251003.mbx

251003.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 Friday, October 3, 2025, Vol. 26, No. 198 Headlines B E R M U D A BERMUDA: Inflation to May 2025 Remains at 1.8% B R A Z I L AZUL SA: Plan Exclusivity Period Extended to Jan. 5 Next Year BRASKEM SA: Fitch Lowers IDR to 'CCC+', Off Watch Negative BRASKEM SA: Moody's Lowers CFR to 'Caa3', Outlook Remains Negative TRANSPORTADORA ASSOCIADA: Moody's Withdraws 'Ba1' CFR C H I L E LATAM AIRLINES: Closes $676 Million Secondary Equity Offering C O S T A R I C A BICSA: Moody's Hikes LongTerm Deposit Rating to Ba2 J A M A I C A JAMAICA: IDB Approves US$6.5MM Loan to Strengthen Cybersecurity P A N A M A ETESA: Fitch Affirms 'B' LongTerm IDRs, Outlook Stable - - - - - ============= B E R M U D A ============= BERMUDA: Inflation to May 2025 Remains at 1.8% ---------------------------------------------- David Fox at The Royal Gazette Bermuda News reports that inflation in Bermuda idled under 2 per cent, according to the May 2025 Consumer Price Index released by the Ministry of Economy and Labour together with the Department of Statistics. Consumers paid 1.8 per cent more in May than a year before for the basket of goods and services included in the Consumer Price Index, according to Royal Gazette. The level of inflation was unchanged from the April 2025 annual inflation rate, the report notes. The department said that over the past decade, the annual rate of inflation exhibited significant variability, reaching a ten-year low of -1.4 per cent in July 2020 and peaking at 5.1 per cent in September 2022, the report discloses. The statement read: "The annual average percentage change for the period 2015–2024 shows an overall upward trend in average price levels, with the highest annual average increase recorded in 2022 at 4.0 per cent. Since then, the annual average rate of increase has slowed, falling to 3.3 per cent in 2023 and further to 1.9 per cent in 2024," the report relates. "This indicates a continued moderation in the average rate of price growth following the post-pandemic peak. "During the last ten years, the year-over-year percentage change in food prices exhibited the most prominent fluctuation between 2022 and 2024, reaching a high of 10.6 per cent in September 2022, the report notes. "The annual average percentage change for the period 2015 to 2024 shows a positive growth trend in the price change of food, peaking in 2022 at an average 7.9 per cent. Since then, the rate of increase has slowed, with a 6.5 per cent rise in 2023 and a further moderation to 3.6 per cent in 2024," the report relays. Between April and May, the average cost of goods and services in the CPI increased 0.1 per cent. The all-items index rose from 119.7 to 119.8. This means that the basket of goods and services that cost $100.00 in April 2015 now costs $119.80, the report discloses. The report discloses that some highlights for May 2024 to May 2025 include: -- The Rent division increased 2.5 per cent -- The Health & Personal Care division rose 3.7 per cent -- The Food division increased 1.8 per cent -- The Fuel & Power division rose 5.7 per cent -- The Education, Recreation, Entertainment & Reading division rose 0.7 per cent The report notes that between April and May, the average cost of goods and services increased 0.1 per cent. Additional areas of note between April and May were as follows: -- The Rent division increased 0.2 per cent -- The Food division increased 0.1 per cent -- The Tobacco & Liquor division rose 0.4 per cent -- The Household Goods, Services & Supplies division was unchanged =========== B R A Z I L =========== AZUL SA: Plan Exclusivity Period Extended to Jan. 5 Next Year ------------------------------------------------------------- Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York extended Azul S.A. and affiliates' exclusive periods to file a plan of reorganization and obtain acceptance thereof to January 5, 2026 and March 4, 2026, respectively. As shared by Troubled Company Reporter, the Debtors explain that they are Brazil's largest airline in terms of departures and cities served, offering passengers a full service experience to approximately 137 destinations in Brazil as of the Petition Date, as well as select international destinations, including in the United States, Portugal, France, Spain, Argentina, Uruguay, Paraguay, and Curaçao. Given the magnitude of the Chapter 11 Cases, the Debtors respectfully submit that the extensions requested herein are appropriate. The Debtors claim that they continue to make timely payments on account of their undisputed postpetition obligations as they come due and, as applicable, in accordance with the terms of the relevant settlements negotiated during the pendency of the Chapter 11 Cases. As such, this factor also weighs in favor of allowing the Debtors to extend the Exclusive Periods. The Debtors expect to be in a position to file a chapter 11 plan in short order. Having entered chapter 11 with RSAs with the Secured Ad Hoc Group, AerCap, and the Strategic Partners, the Debtors continue to diligently negotiate with parties in interest and are making progress with various constituencies toward reaching agreements that will further aid their reorganization efforts. Counsel to the Debtors: DAVIS POLK & WARDWELL LLP Marshall S. Huebner, Esq. Timothy Graulich, Esq. Joshua Y. Sturm, Esq. Jarret Erickson, Esq. Richard J. Steinberg, Esq. 450 Lexington Avenue New York, New York 10017 Telephone: (212) 450-4000 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. The Committee retained Willkie Farr & Gallagher LLP as its counsel, Alvarez & Marsal North America, LLC, as its financial advisor, Houlihan Lokey Capital, Inc., as its investment banker. BRASKEM SA: Fitch Lowers IDR to 'CCC+', Off Watch Negative ---------------------------------------------------------- Fitch Ratings has downgraded Braskem S.A.'s Issuer Default Ratings (IDRs) to 'CCC+' from 'BB-'. Fitch has also downgraded Braskem America Finance Company's senior unsecured rating to 'CCC+' with a Recovery Rating of 'RR4' from 'BB-' and Braskem Netherlands Finance B.V.'s senior unsecured rating to 'CCC+'/'RR4' from 'BB-' and subordinated rating to 'CCC-/'RR6' from 'B'/'RR6'. Fitch has downgraded Braskem's National Scale rating to 'CCC+(bra)' from 'AA(bra)'. The Negative Watch has been removed. The downgrades reflect Braskem's elevated credit and liquidity risk, stemming from persistent cash burn and its impending 2028 bond amortizations. The company's decision to engage financial advisors to assess financial alternatives for its capital structure underscores its stressed financial profile, which increases the probability of default or debt restructuring over the near to medium term. Key Rating Drivers Heightened Debt Restructuring Risk: Braskem must maintain funding access through banks or capital markets to avoid restructuring as petrochemical spreads faced continued downward pressure. The company's engagement of financial advisors may signal an imminent restructuring or other debt actions that could be detrimental to bondholders. Challenged Liquidity, Weak Cash Generation: Braskem's liquidity, which was previously a core strength, has significantly declined. While management's cash preservation and cost reduction initiatives may offer some relief, Fitch views the company's ability to withstand prolonged market volatility as a key risk, particularly as liquidity buffers diminish. The growing challenge of refinancing upcoming debt maturities, especially the 2028, 2030 and 2031 bonds, heightens this risk. Fitch's base case indicates the company may already lack sufficient cash next year to address the 2028 maturities. This reflects projected negative FCF of about BRL 3.5 billion in 2025 and BRL 2.0 billion in 2026, alongside Alagoas- related cash outflows of roughly USD 310 million and USD 190 million, respectively. Even if Braskem achieves neutral FCF in 2026, liquidity headroom would only be marginally extended and would likely still be inadequate to cover the 2028 bonds. High Leverage: Fitch expects petrochemical spreads to remain low throughout 2025 and into 2028, causing Braskem's net leverage to remain elevated and commensurate with the 'B/CCC' rating category, exceeding 10x in 2025 and 2026. Cost efficiencies and antidumping measures may be insufficient to offset this stressed scenario. Peer Analysis Braskem's ratings are below its main peers due to persistently weak credit metrics, negative FCF and high leverage (projected in the low teens), alongside tightening liquidity. These challenges are more acute than those faced by its investment-grade peers. Westlake Corporation (BBB/Stable) benefits from cost-advantaged North American feedstocks, low leverage (below 2x), robust FCF and strong vertical integration, supporting a resilient credit profile and ample liquidity. Dow Inc. (BBB/Stable) supports its rating with significant scale, global diversification and strong liquidity (over USD2 billion cash, USD8 billion in credit), despite elevated leverage (approaching 4x) and negative FCF. Dow's diversified business and flexible feedstock base help moderate volatility. LyondellBasell Industries N.V. (BBB/Stable) is distinguished by large scale, broad diversification and feedstock flexibility, which support stable EBITDA margins and strong liquidity. Its balanced capital allocation and resilient pre-dividend cash flow contrast with Braskem's persistent cash burn. Orbia Advance Corporation, S.A.B. de C.V. (BBB/Stable) is supported by product and geographic diversification, vertical integration and solid cash generation, with leverage expected to be around 3.0x through 2026. Orbia's consistent efficiency and broad exposure reduce volatility relative to Braskem. Alpek, S.A.B. de C.V. (BBB-/Negative) faces high leverage and profitability pressures but maintains investment-grade status through a resilient business model, positive cash flow and manageable maturities. Key Assumptions - Brazil polyethylene projected revenue of USD4.0 billion, USD4.0 billion and USD4.1 billion during 2025-2027; - Brazil polypropylene projected revenue of USD2.0 billion USD2.0 billion and USD2.0 billion during 2025-2027; - Brazil vinyls projected revenue of USD600 million, USD600 million and USD650 million during 2025-2027; - Brazil ethylene/propylene projected revenue of USD800 million, USD950 billion and USD950 billion during 2025-2027; - U.S. and Europe polypropylene projected revenue of USD3.0 billion, USD3.3 billion and USD3.6 billion during 2025-2027; - Polyethylene-ethane reference spreads of USD770/ton in 2025, USD790/ton in 2026 and USD810/ton in 2027; - Polyethylene-naphtha reference spreads of USD440/ton in 2025, USD450/ton in 2026 and USD460/ton in 2027; - Polypropylene-propylene reference spreads of USD400/ton in 2025, USD400/ton in 2026 and USD450/ton in 2027; - Polyvinyl chloride reference spreads of USD330/ton in 2025, USD340/ton in 2026 and USD390/ton in 2027; - Annual maintenance capex of approximately USD400 million; - No dividends to shareholders during the analysis horizon. Recovery Analysis The recovery analysis for Braskem America Finance's senior unsecured notes and Braskem Netherlands Finance B.V.'s senior unsecured and subordinated notes assumes that Braskem would be a going concern (GC) in bankruptcy and that it would be reorganized rather than liquidated. GC Approach: - A 10% administrative claim; - The GC EBITDA is estimated at USD1 billion. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the valuation of Braskem; - EV multiple of 5.0x. With these assumptions, Fitch's waterfall generated recovery computation (WGRC) for the senior unsecured and subordinated notes is in the 'RR4' and the 'RR6' band, respectively. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A Fitch-defined default process has commenced; - Announcement of a Distress Debt Exchange (DDE) or any type of debt restructuring; - The non-renewal of the revolving credit facility due in December 2026, resulting from stressed financing conditions; - Further deterioration of operational and financial indicators. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - While Fitch does not anticipate an upgrade in the near term due to the company's elevated leverage, securing funding to stabilize liquidity could support an upgrade. Liquidity and Debt Structure Braskem reported a BRL 9.4 billion (USD 1.7 billion, excluding Idesa) cash balance as of June 2025. Given Fitch's projected negative FCF, this position could decline materially over the coming quarters, further weakening liquidity. It may also complicate negotiations to renew the RCF maturing in 2026. Issuer Profile Braskem S.A. produces and sells chemicals, petrochemicals, fuels, steam, water, compressed air and industrial gases. The company's plants in Brazil, the U.S., Germany and Mexico produce thermoplastic resins such as polyethylene, polypropylene and polyvinyl chloride. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor 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 Braskem S.A. has an ESG Relevance Score of '4' for Waste & Hazardous Materials Management; Ecological Impacts due to the operations' disruption and large cash outflows triggered by the geological event in Alagoas, which has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors. Braskem S.A. has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to the reparation costs incurred following the geological event in Alagoas for relocating over 14,000 families from neighboring areas. This has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Braskem Netherlands Finance B.V. senior unsecured LT CCC+ Downgrade RR4 BB- subordinated LT CCC- Downgrade RR6 B Braskem America Finance Company senior unsecured LT CCC+ Downgrade RR4 BB- Braskem S.A. LT IDR CCC+ Downgrade BB- LC LT IDR CCC+ Downgrade BB- Natl LT CCC+(bra)Downgrade AA(bra) senior unsecured Natl LT CCC+(bra)Downgrade RR4 AA(bra) BRASKEM SA: Moody's Lowers CFR to 'Caa3', Outlook Remains Negative ------------------------------------------------------------------ Moody's Ratings has downgraded to Caa3 from B2 Braskem S.A.'s Corporate Family Rating and the rating on Braskem America Finance Company's Backed Senior Unsecured Global Bonds, fully guaranteed by Braskem S.A. The outlook for both companies remains negative. RATINGS RATIONALE The downgrade of Braskem's rating to Caa3 follows the company's announcement that it has hired financial and legal advisors to support the company in preparing a diagnosis of economic-financial alternatives to optimize its capital structure. In Moody's views, the announcement increases the risk of transactions that Moody's would consider distressed exchanges in light of Braskem's ongoing cash burn and weak operations. In the twelve months ended in June 2025, Braskem's Moody's adjusted leverage (including Mexico) peaked at 15.3x, while free cash flow was negative at BRL8.8 billion reflecting the weak level of operations and the disbursements related to the provisions in Alagoas. Absent of any protectionism measures that improves the company's EBITDA, Moody's expects Braskem's adjusted leverage (including Mexico) to remain at around 11x-13.5x in the next 12-18 months as the company's EBITDA continues to be strained by petrochemical spreads, despite the company's ongoing initiatives to improve profitability. Braskem's free cash flow generation will also remain pressured with the weak level of operations, remaining disbursements related to Alagoas and the company's investments in its transformation program to increase competitiveness in the long term. The 11.0-13.5x leverage Moody's expects for the next 12-18 months is still high for the rating category and risks remain on the current macro environment, and further deceleration in global economic growth would weigh on demand, extending the downcycle in the industry and limiting the potential recovery of Braskem's credit metrics. Braskem needs to improve operations and reduce cash outflows to achieve free cash flow neutrality and avoid refinancing risks related to significant debt maturities in 2028 during the current market weakness. At the end of June 2025, Braskem had total cash of BRL10.3 billion, plus a $1 billion (BRL5.7 billion) committed credit facility due in December 2026, and only BRL1.9 billion in debt coming due until the end of 2026, including Mexico's debt. With the uncertainties related to the macroeconomic environment, provisions in Alagoas and continued subdued operations in Mexico, Braskem's free cash flow will remain negative in 2025 and its cushion to withstand the industry's weakness in the next few years diminished. Braskem's Caa3 rating continues to be supported by its size as the largest petrochemical company in Brazil and in the Americas in terms of production capacity of resins, with historically above-industry-average operating margins because of high capacity utilization rates, long-term client relationships and product customization. The rating also reflects the company's dominant market position in Brazil and its geographic diversification, with operations in the US, Mexico and Europe. Finally, the company's sizable cash position support its liquidity and is an additional positive credit consideration. The rating is constrained by the sharp deterioration in credit metrics since late 2022, significant cash burn, weak industry conditions globally stemming from global overcapacity as well as the company's high exposure to the volatility of petrochemical spreads. The rating also considers the dependence on Petroleo Brasileiro S.A. - PETROBRAS (PETROBRAS, Ba1 stable) and Petroleos Mexicanos (PEMEX, B1 stable) for the supply of naphtha and ethane in Brazil and Mexico, respectively, although both have been declining over the past years. Additional credit concerns include the potential additional liabilities related to Alagoas, still subdued operations in Mexico and Braskem's shareholders intention to divest the business. RATING OUTLOOK The negative outlook reflects Moody's expectations that Braskem's credit metrics will remain strained in the next 12-18 months while the company pursues initiatives to offset the weak market conditions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating could be downgraded if Braskem enters transactions that lead to losses for creditors higher than those associated with the Caa3 rating. Given the negative rating outlook, an upgrade is unlikely in the short term. Longer term, the rating could be upgraded if the company resolves the current overhangs related to the geological event in Alagoas, while improving its liquidity, financial flexibility and credit metrics. An upgrade could also occur if Braskem shows a continued track record of a conservative financial policy, maintaining sound liquidity and positive free cash flow generation. Quantitatively, an upgrade would also require leverage (as measured by total adjusted debt/EBITDA including Mexico) sustained below 5.5x through commodity cycles. COMPANY PROFILE Braskem is the largest producer of thermoplastic resins (polyethylene, polypropylene and polyvinyl chloride) in the Americas, with an annual production capacity of 9.3 million tons. Braskem also has a production capacity of 10.8 million tons of basic petrochemicals such as ethylene, propylene and gasoline, among others; and about 1.4 million tons of caustic soda, EDC and chlorine. In the twelve months ended June 2025, the company reported consolidated net revenue of BRL77.7 billion ($13.6 billion), with EBITDA margin of 5.4%. The principal methodology used in these ratings was Chemicals published in October 2023. Braskem's scorecard-indicated outcome under Moody's Chemicals rating methodology maps to B3, three notches above the assigned rating, reflecting the company's credit metrics under the current difficult industry environment, while the assigned rating captures the risk of transactions that Moody's would consider distressed exchanges. Moody's 12-18-month forward-looking view maps to B2, reflecting the company's still-strained credit metrics. TRANSPORTADORA ASSOCIADA: Moody's Withdraws 'Ba1' CFR ----------------------------------------------------- Moody's Ratings has withdrawn Transportadora Associada de Gas S.A. (TAG) corporate family rating at Ba1. At the time of withdrawal, the outlook was stable. RATINGS RATIONALE Moody's have decided to withdraw the rating(s) following a review of the issuer's request to withdraw its rating(s). COMPANY PROFILE Based in Rio de Janeiro, Brazil, Transportadora Associada de Gas S.A. specializes in transporting natural gas via an extensive network of gas pipelines. It owns and operates the largest gas pipeline network in Brazil, spanning 4,500 kilometers (47% of Brazil's total gas pipeline network). ========= C H I L E ========= LATAM AIRLINES: Closes $676 Million Secondary Equity Offering ------------------------------------------------------------- Cleary Gottlieb is representing longstanding client LATAM Airlines Group S.A. (LATAM) in an approximately $676 million public offering by certain of its shareholders of 15.51 million American depositary shares (ADSs), each representing 2,000 common shares of LATAM, at a price to the public of $43.60 per ADS. The offering priced on September 24, 2025, and closed on September 26, 2025. No shares are being sold by LATAM, and LATAM will not receive any proceeds from the sale of ADSs by the selling shareholders. J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC acted as underwriters in the offering. LATAM, a company formed by the business combination of LAN Airlines S.A. of Chile and TAM S.A. of Brazil, is Latin America's leading airline group with one of the largest route networks in the world. The transaction marks the fourth successful secondary equity offering by shareholders of LATAM in 2025, totaling $2.1 billion in secondary offerings during the year. Cleary previously represented LATAM in a $370 million public offering by certain of its shareholders of 10 million ADSs in June 2025, a $766 million public offering by certain of its shareholders of 18 million ADSs in August 2025 and a $333 million public offering by one of its shareholders of 7 million ADSs in September 2025. Cleary also previously represented LATAM in its $800 million global bond offering in July 2025, $460 million secondary public offering of 19 million ADSs and concurrent relisting on the New York Stock Exchange, as well as in its strategic partnership with Delta Air Lines, Inc. (Delta) in September 2019, pursuant to which Delta acquired a 20% stake in LATAM. COMPANY PROFILE LATAM Airlines Group S.A. (LATAM) is a Chile-based airline holding company formed by the business combination of LAN Airlines S.A. of Chile and TAM S.A. (TAM) of Brazil in June 2012. LATAM is the largest airline group in South America, with a local presence for domestic passenger services in five countries (Brazil, Chile, Peru, Ecuador and Colombia). The company also provides intraregional and international passenger services, has a cargo operation that is carried out using belly space on passenger flights and a dedicated freighter service and has LATAM Pass, the largest frequent flyer program in the region and 7th largest in the world in terms of members. In the twelve months ended March 2025, LATAM generated $12.9 billion in net revenue. LATAM serves passengers in around 153 destinations in 27 different countries; provides cargo services to 160 destinations in 33 countries; and as of March 2025, had a fleet of 348 aircraft and a set of bilateral alliances. =================== C O S T A R I C A =================== BICSA: Moody's Hikes LongTerm Deposit Rating to Ba2 --------------------------------------------------- Moody's Ratings upgraded all ratings and assessments assigned to Banco Nacional de Costa Rica (BNCR) and Banco de Costa Rica (BCR), including their long-term local and foreign currency deposit ratings to Ba2, from Ba3, as well as the long-term counterparty risk ratings (CRR) to Ba1, from Ba2, both in local and foreign currencies. These banks' baseline credit assessment (BCA) and adjusted BCAs were also upgraded to ba2, from ba3, and their long-term Counterparty Risk Assessments (CRA) were upgraded to Ba1(cr), from Ba2(cr). The short-term deposit ratings and short-term counterparty risk ratings, both in local and foreign currencies, were affirmed at Not Prime, and the short-term CRAs, were also affirmed at NP(cr). In the same rating action, the long-term ratings assigned to Banco Internacional de Costa Rica, S.A. (BICSA) were also upgraded, including the long-term foreign currency deposit rating to Ba2, from Ba3, the long-term foreign currency CRR to Ba1, from Ba2, and the long-term CRA to Ba1(cr), from Ba2(cr). The bank's BCA was affirmed at ba3, however, the Adjusted BCA was upgraded to ba2 from ba3, reflecting the affiliate support from its controlling parent BCR that had its BCA upgraded to ba2, from ba3. The outlook for the long-term deposit ratings for these three banks was revised to stable, from positive. The action follows the upgrade of the Government of Costa Rica's (Costa Rica) sovereign bond rating to Ba2, from Ba3, and the decision to change the outlook to stable, from positive. For details about the sovereign rating action, please refer to Moody's press release " Moody's Ratings upgrades Costa Rica's ratings to Ba2; changes outlook to stable from positive" dated September 24, 2025. A List of Affected Credit Ratings is available at https://urlcurt.com/u?l=gG8MRm RATINGS RATIONALE UPGRADE OF RATINGS AND ASSESSMENTS ASSIGNED TO BNCR AND BCR The upgrade of BNCR and BCR's BCAs to ba2, from Ba3, acknowledges these banks' leading banking franchises in Costa Rica and steady financial fundamentals over the past three quarters. This includes solid asset quality and capital levels, supported by favorable economic conditions and a large, stable base of core deposits. BNCR's and BCR's ba2 BCAs also reflect these banks' broadly stable asset risk metrics, supported by a favorable banking environment and an accommodative monetary policy that has boosted credit demand and contributed to a moderate expansion of the credit market. Both BNCR and BCR have benefited from a diversified loan portfolio and a relatively low proportion of loans denominated in US dollars, which accounted for 26% and 22% of total loans in June 2025 respectively, compared to 63% for privately owned banks in the same period. Problem loans have remained roughly flat, with BNCR reporting 2.3% of total loans, and BCR 2.2%, as of June 2025, compared to 2.0% at the system average. Both banks kept reserves for loan losses close to 150% in June 2025. Conversely, both BCR and BNCR have historically exhibited lower profitability levels compared to private banks in Costa Rica, reflecting the focus on lower-yielding commercial and mortgage loans, that accounted in both cases for 84% of total loans in June 2025. The low level of net income to tangible banking assets is primarily driven by their high mandatory transfers to government entities and low efficiency metrics —relative to Ba2 peers — which constrain the banks' capital replenishment capacity. As of June 2025, the net income to tangible assets ratio was 0.5% for BNCR and 0.7% for BCR. These banks' core deposit base has been a key strength to their credit, however, while capitalization remains adequate at BCR and BNCR, when Moody's considers Moody's preferred capital measures of tangible common equity to risk weighted assets (TCE ratio) of 11.1% at BNCR and 11.4% at BCR, at these level, both banks are still below the median for banks with a BCA of ba2 at 12.7%. The Ba2 deposit ratings assigned to both BNCR and BCR are aligned with Costa Rica's government bond rating of Ba2 and consider these banks as government-related entities, given their full ownership by the Government of Costa Rica that also provides a guarantee to both their obligations. This alignment also takes into account these banks' public policy mandates, and the importance of their deposit and loan franchises within the Costa Rican financial system. UPGRADE OF BICSA'S DEPOSIT RATING AND ADJUSTED BCA TO Ba2 and ba2, REFLECTING PARENTAL SUPPORT The upgrade of BICSA's deposit rating to Ba2, from Ba3, incorporates the high probability of affiliate support from its controlling parent BCR (Ba2, stable, ba2) if needed, which results in a one-notch uplift from its ba3 BCA. BICSA's baseline credit assessment (BCA) of ba3 reflects the bank's improved earnings generation capacity over the past three years, which has enhanced its capital position. These positive developments have helped to mitigate the higher reliance on market funding versus peers that historically exposed the bank to global market volatility. Its limited business diversification and concentration in single-name loans are also structural characteristics of its corporate lending model, primarily focused on trade finance activities. Nonetheless, its strategic efforts to expand geographic exposure and business diversification have gradually contributed to maintaining sound asset quality metrics. Moody's expects BICSA's asset quality to maintain the steady trend shown over the past 12 months ended in June 2025, supported by strong collateral coverage and the short-term nature of its loan portfolio. In June 2025, problem loan ratio stood at 2.9%, down from 3.5% one year prior. However, the bank continued to maintain low loan loss reserve coverage at 40% of problem loans in the same period, which is partially offset by the high quality of collateral backing the loans and the short-term nature of its portfolio. Capitalization remains a key strength in BICSA's financial profile, continuing to support its moderate growth strategy and diversification efforts. Steady improvements in profitability, helped by higher interest income, increased non-interest income, and disciplined cost control, has supported its replenishment capital capacity. BICSA's net income to tangible assets reached 0.9% in June 2025, slightly up from 0.8% in June 2024. MACRO PROFILE OF COSTA RICA CHANGED TO MODERATE The improvement in Costa Rica's Macro Profile to Moderate from Moderate- reflects the country's robust economic performance, with real GDP growth averaging 4.7% between 2022 and 2024, and a strong, albeit moderating, 3.5% growth expected in 2025 and 2026. This growth is expected to continue supporting borrowers' asset quality and driving banking business volumes. The upgrade also reflects Costa Rica's strong governance effectiveness, marked by limited government intervention, high institutional predictability and reliability, low political risk, and contained external imbalances. These favorable conditions contribute to a robust legal and regulatory framework for financial institutions operating in the country. Credit intermediation in Costa Rica stood at 51% of GDP, with moderate credit growth of around 7% as of June 2025. While asset risks persist due to a high level of loan dollarization—39% of total system loans—the loan-to-deposit ratio in foreign currency was 80% in June 2025, continuing a steady decline since 2018. At this level below 100%, the risk of contingent claims on reserves in the event of significant dollar deposit withdrawals is reduced. However, foreign exchange risks remain, particularly in loans extended to borrowers who do not generate hard currency, with private banks being more exposed. Overall funding remains stable and is primarily supported by core deposits. Costa Rica's banking system is highly concentrated, with two state-owned banks holding a combined 41% market share in loans as of June 2025. This dominant position is largely due to the explicit sovereign guarantee on their liabilities, which gives them a significant competitive advantage over private banks in attracting retail deposits and generating new business. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS BNCR and BCR The banks' deposit ratings would be upgraded if Costa Rica's sovereign bond rating was to be upgraded considering Moody's assessments of full public support for the bank. Currently, the BCA of ba2 assigned to BNCR and BCR are at the same level of the government, which limits further upward pressure to the standalone BCA. Conversely, the banks' BCAs could face downward pressures in case of sustained deterioration in their financial fundamentals, including asset quality, profitability, or capital, that could arise from accelerated growth strategies in higher-risk segments. However, if the bank's BCA were downgraded without a preceding downgrade of the sovereign rating, their deposit ratings could be maintained due to Moody's assessments of full support to the government-owned banks. BICSA BICSA's deposit ratings would face upward pressure if its shareholder BCR and BNCR's BCAs are upgraded. Moreover, upward pressure to the BICSA's BCA of ba3 would arise of pressures should profitability and asset quality continue to strengthen, supported by stable capitalization and improvements in its funding structure. Negative pressures on the banks' BCA would accumulate if the bank's asset quality deteriorates materially and unexpectedly from current levels, and earnings reverse its positive trend, with pressures coming from sudden increase in loan loss provisioning expenses. The principal methodology used in these ratings was Banks published in November 2024. For Banco Nacional de Costa Rica and Banco de Costa Rica "Assigned BCA" score of ba2 is set three notches below their "Financial Profile" initial score of baa2 to reflect the banks' low profitability levels driven by substantial government-mandated transfers and low efficiency metrics —relative to Ba2 peers — which constrain these banks' capital replenishment capacity. For BICSA, the net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. ============= J A M A I C A ============= JAMAICA: IDB Approves US$6.5MM Loan to Strengthen Cybersecurity --------------------------------------------------------------- The Inter-American Development Bank (IDB) approved a US$6.5 million loan to help Jamaica strengthen its cybersecurity capabilities, benefiting more than 2.8 million people by improving the resilience of public institutions and critical infrastructure against cyber threats. The operation, which includes US$3.5 million in counterpart funding, for a total of US$10 million, will support the country's efforts to modernize cybersecurity governance, enhance incident response capabilities, and expand its pool of specialized professionals. Cyberattacks in Jamaica have increased significantly, with over 34 million attempted attacks reported in the first half of 2025 alone. The IDB-financed project seeks to address these gaps by implementing a national critical infrastructure protection strategy and strengthening the government's cybersecurity response. The program will also promote cybersecurity awareness and provide training for public sector and critical infrastructure professionals. It will support the development of cybersecurity curricula for primary and secondary schools and improve accreditation standards for university-level programs. The project will directly benefit 15 scholarship recipients for postsecondary cybersecurity studies, approximately 225 students enrolled in improved university programs, and 25 government and infrastructure professionals receiving specialized training. The operation aligns with Jamaica's Vision 2030 development plan and the National Cybersecurity Strategy. It also contributes to the IDB Group's institutional priorities of promoting digital transformation, strengthening institutional capacity, and enhancing citizen security. Additionally, it supports the regional program ONE Caribbean. This is the third IDB loan operation focused exclusively on cybersecurity, following similar initiatives in Uruguay and Argentina. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a positive rating outlook. In October 2023, Moody's upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to B1 from B2, and senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has been changed to positive from stable. In September 2024, S&P affirmed 'BB-/B' longterm foreign and local currency sovereign credit ratings on Jamaica and revised outlook to positive. =========== P A N A M A =========== ETESA: Fitch Affirms 'B' LongTerm IDRs, Outlook Stable ------------------------------------------------------ Fitch Ratings has affirmed Empresa de Transmision Electrica S.A.'s (ETESA) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B' and its national long-term rating at 'BB(pan)'. The Rating Outlook is Stable. Fitch has also affirmed ETSEA's international long-term senior unsecured rating at 'B' with a Recovery Rating of 'RR4', and the national long-term senior unsecured rating at 'BB(pan)'. The ratings reflect ETESA's linkage with Panama's sovereign rating (BB+/Stable) in accordance with Fitch's Government Related Entities (GRE) rating criteria due to the government's 100% ownership in the company and track record of financial support. The ratings also incorporate ETSA's Standalone Credit Profile (SCP) of 'b-', constrained by persistently high gross leverage (total debt/EBITDA) and limited liquidity position, both weaker than regional peers. Key Rating Drivers Moderate Government Support: Fitch assesses ETESA's linkage to the government as 'Moderate' per the GRE criteria, resulting in a one-notch uplift from the company's SCP of 'b-'. The assessment reflects strong precedents of support and ETESA's strategic importance in preserving the government's policy role, offset by weaker decision-making oversight and limited contagion risk. Despite 100% government ownership, operational and financial ties between ETESA and the government have evolved toward a more decoupled relationship, limiting further rating uplift in the intermediate term. A stronger assessment of government decision-making and oversight would require evidence of several smooth and timely payment cycles. The current assessment reflects risks in the governance framework and oversight mechanisms, which have weighed on operational and financial performance. Improved stability and predictability in payment processes, alongside enhanced transparency, would be prerequisites for strengthening this factor in the GRE assessment and could support future rating improvement, in concert with an improved SCP. Sustained, Elevated Leverage: ETESA's 'b-' SCP reflects persistently high gross leverage (total debt/EBITDA) profile exceeding 8x over the past two fiscal years and an only satisfactory 2.8x EBITDA/interest ratio. Fitch expects a gradual deleveraging, still exceeding 7x, on account of USD50 million new debt added as of 2Q25 and more in the pipeline to fund capex spending. While transmission companies typically operate with higher leverage given the predictable and highly regulated cash flows with high capex costs and no volume risk, ETESA's leverage has persisted far above regional peers. Constrained Liquidity Position: ETESA's liquidity is weakened by persistent negative free cash flow, reflected in a USD18.4 million cash decline in 1H2025 and USD125 million in short-term debt maturities due in 2026. Fitch expects FCF to remain negative as the company executes capital expenditures averaging USD105 million annually through 2028 for grid expansion, requiring approximately USD125 million in additional debt. While ETESA has demonstrated access to credit facilities and the local debt market, its reliance on external financing rather than operational cash elevates refinancing risk. Tariff-Driven Cash Flows: ETESA's revenue structure resets every four years and is linked to asset base and capital investments, intended to ensure cost recovery with a profit component. Despite this structure, revenues remained flat YE2023-YE2024, hindering the company's investment capacity. The June 2025 tariff adjustment boosted the allowed profitability margin by 2 percentage points to 9.6%, potentially enhancing future revenues. Nonetheless, cash flow generation remains inadequate, as shown by sustained negative free cash flow and rising debt dependency for investment funding, despite the mechanism to allocate payment defaults across sector participants. ESG - Management Strategy, Financial Transparency: ETESA's past failure to promptly make a routine interest payment and its failure to disclose the delay both reflect heightened risk around management strategy and financial transparency to the market. Fitch has additional concerns about management's ability to support future rising debt carrying costs that will further weaken financial outcomes absent material EBITDA growth. Peer Analysis ETESA's ratings reflect its full government ownership and legal monopoly on electricity transmission in Panama and are therefore linked to the sovereign's rating. ETESA's 'b-' SCP reflects the company's weak financial indicators despite a relatively low business risk profile and stable cash flows, the latter two of which are characteristic of regulated electricity transmission companies. ETESA's total debt to operating EBITDA ratio is expected to be 8.0x in 2025, higher than that of regional transmission companies Transelec S.A. (BBB/Stable) of Chile with 6.0x leverage and Consorcio Transmantaro S.A. (CTM; BBB/Stable) of Peru with 4.7x leverage. Key Assumptions - Updated June 2025-June 2029 tariffs at 9.6% profitability margin, driving moderate revenue growth; - 30-year Treasury rate 4.4% from 2025-2028; - 35% annual tax rate; - Negative free cash flow in every forecast year; - Service interruption payments (generación obligada) of around USD1.5 million per year; - No dividends paid to the government through the rating horizon, and year-end cash balances averaging USD45 million; - Average annual capex budget of USD105 million through the rating horizon, or around 70% of forecast revenues, supported by around USD125 million in new debt; - Debt issuances post-2025 priced at interest rates of between 8.5% and 9.0%. Recovery Analysis The recovery analysis assumes that ETESA would be a going concern in bankruptcy and that it would be reorganized rather than liquidated. Going Concern Approach: - A 10% administrative claim; - Going concern EBITDA estimate of USD99 million, reflecting Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the valuation of ETESA; - Enterprise value multiple of 5.0x. With these assumptions, Fitch's waterfall generated recovery computation for the senior unsecured notes is in the 'RR3' band. However, according to Fitch's "Country-Specific Treatment of Recovery Ratings Criteria," the Recovery Rating for corporate issuers in Panama is capped at 'RR4', Group D. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Negative rating action on the sovereign. Fitch could lower the SCP for the following reasons: - Total debt/EBITDA sustains at or above 7.5x; - Liquidity pressures not addressed through reliable access to local lending markets to manage refinancing risk. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A stronger GRE score, particularly pertaining to governmental oversight, decision making and contagion risk. Fitch could raise the SCP for the following reasons: - Demonstrated successful refinancing activity; - Stable cash generation; - Sustained total debt/EBITDA at or below 5.5x. Liquidity and Debt Structure ETESA's cash balance decreased to USD9.9 million in 2Q25 from USD28 million at year-end 2024 due to capital expenditures. Fitch expects the company to increase its liquidity by year-end 2025 through a collective new debt acquisition of up to USD100 million (with USD50 million already issued in short-term commercial paper [CP] as of 1H2025). The company plans to refinance its USD75 million revolving national scale bonds due May 2026 in early 2026, along with the USD50 million in CP, and will refinance the second tranche of USD120 million in 2027 when due. A USD55 million tranche matures in 2032, while the USD500 million senior unsecured note matures in 2049, coinciding with the concession expiration. Fitch forecasts cash balances will average USD45 million at year-end in future periods Issuer Profile ETESA is a 100% state-owned electricity transmission company with a monopoly on the transmission, dispatch, control and demand planning for electricity generation in Panama. Public Ratings with Credit Linkage to other ratings The issuer is linked to Panama's sovereign rating. 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 ETESA has an ESG Relevance Score of '5' for Management Strategy due to a failure to promptly make a routine interest payment, demonstrating an inability to meet fundamental financial obligations and the government's ineffective oversight. This has a negative impact on the credit profile and is highly relevant to the rating, resulting in downgrade. ETASA has an ESG Relevance Score of '5' for Financial Transparency due to a failure to disclose the delayed coupon payment to relevant parties. This has a negative impact on the credit profile and is highly relevant to the rating, resulting in downgrade. ETESA has an ESG Relevance Score of '4' for Governance Structure due to its nature as a majority state-owned entity and the inherent governance risk that arises with a dominant state shareholder. This has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Empresa de Transmision Electrica S.A. LT IDR B Affirmed B LC LT IDR B Affirmed B Natl LT BB(pan)Affirmed BB(pan) senior unsecured LT B Affirmed RR4 B senior unsecured Natl LT BB(pan)Affirmed BB(pan) ********* 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 * * *