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T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, February 4, 2026, Vol. 27, No. 25
Headlines
A R G E N T I N A
ARGENTINA: EU-Mercosur Trade Deal Should Take Effect Provisionally
ARGENTINA: Global Debt Hopes Get Boost From Ecuador's Bond Success
ARGENTINA: Governor Cries Foul as Ushuaia Port Under Trusteeship
CAPEX SA: S&P Affirms 'B-' Issuer Credit Rating, Outlook Stable
B R A Z I L
KLABIN SA: Moody's Affirms 'Ba1' CFR, Outlook Remains Stable
C O L O M B I A
COLOMBIA: Central Bank Shocks with 100-bp Rate Hike to 10.25%
J A M A I C A
JAMAICA: Warns Hurricane Recovery Will Up Economic Pressures
P E R U
PETROLEOS DEL PERU: Moody's Cuts CFR to 'Caa1', Outlook Negative
P U E R T O R I C O
KKHR CONSTRUCCIONES: Hires Bufete Emmanuelli LLC as Attorney
V E N E Z U E L A
VENEZUELA: US Officials Awarded Contracts to Firms Tied to Bribery
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A R G E N T I N A
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ARGENTINA: EU-Mercosur Trade Deal Should Take Effect Provisionally
------------------------------------------------------------------
Buenos Aires Times reports that German Chancellor Friedrich Merz
urged the European Union to implement a new trade agreement with
South American countries on a provisional basis, effectively
sidestepping a judicial review of the pact engineered by its
opponents in the European Parliament.
The “democratic legitimacy” of the EU’s Mercosur deal with
Argentina, Brazil, Uruguay and Paraguay is beyond doubt, Merz told
reporters after talks with Italian Prime Minister Giorgia Meloni in
Rome. It can provisionally take effect as soon as the first of
those South American nations ratifies it, he said, according to
Buenos Aires Times.
“I regret very much that the European Parliament made its
decision at a time when the world expects the European Union to
demonstrate its ability to act,” Merz said, the report notes.
“We mustn’t let ourselves be held back by those who want to use
the lever of trade policy to drive the weakening of Europe,” the
report relays.
The EU recently approved the Mercosur agreement after more than 25
years of negotiations, pushing it through over strong objections
from France, which argued that the free-trade agreement would
undermine European agriculture, the report says.
Meloni’s government also had initial doubts but ultimately backed
the pact. Meloni reiterated that stance, saying it was a
“balanced deal” in part thanks to her lobbying and should come
into effect.
EU leaders raised the issue of applying the Mercosur agreement
provisionally during a summit in Brussels, according to European
Commission President Ursula von der Leyen, the report discloses.
She said the Commission, which handles trade matters for the EU,
hasn’t decided yet on applying the trade deal, the report says.
Merz and Meloni were speaking at a joint press conference after
German-Italian government consultations with senior ministers from
both countries, the report notes.
Buenos Aires Times relays that Merz is seeking to deepen
Germany’s ties with Italy having grown frustrated over widening
divisions with French President Emmanuel Macron in policy areas
like trade and defence, as well as how to deal with an increasingly
erratic US President Donald Trump.
In a speech at the World Economic Forum in Davos, the conservative
German leader said he hoped the Berlin-Rome axis would produce
“almost revolutionary ideas” to spur economic growth and help
create “a fast, dynamic Europe,” the report relays.
Buenos Aires Times says that Merz and Meloni are not obvious
political bedfellows – the Italian premier’s Brothers of Italy
party has its roots in the country’s fascist movement ≠ but
have agreed to present joint proposals on how to boost
competitiveness to EU counterparts at a summit in Belgium on
February 12.
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.
ARGENTINA: Global Debt Hopes Get Boost From Ecuador's Bond Success
------------------------------------------------------------------
David Feliba at Bloomberg News reports that Ecuador's splashy
return to global credit markets is being seen as a good portent
among investors who are eagerly awaiting Argentina's own comeback
from years of being cut off from international financing.
Ecuador sold US$4 billion of bonds – its biggest-ever global
offering and its first such sale since a debt restructuring in
2020, according to Bloomberg News. The deal met with enough demand
for the nation to obtain its lowest borrowing costs in years,
Bloomberg News notes. Moody's Ratings followed with an upgrade to
the country's credit score, which compressed yields further,
Bloomberg News discloses.
Bloomberg News says that the positive reception was both a vote of
confidence for Ecuador, which will use proceeds to repay existing
debt, and the latest sign of appetite for high-yield
emerging-market credits amid a broad-based rally in the debt. And
for many investors, it also raised hopes of a similar result soon
for Argentina, which has been away from global credit markets after
its own restructuring in 2020, Bloomberg News relates.
"Ecuador's debt issuance shows that even countries with a long
history of defaults, high political risk and scarce reserves can
access international markets at single-digit yields," said Diego
Chameides, chief economist at Banco Galicia, one of Argentina's
largest lenders, Bloomberg News notes. "It appears the window for
Argentina's market access could open up, which is key to dealing
with large debt maturities in the coming years," he added.
Bloomberg News relays that Argentine bonds rallied in tandem with
Ecuadorian debt, extending recent gains. A measure of country risk
has fallen below 500 basis points, levels officials have previously
flagged as consistent with a return to markets, Bloomberg News
notes.
Despite differences in size – Argentina's economy is roughly four
times larger than Ecuador's – the two countries share several
financial similarities, Bloomberg News discloses. Both have
restructured debt multiple times – nine for Argentina, 10 for
Ecuador since their independences in the early part of the 1800s,
Bloomberg News says. And both remain under International Monetary
Fund programs while facing weak foreign-reserve positions, a
longstanding concern for debt investors, Bloomberg News notes.
But the countries are also alike in seeing their prospects improve
as political risks have eased under new administrations focused on
fiscal consolidation, helping drive down yields, Bloomberg News
relays. Ecuador President Daniel Noboa slashed a diesel subsidy
and managed to contain subsequent social unrest, while Argentina's
Javier Milei alleviated investor concerns by loosening currency
trading restrictions and building foreign reserves after a
landslide victory in October's midterm elections, Bloomberg News
says.
For investors, Ecuador's buyback offer to reduce near-term
maturities is a positive signal – and could also serve as a
potential blueprint for Argentina, Bloomberg News notes.
"Ecuador's latest transaction is a clean read-through for how
Argentina's curve could react to a well-designed liability
management deal," said Mauro Favini, senior portfolio manager at
Vanguard, Bloomberg News relays. "Argentina is clearly improving,
but until it extends its debt stack through a transaction akin to
Ecuador's, the market will struggle to take the curve meaningfully
tighter," he added.
Bloomberg News notes that Argentina has weighed a return to markets
since Milei’s midterms win helped push yield spreads toward the
550 basis-point area. While the rally has enabled a wave of
corporate and provincial issuance, the sovereign itself has yet to
test demand, relying instead on a repurchase agreement with banks
to meet January payments, Bloomberg News says.
In the meantime, Argentina's Central Bank has been buying US
dollars to rebuild its depleted stockpile of foreign reserves, one
of debt investors' most pressing concerns, Bloomberg News relays.
While the Central Bank has made substantial purchases in January,
it may want to show more progress before launching a deal,
Bloomberg News discloses.
"Our impression is that they want to show several billion in FX
purchases before going to market, as they are very focused on
bringing down country risk before launching the deal," said Walter
Stoeppelwerth, chief investment officer at Grit Capital Group,
Bloomberg News relays. "But it's not as simple as Ecuador.
Argentina's swap could be gigantic in comparison,” he added.
Bloomberg News notes that officials have tried to downplay
expectations of Argentina's comeback. Economy Minister Luis Caputo
has said he wants to reduce the country's dependence on Wall
Street, Bloomberg News says. Milei recently said "the only thing
we would go to international markets for would be rollover,"
Bloomberg News adds.
That's a stark contrast with the 2016-2018 period under former
president Mauricio Macri, the last time Argentina had broad market
access, in what ultimately became a debt-fuelled boom that
collapsed, Bloomberg News notes.
Still, looming maturities leave limited room for Argentina to wait,
Bloomberg News relays. Foreign-currency debt payments in 2026 and
2027 total nearly US$43 billion, according to calculations by
Galicia, for which regaining market access is critical, Bloomberg
News notes.
Bloomberg News discloses that yields on Argentina's 2035 global
bonds are near 9.1 percent, keeping the country among the few
large, liquid emerging-market credits still offering enticing
returns. Sovereign bond risk in the developing world has fallen to
the lowest level in 13 years, shrinking the pool of high-yielding
assets and boosting demand for riskier credits, Bloomberg News
sats.
All of this argues for Argentina moving sooner rather than later,
investors say, Bloomberg News relays.
"To push the curve toward true normalisation and lower long-term
funding costs, Argentina will need an Ecuador-style, proactive
liability management strategy," Favini said. ÆEven after covering
its 2026 liquidity needs via the repo, Argentina still needs to use
the current market window," he added.
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.
ARGENTINA: Governor Cries Foul as Ushuaia Port Under Trusteeship
----------------------------------------------------------------
Buenos Aires Times reports that Tierra del Fuego Governor Gustavo
Melella lashed out against the national government's intervention
into the running of the port of Ushuaia, attributing it to possible
"geopolitical factors" stemming from the Javier Milei
administration's alignment with the United States.
"It's all suspicious and triggers more doubts, especially in this
context where the US government and ours are so closely linked over
this issue and others," expressed the governor on his X account,
days after the port was placed under trusteeship for alleged
mismanagement, according to Buenos Aires Times.
The report notes that Melella insisted: "Understanding that the
trusteeship is illegal, irrational and completely unfounded,
because that is the truth, you have to say, well, what is the real
motive behind all this?"
"It could be some business deal or really have something to do with
geopolitical questions because Argentina is very strongly in hock
to the United States, surrendering its sovereignty. The truth is
that there are strong suspicions," speculated the opposition
governor, the report relays.
The report discloses that the 12-month trusteeship at the Port of
Ushuaia was announced citing financial irregularities and serious
shortcomings in port infrastructure.
The intervention sparked strong opposition from Melella, who
described the claims as unfounded, the report relays.
"There is no objective justification for a decision of this
magnitude," said the Peronist governor, the report discloses.
The report relays that the governor said that Tierra del Fuego "has
a strategic location valued by the whole world except we
Argentines," adding: "I always recognise that the British presence
in the Malvinas [Islands] is not due to how they understand
sovereignty or any affection for its soil – it is a geopolitical
question."
The report relays that the Port of Ushuaia is considered a
strategic asset, due to its proximity to Antarctica and its status
as one of the country's main cruiser ports. Although it does not
have the highest commercial volume, its role in international
connectivity and tourism makes it sensitive both operationally and
politically, the report notes.
Buenos Aires Times discloses that Melella insisted that the
national government trusteeship could be linked to that
geopolitical question since "it’s all about the South Atlantic,
the natural resources, the port of entry into the Antarctic and the
next great global dispute looming."
"It is possible and real to me that the United States has a
geopolitical outlook on the South Atlantic. Since I cannot find
any reasonable explanation in any legal issue for the port
trusteeship, the truth is that the mantle of suspicion is extremely
broad," he concluded, the report relays.
The governor's statements were made almost a week after the
government announced a trusteeship over the local port and two days
after a US military aircraft landed at Malvinas Argentinas Airport
without official clearance, the report notes.
Trouble on Port Side
Argentina's National Agency for Ports and Navigation (ANPyN)
suspended the operating licence of the Port of Ushuaia after
detecting irregularities in the management of funds and ordered the
trusteeship over the port administration, the report relays.
In a statement, the ANPyN said it had formally instructed the
provincial government to address a range of irregularities,
including alleged deviation of funds and operational and safety
risks linked to insufficient infrastructure investment, the report
discloses.
"The decision was taken as a result of the lack of concrete
responses to inspections carried out, complaints of asset-stripping
raised by workers and concerns expressed by representatives of
shipping companies operating at the port," the agency said, the
report relays.
The resolution, signed by ANPyN executive director Inaki
Arreseygor, establishes that the port will be placed under
trusteeship for one year, the report relays. It was published in
the Official Gazette.
The measure was triggered by a lawsuit challenging Provincial Law
No. 1596, which created a fund to cover debts of the state-run
health insurer OSEF using the Port of Ushuaia’s financial
surplus, the report says.
The lawsuit was filed by Juan Avellaneda, secretary-general of the
senior railway staff trade union, who has been appointed to oversee
the port's operational management under the supervision of ANPyN
directors and senior officials, reported Noticias Argentinas, the
report notes.
ANPyN said inspections uncovered multiple infrastructural failures
and deficiencies, along with serious shortcomings in administrative
and financial management, as well as basic operational safety
conditions, the report relays.
The report discloses that the agency said these issues were
formally reported to the provincial authorities, alongside a demand
for the creation of a transparent register of income, expenditure
and procurement. That function, it noted, had been outsourced to a
company whose registered business activities were unrelated to port
services, the report says.
According to ANPyN, a third of the port's budget had been used to
subsidise the provincial government accounts, in breach of
regulations requiring port revenues to be reinvested exclusively in
port infrastructure and operations, the report notes.
As a result, just 1.3 percent of the budget was allocated to works
and services aimed at improving operational quality, the report
relays.
Argentina's Coast Guard (Prefectura Naval) will assist the trustees
to strengthen safety conditions and support operational tasks at
the port, the agency added, 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.
CAPEX SA: S&P Affirms 'B-' Issuer Credit Rating, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings, on January 29, 2026, affirmed its 'B-' ratings
on Capex S.A. S&P also revised down the company's SACP to 'b-' from
'b', reflecting a weaker capital structure.
The stable outlook reflects its expectation that Capex's
operational performance will remain stable, supported by its
business diversification. It also incorporates its view that the
company should be able to manage upcoming short-term debt
payments.
Capex faces heightened refinancing risks because of its upcoming
$300 million in debt maturities over the next 24 months, reflecting
a deterioration in its capital structure.
The company has approximately $140 million in maturities this year
and an additional $160 million due in 2027. Currently, Capex's
weighted average maturity (WAM) is less than two years. Our
downward revision of the SACP to 'b-' captures a weaker capital
structure and the upcoming refinancing challenges.
S&P said, "In addition, we anticipate that financing costs will
increase for Capex. The company previously benefited from favorable
local market conditions, including zero-coupon note
issuances--conditions that are currently less prevalent.
Consequently, we expect financing costs to rise in the next few
years, further pressuring the company's financial flexibility.
However, we expect the increased cash flow stemming from recent
investments in Aguas del Cajón and Pampa del Castillo to largely
offset the effects of the anticipated higher financing costs. As a
result, we forecast that coverage ratios will remain stable around
5x.
"Capex maintains a plan to manage its upcoming debt obligations,
supported by good access to the local market and uncommitted bank
lines. We believe its short-term maturities remain manageable, but
we will closely monitor management's actions to extend its debt
maturity profile. Our stable outlook on the ratings reflects our
expectation that Capex will be able to navigate these refinancing
challenges.
"Capex's stable operational performance, diversified business
lines, and continued access to financing should allow the company
to manage refinancing risks. Over the past five years, the company
has demonstrated a solid operational track record, maintaining
stable margins around 40% despite challenging macroeconomic
conditions and the inherent volatility of the oil and gas segment,
its primary contributor. We expect this trend to continue,
supported by the development of the Agua del Cajon and Pampa Del
Castillo areas and the revenue from the new solar park La
Salvacion, which will boost cash flows.
"For the fiscal year ending April 30, 2026, we anticipate EBITDA
between $135 million and $145 million, increasing to $150 million
by 2027 amid higher investments, and stable margins near 40%. We
forecast leverage, measured as debt to EBITDA, of 3.0x-3.5x,
converging toward 2.5x in 2027."
Furthermore, the company has demonstrated continued access to the
local market, indicated by $110 million of issuances in 2025 that
allowed for the cancellation of short-term maturities, although
these issuances were insufficient to address the short debt
maturity profile. The company has also maintained uncommitted
facilities with banks in the domestic market, providing financial
flexibility in complex macroeconomic conditions.
S&P said, "The stable outlook on Capex reflects our expectation
that management will be able to extend the company's debt maturity
profile, and refinance upcoming maturities. It also incorporates
the company's conservative financial profile, supported by an
expected debt-to-EBITDA ratio close to 3.5x and funds from
operations (FFO) to debt above 25%. We anticipate robust debt
coverage metrics exceeding 5x over the next 12 months.
"In the next six months, we could lower our ratings on Capex if it
fails to extend its maturity profile and refinancing risks
increase, and/or if its liquidity position deteriorates
significantly.
"Alternatively, a worsening of our transfer and convertibility
(T&C) assessment for Argentina, reflecting increased foreign
exchange restrictions, could also lead to a downgrade.
"We could revise upward the SACP if the company extends its
maturity debt profile beyond two years, significantly reducing
refinancing risk, and it maintains a robust liquidity position with
sources over uses above 1.2x, while its leverage remains below
3.5x. In this scenario, we could raise the ratings if we were to
improve our T&C assessment for Argentina."
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B R A Z I L
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KLABIN SA: Moody's Affirms 'Ba1' CFR, Outlook Remains Stable
------------------------------------------------------------
Moody's Ratings has affirmed Klabin S.A.'s Ba1 Corporate Family
Rating. The outlook remains stable.
RATINGS RATIONALE
Klabin's Ba1 rating reflects its position as one of Latin America's
largest integrated producers of pulp, paperboard, and packaging,
supported by strong and resilient profitability—its Moody's
adjusted EBITDA margin averaged 43.2% over the past five years and
reached 43.9% for the twelve months ended September 2025—and by
solid liquidity and a well balanced revenue mix. As Brazil's
leading paperboard manufacturer, Klabin benefits from extensive
product diversification across market pulp, kraftliner, coated
boards, industrial bags, and corrugated boxes, with meaningful
exposure to stable end use segments such as tissue and food and
beverage packaging. The company's fully integrated forestry to
packaging model and diversified domestic and export channels
enhance operating flexibility, allowing Klabin to adjust volumes
and product mix as demand evolves, thereby mitigating sector
cyclicality and supporting its competitive position.
The rating also incorporates Klabin's structurally improved profile
following the Puma II expansion. The state of the art PM27 and PM28
machines—which together add approximately 900,000 tons per year
of kraftliner and coated board capacity—combined with recent
forestry acquisitions that enhance long term fiber security,
collectively strengthen Klabin's cost visibility and operational
stability while reducing execution risk. With major growth
investments completed, Klabin has entered a post investment phase
in which capital spending declines to materially lower, maintenance
and efficiency oriented levels, enabling the company to transition
to sustained positive free cash flow beginning in 2026. Leverage
has already begun to improve—declining to 4.0x as of September
2025 from its 4.7x peak in 2023—underpinned by management's
deliberate deleveraging strategy.
Klabin's credit profile also benefits from strengthening of its
financial policy adopted in October 2024. Following the completion
of its peak investment cycle, the company adopted a more
conservative approach that materially reduces execution and
shareholder return risk. Klabin now targets a dividend payout of
10%–20% of adjusted EBITDA, down from the previous 15%–25%
range, and has tightened leverage guardrails by establishing a
maximum net debt/EBITDA ceiling of 3.9x during investment cycles,
compared with the prior 3.5x–4.5x range. These measures reinforce
the company's commitment to maintaining stronger balance sheet
discipline through future cycles.
Liquidity remains a core strength. As of September 2025, Klabin
held BRL9 billion ($1.6 billion) in cash—enough to cover roughly
41 months of debt maturities—and maintained a fully available
$500 million revolving credit facility maturing in 2030. Liquidity
is further supported by diversified funding sources, FX linked cash
flows, and incremental financial flexibility from forestry
monetization initiatives, which provided cash proceeds for debt
reduction while preserving operational control and long term wood
supply.
The rating is constrained by Klabin's smaller scale relative to
global peers, leverage that remains elevated for the rating
category, and continued exposure to cyclical segments. Market pulp
accounted for about 39% of EBITDA in the twelve months ended
September 2025, leaving the company exposed to pulp price
volatility. Additionally, with 63% of revenues generated in Brazil,
Klabin remains sensitive to domestic economic conditions and demand
trends in key packaging end markets. These factors temper the
benefits of the company's strong cost structure, integrated
operations, and meaningful operating flexibility.
The stable outlook reflects the balance between Klabin's
strengthened post expansion operating profile, robust liquidity,
and reinforced financial policy discipline against these remaining
constraints. The outlook assumes prudent capital allocation,
continued preservation of strong liquidity, and gradual
deleveraging as market conditions normalize through 2026–2027.
Moody's expects Moody's adjusted leverage to decline further and
fall between 2.6x and 2.9x by year end 2027, supported by sustained
positive free cash flow, lower capex, and improving operating
performance.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Klabin's rating could be upgraded if the company maintains a strong
liquidity position and demonstrates conservative financial
policies. An upward rating movement would also be subject to the
relative position of the Government of Brazil's (Ba1 stable)
sovereign rating. Quantitatively, an upgrade of the company's
rating would depend on leverage below 3.0x adjusted total
debt/EBITDA on an ongoing basis; improvement in retained cash flow
to above 25% adjusted retained cash flow/net debt; and positive
free cash flow generation on a consistent basis.
The rating could be downgraded if Klabin's operating environment
deteriorates significantly, leading to weaker operating performance
and liquidity. Quantitatively, the rating could be downgraded if
adjusted total debt/EBITDA exceeds 4.5x on a consistent basis, or
free cash flow is persistently negative. A downgrade could be
subject to the relative position of the Goverment of Brazil's
sovereign rating.
The principal methodology used in this rating was Paper and Forest
Products published in November 2025.
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.
Headquartered in São Paulo, Brazil, Klabin is an integrated and
diversified pulp and paper packaging producer with 4.6 million tons
of pulp capacity per year — 1.6 million tons of market pulp and
2.6 million tons of coated boards and containerboard, part of which
is converted into 1.4 million tons of corrugated boxes and
industrial bags. The company is the largest producer, exporter and
recycler of packaging paper in Brazil, and one of the largest
integrated producers in Latin America. The company is organized
into four main business units: forestry, pulp, paper and packaging,
which together generated $3.9 billion (BRL21.3 billion) in revenue
and $1.7 billion (BRL9.4 billion) in EBITDA, as adjusted by
Moody's, in the 12 months that ended September 2025.
===============
C O L O M B I A
===============
COLOMBIA: Central Bank Shocks with 100-bp Rate Hike to 10.25%
-------------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Colombia's
central bank raised its benchmark interest rate by 100 basis points
to 10.25%, its first hike in nearly three years and a larger
move than most analysts had expected, as policymakers pointed to
rising inflation pressures, a sharp jump in inflation expectations
and mounting fiscal and external risks.
The increase was approved by a divided seven-member board: four
directors voted for the 100-basis-point hike, two voted for a
50-basis-point cut and one backed holding the rate unchanged,
according to the central bank's statement, according to
globalinsolvency.com.
As reported in the Troubled Company Reporter-Latin America in
December 2025, Fitch Ratings has downgraded Colombia's Long-Term
Foreign Currency (LT FC) Issuer Default Rating (IDR) to 'BB' from
'BB+'. The Rating Outlook is Stable following the downgrade.
=============
J A M A I C A
=============
JAMAICA: Warns Hurricane Recovery Will Up Economic Pressures
------------------------------------------------------------
RJR News reports that Jamaica's Fiscal Commissioner, Courtney
Williams, is warning that the economic reconstruction following the
devastation caused by Hurricane Melissa will fuel higher imports.
Mr. Williams said the increase in imports combined with a decline
in exports is expected to place added pressure on the country's
balance of payments, according to RJR News.
He also cautioned that government revenues could continue to trail
expenditure over the medium term, the report notes.
The Fiscal Commissioner noted that Hurricane Melissa is projected
to cause an J$80.5 billion decline in tax revenues, reducing
collections to about 25% of gross domestic product, down from over
27%, the report relays.
His comments come against the background of a 3.6% increase in
imports to $5.7 billion during the first nine months of last year,
while exports fell 2% to just $1.3 billion, the report discloses.
As a result, Jamaica's trade deficit widened by $200 million to
$4.4 billion during the period under review, the report adds.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea. Jamaica
is an upper-middle income country with an economy heavily dependent
on tourism. Other major sectors of the Jamaican economy include
agriculture, mining, manufacturing, petroleum refining, financial
and insurance services.
On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a
positive rating outlook. In October 2023, Moody's upgraded the
Government of Jamaica's long-term issuer and senior unsecured
ratings to B1 from B2, and senior unsecured shelf rating to (P)B1
from (P)B2. The outlook has been changed to positive from stable.
In September 2024, S&P affirmed 'BB-/B' longterm foreign and local
currency sovereign credit ratings on Jamaica and revised outlook to
positive.
=======
P E R U
=======
PETROLEOS DEL PERU: Moody's Cuts CFR to 'Caa1', Outlook Negative
----------------------------------------------------------------
Moody's Ratings has downgraded Petroleos del Peru – Petroperu
S.A.'s ("Petroperu") ratings to Caa1 from B3, including its
Corporate Family Rating and senior unsecured ratings. At the same
time, Moody's affirmed the company's Baseline Credit Assessment
(BCA) of ca. The outlook changed to negative from stable.
RATINGS RATIONALE
The downgrade reflects Moody's views that the measures outlined
under Emergency Decree No. 010-2025—including the potential
segmentation or transfer of assets through structures under
ProInversión—are credit negative for Petroperu. While existing
debt covenants currently help safeguard core assets, these measures
could weaken the company's asset base, raise execution and
governance risks, and potentially weaken creditor protections under
existing debt covenants that limit asset transfers or ring-fencing
of core assets, particularly those related to the Talara refinery.
Although the decree reaffirms Petroperu's strategic national role,
the contemplated actions increase uncertainty regarding the
preservation of the company's operational and financial profile.
The affirmation of Petroperu's ca Baseline Credit Assessment (BCA)
reflects its persistently weak liquidity position and ongoing
financial and operational challenges, which continue to constrain
its standalone credit strength despite early signs of operating
stabilization. As of 30 September, 2025, the company held only
$33.9 million in cash—insufficient to cover near-term
obligations, including roughly $400 million in annual interest
payments—while negative operating cash flow, reliance on
short-term refinancing, and limited access to unguaranteed credit
lines further underscore its vulnerability.
Although Petroperu posted a positive EBITDA in the third quarter of
2025, an important milestone after prolonged losses, it's high
leverage (total adjusted debt as of September 2025 was $6.3
billion), negative interest coverage, and dependence on
extraordinary government support continue to weigh heavily on its
standalone profile. These factors remain consistent with a BCA of
ca, even as efficiency measures and the gradual normalization of
operations could support a slow recovery over time.
The Caa1 ratings take into account Moody's Joint Default Analysis
which includes Moody's assumptions of a high level of default
correlation between the Government of Peru (Baa1 stable) and
Petroperu and a high support assumption by the sovereign to the
company in case of need, resulting in three notches of uplift from
the company's ca BCA. However, while the Government of Peru has a
long-standing track record of providing extraordinary support, such
support has historically been reactive. Governance risk is a
consideration in the rating action. The combination of
deteriorating liquidity, limited visibility on future support, and
increased execution risks under the reorganization framework
underpin the rating downgrade.
The negative outlook reflects the heightened uncertainties
surrounding government support implementation and the potential for
further weakening of Petroperu's credit fundamentals amid asset
transfer processes, liquidity shortfalls, and limited refinancing
flexibility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure on the ratings is unlikely in the near term given
the negative outlook. However, clear evidence of timely,
predictable and effective government support, alongside material
improvement in liquidity and cash flow visibility, could stabilize
the outlook.
Further downward pressure could arise if liquidity deteriorates
further, restructuring or asset transfer actions weaken creditor
protections, or the company engages in transactions that Moody's
deems to be distressed exchanges.
COMPANY PROFILE
Petroperu is a 100% Peruvian government-owned company founded in
1969, focused primarily on the refining of oil and sale of oil
products in Peru. As of January 2026, the Ministry of Energy and
Mines (MINEM) owns 40% of the company and the Ministry of Economy
and Finance (MEF) the remaining 60%, maintaining strong oversight.
Petroperu's current total throughput capacity is 122.5 thousand
barrels per day (kbpd).
The methodologies used in these ratings were Refining and Marketing
published in August 2021.
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.
=====================
P U E R T O R I C O
=====================
KKHR CONSTRUCCIONES: Hires Bufete Emmanuelli LLC as Attorney
------------------------------------------------------------
KKHR Construcciones & Associados, Inc. seeks approval from the U.S.
Bankruptcy Court for the District of Puerto Rico to employ Bufete
Emmanuelli LLC as counsel to handle its Chapter 11 case.
The firm will be paid at these rates:
Rolando Emmanuelli-Jimenez, Esq. $285 per hour
Paralegal $40 per hour
The firm will be paid a retainer in the amount of $10,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Mr. Jimenez disclosed in a court filing that the firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Rolando Emmanuelli Jimenez, Esq.
Bufete Emmanuelli LLC
P.O. Box 10779
Ponce, PR 00732
Tel: (787) 848-0666
Fax: (787) 841-1435
Email: notificaciones@bufete-emmanuelli.com
About KKHR Construcciones & Associados, Inc.
KKHR Construcciones & Asociados Inc., doing business as KKHR
Construction, provides construction services that include heavy
equipment operations and concrete foundation work.
KKHR Construcciones & Asociados Inc. d/b/a KKHR Construction in
Ponce, PR, sought relief under Chapter 11 of the Bankruptcy Code
filed its voluntary petition for Chapter 11 protection (Bankr.
D.P.R. Case No. 26-00134) on Jan. 21, 2026, listing as much as $1
million to $10 million in both assets and liabilities. Norhem
Martinez Perez as president, signed the petition.
BUFETE EMMANUELLI, C.S.P. serve as the Debtor's legal counsel.
=================
V E N E Z U E L A
=================
VENEZUELA: US Officials Awarded Contracts to Firms Tied to Bribery
------------------------------------------------------------------
globalinsolvency.com, citing the Washington Post, reports that two
global trading houses that brokered an opaque deal with the Trump
administration to sell Venezuelan oil were previously prosecuted
for bribery schemes involving oil sales elsewhere, court records
show, underscoring concerns by anti-corruption experts and
lawmakers that the arrangement is vulnerable to abuse.
The administration granted confidential licenses to Vitol and
Trafigura in early January to sell Venezuelan oil with little
independent oversight.
About Venezuela
Venezuela, officially the Bolivarian Republic of Venezuela, is a
country on the northern coast of South America, consisting of a
continental landmass and a large number of small islands and
islets in the Caribbean sea, according to globalinsolvency.com.
The capital is the city of Caracas, the report notes.
Hugo Chavez was president to Venezuela from 1999 to 2013. The
Chavez presidency was plagued with challenges, which included a
2002 coup d'etat, a 2002 national strike and a 2004 recall
referendum. Nicolas Maduro was elected president in 2013 after
the death of Chavez. Maduro won a second term at the May 2018
Venezuela elections, but this result has been challenged by
countries including Argentina, Chile, Colombia, Brazil, Canada,
Germany, France and the United States who deemed it fraudulent and
moved to recognize Juan Guaido as president.
The presidencies of Chavez and Maduro have challenged Venezuela
with a socioeconomic and political crisis. It is marked by
hyperinflation, climbing hunger, poverty, disease, crime and death
rates, social unrest, corruption and emigration from the country.
Moody's has withdrawn its 'C' local currency and foreign currency
ceilings for Venezuela in September 2022. Standard & Poors has
also withdrawn its 'SD/D' foreign currency sovereign credit
ratings and 'CCC-/C' local currency ratings on Venezuela in
September 2021 due to lack of sufficient information. Fitch
withdrew its own 'RD/C' Issuer Default Ratings on Venezuela in
June 2019 due to the imposition of U.S. sanctions on the country's
government.
*********
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 2026. All rights reserved. ISSN 1529-2746.
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