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260318.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 Wednesday, March 18, 2026, Vol. 27, No. 55 Headlines A R G E N T I N A ARGENTINA: Posted Higher-Than-Expected Inflation Ahead of Iran War B R A Z I L BRAZIL: Inflation Forecast Spikes to 4.1% BRAZIL: War in Iran May Upend Central Bank's Plans to Cut Rates RAIZEN SA: Moody's Lowers CFR to Caa3, Outlook Remains Negative C H I L E CHILE: New President to Signal Swift Alignment With Trump M E X I C O GRUPO POSADAS: S&P Upgrades ICR to 'B+' on Improved Debt Structure LUCKY STRIKE: Moody's Lowers CFR to B3, Outlook Remains Stable ORBIA ADVANCE: Moody's Lowers CFR & Senior Unsecured Notes to Ba2 P A R A G U A Y PARAGUAY: IDB Will Expand Office and Project Portfolio in Country P U E R T O R I C O PHOENIX FUND: OCIF's Enforcement Proceeding Can Proceed - - - - - ================= A R G E N T I N A ================= ARGENTINA: Posted Higher-Than-Expected Inflation Ahead of Iran War ------------------------------------------------------------------ Buenos Aires Times reports that Argentina's monthly and annual inflation readings both came in higher than expected in February before the war in Iran put upward pressure on oil prices. Consumer prices rose 2.9 percent last month compared with January, above the 2.8 percent median estimate of economists surveyed by Bloomberg and unchanged from January's 2.9 percent print, according to Buenos Aires Times. From a year ago, inflation accelerated to 33.1 percent from 32.4 percent and above the 32.9 percent median estimate, according to data published by the INDEC national statistics bureau, the notes. Food and non-alcoholic beverages, driven by beef, contributed the most to last month's price increases, while housing and utilities rose the most, according to INDEC, the report relays. In February, the government of President Javier Milei continued to strip energy subsidies to help maintain fiscal balance, the main tenet of his economic turnaround, the report discloses. State coffers have suffered a roughly nine percent year-on-year drop in revenues due to lower tax revenue, the report says. Meanwhile, electricity prices were expected to rise 3.6 percent, while gas jumped 17 percent, according to a late January announcement from the national energy secretary, the report relays. The inflation rate in March is likely to edge higher as a result of the fallout from the United States and Israeli attacks on Iran, especially creeping gasoline and diesel prices and higher costs for fertilisers. So far this month, local fuel prices have jumped about six percent, according to local consultancy firm EcoGo, the report notes. But that's attributed to a roughly one percent monthly fuel tax increase plus price adjustments to account for January and February inflation, according to EcoGo's Sebastián Menescaldi, the report discloses. Menescaldi estimates that March's inflation rate will come in at 2.9 percent, with 0.3 percent of the rise driven by higher international oil prices, the report relays. State-owned YPF controls just over half the motor fuels market, and CEO Horacio Marin promised earlier this month that the company will avoid generating shocks at the pump, the report notes. In a March 1 note to investors, Citigroup analysts forecast an annual inflationary impact of 0.9 percent in Argentina from the conflict, while Barclays on March 6 predicted a 0.8 percent inflation bump, the report says. Just before January's inflation print was published, the government's statistics agency chief resigned over disagreements about when to implement an updated formula to measure the rate of rising consumer prices, the report relates. The change was shelved indefinitely. Services, like utilities and rent, would have weighed more heavily in the new formula, while food would have had a smaller impact, the report discloses. Economy Minister Luis Caputo has argued that changing the methodology now would be viewed negatively by the public, the report notes. Milei has struggled in his bid to continue slowing monthly inflation since hitting a two-percent average from last year's second quarter, the report relays. The key economic indicator has cooled from a peak of more than 25 percent when the libertarian economist took office in late 2023, the report says. "The rapid disinflation observed in core goods through the first two years of the macro stabilisation program relates to the administration’s strong emphasis on opening the economy and reducing import duties; meanwhile, core services, less affected by the exchange rate and more by wage dynamics, has proved stickier to the downside," JPMorgan analyst Lucila Barbeito wrote in a February 26 note, the report notes. Inflation is still expected to cool this year, albeit at a slower pace, the report says. Economists surveyed by the Central Bank in February forecast 26 percent annual inflation by the end of the year and growth of 3.4 percent in 2026, the report adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. In March 2022, the International Monetary Fund (IMF) approved a 30-month arrangement under an Extended Fund Facility for Argentina in the amount of SDR 31.914 billion (equivalent to US$44 billion, or 1000 percent of quota) -- with an approved immediate disbursement of an equivalent of US$9.65 billion. Argentina's IMF-supported program sought to improve public finances and start to reduce persistent high inflation through a multi-pronged strategy. On April 11, 2025, the IMF further approved a 48-month Extended Fund Facility (EFF) arrangement for Argentina totaling US$20 billion (or 479 percent of quota), with an immediate disbursement of US$12 billion, and a first review planned for June 2025 with an associated disbursement of about US$2 billion. The program is expected to help catalyze additional official multilateral and bilateral support, and a timely re-access to international capital markets. Moody's Ratings on July 17, 2025, upgraded Argentina's long-term foreign currency and local currency issuer ratings to Caa1 from Caa3 and changed the outlook to stable from positive. The upgrade reflects Moody's views that the extensive liberalization of exchange and (to a lesser extent) capital controls, alongside a new International Monetary Fund (IMF) program, support the availability of hard currency liquidity and ease pressure on external finances. This reduces the likelihood of a credit event. In January 2025, Moody's raised Argentina's local currency ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1 from Caa3. Fitch Ratings, on May 12, 2025, upgraded Argentina's Long-Term Foreign-Currency and Local-Currency Issuer Default Rating (IDR) to 'CCC+' from 'CCC'. S&P Global Ratings, in February 2025 lowered its local currency sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and its national scale rating to 'SD' from 'raB+'. DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local Currency Issuer Ratings to B (low) from CCC in November 2024. =========== B R A Z I L =========== BRAZIL: Inflation Forecast Spikes to 4.1% ----------------------------------------- Iolanda Fonseca at Rio Times Online reports that Brazil's financial market analysts raised their forecasts for inflation, interest rates, and economic growth simultaneously in the March 16 Focus survey, signaling that the Iran war's energy shock is beginning to filter into domestic expectations even as the central bank prepares to cut rates. The Brazil Focus report, published by the Banco Central do Brasil on March 16, showed the year-end IPCA inflation estimate jumping from 3.91% to 4.10% -- the sharpest single-week increase in recent editions -- while the Selic rate forecast climbed from 12.13% to 12.25%, according to Rio Times Online. Brazil Focus Report: Inflation Expectations Surge The 19-basis-point jump in the 2026 IPCA forecast -- from 3.91% to 4.10% -- represents a notable acceleration in inflation expectations that had been drifting upward for weeks at a more gradual pace, the report notes. The new estimate still falls within the National Monetary Council's target framework: the 3% center with a 1.5 percentage point tolerance band means the target is met if inflation lands between 1.5% and 4.5%, the report relays. Brazil's trailing 12-month IPCA stood at 3.81% through February, after a 0.70% monthly reading that came in slightly above market expectations, the report says. The upward revision reflects multiple pressures, the report discloses. Brent crude prices have surged past $105 per barrel amid the Strait of Hormuz disruption, threatening to push fuel and transportation costs higher, the report notes. Petrobras announced a R$0.38-per-liter increase in refinery diesel prices in response, and further adjustments to gasoline cannot be ruled out if oil prices remain elevated, the report says. Domestically, food inflation -- particularly vegetables and meat -- drove the January price acceleration, while services inflation remains sticky at levels above the central bank’s comfort zone, the report notes. Selic Path and Copom Decision The year-end Selic forecast rose for the second consecutive week to 12.25%, up from 12.13%, the report relays. The benchmark rate has held at 15% since June 2025, and the Copom meets March 17 and March 18 with markets pricing a 25-basis-point cut that would bring the rate to 14.75%, the report discloses. If delivered, it would mark the first reduction in nine months and the third cut in the current easing cycle, which began with a 25-basis-point move in February, the report notes. The higher year-end Selic expectation suggests analysts believe the easing pace will slow relative to earlier projections, likely because oil-driven inflation limits the central bank’s room to maneuver, the report relays. For 2027, the consensus held steady at 10.50% for the 57th consecutive week, and for 2028 at 10.00% for the eighth straight week, indicating that markets see the terminal rate settling well above the pre-pandemic norm, the report says. Growth and Currency Outlook The GDP growth forecast in the Brazil Focus report ticked up marginally from 1.82% to 1.83% for 2026, a figure that sits well below the government's more optimistic 2.3% projection and the central bank’s own 1.6% estimate, the report relays. Brazil's economy grew 2.3% in 2025, but the combination of elevated interest rates, global uncertainty, and fiscal tightening is expected to produce a meaningful deceleration this year, the report says. Projections for 2027 held at 1.80%, with 2028 and 2029 both unchanged at 2.00%, the report notes. On the currency front, the dollar forecast eased from R$5.41 to R$5.40, continuing a gradual improvement from R$5.50 a month ago, the report discloses. For 2027, the estimate fell from R$5.50 to R$5.47, the report relays. The real's relative stability has been supported by high carry-trade returns at 15% Selic, but analysts caution that any escalation in global risk aversion -- particularly if the Hormuz crisis extends beyond the Pentagon's four-to-six-week estimate -- could quickly reverse the currency's recent gains, the report adds. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. In October 2024, Moody's Ratings upgraded the Government of Brazil's long-term issuer and senior unsecured bond ratings to Ba1 from Ba2, the senior unsecured shelf rating to (P)Ba1 from (P)Ba2; and maintained the positive outlook. S&P Global Ratings raised on Dec. 19, 2023, its long-term global scale ratings on Brazil to 'BB' from 'BB-'. Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable Outlook. DBRS' credit rating for Brazil was last reported at BB with stable outlook at July 2023. BRAZIL: War in Iran May Upend Central Bank's Plans to Cut Rates --------------------------------------------------------------- The Wall Street Journal reports that the conflict in the Middle East may force the hand of Brazil's central bank, and not in a good way. The central bank has heavily foreshadowed a rate cut on March 18, according to WSJ. However, the escalating war in the Middle East may throw cold water on those plans, and Brazil's market rally, WSJ notes. "If oil prices start climbing high or [if] they stay high, then, yes, the central bank might hold," Juan Egana, a strategist at BCA Research, said, the report relays. "Brazilian markets have rallied so much in expectation that monetary easing is coming." About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He was sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. In October 2024, Moody's Ratings upgraded the Government of Brazil's long-term issuer and senior unsecured bond ratings to Ba1 from Ba2, the senior unsecured shelf rating to (P)Ba1 from (P)Ba2; and maintained the positive outlook. S&P Global Ratings raised on Dec. 19, 2023, its long-term global scale ratings on Brazil to 'BB' from 'BB-'. Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable Outlook. DBRS' credit rating for Brazil was last reported at BB with stable outlook at July 2023. RAIZEN SA: Moody's Lowers CFR to Caa3, Outlook Remains Negative --------------------------------------------------------------- Moody's Ratings downgraded to Caa3 from Caa1 the Corporate Family Rating of Raizen S.A. (Raizen). Concurrently, Moody's downgraded to Caa3 from Caa1 the $187 million senior unsecured notes rating due 2027 issued by Raizen Fuels Finance S.A. and guaranteed by Raizen S.A. and Raizen Energia S.A. The outlook remains negative. The downgrade follows the announcement by Raizen, on March 04, detailing the likely solution to its highly leveraged capital structure including a BRL3.5 billion equity injection by Shell Plc (Shell, Aa2 stable) and BRL500 million Mr. Rubens Ometto, owner of Cosan S.A. (Ba3 RUR-Down). The announcement also indicates the possibility of the conversion of part of its indebtedness into equity, combined with the extension of the maturity of the remaining debt balance and the possibility of entering an out-of-court restructuring to start discussions with its creditors in the pursuit of a consensual solution. If executed as described Moody's believes the probability of a distress exchange or default like event has increased and is more aligned with the Caa3 rating level. RATINGS RATIONALE The Caa3 rating incorporates a deterioration of Raizen's credit metrics, high leverage and sustained negative cash flow generation, given the high interest burden and still weaker than usual results on the sugar-ethanol core segment – below potential crushing level and lower cost dilution in 2025-26. The current debt level continues to impose significant constraints on the business, challenging Raizen's ability to sustain positive cash generation. Moody's do not foresee a significant recovery in the near term and expect leverage to close the harvest at over 5.9x with sustained negative free cash flow. In Moody's views, improved credit metrics along with a solid liquidity are necessary to mitigate the inherent volatility of the commodity markets to which the company is exposed in sugar-ethanol business. The sugar-ethanol business in particular requires relatively large capex to support the quality of plantations and agricultural productivity, while being exposed to considerable event risk including weather conditions. Governance is a key factor in the rating assessment and the present situation is a direct outcome of the strategies pursued during the pre-turnaround cycle, which focused on an aggressive, debt-driven growth strategy that pushed leverage up. Raizen's fundamental profile still incorporates its solid position in the sugar cane and fuel distribution businesses in Brazil. Raizen is a joint venture between Cosan S.A. and Shell Plc. At the present moment Moody's do not incorporate any direct support by shareholders, but recognize that Raizen benefits from its ownership by Shell Brazil Holdings BV, a 100% subsidiary of Shell, derived from Shell's brand and managerial expertise, and Cosan, given its local expertise and execution track record. The ratings consider the existence of cross guarantees between Raizen Energia and Raizen in most debt instruments. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A downgrade could occur if Raizen announces a distressed exchange or a default like transaction. An upgrade could occur if Raizen is able to improve its capital structure substantially reducing its debt balance without incurring a distressed exchange or a default like transaction, sustain an adequate liquidity, sustain consistent operational improvements, and reduces capex so that it can return to positive free cash flow generation. The principal methodology used in these ratings was Protein and Agriculture published in October 2025. Raizen's Caa3 rating is six notches below the Ba3 scorecard-indicated outcome by Moody's Protein and Agriculture methodology in the twelve months ended in September 2025. Current ratings incorporate the uncertainty regarding an equity injection and measures to improve Raizen capital structure which could be considered a distressed exchange. ========= C H I L E ========= CHILE: New President to Signal Swift Alignment With Trump --------------------------------------------------------- Buenos Aires Times reports that Chile just inaugurated a right-wing president who will quickly signal his intention to bring the copper-rich country into closer alignment with the administration of US head of state Donald Trump. Jose Antonio Kast, 60, was sworn in just past midday Wednesday, March 11, replacing leftist Gabriel Boric, according to Buenos Aires Times. His first full day in office, Kast's administration plans to sign broad agreements with the United States to boost cooperation on critical minerals and security matters, according to people familiar with the program who were not authorised to speak publicly, the report notes. Kast's press office didn't reply to requests for comment, and a press officer for Chile's incoming economy and mining minister declined to comment, notes the report. The White House also didn't immediately respond to a request for comment. The report discloses that Trump's administration is strengthening ties with Chile at a time when it's trying to make the US less dependent on China for critical minerals. When it comes to metals, Chile is a global heavyweight that's both the world's largest copper producer and also holds about a third of the world's lithium reserves, the report notes. Chile is set to become the latest nation to sign a minerals accord with the United States, the report relays. At a summit in Washington last month, Trump's government inked similar agreements with 11 countries including Argentina, Peru and Ecuador, the report says. At the same time, accords point to a growing departure from Chile's longtime balanced relationship between the US and China -- its two largest trading partners -- even though the Asian giant is the biggest buyer of the country's commodities, the report says. The South American nation is also shifting toward Trump at a time when US-Israeli military strikes in Iran are hurting the pocketbooks of Chileans who are consequently now paying more for oil and gas, the report discloses. 'Reset' Relations During what is normally a staid transition from one administration to the next, Kast publicly clashed with Boric this month over a Chinese fibre-optic cable project that is vehemently opposed by the US, alleging that outgoing authorities had not disclosed key information about the sensitive plans, the report discloses. The US imposed visa restrictions on three outgoing Chilean government officials, alleging a broader threat to regional security, the report notes. The Boric administration denied withholding any information about the initiative, which is still pending approval, the report says. At the time, China's Embassy in Chile accused the US of showing "obvious contempt for Chile's sovereignty, dignity and national interests," the report relays. The US delegation to Kast's inauguration ceremony includes Deputy Secretary of State Christopher Landau. Joseph Humire, acting assistant secretary of Defense for homeland security and the Americas, will also be present, the report notes. Ahead of the inauguration, the US Embassy in Chile said in a statement that Landau would meet with Kast and senior Chilean officials "to reset the US-Chile relationship and lay the foundation for progress on shared priorities, including upgrading our security partnership, securing supply chains, and expanding commercial ties to attract US investment," the report says. The report relays that Kast, an arch conservative father of nine and son of Bavarian immigrants, won election in December after campaigning on a platform to crack down on clandestine migration and organised crime, while reinvigorating the sluggish economy. After his election, he travelled abroad to visit allies including El Salvador’s President Nayib Bukele and Hungarian Prime Minister Viktor Orban, the report notes. Most recently, Kast attended a summit of like-minded Latin American leaders in Florida, the report says. The so-called "Shield of the Americas" event reinforced the Trump administration’s effort to reassert sway over the region, where several right-wing leaders have swept into power amid an anti-incumbent wave, the report discloses. =========== M E X I C O =========== GRUPO POSADAS: S&P Upgrades ICR to 'B+' on Improved Debt Structure ------------------------------------------------------------------ S&P Global Ratings raised its long-term issuer credit rating on Mexico-based lodging company Grupo Posadas S.A.B. de C.V. to 'B+' from 'B'. The stable outlook reflects S&P's view that Posadas will maintain steady operating and financial performance over the next 12 months, with adjusted net debt to EBITDA and EBITDA interest coverage both around 3.0x by the end of 2026. Grupo Posadas S.A.B. de C.V. recently completed the refinancing of its senior secured notes due 2027, improving its capital structure and liquidity position for the next few years. As part of the transaction, Posadas used part of its cash balance to reduce the gross debt on its balance sheet. Considering this reduction and the new debt structure's significant proportion denominated in Mexican pesos, we expect the company to become less exposed to currency risk. The upgrade to 'B+' reflects Posadas' improved debt structure. Posadas completed the refinancing of its $370 million senior secured notes by securing a $270 million syndicated loan and using a portion of its cash balance to prepay the remaining $100 million. The new loan is structured with a 45/55 split between U.S. dollar and Mexican peso tranches and now represents approximately 99% of the company's total debt. This transaction therefore reduces Posadas' unhedged dollar-denominated debt to about 45% of its total debt, from 99% as of December 2025. S&P believes the new debt structure significantly reduces foreign currency risk on the balance sheet and better aligns with the company's revenue mix, given approximately 30% of its income is dollar denominated, primarily related to its coastal hotels. The loan bears a floating interest rate; however, the company hedges 65% of the amount, which should provide greater predictability regarding interest expense and, consequently, cash flow. Furthermore, the refinancing eliminates potential liquidity pressure from the previous notes' December 2027 maturity. Posadas now benefits from a more comfortable debt maturity schedule, with an average life of about five years, compared with approximately two years previously. S&P said, "This improvement led us to revise up our view of the company's liquidity, given we now project liquidity sources to consistently exceed uses by more than 1.2x. Moreover, we believe Posadas' cash balance and flexibility to postpone capital expenditure and dividend payments provide a buffer to absorb high-impact, low-probability events with limited need for refinancing, given the small amortizations over the next four years." S&P said, "Finally, in our view, the proactive refinancing of the company's international notes, well in advance of maturity; the reduction in exposure to unhedged dollar-denominated debt; and the overall reduction in gross debt through the $100 million prepayment demonstrate adequate enterprise risk management. Consequently, we also revised up our view of management and governance to neutral from moderately negative. "We expect Posadas will maintain solid credit metrics for the next 12 months. We expect continued solid group demand, coupled with Posadas' flexibility to target diverse socioeconomic segments through its brand portfolio, will support stable occupancy rates despite recent market volatility. We forecast revenue growth of 5.0% and an EBITDA margin near 20% in 2026, with relatively stable occupancy rates of 63%-64% (compared with 64.3% in 2025), higher average daily rates (ADRs) across segments, and net rooms growth of 4%-5%. "Furthermore, we expect Posadas to invest approximately Mexican peso (MXN) 400 million annually in capital expenditure, aligning with its strategy to increase net rooms by 16% by the end of 2028, primarily through managed or franchised formats that require lower capex than owned properties. We also expect the company will continue to net cash taxes through the amortization of tax-loss carryforwards, which should enable free operating cash flow above MXN900 million annually. "In addition, we expect Posadas to adopt a prudent approach to shareholder returns, with a modest dividend payment in 2026. Consequently, we forecast excess cash generation should help the company to maintain solid credit metrics. In our base case, we forecast adjusted net debt to EBITDA and EBITDA interest coverage ratios of about 3.2x and 2.8x, respectively, by year-end 2026. "However, Posadas remains exposed to risks that could weaken credit metrics. Although we expect Posadas to maintain solid credit metrics in the next 12-18 months, we recognize that global geopolitical tensions and security issues in Mexico could result in lower-than-expected occupancy rates. In addition, market volatility, including a recent spike in oil prices, could reignite inflationary pressure, which in turn could lower disposable income for travel and leisure activities. "In our view, these factors could lower revenue, EBITDA, and cash flow, pressuring Posadas' financial position. Also, we think the company's smaller scale of operations than global rated peers and its revenue concentration in Mexico expose it to earnings volatility across economic cycles. For these reasons, we continue applying a negative adjustment for comparable rating analysis. "The stable outlook reflects our view that Posadas will maintain steady operating and financial performance in the next 12 months, with revenue growth above 4% and EBITDA margins above 19% amid broadly stable occupancy rates and higher ADRs across business segments. As a result, we expect Posadas' adjusted net debt to EBITDA and EBITDA interest coverage both at around 3.0x by the end of 2026. "We could take a negative rating action on Posadas in the next 12 months if its operating and financial performance deviate from our current estimate or if it faces liquidity pressure. This could occur if occupancy rates plummet because of a worsening economy or if external factors undermine travel conditions. We could also take a negative rating action if, contrary to our expectations, the company adopts an aggressive financial approach toward investments or shareholder rewards." Therefore, S&P would downgrade the company if any of the following scenarios materialize: -- Adjusted net debt to EBITDA rises above 5x or EBITDA interest coverage falls below 2x consistently; -- S&P comes to view liquidity as less than adequate, with sources over uses of liquidity falling below 1.2x or because the company fails to meet its supplemental qualitative factors, including covenant headroom; or -- Contrary to S&P's expectations, the company changes its debt structure, increasing its exposure to unhedged foreign-currency-denominated debt. S&P could upgrade Posadas in the next 12 months if its operating and financial performance surpasses its current estimates, with revenue per available room, EBITDA, and cash flow generation continuing to rise despite challenging macroeconomic conditions. To consider an upgrade, S&P would look for the company to meet all the following conditions: -- Adjusted net debt to EBITDA below 3.0x consistently, or adjusted net debt to EBITDA well below 4.0x and EBITDA interest coverage well above 3.0x; and -- Prudent risk management, with sources over uses of liquidity well above 1.2x on a consistent basis. Environmental, social, and governance (ESG) credit factors for this change in credit rating/outlook and/or CreditWatch status: -- Risk management, culture, and oversight. LUCKY STRIKE: Moody's Lowers CFR to B3, Outlook Remains Stable -------------------------------------------------------------- Moody's Ratings downgraded the ratings for Lucky Strike Entertainment Corporation (Lucky Strike) including its Corporate Family Rating to B3 from B2 and Probability of Default Rating to B3-PD from B2-PD. Concurrently, Moody's downgraded to B3 from B2 the backed senior secured first lien bank credit facility ratings (revolving credit facility and term loan) and backed senior secured first lien notes issued by Lucky Strike's subsidiary, Kingpin Intermediate Holdings, LLC (Kingpin). The outlook for Lucky Strike and Kingpin remains stable. Moody's also downgraded Lucky Strike's speculative grade liquidity rating (SGL) to SGL-3 from SGL-2. The downgrade actions are driven by the company's weakening operating performance and cash flow profile, as well as its persistent high leverage, and also reflect the correction of an error in Moody's prior analysis. Lucky Strike's credit profile is characterized by persistent high financial leverage, limited ability to quickly deleverage through earnings growth, and shareholder distributions which limit cash available for debt reductions. The company's investments to lift its low organic revenue growth rate, as well as a high interest burden and annual dividend, are contributing to weak free cash flow. Earnings materially weakened during the second quarter of fiscal year 2026 when growth investments did not translate into as much revenue uplift as anticipated, which pushed leverage higher. The company is taking steps to more efficiently invest for growth, but Moody's believes it will be challenging to grow by enough to materially reduce leverage due to continued pressure on discretionary spending, a gradual and limited recovery in corporate events, and limited pricing power. Although Moody's projects earnings to improve in the second half of fiscal year 2026, including seasonal contributions from recently acquired water park assets, Moody's expects margin recovery to be modest as the company invests to maintain volume and debt-to-EBITDA leverage (incorporating Moody's standard adjustments) to remain elevated at around 8.0x over the next 12-18 months. During the second quarter of FY2026 (ended December 2025), EBITDA declined sharply, reflecting margin compression driven by higher labor and operating costs at the location level, as well as increased marketing spending that did not generate the as much traffic improvement as anticipated. The results highlight Lucky Strike's elevated fixed cost structure, which amplifies modest revenue softness into outsized earnings declines. While same-center sales trends have recently stabilized, traffic remains sensitive to consumer discretionary spending pressures and corporate event demand. Leverage has increased steadily, with Moody's-adjusted debt-to-EBITDA rising to approximately 8.7x as the last 12 months ended December 2025. The actions also reflect the correction of an error in Moody's calculations of Lucky Strike's debt. Subsequent to a sale and leaseback of land and real estate assets in October 2023, Moody's did not incorporate the company's recorded financing obligation in connection with these transactions into Moody's debt and credit metrics, such as debt-to-EBITDA leverage, that are based on debt. The correction of this error resulted in higher debt and leverage metrics, contributing to the downgrade pressure on the ratings. The downgrade of the speculative grade liquidity rating to SGL-3 reflects Lucky Strike's elevated leverage, limited free cash flow generation, and continued reliance on cash and the revolver to fund capital expenditures and shareholder distributions. Liquidity remains adequate, supported by cash balances of approximately $96 million and availability under the company's $425 million senior secured revolving credit facility as of December 2025. Moody's expects that available liquidity, together with cash from operations, will be sufficient to fund ongoing capital expenditures, the dividend, and required amortization on the company's term loan. Lucky Strike has no near-term maturity pressure, with its revolving credit facility maturing in September 2030, its $1.2 billion first-lien term loan in September 2032 and $500 million senior secured notes maturing in October 2032. RATINGS RATIONALE Lucky Strike's B3 CFR reflects the company's high financial leverage with Moody's lease adjusted debt-to-EBITDA leverage at 8.7x as of the 12 months ended December 28, 2025. Moody's expects leverage to decline over the next 12â€“18 months but remain elevated due to limited free cash flow generation as the company continues to invest to update existing locations and maintain volume, fund the high interest burden, and pay a dividend. Lucky Strike's ratings are supported by the company's established position as the largest and leading operator in the US bowling industry with geographic diversification across the country. The ratings also reflect the good track record of integrating acquisitions and achieving cost synergies. The rating also reflects concentration in the leisure/entertainment industry including the bowling segment that is subject to economic cycles and shifts in discretionary consumer spending. Lucky Strike's operating results are seasonal in nature as bowling centers perform best during the colder winter months (the quarters ending in December and March are the company's most profitable quarters) and have lower visitation during warmer summer months. Bowling activity is negatively impacted by good weather that drives consumers to pursue outdoor activities, but benefits from cold or rainy weather. Recent investments into water parks seeks to reduce this seasonality for Lucky Strike given water parks are most profitable during the summer. However, the strategy also brings execution risks for Lucky Strike because water parks have high reinvestment needs and different operating strategies. Moody's expects limited acquisition activity and no new bowling center builds over the next year. The company's historically aggressive financial policy, including dividend payments and debt-funded share repurchases, which Moody's had expected to subside more quickly to support deleveraging, remains a credit constraint and has contributed to high financial leverage and limited financial flexibility. The continued payment of a sizable dividend, together with elevated reinvestment needs, is pressuring free cash flow and is contributing to leverage remaining elevated. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's expectations that Lucky Strike's operating earnings will improve modestly over the next 12 to 18 months, supported by low organic revenue growth, seasonal contributions from water park assets and family entertainment centers, and management's efforts to improve cost discipline. The stable outlook also reflects Moody's expectations that the company will restore modestly positive free cash flow over the next year and maintain adequate liquidity aided by flexibility to pull back on development spending to preserve cash if necessary. The ratings could be upgraded if Lucky Strike demonstrates sustained improvement in operating earnings, including consistent same-center sales growth with improving margins. An upgrade would also require sustained reduction in debt-to-EBITDA leverage below 6.5x (incorporating Moody's adjustments), consistent and comfortably positive free cash flow generation assuming healthy reinvestment levels, maintenance of good liquidity, and a financial policies that maintains more moderate leverage. The ratings could be downgraded if operating earnings weaken further due to factors such as declining visitation, negative same-center sales, or higher operating costs that result in additional margin pressure. A downgrade could also result from leverage remaining elevated, an inability to maintain positive free cash flow with sufficient maintenance capital spending, EBITA-to-interest is below 1.0x, or liquidity deteriorates. Lucky Strike Entertainment Corporation is the largest bowling center operator in the US, with additional locations in Canada and Mexico and a total of 360 bowling centers, 5 water action parks, and 3 family entertainment centers. The company went public through a SPAC transaction in December 2021 after the merger with ISOS Acquisition Corporation and trades under the ticker symbol LUCK. Revenue during the 12 months ending December 30, 2025 was approximately $1.2 billion. The principal methodology used in these ratings was Business and Consumer Services published in February 2026. 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. ORBIA ADVANCE: Moody's Lowers CFR & Senior Unsecured Notes to Ba2 ----------------------------------------------------------------- Moody's Ratings has downgraded Orbia Advance Corporation, S.A.B. de C.V.'s (Orbia) Corporate Family Rating and senior unsecured ratings to Ba2 from Ba1. The outlook remains negative. RATINGS RATIONALE The rating downgrade reflects Moody's expectations that Orbia's credit metrics will remain relatively weak, driven by high leverage and a slower-than-expected recovery in key end-markets. In particular, Moody's expects leverage to remain elevated, with debt-to-EBITDA projected to stay above 4.4x, on average, during 2026–2027, which is above the range typically commensurate with the Ba category. Moody's also expects the prolonged downturn in the global chemicals sector, characterized by low prices and a slow recovery in demand, to continue weighing on Orbia's earnings and cash flow generation, delaying a meaningful improvement in credit metrics in 2026–27. The sector outlook remains negative, reflecting weak demand conditions and only modest EBITDA growth expectations over the next 12–18 months. Orbia's operating performance continues to weigh on its credit profile, reflecting weakness in its Polymer Solutions (PVC) and Building & Infrastructure segments, which together represent a material share of consolidated revenue (62%) and EBITDA (48.1%). Performance in both segments remains pressured by a combination of structural oversupply and cyclical demand weakness, limiting EBITDA generation and cash flow resilience. In 2025, Polymer Solutions reported revenue of approximately $2.4 billion, down 4.3% from 2024, and EBITDA of about $250 million, a 30.3% year-over-year decline, driven by excess global PVC supply, pricing pressure and operational disruptions. Building & Infrastructure generated revenue of around $2.5 billion, a 1.4% decrease from 2024, and EBITDA of approximately $250 million, down 10.2% year over year, reflecting weak construction activity—particularly in Mexico and Western Europe—only partially offset by product mix improvements and cost optimization initiatives. These pressures have been partially mitigated by stronger performance in Orbia's more specialty-oriented and infrastructure-exposed segments. In 2025, Fluor & Energy Materials, Connectivity Solutions and Precision Agriculture reported combined year-over-year revenue and EBITDA growth of 8.5% and 14.3%, respectively, contributing to business diversification and somewhat lower earnings volatility. However, the contribution from these segments is not expected to fully counterbalance the sustained weakness in PVC and construction-related demand, limiting improvement in consolidated credit metrics in the near term. As a result, despite revenue stabilization, Orbia's EBITDA generation remains constrained. In 2025, the company reported consolidated revenue of approximately $7.7 billion, up 1.1% from 2024, while EBITDA declined by 6.3% to about $1.0 billion, underscoring continued pressure on leverage and deleveraging capacity. Moody's expects adjusted debt/EBITDA to remain elevated, averaging around 4.2x based on Moody's updated assessment of Orbia's through-the-cycle earnings over the 2026–2028 period, a level that is no longer consistent with a Ba1 rating. Adjusted debt/EBITDA stood at 5.8x as of December 2025, up from 4.5x at year-end 2024, driven primarily by lower EBITDA and the appreciation of the Mexican peso against the US dollar. Orbia's credit profile remains constrained by earnings volatility across its industrial end-markets, which are exposed to factors such as commodity price fluctuations, interest rate movements and energy costs. As a result, Moody's expects credit metrics to remain outside the Ba1 rating boundaries for several quarters before any sustained improvement. The Ba2 ratings, although still weakly positioned given the pressure on credit metrics, continue to incorporate the company's size (revenues of over $7.6 billion), strength of its global operations; and its diversification across segments, geographies, and markets. Liquidity remains good, supported by approximately $1.0 billion of cash as of December 2025 and a fully available committed revolving credit facility of up to $1.4 billion. Orbia faces maturities of up to approximately $276 million during 2026, which Moody's views as manageable relative to available liquidity. In addition, Orbia has taken proactive actions to extend its maturity profile, including refinancing $1.4 billion of debt and extending maturities to 2030 and beyond, as well as issuing MXN-denominated medium-term notes in the local market. The negative outlook reflects Moody's expectations that the sector downturn, including low prices for PVC and other chemicals, will continue to weigh on Orbia's credit metrics through 2028. Moody's expects leverage, measured as total debt-to-EBITDA, to exceed 4.0x, although this risk is mitigated by the company's adequate liquidity over the next 12–18 months. At current profit levels, free cash flow is expected to remain positive but tight, so any material reduction in leverage would likely require divestitures or asset sales to return to metrics more in line with the current rating. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Because of the negative outlook, a ratings upgrade is unlikely. However, factors that could lead to a return of the outlook to stable include a recovery in credit metrics toward levels commensurate with the Ba2 rating level, with improvements in leverage (total debt/EBITDA) and interest coverage (EBITA/interest expense) toward 3.5x and 5.0x, respectively. A change in outlook to stable would also require Orbia to generate positive free cash flow on a sustained basis, while managing its capital spending, M&A strategy and dividend payouts without jeopardizing liquidity and maintaining leverage within the targets stated in its financial policies. Moody's could downgrade Orbia's ratings if its operating performance remains weak, financial policy becomes more aggressive or liquidity deteriorates. A downgrade could be triggered by events that can increase liquidity risk, including negative FCF as a result of increase in growth capital spending or dividend distributions. Quantitatively, a downgrade could also occur if the company's leverage (total debt/EBITDA) stays above 4.0x with no clear path for leverage reduction, for example, because of a debt-financed acquisition, non-accretive acquisitions or a contraction in profitability in a normalized environment, such that its EBITDA margin remains below 15%. PROFILE Orbia Advance Corporation, S.A.B. de C.V. manufactures general and specialty PVC resins and zero halogen specialty compounds with applications in pipes, cables, flooring, auto parts, household appliances, clothing, packaging and medical devices. Solutions for the building and infrastructure industries including PVC pipes and fittings for water conduction products, indoor climate solutions and urban climate resilience solutions. Leading-edge irrigation systems, passive infrastructure supported by HDPE conduit solutions to create physical pathways for fiber and other network technologies, value-added chemicals derived from its unique access to fluorspar, refrigerant gases and medical propellants that serve a wide array of customer applications including automotive, infrastructure, health and medicine, heating, ventilation and air conditioning climate control, and the food cold chain. Orbia reported revenues of $7,619 million over the twelve months ended December 2025. The principal methodology used in these ratings was Chemicals published in February 2026. 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 A R A G U A Y =============== PARAGUAY: IDB Will Expand Office and Project Portfolio in Country ----------------------------------------------------------------- The Inter-American Development Bank Group (IDB Group) will expand its office in Paraguay, adding more staff and strengthening its operational capacity in the country. This expansion responds to the growth of the project portfolio, which is estimated at $2.7 billion over the next two years, with the private sector expected to receive three times as much as the public sector. Of the new financing, approximately $2 billion will be channeled through IDB Invest, the private-sector arm of the IDB Group, while close to $700 million will be available for projects with the public sector. The expansion also reflects Paraguay's progress in driving growth through private investment, supported by strong institutions and sound macroeconomic policies. The IDB Group's program in Paraguay focuses on projects that mobilize private investment and support growth. This includes flagship private sector projects such as Paracel's sustainable forestry industrial hub and Atome's first green hydrogen–based fertilizer production and export project. The program also supports investments in infrastructure and connectivity, including the Bi-Oceanic Corridor and the expansion of Routes 2 and 7—the country’s first Public-Private Partnership (PPP); the exploration of improvements to Route 1; and energy projects, strengthening the electrical grid and the resilience of the water and sanitation system in the Ypacaraí Lake Basin. "Paraguay is demonstrating that sustained growth is possible when there is stability, strong institutions, and a clear development vision. The IDB Group shares the country's priorities and supports this process. The expansion of our office in Asuncion reflects that commitment and will allow us to work even more closely with the country in its next stage of growth," said Ilan Goldfajn, President of the IDB Group. The new package reinforces the development model that Paraguay has consolidated in recent years. Since 2023, IDB Invest has channeled $1.6 billion in financing to the country. Together with the new program announced, total support from the private-sector arm of the IDB Group to Paraguay will reach around 7% of GDP. The expansion in Paraguay also reflects the country's increasingly important role in regional initiatives of the IDB Group, such as South Connection, which promotes physical, digital, and energy connectivity in South America through coordinated investments in regional integration projects. It is also part of a broader IDB Group strategy to strengthen its presence in the region by bringing staff and decision-making closer to countries. ===================== P U E R T O R I C O ===================== PHOENIX FUND: OCIF's Enforcement Proceeding Can Proceed ------------------------------------------------------- Judge Enrique S. Lamoutte of the U.S. Bankruptcy Court for the District of Puerto Rico granted the motion of the Office of the Commissioner of Financial Institutions of Puerto Rico to continue its enforcement action against The Phoenix Fund LLC. The Fund is subject to the regulatory oversight and authority of the Office of the Commissioner of Financial Institutions of Puerto Rico ("OCIF"). Prior to the petition for relief, the OCIF initiated an examination of the Fund's operations. The OCIF was unable to complete the examination due to the Fund's alleged noncompliance. As a result, the OCIF filed an Amended Complaint and Order of (I) Cease and Desist, (II) Liquidation of Private Equity Fund and (III) Interim and Permanent Appointment of Receiver to Carry Out the Liquidation on or about February 18, 2026 (the "Amended Complaint and Receivership Order"). The filing of the Amended Complaint and Receivership Order commenced an administrative enforcement proceeding against the Fund styled Office of the Commissioner of Financial Institutions v. The Phoenix Fund LLC, Case No. C25-V-001 (the "Enforcement Action"). Following the petition date, the OCIF filed two interrelated motions: a Motion For Entry of an Order to Continue OCIF's Enforcement Action Or, In The Alternative For Relief From The Automatic Stay ("Motion to Continue Enforcement Action"), and an Urgent Motion For Order Recognizing Authority of the Pre-Petition Receiver, Driven, P.S.C., to Act on Behalf of Debtor-In-Possession ("Motion Recognizing Authority", each filed on February 25, 2026, and relating to the Enforcement Action. The Motion to Continue Enforcement Action requests that the Court enter an order allowing for the continuation of the Enforcement Action relating to the Amended Complaint and Receivership Order under Case No. C25-V-001, and argues that the automatic stay provisions of Section 362(a) of the Bankruptcy Code do not apply to bar or stay OCIF's regulatory and police powers against the Fund. The Motion Recognizing Authority seeks, on an emergency basis, the entry of an order recognizing the authority of Driven, P.S.C. ("Driven" or the "Receiver") to act as debtor-in-possession on behalf of the Fund. According to the Court, irrespective of the merits of the proceedings before the OCIF, the intervention by the OCIF was due to the lack of compliance by the Fund of its obligations under the Incentive Code, resulting in the issuance of a Consent Order and, ultimately, liquidation of the Fund to safeguard the public welfare of the Puerto Rico financial system. The Enforcement Action in no manner or form benefits the OCIF or any related Puerto Rico government agency with any financial interest, nor does it constitute a collection action. Therefore, the police power exception of Section 362(b)(4) applies. The Court concludes the automatic stay is inapplicable to the continued prosecution of the Enforcement Action in the OCIF's administrative forum, including the enforcement of the Amended Complaint and Receiver Order, the Consent Order, and the appointment of Driven, P.S.C., as Receiver with authority act as debtor-in-possession, pursuant to 11 U.S.C. Sec. 362(b)(4). Accordingly, both the Motion to Continue Enforcement Action and the Motion Recognizing Authority are granted. A status conference is scheduled for May 19, 2026. A copy of the Court's Opinion and Order dated March 11, 2026, is available at https://urlcurt.com/u?l=GormXp from PacerMonitor.com. About The Phoenix Fund LLC The Phoenix Fund LLC is a Puerto Rico based private equity firm formed in 2018 and headquartered in Guaynabo, Puerto Rico. The company focuses on making strategic equity and debt investments in privately held businesses in Puerto Rico and international markets. Phoenix Fund LLC sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.P.R. Case No. 26-00712) on February 23, 2026. Honorable Bankruptcy Judge Enrique S. Lamoutte Inclan handles the case. In its petition, the Debtor reports estimated assets between $500 million and $1 billion and estimated liabilities between $100 million and $500 million. The Debtor is represented by Alexis Fuentes Hernandez, Esq. of Fuentes Law Offices, LLC. ********* 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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