overall financial profile considering that the secondary metric is significantly weaker than the primary metric The City of Rio de Janeiro is facing increasing amortization payments through 2029, resulting in sustained pressure on its coverage metrics under the rating case. Conversely, the payback ratio is anticipated to improve slightly as projected debt amortization outpaces new borrowing over the period, according to information provided by the municipality. Peer Analysis The City of Rio's ratings reflect the combination of a 'Low Midrange' risk profile and 'a' financial profile under Fitch's rating case. The SCP is assessed at 'bb' and factors in a comparison with national and international peers. Rio's 'BB' IDRs are not affected by any other rating factors. Its 'AA+(bra)' national scale rating is based on a national peer comparison. Issuer Profile The City of Rio de Janeiro has the second-highest municipal GDP in Brazil, accounting for 4% of national GDP. The City of Rio's economy correlates highly with the performance of the oil and tourism sectors. Key Assumptions Risk Profile: 'Low Midrange' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Midrange' Expenditure Adjustability: 'Weaker' Liabilities and Liquidity Robustness: 'Midrange' Liabilities and Liquidity Flexibility: 'Midrange' Financial Profile: 'a' Asymmetric Risk: 'N/A' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Rating Cap (LT IDR): 'N/A' Rating Cap (LT LC IDR) 'N/A' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's rating case is a "through-the-cycle" scenario that incorporates a combination of revenue, cost and financial risk stresses. It uses figures from 2020-2024 and projected ratios for 2025-2029. The key assumptions for the scenario include: - An average year-over-year increase of 5.1% in operating revenue for 2025-2029. - An average year-over-year increase of 5.6% in tax revenue for 2025-2029. - An average year-over-year increase of 5.4% in operating expenditure for 2025-2029. - A net capital balance of -BRL 2,433 million on average for 2025-2029. - Cost of debt: 6.1% on average 2025-2029. Quantitative assumptions - Sovereign Related Figures are based on Fitch's sovereign actuals for 2024 and forecast for 2025-2026, respectively. No weights and changes were included since the last review, as none of these assumptions were material to the rating action. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A negative rating action on Brazil IDRs would negatively affect Rio's IDRs; - Rio's ratings could be downgraded if its payback ratio approaches 8x, indicating a deterioration against peers in the 'BB' category; - Rio's ratings could also be downgraded due to an erosion of the municipality's liquidity metrics or expenditure sustainability towards 'Weaker' per Fitch's assessment. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Rio's IDRs are at the sovereign level and could only be upgraded if the sovereign is upgraded in combination with an upgrade of the municipality's SCP; - Rio's SCP could be raised if its actual debt service coverage ratio consistently improves to about 1.5x and its payback ratio is projected below 6x; - Rio's Long-Term National Scale Rating could be upgraded if its financial profile improves to the 'aa' category. 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 ----------- ------ ----- Rio de Janeiro, City of LT IDR BB Affirmed BB ST IDR B Affirmed B LC LT IDR BB Affirmed BB LC ST IDR B Affirmed B Natl LT AA+(bra) Affirmed AA+(bra) Natl ST F1+(bra) Affirmed F1+(bra) STATE OF RIO DE JANEIRO: Fitch Affirms 'BB' IDR, Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed the Brazilian State of Rio de Janeiro's (ERJ) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB' with a Stable Rating Outlook and Short-Term Foreign and Local Currency IDRs at 'B'. Fitch has also affirmed the state's National Long-Term Rating at 'AAA(bra)' with a Stable Outlook and National Short-Term Rating at 'F1+(bra)'. The State of Rio de Janeiro's Standalone Credit Profile (SCP) is assessed at 'ccc-'. The State of Rio de Janeiro's Issuer Default Ratings (IDRs) benefit from a seven-notch uplift from the SCP due to the support derived from the New Fiscal Recovery Regime (NFRR). The NFRR is a national framework to ease the debt burden of distressed subnational governments. The state benefits from debt service relief through a step-up debt service schedule throughout the duration of the NFRR program. Additionally, the federal government will service all contracts included under the program. Fitch expects the Brazilian government (BB/Stable) will continue to honor the State of Rio de Janeiro's debt service under the NFRR. The state is negotiating entrance into the Program for Full Payment of State's Debt (Propag), which could enable partial prepayment of its intergovernmental debt and reduce future debt service costs. The program's conditions are still under negotiation. Fitch will monitor the state's adherence to Propag and its impact on the state's debt and debt service schedule. Continued federal support for the state's debt service is critical to its ratings and Outlook. KEY RATING DRIVERS Standalone Credit Profile The State of Rio de Janeiro's 'ccc-' SCP is based on Fitch's rating definitions and reflects its recent financial history. After a prolonged period of default at the SCP level, the state entered a debt restructuring agreement with the federal government in 2022. Its 'ccc-' SCP also indicates distressed debt metrics, as evaluated under Fitch's rating case, amid rising debt service requirements and declining operating margins. Risk Profile: 'Weaker' The assessment reflects Fitch's view that there is a high risk of the issuer's ability to cover debt service with the operating balance weakening unexpectedly over the scenario horizon (2025-2029) due to lower revenue, higher expenditure, or an unexpected rise in liabilities or debt-service requirement. Revenue Robustness: 'Weaker' Fitch evaluates this factor as 'Weaker' due to the state's reliance on volatile revenue sources. The state relies on volatile revenue sources tied to oil royalties. This dependency on volatile revenue sources like commodity sales, is considered a weakness for revenue robustness. Unanticipated shocks to oil prices could have a potentially large negative impact on the state's budget, especially due to its annual pension deficit, which is financed through royalties according to state law. The share of oil royalties to operating revenues decreased to 25.1% in 2024 from 31.8% in 2022 due to decreasing oil prices. Fitch expects Brent oil prices per barrel to average USD70 in 2025, down from 2023 average prices of USD80. Fitch projects Brent oil will be at USD65 in 2026-2027 and USD60 in 2028, leading to a drop in projected operating revenues. The Brazilian tax collection framework assigns a significant responsibility to states and municipalities for tax collection. Constitutional transfers serve as a mechanism to compensate poorer entities. Consequently, high dependence on transfers is considered a weak feature for Brazilian local and regional governments (LRGs). The State of Rio de Janeiro demonstrates significant fiscal autonomy, relying on transfers for only 10.7% of its operating revenues between 2020 and 2024. However, this fiscal autonomy does not offset its high dependency on volatile revenue sources. Revenue Adjustability: 'Weaker' Fitch evaluates this factor as 'Weaker' due to Brazilian states' reliance on a small number of taxpayers and the history of federal intervention in state tax policy. In 2024, the State of Rio de Janeiro made substantial efforts to recover tax collection by increasing the ICMS basic tariff to 20% from 18%. The state continues to implement measures to boost tax collection efficiency to recover some of the tax losses incurred after the National Congress movement in June 2022, which limited the ICMS tariff on fuels and electricity. Rio de Janeiro was among the states that suffered larger losses, as its fuel tariffs were at 34% before the federal intervention. Despite the state's efforts, revenue adjustability is very limited for Brazilian states and municipalities. Overall, the affordability of additional taxation is low because tax tariffs are near the constitutional national ceiling. A small number of taxpayers contribute a large share of the tax collection, with the 10 largest representing approximately 30% of ICMS tax collection in Rio de Janeiro. The history of federal intervention creates additional challenges for revenue adjustability due to tax policy uncertainty. Expenditure Sustainability: 'Midrange' Fitch evaluates Expenditure Sustainability as 'Midrange' due adequate operating margins in recent years. States have moderately countercyclical responsibilities because they handle healthcare, education and law enforcement. Expenditures grow with revenues due to earmarked revenues. States and municipalities must allocate a share of revenues to health and education, causing procyclical behavior in good times; high revenue growth leads to increased spending. However, the significant weight of personal expenditures and salary rigidity prevents expenditures from dropping during downturns despite lower revenues. The state reports moderate control over expenditure growth, maintaining sound margins. Operating margins averaged 10.2% in 2020-2024 and 6.3% at year-end 2024. The state is current on its payroll and has no significant delays in paying suppliers. The state recorded a compound annual growth rate (CAGR) of 2.3% for operating expenditure in real terms from 2019 to 2024, aligning with an operating revenues CAGR of 2.2%. The NFRR creates conditions on expenditure growth, which is expected to limit operating expenditures growth below operating revenues growth. Nonetheless, lower margins in 2024 and prospects for lower oil prices create challenges for expenditure sustainability in the coming years. Fitch will closely monitor the sustainability of state expenditures. Expenditure Adjustability: 'Weaker' Fitch evaluates Expenditure Adjustability as 'Weaker' due to budget rigidity and the limited ability to reduce spending. Brazilian local governments have a rigid cost structure, categorizing this factor as 'Weaker.' According to the Brazilian Constitution, there is low affordability for reducing expenditures, particularly for payroll and pensions. Consequently, when revenues unpredictably decrease, operating expenditures do not automatically decline in parallel. The state's personal expenditures were 61.4% of total expenditures in 2024. This item has very limited flexibility for adjustments given salary rigidity and limited ability to manage human resources or pensions. Other operating expenditures were close to 30.8% of total expenditures in 2024 and have some flexibility for adjustments, but remain limited by constitutional mandates on health and education. Capex was 4.7% of total expenditures in 2024 and averaged 4.1% between 2020 and 2024. Brazilian LRGs often rely on investment cuts in challenging economic scenarios. Liabilities and Liquidity Robustness: 'Weaker' There is a moderate national framework for debt and liquidity management, since there are prudent borrowing limits and restrictions on loan types. Under the Fiscal Responsibility Law, or Lei deResponsabilidadeFiscal(LRF), of 2000, Brazilian LRGs must comply with indebtedness limits. Consolidated net debt for states cannot exceed 2.0x, or 200%, of net current revenue. The State of Rio de Janeiro reported a debt ratio of 211.32% in December 2024 and has not complied with this indicator under the Fiscal Responsibility Law. The LRF also sets limits for guarantees at 22% of net current revenues. The state reported a 0.09% ratio as of December 2024. The state did not service most of its debt between 2017 and 2022. It joined the Fiscal Recovery Regime in September 2017, sponsored by the federal government. The program was valid for three years and aimed to provide the State of Rio de Janeiro with debt service relief while promoting fiscal austerity. On June 21, 2022, the state formalized its entry into the New Fiscal Recovery Regime, with the negotiated conditions effective from August 1, 2022. Under the new program, the state has a nine-year transition period with a step-up debt service profile. Meanwhile, the federal government will continue to honor all debt contracts included under the program, which equates to 98.2% of the state's debt. During the program, the state's capacity to take on new loans will be limited and permitted only under specific circumstances with federal approval. Rio de Janeiro is not fully compliant with the NFRR conditions but has remained in the program through a judicial decision. The Supreme Court established that, as in 2024, Rio de Janeiro's debt service will be limited to BRL 4.9 billion in 2025. The federal government continues to service state debt as agreed under the NFRR. The state is currently negotiating entry into the Program for Full Payment of State Debts (Propag), which could reduce its intergovernmental debt stock and lower debt service. Fitch will continue to monitor the potential debt renegotiation through the Propag and federal support for the state's debt service. There is moderate off-balance sheet risk from the pension system, which burdens most Brazilian LRGs, especially states due to their mandate over education and public security. Another significant contingent liability involves the payment of judicial claims, known as "precatorios." The national congress mandates that subnational governments fully amortize these liabilities by 2029. Liabilities and Liquidity Flexibility: 'Weaker' A framework exists for providing emergency liquidity support from the federal government via the granting of extended maturity over the prevalent federal debt portion. Fitch assesses the entity's available liquidity to differentiate between 'Weaker' and 'Midrange' for liabilities and liquidity flexibility. The Brazilian National Treasury analyzes the liquidity rate for LRGs to assess which entities qualify for federal government guarantees (Capacidade de Pagamento or CAPAG), which is measured by the LRGs' short-term financial obligation to net cash. For the State of Rio de Janeiro, the National Treasury reported a negative liquidity ratio of -11.24% as of December 2024, what results in a 'Weaker' assessment under Fitch's Liabilities and Liquidity Flexibility criteria. Financial Profile: 'b category' The Financial Profile is assessed at 'b.' Fitch's forward-looking scenario indicates that the payback ratio (net adjusted debt to operating balance), the primary financial profile metric, will average 78.9x for the 2027-2029 period, aligning with a 'b' assessment. The actual debt service coverage ratio (ADSCR), the secondary metric, is projected to average 0.3x for 2027-2029, also aligning with a 'b' assessment. The fiscal debt burden is projected at 191.1% for the same period. Fitch's rating case considers the current debt accumulation dynamic will continue under the NFRR, and without adherence to the Propag thus far. Under the NFRR, the state benefits from a step-up debt service discount until 2031. Unpaid debt service accumulates to the debt stock and is corrected by the monetary adjustment coefficient. The state's payback is further stressed by the expected deterioration of operating margins under Fitch's rating case, due to an expected drop in oil prices and expenditure pressures. Additional Risk Factors Considerations The State of Rio de Janeiro's IDRs are derived from the sovereign support through the NFRR. The federal government has restructured the state's debt service schedule into a nine-year step-up approach, which applies to the debt owed to the federal government and all guaranteed debt contracts. The federal government commits to honor the original terms of all contracts included under the program. ESG Governance -- Creditor Rights: State of Rio de Janeiro's track record in the breach of legal documentation stating full debt service payments, reflects the very low willingness to pay. The SCP will be reassessed once the state recovers and can honor its committed financial obligations in time with no federal government aid. Peer Analysis The State of Rio de Janeiro's 'ccc-' SCP is based on Fitch's rating definitions and reflects the state's recent financial history. After a prolonged period of default at the SCP level, Rio entered a debt restructuring agreement with the federal government in 2022. The state's 'ccc-' Standalone Credit Profile (SCP) also indicates distressed debt metrics, as evaluated under Fitch's rating case, amid rising debt service requirements and declining operating margins. Despite highly leveraged, the state has unrestricted cash reserves of BRL 14.2 billion as of December 2024, providing a buffer against estimated debt service payments of approximately BRL 11 billion for 2025-2026, as outlined in the state's debt service schedule. The state's IDRs benefit from a seven-notch uplift from its SCP through intergovernmental finance support. According to the Brazilian institutional framework, LRGs benefit from external support, including a potential bail-out from the federal government, through the NFRR. Throughout the duration of the NFRR, the federal government will honor all debt contracts under the program, which accounts for over 98.2% of the state's debt. Issuer Profile The State of Rio de Janeiro is classified by Fitch as a Type B LRG, which is required to cover debt service from cash flows on an annual basis. Rio de Janeiro is the second-largest regional economy in Brazil, at 11.4% of national GDP. GDP per capita of BRL71,850 is 1.45x the national average. Revenue sources are mainly based on taxation and royalties from oil-related activities, with a low dependence on federal transfers. Key Assumptions Risk Profile: 'Weaker' Revenue Robustness: 'Weaker' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Midrange' Expenditure Adjustability: 'Weaker' Liabilities and Liquidity Robustness: 'Weaker' Liabilities and Liquidity Flexibility: 'Weaker' Financial Profile: 'b' Asymmetric Risk: 'N/A' Support (Budget Loans): '7' Support (Ad Hoc): 'N/A' Rating Cap (LT IDR): 'N/A' Rating Cap (LT LC IDR) 'N/A' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's rating case is a "through-the-cycle" scenario that combines revenue, cost, and financial risk stresses. It is based on 2018-2022 figures and 2024-2028 projected ratios. Key assumptions for the scenario include: - Average yoy increase of 3.9% in operating revenues for 2025-2029; - Average yoy increase of 6.8% in tax revenue for 2025-2029; - Average yoy increase of 4.7% in operating expenditures for 2025-2029; - Average net capital balance of -BRL 5,452 million for 2025-2029; - Average cost of debt of 1.1% for 2025-2029, considering the NFRR step-up approach. Quantitative assumptions - Sovereign Related Figures use Fitch's sovereign actuals for 2024 and 2025-2026 forecast, respectively. No weights and changes were included since the last review as none of these assumptions were material to the rating action. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A negative action on the sovereign rating would lead to a corresponding rating action on the State of Rio de Janeiro given that its ratings are uplifted to the sovereign level through of intergovernmental finance support; - The State of Rio de Janeiro's IDRs would be downgraded under the perception of weakened federal support to the state's debt service. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A positive rating action on Brazil's IDR could lead to a corresponding rating action on the State of Rio de Janeiro given that its ratings are uplifted to the sovereign level through of intergovernmental finance support. ESG Considerations Rio de Janeiro. State of has an ESG Relevance Score of '5' for Creditor Rights due to its history of breaching legal documentation that requires full debt service payments. This reflects the very low willingness to pay, negatively impacting the credit profile and is highly relevant to the rating, resulting in an implicitly lower rating. Rio de Janeiro. State of has an ESG Relevance Score of '4' for Rule of Law, Institutional & Regulatory Quality, Control of Corruption due to the the government's insufficient effectiveness and institutional and regulatory quality in preventing the state from resorting to external financial support, namely the federal government, to pursue fiscal balance, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Rio de Janeiro. State of has an ESG Relevance Score of '4' for Biodiversity and Natural Resource Management in recognition of its economic and financial dependency on the hydrocarbon sector, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Public Ratings with Credit Linkage to other ratings The ratings of the State of Rio de Janeiro are equalized to the sovereign through intergovernmental finance support. Entity/Debt Rating Prior ----------- ------ ----- Rio de Janeiro. State of LT IDR BB Affirmed BB ST IDR B Affirmed B LC LT IDR BB Affirmed BB LC ST IDR B Affirmed B Natl LT AAA(bra) Affirmed AAA(bra) Natl ST F1+(bra) Affirmed F1+(bra) =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Deepen Bilateral Relations with Honduras ------------------------------------------------------------ Dominican Today reports that the Dominican Republic's ambassador to Honduras, Luis Bienvenido Garcia Mercado, met with Honduran Foreign Minister Javier Bu Soto to discuss strengthening cooperation in areas such as air connectivity, security, tourism, trade, and mutual support in international forums. Honduras and President Xiomara Castro expressed gratitude for the Dominican government's assistance following Tropical Storm Sara. Garcia Mercado described current diplomatic, trade, cultural, and cooperation ties as being at one of their "best moments," noting trade growth and the potential for further expansion through direct air routes, according to Dominican Today. Between 2020 and 2024, bilateral trade totaled US$937.7 million, with an average annual growth of 8%. In the first five months of 2025 alone, trade reached US$75.5 million, up 9.3% from the same period last year, the report notes. Dominican exports to Honduras include tobacco, medicines, cornmeal, textiles, polymers, and other high-value agro-industrial goods, the report relays. Foreign Minister Bu thanked the Dominican Republic for its ongoing cooperation and support for Honduran initiatives in multilateral spaces, the report says. Both governments emphasized that such meetings strengthen bilateral relations and reaffirm their shared commitment to the prosperity of both nations, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCR-LA reported in April 2019 that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic was raised to 'BB' in December 2022 with stable outlook. Moody's credit rating for Dominican Republic was last set at Ba3 in August 2023 with the outlook changed to positive. Fitch, in December 2023, affirmed the Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' and revised the outlook to positive. ============= J A M A I C A ============= STATIONERY & OFFICE: Sees 51% Net Profit Drop --------------------------------------------- RJR News reports that Stationery & Office Supplies has reported a sharp 51 per cent drop in net profit before tax — down to $23.1 million, despite a 3.5 per cent increase in revenues during the second quarter of this year. That's compared to net profit before tax of $47.4 million on revenues of $433 million during the corresponding period last year, according to RJR News. For the first six months of this year, net profit before tax fell by 31 per cent to $107 million on revenues of $985.2 million, the report notes. This compares with $156.7 million on revenues of $957.6 million for the first half of last year, the report relays. The company says the decline was due to expenses climbing nine per cent, from $391.1 million to $427 million, the report adds. Stationery & Office Supplies Limited (SOS) is a seller and distributor of stationery items and office furniture in Kingston, Jamaica. The family-run company was founded in 1965 by David McDaniel and partners Richard Hing and George Hew. =========== M E X I C O =========== GRUPO AEROMEXICO: DOJ Supports Delta Alliance Breakup ----------------------------------------------------- Mary Schlangenstein of Bloomberg News reports that the U.S. Justice Department has called for ending the antitrust immunity that lets Delta Air Lines Inc. and Grupo Aeromexico coordinate routes and pricing. In an August 8, 2025 filing, the agency said policies by Mexico's government appear restrictive and potentially discriminatory, limiting market competition, according to the report. It supported a U.S. Transportation Department proposal that the Trump administration revoke the long-standing partnership's antitrust protection, the report related. Grupo Aeromexico, S.A.B. de C.V. (BMV: AEROMEX) -- https://www.aeromexico.com/ -- is a holding company whose subsidiaries are engaged in commercial aviation in Mexico and the promotion of passenger loyalty programs. Aeromexico, Mexico's global airline, has its main hub at Terminal 2 at the Mexico City International Airport. Its destinations network features the United States, Canada, Central America, South America, Asia and Europe. Grupo Aeromexico and three of its subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11563) on June 30, 2020. In the petitions signed by CFO Ricardo Javier Sanchez Baker, the Debtors reported consolidated assets and liabilities of $1 billion to $10 billion. The Debtors tapped Davis Polk and Wardell LLP as their bankruptcy counsel, KPMG Cardenas Dosal S.C. as auditor, and Rothschild & Co US Inc. and Rothschild & Co Mexico S.A. de C.V. as financial advisor and investment banker. White & Case LLP, Cervantes Sainz S.C. and De la Vega & Martinez Rojas, S.C., serve as the Debtors' special counsel. Epiq Corporate Restructuring, LLC, is the claims and administrative agent. The U.S. Trustee for Region 2 appointed a committee to represent unsecured creditors on July 13, 2020. The committee is represented by Willkie Farr & Gallagher, LLP and Morrison & Foerster, LLP. MEXICO: IDB Lab Invests $1.5MM in Aviva to Expand Fin'l. Services ----------------------------------------------------------------- IDB Lab, the innovation and venture capital arm of the Inter-American Development Bank Group, announced a strategic investment of $1.5 million in the financial technology startup Aviva in Mexico. Founded in 2022, Aviva leverages AI-powered kiosks to expand access to financial services among underserved communities across the country. As its first venture debt operation in Latin America, a type of financing offered to startups that are backed by venture capital firms, this investment represents a strategic milestone for IDB Lab, and it positions the multilateral institution to potentially become one of Aviva's key equity shareholders in the future. It also reinforces IDB Lab's commitment to support innovative and high-growth companies in scaling impact, while also spotlighting efforts to strengthen Mexico's entrepreneurial ecosystem. Aviva offers loans of up to $1,000 to individuals living in cities with fewer than 500,000 inhabitants where formal financial services are still limited. Through its kiosks, Aviva offers a paperless, document-free, conversational loan origination process and credit onboarding that only takes 7 minutes. By leveraging technologies such as machine learning, computer vision, and natural language processing, Aviva transforms conversations into data to accurately assess creditworthiness in real time, breaking with conventional form-based credit applications. "We recognized how Aviva's innovative phygital approach directly addresses persistent barriers to financial inclusion in underserved markets. Aviva has gained strong growth and market traction in the last years, and IDB Lab's financing reinforces its commitment to scalable innovative solutions for inclusive finance," said Magdalena Coronel, acting Chief of the Venture Capital Investments Division at IDB Lab. "At Aviva, we ask customers to share their stories instead of imposing rigid requirements like employment records or bank statements. Their stories matter — using the latest technology, we turn them into tangible value, giving our customers access to premium financial products," said Filiberto Castro, Co-CEO and Founder of Aviva. IDB Lab's convertible venture financing will support Aviva as it scales its loan portfolio and expands operations into additional underserved areas of Mexico. Aviva currently operates more than 70 kiosks and expects to reach 150 by the end of the year. To date, Aviva has raised over $ 16 million in equity, underscoring significant investor confidence in its innovative model and market potential. With IDB Lab's support, Aviva aims to tap at a 70 million people market. This milestone is especially relevant within IDB Lab's broader efforts to deepen collaboration with local stakeholders by channeling resources towards high-impact solutions. IDB Lab Invests $1.5 Million in Aviva to Expand Financial Services Among Underserved Communities in Mexico ===================== P U E R T O R I C O ===================== VOYAGER DIGITAL: MCB Wins Bid to Dismiss Case Under Rule 12(b)(6) ----------------------------------------------------------------- Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York denied Metropolitan Commercial Bank's motion to dismiss the case captioned as MICHAEL WYSE, as Plan Administrator for the Voyager Wind-Down Debtor, Plaintiff, -v- METRO POLITAN COMMERCIAL BANK, Defendant, Case No. 24-cv-09108-PAE (S.D.N.Y.) under Federal Rules of Civil Procedure 12(b)(l). However, MCB's Rule 12(b)(6) motion was granted. Plaintiff Michael Wyse brings this action as Plan Administrator for the Voyager Wind-Down Debtor, consisting of debtors Voyager Digital Ltd., Voyager Digital Holdings, Inc., and Voyager Digital, LLC, pursuant to Chapter 11 of the Bankruptcy Code, 11 U.S.C. Sec. 1101 et seq. Until its bankruptcy in July 2022, Voyager had operated a digital asset trading platform that attracted more than 3.5 million users and held more than $5.6 billion in customer assets. Central to the Platform's functionality was a custodial for the benefit of account established at defendant Metropolitan Commercial Bank. In this lawsuit, the Plan Administrator alleges that MCB facilitated Voyager's ability to falsely market the Platform as legally compliant. On behalf of 31,867 former Voyager customers, he claims that MCB enabled, aided, and profited from Voyager's allegedly deceptive and unlawful Platform. His claims are brought exclusively under the laws of all 50 states, and those of the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. These claim common law fraud, statutory consumer fraud, statutory securities fraud, and the sale of unregistered securities, mostly based on secondary theories of liability. The Plan Administrator also brings an unjust enrichment claim. MCB now moves to dismiss the Complaint for lack of standing and failure to state a claim under Federal Rules of Civil Procedure 12(b)(l) and 12(b)(6), respectively. Rule 12(b)(l) Motion In moving to dismiss for lack of standing, MCB emphasizes that, in general, unassignable state law claims cannot be brought by an assignee, and that whether an assignment is permitted is a function of state law. But, as the Plan Administrator notes, assignments made pursuant to bankruptcy reorganization plans supersede state anti-assignment laws. Judge Engelmayer explains, "Such is the case here. The Plan, organized in connection with bankruptcy proceedings in this District, expressly assigned to the Plan Administrator any and all causes of action related to the Voyager bankruptcy. It also transferred and assigned to the Plan Administrator all of Voyager's assets and corresponding claims. And there is no dispute about the integrity of the Assignment." To the extent MCB separately disputes the Plan's transfer to the Plan Administrator of the state-law fraud claims of certain Assignors, that objection should have been brought at the time the Plan was confirmed. MCB did not make any formal objection to the Plan, despite the opportunity to do so. It is thus bound by the Plan's provisions, including those authorizing the Plan Administrator to bring claims on behalf of the Assignors. The Court accordingly denies MCB's challenge on this ground, an improper and belated collateral attack. The Court therefore denies MCB's motion to dismiss based on Rule 12(b)(l) for a lack of standing. Rule 12(b)(6) Motion In support of its fraud claims, the Complaint alleges three categories of misstatements or omissions by Voyager that MCB ostensibly knew of and facilitated, either directly or secondarily. These consist of false representations about: (1) the applicability of FDIC insurance, (2) the safety of the Voyager Platform, and (3) Voyager's MTLs. In support of its non-fraud securities claims alleging the sale by Voyager of unregistered securities, it alleges that, as Voyager's agent or partner, MCB facilitated these sales of unregistered securities as part of the FBO Agreement. MCB moves for dismissal of all claims, under Rule 12(b)(6), for failure to state a claim. As to the claims sounding in fraud, MCB argues that the Complaint does not satisfy Rule 9(b)'s heightened pleading standard, and does not plausibly plead the elements of reliance, causation, or actual knowledge. As to the claims based solely on vicarious or secondary liability, which include the non-fraud statutory claims alleging sale of unregistered securities, it argues that the Complaint fails to plausibly plead an agency or partnership relationship. As to the remaining claim of unjust enrichment, MCB argues that it fails for multiple reasons, including that it duplicates dismissed claims. Fraud Claims Of the Complaint's 53 counts asserting MCB's liability to the Assignors, 38 sound in fraud-predominantly common law fraud, securities fraud, or consumer fraud. Invoking the laws barring such frauds in all 50 states plus several territories, it alleges that MCB is liable to the Assignors on theories of direct, aiding and abetting, conspiracy, vicarious, and secondary liability. MCB's motion to dismiss challenges the plausibility of the Complaint's pleadings as to three elements: reliance, causation, and actual knowledge. The Court holds that multiple elements of these are not adequately pled with particularly, requiring dismissal of all counts sounding in fraud. Reliance is an element of many of the Complaint's claims sounding in fraud, common law and statutory. The Court finds the Complaint, however, is entirely conclusory on this point. It is devoid of any particularized factual allegation that any of the 31,867 Assignors actually relied on any alleged misrepresentation or omission, whether made by MCB or Voyager. That is fatal to such claims. The Court finds the Complaint's central theory of causation – that MCB, knowing of Voyager's misrepresentations, took (or failed to take) actions that helped bring about the 31,867 Assignors' losses-is based on speculative inferences. According to Judge Engelmayer, "The Complaint does not plead that MCB exercised any control over Voyager. It does not plead that MCB caused Voyager to engage in any alleged misconduct. It does not allege a non-speculative causal chain between MCB's actions and any Assignor's loss. The Complaint attributes Voyager's collapse to various factors -- including borrower defaults, crypto lending risks, and regulatory violations. But, despite the Plan Administrator's ability to take and access pre-Complaint discovery, it does not plead facts under which any action by MCB was a proximate cause of the losses of any Assignor." The Court also finds the Complaint fails to plausibly plead MCB's actual knowledge. According to the Court, MCB's right of access to certain information, and its approval rights over Voyager's public statements, are not tantamount to its actual knowledge of fraudulent conduct within Voyager. Securities Claims The Complaint also brings claims under the statutes of most states to the effect that MCB was vicariously or secondarily liable for Voyager's alleged sales of unregistered securities. The Court finds these claims are deficient, at a minimum, because the Plan Administrator has failed to plausibly allege, as these claims presuppose, an agency or partner relationship between Voyager and MCB with respect to these sales. Unjust Enrichment Claim The Court dismisses the unjust enrichment claim. According to the Court, the claim duplicates the dismissed fraud claims. A copy of the Court's Opinion & Order dated August 4, 2025, is available at https://urlcurt.com/u?l=8HQiDJ from PacerMonitor.com. About Voyager Digital Holdings Based in Toronto, Canada, Voyager Digital Holdings Inc. -- https://www.investvoyager.com/ -- ran a cryptocurrency platform. Voyager claimed to offer a secure way to trade over 100 different crypto assets using its easy-to-use mobile application. Through its subsidiary Coinify ApS, Voyager provided crypto payment solutions for both consumers and merchants around the globe. Voyager Digital Holdings Inc. and two affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-10943) on July 5, 2022. In the petition filed by Stephen Ehrlich, chief executive officer, the Debtors estimated assets and liabilities between $1 billion and $10 billion. Judge Michael E. Wiles oversees the cases. The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy counsel; Berkeley Research Group, LLC, as financial advisor; Moelis & Company as investment banker; Consello Group as strategic financial advisor; Deloitte Tax, LLP as tax services provider; and Deloitte & Touche, LLP, as accounting advisor. Stretto, Inc., is the claims agent. On July 19, 2022, the U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in the Chapter 11 cases. The committee tapped McDermott Will & Emery, LLP as bankruptcy counsel; FTI Consulting, Inc., as financial advisor; Cassels Brock & Blackwell, LLP as Canadian counsel; and Epiq Corporate Restructuring, LLC, as noticing and information agent. The committee also tapped the services of Harney Westwood & Riegels, LP, in connection with Three Arrows Capital Ltd.'s liquidation proceedings in British Virgin Islands. On July 6, 2022, the Debtors filed a joint Chapter 11 plan of reorganization. * * * Following an auction process, the Debtors in September 2022 selected the bid submitted by FTX US' West Realm Shires Inc. as the winning bid for the assets. But after a series of events, FTX collapsed in November 2022, before the sale could be completed. After reopening bidding, Voyager Digital selected the offer from U.S. exchange BAM Trading Services Inc. (doing business as "Binance.US") as the highest and best bid for its assets. Binance's bid is valued at $1.022 billion. In April 2023, Binance.US called off its deal to buy assets of bankrupt crypto lender Voyager Digital, citing a "hostile and uncertain regulatory climate." ================= V E N E Z U E L A ================= CITGO PETROLEUM: Court to Reschedule Final Sale Hearing in Auction ------------------------------------------------------------------ Marianna Parraga, citing a filing, at Reuters reports that a U.S. federal court approved the rescheduling of a long-awaited sale hearing originally planned to decide the final winner of an auction of shares in the parent of Venezuela-owned refiner Citgo Petroleum. The change was approved after two unsolicited bids were recently submitted by affiliates of hedge fund Elliott Investment Management and commodities house Vitol, after a court officer overseeing the auction had recommended a different bid by a unit of miner Gold Reserve (GRZ.V), according to Reuters. A new date for the final hearing will be set once the court receives input from officer Robert Pincus, parties in the process and creditors, Delaware Judge Leonard Stark said in his order, the report notes. The court plans to hold an in-person hearing to listen to the parties, the report relays. An adjournment of the final hearing had been requested by Pincus, supported by several creditors and bidders, notes the report. Gold Reserve, which wants its subsidiary's bid confirmed by the judge as the auction's winner, told the court it opposes any changes in the calendar, the report says. According to the report, the emerging bids have heated up the competition for Citgo at the last minute, but also have increased disagreements between the parties, complicating the case. The postponement is expected to add delays to the 8-year court case, first introduced by miner Crystallex against Venezuela, and which has opened the door for more than a dozen additional creditors to seek compensation for debt defaults and expropriations in the South American country, the report adds. About Citgo Petroleum Citgo Petroleum Corporation is a United States-based refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. Based in Houston, Texas, Citgo is majority-owned by PDVSA, a state-owned company of the Venezuelan government (although due to U.S. sanctions, in 2019, they no longer economically benefit from Citgo.) Fitch Ratings, in early October 2024, affirmed the Long-Term Issuer Default Rating (IDR) of CITGO Petroleum Corp. (CITGO, or Opco) at 'B' with a Stable Outlook and the IDR of CITGO Holding, Inc. (Holdco) at 'CCC+'. Fitch also affirmed Opco's existing senior secured notes and industrial revenue bonds at 'BB'/'RR1'. S&P Global Ratings, in June 2022, affirmed its 'B-' long-term issuer credit ratings on CITGO Holding Inc. and core subsidiary CITGO Petroleum Corp. ********* 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 * * *