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/raid1/www/Hosts/bankrupt/TCRLA_Public/241107.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, November 7, 2024, Vol. 25, No. 224 Headlines A R G E N T I N A AGUA Y SANEAMIENTOS: Fitch Affirms 'CCC-' Issuer Default Ratings ARGENTINA: Massive Scams Reported as 'Ponzidemia' Grips Country ARGENTINA: Milei's Revamp Offers CEOs a Glimmer of Optimism B A H A M A S BAHAMAS: CB Governor Reports Slower Growth in Economy for 2024 BAHAMAS: Unemployment Drops to 8.7% in 2024, Lowest Since 2008 B A R B A D O S BARBADOS: S&P Raises LT Sovereign Credit Ratings to B, Outlook Pos. B R A Z I L BRAZIL: Fiscal Measures Could Be Announced This Week, Haddad Says MRS LOGISTICA: Fitch Affirms BB+ Foreign Currency IDR C O L O M B I A COLOMBIA: Senate Agrees to Begin Decentralizing Government E C U A D O R BANCO DEL AUSTRO: Fitch Affirms 'CCC+' LongTerm IDR P U E R T O R I C O GOLDEN TRIANGLE: Commences Bankruptcy Proceeding GOLDEN TRIANGLE: Seeks to Hire Alexis Fuentes-Hernandez as Counsel T R I N I D A D A N D T O B A G O NCB FINANCIAL: S&P Assigns 'B-/B' ICRs, Outlook Stable - - - - - ================= A R G E N T I N A ================= AGUA Y SANEAMIENTOS: Fitch Affirms 'CCC-' Issuer Default Ratings ---------------------------------------------------------------- Fitch Ratings has affirmed Agua y Saneamientos Argentinos S.A.'s (AySA) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'CCC-'. Fitch has also affirmed the company's USD310 million senior unsecured amortizing notes due 2026 at 'CCC-'with a Recovery Rating of 'RR4'. The 'RR4' for the company's senior unsecured notes incorporates an average expected recovery given default of 31% to 50% as per country cap established for Argentina. AySA's rating reflects its standalone credit profile (SCP) 'ccc-', which is above that of its controlling shareholder Argentina (CC). Fitch does constrain AySA's IDR with the sovereign, despite of its reliance on government support to meet its obligations, as the definition of a 'CCC-' IDR, that indicates that a default is a real possibility, better reflects Fitch's expectations for the issuer's credit profile. The 'CC' IDR would denote that a default of some kind appears probable. Fitch considers that AySA's improved its business profile after implementation of tariff increases and efficiency measures from April 2024 onwards. Nevertheless, these initiatives are insufficient to make the company self-sufficient going forward to meet its operating and financial obligations, as well as finance its capex plan. Key Rating Drivers Significant Support for Debt and Operations: AySA relies on capital injections from the Argentine government to support its loss-making operations, capex and debt obligations in the short-to-mid-term. The company provides important water/wastewater utility services for the most economically relevant region in Argentina, which underpins expectations of continued government support. The government's capital injections for O&M and capex totaled ARS232 billion in first half of 2024 and ARS481 billion in 2023. Improved Business Profile: The implementation of a 209% tariff increase in April 2024 and monthly tariff increases thereafter linked to inflation is credit positive as benefits the company's cash flow generation and reinforces the Argentine government's intention to reduce its operating losses. The higher tariff partially compensated AySA for the cost inflation during the last months and supports expectations of lower negative results. AySA's cost-cutting and efficiency initiatives, should also provide some cash flow protection for the company going forward that will enhance its SCP and support lower need of shareholder's cash transfers for the next years. Government-Related Entity: The distress condition of Argentina leads to rating derivation of AySA mainly based on Fitch's Rating Definition as per Government Related Entity (GRE) criteria. Despite the company's shareholder challenging situation, the government capacity to support AySA remains, which has also been considered on the company's assessment. Lower Negative EBITDA and FCF: AySA should report negative EBITDA for YE 2024 close to ARS300 billion, gradually reducing to approximately breakeven by 2025 onwards. These figures favorably compares with negative ARS300 billion reported in 2023, assuming high inflation environment. The company's monthly tariff increase presents some revenue protection and should support the company's strategy of operating cash generation at breakeven levels, despite continued dependency on government transfers for debt and capex obligations. AySA's FCF should remain negative at close to ARS700 billion in 2024, and average annually around ARS650 billion in 2025-2026. Fitch assumed the negative FCF and upcoming debt obligation fully supported by government funding close to ARS900 billion in 2024 and ARS800 billion on annual average until 2026. Derivation Summary AySA's SCP is weak compared with its main peers in other Latin American countries, owing to its fragile operating performance, weak regulatory environment and strong dependence on its dominant state shareholder to support cash needs. This condition compares unfavorably with Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP; BB+/Stable), a recently privatized company based in Brazil with sound cash flow generation and strong credit metrics, and Aegea Saneamento e Participacoes S.A. (BB/Stable), a privately-owned company in Brazil with strong EBITDA margins and a diversified portfolio of concessions. AySA unfavorably compares with Namibia Water Corporation (NamWater; BB-/Stable), a government-related entity in Namibia that has its ratings constrained by the shareholder given Fitch's view of legal ring-fencing and access and control as 'open'. NamWater SCP is 'bbb-' supported by the company's role as the water supplier in Namibia, with a cost pass-through tariff framework and a strong financial profile. Key Assumptions - Continued support from government through capital injections; - Tariff increase of 209% in April 2024 and monthly readjustments according to Fitch's inflation estimates for Argentina thereafter; - Maintenance capex of approximately ARS500 billion in 2024 and average annual of around ARS880 billion in 2025-2026; - Gradual reduction of operating losses with breakeven from 2026 onwards. Recovery Analysis For issuers with IDRs of 'B+' or below, Fitch performs a recovery analysis for each class of obligations of the issuer based on the going concern enterprise value of a distressed scenario or the company's liquidation value. In AySA's case, the consideration for average recovery considers the company's state-owned condition that operates a concession utility and is strongly supported by the Argentine government that subsidizes its loss-making operations. Under these circumstances, the recovery exercise is meaningless either through enterprise value as a going concern (given its loss-making figures) or the liquidation approach (given its concessionaire status). RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of AySA below 'CCC-' could occur if Fitch believes a default of some kind is probable or a default-like process has begun. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Upgrade of Argentine sovereign IDR in more than one notch. Liquidity and Debt Structure Weak Liquidity: Despite expected improvement on cash generation, AySA's liquidity in the medium term should continue to rely on cash transfers from its majority shareholder, the national state, given its inability to generate enough internal cash and its restricted access to debt and the capital markets on a standalone basis. At the end of June 2024, total debt was ARS215 billion, comprised of the bonds maturing in 2026, and the cash and equivalents position was ARS20 million. Issuer Profile AySA is the water/wastewater concessionaire of Buenos Aires and 26 municipalities of the metropolitan region assisting an estimate of 15 million people through a concession agreement that matures in 2036 (extendable). Argentina controls the company through its 90% ownership. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations AySA has an ESG Relevance score of '4' for Governance Structure due to its nature as a majority government-owned entity and the inherent governance risk that arises with a dominant state shareholder, which has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Agua y Saneamientos Argentinos S.A. LT IDR CCC- Affirmed CCC- LC LT IDR CCC- Affirmed CCC- senior unsecured LT CCC- Affirmed RR4 CCC- ARGENTINA: Massive Scams Reported as 'Ponzidemia' Grips Country --------------------------------------------------------------- Tomás Viola at Agence France-Presse (AFP) reports that nearly 30 percent of the population of San Pedro, a town of 70,000 people situated about 170 kilometres (106 miles) north of Buenos Aires, fell for an investment app peddled by two actors posing as businessmen that promised up to two-percent daily returns paid in cryptocurrency. "I trusted it, as did some in my family," Carlos Rodríguez, a 66-year-resident, told the Cadena 3 radio station, adding that the RainbowEx app showed him earning US$80 to US$100 a day, nearly doubling his income. But the dream of easy money in a country battling a severe recession and three-digit inflation soon turned to dust. "We're looking at a US$49-million scam," lawyer Adolfo Suarez Erdaire, who represents around a hundred alleged victims, told AFP, adding that he had "calls coming in from all over the country." According to AFP, Argentina's Judiciary has launched an investigation into the pyramid scheme. Two Argentine nationals have been arrested in connection with the case. A Ponzi scheme is a fraudulent scheme where new investors' money is used to pay off old investors until the flow of new money dries up and the enterprise collapses. Similar suspected scams were also reported recently in Esquel (Chubut Province), and San Juan Province, Casilda in Santa Fe Province, and Córdoba, all involving another platform, Peak Capital, which closed on October 18, AFP notes. "There are thousands of victims," the Chubut prosecutor's office said, adding that the amounts swindled ran into the millions of dollars. "There is an epidemic," Maximiliano Firtman, an IT expert, who investigated RainbowEx, told AFP. AFP relates that Mr. Firtman followed the platform's trail to a luxury hotel in Buenos Aires, where two men presenting themselves as US executives gave a talk last month to potential investors. The businessmen were in fact Polish actors who were hired by an agency to play the part of slick money men. The scandal made headlines around the country. RainbowEx, which claims to be based in Singapore, halted its operations in Argentina last month and demanded US$88 from users to be able to withdraw their funds, according to AFP. Many paid the money but did not recoup their investment. AFP notes that the revelations come as Argentina's economy sinks deeper into recession after months of tough austerity measures prescribed by libertarian President Javier Milei to tame one of the world's highest inflation rates and erase a deep budget deficit. More than half of the population of Latin America's second-biggest economy now lives below the poverty line, AFP states. 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 new 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). The IMF Executive Board's decision allowed the authories an immediate disbursement of an equivalent of US$9.65 billion in March 2022. Argentina's IMF-supported program seeks to improve public finances and start to reduce persistent high inflation through a multi-pronged strategy, involving a gradual elimination of monetary financing of the fiscal deficit and enhancements in the monetary policy framework. In June 2024, the IMF Board completed an eighth review of the Extended Arrangement under the Extended Fund Facility for Argentina. The IMF Board's decision enabled a disbursement of around US$800 million to support the authorities' efforts to entrench the disinflation process, rebuild fiscal and external buffers, and underpin the recovery. S&P, in March 2024, raised its local currency sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and its national scale rating to 'raB+' from 'SD'. S&P also raised its long-term foreign currency sovereign credit rating to 'CCC' from 'CCC-' and affirmed its 'C' short-term foreign currency rating. The S&P ratings have been affirmed as of August 2024. S&P said the stable outlook on the long-term ratings balances the risks posed by pronounced economic imbalances and other uncertainties with recent progress in making fiscal adjustments, reducing inflation, and undertaking structural reforms to address long-standing microeconomic weaknesses that have contributed to poor economic performance for many years that it would likely consider to be distressed. In June 2023, Fitch ratings also upgraded Argentina's Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from 'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'. The upgrade of the FC IDR reflects that Fitch no longer deems a default-like process to have begun, as the authorities have not signaled a clear intention to follow through with an intra-public debt swap announced in March 2023. The new 'CC' rating signals a default event of some sort appears probable in the coming years. The affirmation of the LC IDR at 'CCC-' follows the peso debt swap in June that Fitch did not deem to be a "distressed debt exchange" (DDE). Moody's Investors Service, in September 2022, affirmed Argentina's Ca foreign-currency and local-currency long-term issuer and senior unsecured ratings. The outlook remains stable. The decision to affirm the Ca ratings balances Argentina's limited market access, weak governance, and history of recurrent debt restructurings with recent efforts to marshal fiscal and monetary measures to start addressing underlying macroeconomic imbalances in the context of the IMF program that was approved in 2022, according to Moody's. DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer Rating at CCC and downgraded its Long-Term Local Currency Issuer Rating to CCC from CCC (high) on March 3, 2023. ARGENTINA: Milei's Revamp Offers CEOs a Glimmer of Optimism ----------------------------------------------------------- Bloomberg News reports that in the early days of Javier Milei's Presidency, Volkswagen AG's South America chief wasn't too happy with him. Now he's part of a chorus of business leaders feeling encouraged about Argentina for the first time in years. Milei's move to devalue the peso after taking office last December, followed by aggressive austerity measures, was badly-needed medicine that dragged the economy into recession, Bloomberg relates. Companies were left with diminished cash balances and weak demand. But corporate executives like the way the president is eliminating protectionist measures and clearing red tape - and they're starting to see a path to profits in what has long been a frustrating market. For Alexander Seitz, Volkswagen's executive chairman for South America, the turning point came when Milei eased import controls, reducing the financing period from 180 days to 30 days, Bloomberg says. That makes it easier to predictably pay back suppliers without worrying about currency moves. "The government measures are going now in the right direction," Bloomberg quotes Mr. Seitz as saying in an interview in São Paulo last month. "I get much more focused on my business and can really work on operational things and not financial arts." Bloomberg notes that the cautious optimism of Mr. Seitz and other executives, from finance to commodities, has been slow to translate into new investments. Too many companies got burned by Argentina's earlier turn to market-friendly policies, which ended in 2019 when the statist Peronist party defeated pro-business president Mauricio Macri and returned to power. Investors said they want to see a full removal of currency controls before they are willing to commit. But a growing sentiment is taking hold that this time is different, Bloomberg states. Nu Holdings, which in May became Latin America's most valuable financial institution, is taking a look at Argentina again after ruling it out years earlier. MercadoLibre Inc is seeing a pickup in sales. Corporate bond activity is up as issuers see a swell of demand. "It's impossible to ignore what he's doing," Nubank CEO David Vélez said of Milei's turnaround efforts in an on-stage interview during Bloomberg New Economy at B20 in São Paulo. "I think the speed at which the situation in Argentina has been changing has impressed absolutely everybody." Even with the economy mired in recession, companies are optimistic that an incipient recovery isn't another one of Argentina's many false dawns. MercadoLibre, the Latin American e-commerce and financial technology giant, reported an uptick in sales in Argentina with the economy showing signs of a pickup, Bloomberg discloses. Speaking about the trend, André Chaves, the head of its Mercado Pago payments unit in Brazil, said that's prompting the company to begin ramping up lending activities. "Now that things are improving, we are accelerating again very fast in Argentina," Bloomberg quotes Mr. Chaves as saying in an interview. "The lending environment has improved significantly and as you have a little bit more predictability - you know, inflation rates and interest rates - we are more comfortable in extending more loans as well." Executives still have a tempered economic outlook over the next year as the country emerges from one of its worst downturns with more than half of Argentines living in poverty. Argentina ranks 126 out of 190 nations on the ease of doing business, just ahead of Iran, according to the World Bank. Foreign investment remains low and the private sector has cut salaried formal jobs for 11 consecutive months through July, according to government data. 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 new 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). The IMF Executive Board's decision allowed the authories an immediate disbursement of an equivalent of US$9.65 billion in March 2022. Argentina's IMF-supported program seeks to improve public finances and start to reduce persistent high inflation through a multi-pronged strategy, involving a gradual elimination of monetary financing of the fiscal deficit and enhancements in the monetary policy framework. In June 2024, the IMF Board completed an eighth review of the Extended Arrangement under the Extended Fund Facility for Argentina. The IMF Board's decision enabled a disbursement of around US$800 million to support the authorities' efforts to entrench the disinflation process, rebuild fiscal and external buffers, and underpin the recovery. S&P, in March 2024, raised its local currency sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and its national scale rating to 'raB+' from 'SD'. S&P also raised its long-term foreign currency sovereign credit rating to 'CCC' from 'CCC-' and affirmed its 'C' short-term foreign currency rating. The S&P ratings have been affirmed as of August 2024. S&P said the stable outlook on the long-term ratings balances the risks posed by pronounced economic imbalances and other uncertainties with recent progress in making fiscal adjustments, reducing inflation, and undertaking structural reforms to address long-standing microeconomic weaknesses that have contributed to poor economic performance for many years that it would likely consider to be distressed. In June 2023, Fitch ratings also upgraded Argentina's Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from 'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'. The upgrade of the FC IDR reflects that Fitch no longer deems a default-like process to have begun, as the authorities have not signaled a clear intention to follow through with an intra-public debt swap announced in March 2023. The new 'CC' rating signals a default event of some sort appears probable in the coming years. The affirmation of the LC IDR at 'CCC-' follows the peso debt swap in June that Fitch did not deem to be a "distressed debt exchange" (DDE). Moody's Investors Service, in September 2022, affirmed Argentina's Ca foreign-currency and local-currency long-term issuer and senior unsecured ratings. The outlook remains stable. The decision to affirm the Ca ratings balances Argentina's limited market access, weak governance, and history of recurrent debt restructurings with recent efforts to marshal fiscal and monetary measures to start addressing underlying macroeconomic imbalances in the context of the IMF program that was approved in 2022, according to Moody's. DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer Rating at CCC and downgraded its Long-Term Local Currency Issuer Rating to CCC from CCC (high) on March 3, 2023. ============= B A H A M A S ============= BAHAMAS: CB Governor Reports Slower Growth in Economy for 2024 -------------------------------------------------------------- Radio Jamaica News reports that Governor of the Central Bank of the Bahamas, John Rolle, said the local economy continued to expand over the first three quarters of 2024; however, the available indicators of growth slowed in comparison to 2023. Speaking Nov. 4 at a news conference where he presented the "Monthly Economic and Financial Developments for September 2024, Mr. Rolle said the trends are further in line with the expected leveling off in gains since the economy completed its recovery from the pandemic, Radio Jamaica News relates. He told reporters that the indicators reflect slower growth in tourism earnings, due to constrained capacity in the stopover segment and moderation in the otherwise healthy cruise trends. As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings, on Sept. 25, 2024, affirmed its 'B+' long-term foreign and local currency sovereign credit ratings on the Commonwealth of The Bahamas. The outlook remains stable. S&P also affirmed its 'B' short-term sovereign credit ratings. BAHAMAS: Unemployment Drops to 8.7% in 2024, Lowest Since 2008 -------------------------------------------------------------- Radio Jamaica News reports that Bahamas' unemployment rate stood at 8.7 per cent for the first half of 2024, down 1.2 percentage points from the 9.9 per cent jobless figure recorded at the end of 2023. The data were released by officials from the Bahamas National Statistical Institute on Oct. 28. According to the report, the Ministry of Labour and Public Service noted that this marks the country's lowest recorded unemployment rate since 2008. Figures showed that the overall unemployment rate in the Bahamas of 8.7 per cent remained the same during the first and second quarters of 2024, Radio Jamaica News relays. As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings, on Sept. 25, 2024, affirmed its 'B+' long-term foreign and local currency sovereign credit ratings on the Commonwealth of The Bahamas. The outlook remains stable. S&P also affirmed its 'B' short-term sovereign credit ratings. =============== B A R B A D O S =============== BARBADOS: S&P Raises LT Sovereign Credit Ratings to B, Outlook Pos. ------------------------------------------------------------------- S&P Global Ratings raised its long-term local and foreign currency sovereign credit ratings on Barbados to 'B' from 'B-', and affirmed its 'B' short-term ratings. The transfer and convertibility assessment is 'B'. Outlook The positive outlook reflects S&P Global Ratings' expectation that Barbados is likely to make progress in achieving sustained GDP growth while strengthening its public finances, thereby gradually reducing its debt burden. S&P expects policy continuity and continued reforms beyond the scheduled expiry of the country's current International Monetary Fund (IMF) program in 2025. Downside scenario S&P said, "We could revise the outlook to stable over the next 12-18 months in the event of unexpected fiscal setbacks or signals of diminished commitment to the government's long-term strategy to strengthen public finances and reduce its high debt burden. We could also revise the outlook to stable if we believe that the government would face difficulties in getting sufficient funding to meet its fiscal or external financing needs." Upside scenario S&P said, "We could raise our ratings in the next 12 months if continued reform momentum and fiscal adjustment support strengthened GDP growth prospects and stronger public finances. A favorable policy track record could boost investor confidence and improve our view of the sovereign's institutional assessment." Rationale Institutional and economic profile: S&P expects the government will continue its work on sustainable public finances and supportive economic policies in the coming two years. S&P said, "We expect continued growth in 2024 following strong results in 2023. GDP growth was 3.9% in the first nine months of the year, supported by the Cricket World Cup, and offset by damage from Hurricane Beryl. Growth will likely moderate toward the end of the year and reach 3.7% for 2024. We expect growth will moderate toward 2% in the next few years." Tourism will remain one of the largest sectors, directly contributing about 10% of GDP (and indirectly approximately 40%). Tourist arrivals for the first nine months of 2024 surpassed pre-pandemic numbers, and were dominated by traditional source markets, but with the U.S. surpassing the U.K. for the highest share. A large new resort opened in 2024. Several large investment projects will support medium-term growth prospects, mostly tourism-related (reinforcing dependence on a volatile sector). Barbados is also working on developing renewable energy capacity, which should spur local economic activity and lower dependence on imported fuel. Barbados has an ambitious climate policy agenda, which has garnered support from multilateral lenders. S&P expects growth in tourism and related projects will propel GDP per capita to US$24,800 in 2024. Despite potential external shocks, S&P believes Barbados will continue to demonstrate its commitment to reform. Under the IMF's 2018-2022 extended fund facility (EFF) program, the country implemented reforms to reinforce fiscal sustainability, build capacity to monitor the financial performance of state-owned enterprises, and improve the business climate. In 2022, the government launched BERT 2022, a program that focuses on a growth strategy to support the private sector and improve business conditions. Subsequently, the government created a new public-private sector growth council. S&P expects these initiatives will support long-term growth. Barbados has a stable, predictable, and mature political system, which has traditionally benefited from consensus on economic and social issues. Government has alternated between the Democratic Labour Party and the Barbados Labour Party (BLP). The BLP has been in office since 2018, and during the January 2022 elections, won all 30 seats of the House of Assembly for the second consecutive time. The BLP is led by Prime Minister Mia Mottley, who has governed since 2018 with a strong mandate to undertake fiscal and macroeconomic reform. Upon first taking office, the government acted swiftly to restructure debt, agree with the IMF on an EFF, and implement its BERT program. Prior to these reforms, previous policymakers had been slow to respond to fiscal and economic problems. A continued proactive approach to economic challenges would create a favorable track record that could boost investor confidence, improve the profile of public finances, and strengthen the rating. Flexibility and performance profile: Continued access to multilateral financing combined with a re-entry into the domestic capital market should support elevated refinancing requirements. S&P said, "We expect Barbados will gradually lower its fiscal deficit in coming years. In fiscal 2024, the country posted a strong primary surplus and declining overall deficit of 1.7% of GDP. We expect the deficit will fall to 1.2% of GDP in fiscal 2025. Revenues in the current year are supported by higher corporate and property taxes. Nevertheless, the island's dependence on tourism makes it vulnerable to global events that could hurt GDP growth and government revenues. Unaddressed age-related spending had previously weighed on our fiscal assessment, but Barbados has enacted a series of pension reforms that we believe will mitigate this risk." Barbados faces elevated refinancing needs beginning in 2025, when principal repayments start to climb. Under the IMF program, the primary balance target is 3.8% of GDP in fiscal years 2024-2025, climbing to 4.4% in fiscal years 2025-2026 and beyond. Due to its strong performance under the EFF program, Barbados has good access to multilateral funding. S&P said, "We expect it will receive, over fiscal years 2024-2025, about US$220 million from the IMF, the Inter-American Development Bank (IDB), and the World Bank, with at least US$1 billion in multilateral institutions financing under BERT 2022 for direct budgetary support and an additional US$1 billion for project-specific financing. Barbados has also issued debt in local capital markets via its BOSS+ bonds, launched in 2022. We expect that the government will rely on domestic markets and multilateral lenders to meet its financing needs over the next year." S&P said, "We estimate the increase in net general government debt to GDP will average about 1% in the next three years. In our forecasts, net general government debt remains high but drops to 101% this year, and to 95% by 2026. We expect the government will maintain its goal of reducing public debt-to-GDP ratio to 60% by fiscal years 2035-2036." Barbados' debt service profile improved after domestic and external debt restructuring in 2018 and 2019, respectively. S&P expects the government's external debt service will be about US$350 million for fiscal 2025 while the total interest burden will average 14.8% of general government revenues over the forecast horizon. In its external debt exchange, the government exchanged approximately US$531 million in new 2029 bonds and US$32 million in past-due interest bonds with holders of about US$677 million in external debt. The first principal payment on the new external 2029 bonds is due April 1, 2025, after which equal principal payments will be made biannually until the final maturity on Oct. 1, 2029. Barbados has advanced its plans for a debt for climate swap that would be supported by guarantees totaling $300 million from the IDB and the European Investment Bank (EIB). Barbados plans to repurchase higher-cost debt, replacing it with lower cost guaranteed debt to create resources for environmental projects. S&P forecasts the current account deficit will narrow to 6.5% of GDP in 2024 from a peak of 10.3% of GDP in 2021, supported by recovery in tourism. Barbados' gross external financing needs will remain high, averaging 209% of current account receipts plus usable reserves. At the same time, international reserves are historically high and will continue to provide external liquidity even as current account deficits persist. As of September 2024, international reserves were about US$1.6 billion, supported by multilateral funding and an increase in special drawing rights allocation from the IMF. Barbados' banking sector has remained stable, as banks hold large cash balances with the central bank and their capital adequacy ratios have been increasing. Although nonperforming loans rose early in the pandemic, availability of moratoriums and the slight recovery in the tourism sector have led to improvement in reported numbers. At the same time, S&P believes Barbados' monetary policy flexibility remains limited due to its fixed exchange rate and weak transmission mechanism after the completion of its debt restructuring program. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. Ratings List Upgraded To From Barbados Transfer & Convertibility Assessment Local Currency B B- Barbados Senior Unsecured B B- Upgraded; Ratings Affirmed To From Barbados Sovereign Credit Rating B/Positive/B B-/Positive/B =========== B R A Z I L =========== BRAZIL: Fiscal Measures Could Be Announced This Week, Haddad Says ----------------------------------------------------------------- Reuters reports that Brazil's Finance Minister Fernando Haddad said on Nov. 4 that fiscal measures to support the country's fiscal framework could be announced this week, adding that the government is in the final stages of preparation for the announcement. Speaking to reporters, he said President Luiz Inacio Lula da Silva is expected to call him later on Nov. 4 for a meeting on the matter. "After the meeting with him, I'll speak with you," he said. According to Reuters, the minister had previously stated that the government would announce measures after the municipal elections concluded at the end of October to give longevity to new fiscal rules approved by leftist Lula last year. Reuters says the fiscal framework caps overall spending growth to a certain limit above inflation. However, with many mandatory expenses - such as social benefits and pensions - growing at a faster rate, this dynamic squeezes the space for investments and operational expenses. Reuters relates that numerous economists warn that without reforms to curb expenditures, the framework would become unsustainable within a few years. Uncertainty over the fiscal outlook and the upcoming government measures have been affecting Brazilian asset prices, weakening the real against the U.S. dollar and pushing up future interest rates. Following the minister's comments on Nov. 4, the local currency strengthened 1.6%, Reuters notes. On Nov. 3, the Finance Ministry had already said that Haddad canceled a planned trip to Europe this week at Lula's request to address domestic issues. "As the president asked me to stay, and since things are technically very advanced, I believe we will be able to make the announcement this week," he said. 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. Moody's credit rating for Brazil was last set at Ba2 with positive outlook as of May 2024. 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. MRS LOGISTICA: Fitch Affirms BB+ Foreign Currency IDR ----------------------------------------------------- Fitch Ratings has affirmed MRS Logistica S.A.'s (MRS) Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB+', Long-Term Local Currency IDR at 'BBB-' and Long-Term National Scale Rating at 'AAA(bra)'. In addition, Fitch has affirmed the Long-Term National Scale Rating for MRS's unsecured debentures and promissory notes at 'AAA(bra)'. The Rating Outlook for the corporate ratings is Stable. The ratings reflect MRS's mature railroad operations, strong and resilient cash generation and margins, conservative capital structure and adequate liquidity, even during a period of heavy investment. The company's business model benefits from captive demand for transportation, take-or-pay protection clauses in most contracts and a well-defined tariff model. MRS's operating environment limits its Local Currency IDR, while Brazil's 'BB+' Country Ceiling constrains its Foreign Currency IDR. Key Rating Drivers Solid Business Profile: MRS operates a mature and important railway concession in Brazil, expiring in 2056. As the sole provider of railway transportation for its major clients, who are also its primary shareholders, MRS benefits from a strong market position. Its network connects Brazil's central region to key southeast ports. Limited competition from other transportation modes enhances cash flow predictability. Railway transportation in Brazil enjoys strong demand, low operator competition, high entry barriers, and medium to high profitability. These factors, along with substantial opportunities to improve the country's transportation infrastructure, create a favorable credit environment for Brazilian railway companies. Captive Clients: MRS's rating benefits from demand from captive customers, enforceable take-or-pay clauses in most contracts, and favorable long-term sector fundamentals. Its main individual shareholder, Minerações Brasileiras Reunidas S.A. (MBR), is controlled by Vale S.A. (Vale; IDRs 'BBB'/Positive). In 2023, MBR and Vale contributed nearly half of MRS's revenue. Both MBR and Vale rely heavily on MRS's iron ore transportation capacity. Other major shareholders are also heavily reliant on MRS for iron ore transportation including Companhia Siderúrgica Nacional (CSN; IDRs 'BB'/Stable; 37.2%), Usinas Siderúrgicas de Minas Gerais (Usiminas; IDRs 'BB'/Stable; 11.1%) and Gerdau S.A. (IDRs 'BBB'/Stable; 1.3%). Captive cargo makes up about 60% of the volume transported by MRS. Shareholder Agreement Protects Profitability: MRS's shareholder agreement includes a tariff model that protects the company's profitability and cash flow. In recent years, MRS's operating cash flow has shown resilience against economic downturns, unfavorable exchange rates, and fluctuations in fuel and iron ore prices. The tariff model sets annual freight rates for each captive client based on predefined cargo volumes and a target return over equity ratio. It also allows for monthly tariff adjustments in in response to significant cost increases, especially for fuel. This model has consistently delivered high EBITDA margins of 40%-50% through various economic cycles. Negative FCF: MRS should continue generating consistent operating cash flow to partially support its large investment plan, including meeting the requirements of the concession contract renewed in July 2022. The company's EBITDA is projected to gradually improve due to increases in both captive and non-captive freight orders and tariffs. Fitch believes the slowing demand from China for Brazilian iron ore will not significantly pressure MRS's volumes. Fitch's base scenario projects volumes of 204 million tons (TUs) in 2024 and 211 million TUs in 2025, driven primarily by general cargo demand. Average tariffs are expected to increase, ranging from BRL34 to BRL35 per ton during this period. The base case scenario projects MRS's EBITDA at BRL3.4 billion and cash flow from operations (CFFO) at BRL2.1 billion in 2024, and BRL3.7 billion and BRL2.6 billion, respectively, in 2025. Following the aggressive investments required by the concession contract, FCF is expected to be negative at BRL942 million in 2024 and significantly negative from 2025 onward, averaging BRL2.1 billion in the 2025-2026 period. Investments are expected to reach BRL11.8 billion from 2024 to 2026, with CFFO financing approximately 55% of investments in this period. Leverage Still Conservative: MRS's net debt is expected to remain conservative, even during a period of significant negative FCF. Fitch's base case projects net debt to rise to BRL5.0 billion by 2026, up from BRL3.4 billion as of June 30, 2024. Over the past five years, MRS's net debt/EBITDA ratio has been very conservative, around 1.3x, positioning the company well to manage its aggressive capex plan. Net leverage is anticipated to stay below 2.2x throughout the rating period, supported by increasing EBITDA. The company is also expected to maintain low funds from operations (FFO)-adjusted net leverage in the 1.5x-2.6x range. Fitch believes that a potential additional fee of BRL2.6 billion related to the renewed concession contract, currently under discussion with the federal government, should have a limited impact on MRS's conservative capital structure. In an alternative scenario, assuming this amount is paid in installments over the next 10-12 years and expected capex remains unchanged, net leverage should stay below 2.5x, consistent with the current ratings. Derivation Summary MRS's rating is below those of the other mature rail companies in North America, which are generally rated in the high 'BBB' to low 'A' range. MRS's 'BBB-' negatively compares with 'BBB+' of Grupo Ferroviario Mexicano, S.A. de C.V (GFM), in Mexico, and the 'A-' of Union Pacific Corporation (UPC), in the U.S. Although the three railroads operate with similar business profiles and competitive positions in their respective markets, GFM and UPC are more mature, more geographically diversified — accessing Mexican, U.S. and Canadian markets — and less leveraged rail companies. Compared with other Brazilian railroads, MRS is the best positioned given its strong business profile, with captive clients (shareholders) rated 'BBB' or below, consistent operating cash flow generation, relatively flat operating margins, low leverage and sound liquidity. Rumo S.A. (BB+/AAA(bra)/Stable) and VLI S.A. (AAA(bra)/Stable) have presented negative FCF trends from substantial capex plans that need to be financed, and higher leverage, which is compatible with their growth momentum. Key Assumptions - Heavy haul volumes increase by 1.9% in 2024 and 2.5% in 2025; - General cargo volumes increase by 5.3% in 2024 and 6.0% in 2025; - Tariffs increase by inflation; - Capex of BRL15.9 billion from 2024 to 2027, being BRL6.9billion in 2024-2025; - Payout of 25% of net income. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Improvements in cargo diversification and credit quality of its major clients/shareholders, combined with a better operating environment in Brazil, could lead to an upgrade on the Local Currency IDR; - A higher Country Ceiling for Brazil (currently at BB+) would lead to an upgrade on the Foreign Currency IDR. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Deterioration of EBITDA margins to lower than 35% on a sustainable basis; - Net debt/EBITDA ratios consistently above 3.0x; - Severe deterioration of credit quality of its major clients/shareholders; - A deterioration of Brazil's operating environment could lead to a downgrade on the Local Currency IDR; - A lower Country Ceiling for Brazil would lead to a downgrade on the Foreign Currency IDR. Liquidity and Debt Structure Healthy Liquidity: MRS presents a robust liquidity profile, supported by an adequate cash position and manageable debt amortization schedule. The company also benefits from proven access to banking and capital markets. The BRL2.5 billion of debentures issued in 3Q2024 further enhanced the company's liquidity, strengthening its ability to refinance its short-term debt and face the expected negative FCF. Fitch expects MRS's cash to remain around BRL4.0 billion by the end of the year, trending toward BRL1.5 billion to BRL2.5 billion in the following years. As of June 2024, MRS's cash and marketable securities reached BRL2.6 billion, which covered short-term debt of BRL1.2 billion by 2.2x. Total debt was BRL6.0 billion, mainly comprised of BRL3.7 billion in debentures (60%) and BRL870 million in outstanding debt with Banco Nacional de Desenvolvimento Econômico e Social (BNDES; 20%). Issuer Profile MRS is a Brazilian railroad concessionaire operating the mature Southeastern stretch of the country's railnet. Its cargo includes iron ore, coal, coke (60% of total volume) and general cargo, including agricultural, siderurgy and cement products (40% of total volume). MRS's capital belongs to Vale (44% of capital, directly and indirectly), CSN (38% of capital, directly and indirectly), Usiminas (11%) and others. Summary of Financial Adjustments - Net derivatives adjusted to debt; - D&A removed from costs and allocated as other operating expenses. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- MRS Logistica S.A. LT IDR BB+ Affirmed BB+ LC LT IDR BBB- Affirmed BBB- Natl LT AAA(bra)Affirmed AAA(bra) senior unsecured Natl LT AAA(bra)Affirmed AAA(bra) =============== C O L O M B I A =============== COLOMBIA: Senate Agrees to Begin Decentralizing Government ---------------------------------------------------------- Adriaan Alsema at Colombia Reports relays that Colombia's Senate voted to dramatically increase the budgets of regional authorities ahead of a debate to decentralize government. Colombia Reports relates that the bill, which has yet to be approved by the House of Representatives, obligated the national government to gradually increase the funds sent to mayors and governments from 20% of the national government's revenue in 2027 to 39.5% in 2039. According to Colombia Reports, the decentralization will allow local and regional authorities to exercise more control over economic development, poverty reduction, public healthcare and education. Economists had criticized the move to begin sending funds to regional and local governments, arguing that Congress has yet to approve legislation that decentralizes spending. Colombia Reports notes that Congress initially wanted to send regional and local governments as much of 46.5% of the national revenue before 2034, but agreed on a less ambitious decentralization in an attempt to soothe criticism from within the Finance Ministry. Colombia Reports relates that the senators also agreed to add a clause that would suspend the increasing of funds for local and regional governments until after Congress regulates decentralized spending. The compromise received all but absolute support in the Senate and is expected to see little opposition in the House. The bill, which was sponsored by Green Alliance Senator Ariel Avila, can also count on the support of President Gustavo Petro, adds Colombia Reports. As reported in the Troubled Company Reporter in August 2024, Fitch Ratings affirmed Colombia's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB+' with a Stable Rating Outlook. ============= E C U A D O R ============= BANCO DEL AUSTRO: Fitch Affirms 'CCC+' LongTerm IDR --------------------------------------------------- Fitch Ratings has affirmed Banco del Austro S.A.'s (Austro) Long-Term Issuer Default Rating (IDR) at 'CCC+', Short-Term IDR at 'C' and Viability Rating (VR) at 'ccc+'. Fitch has also affirmed the Government Support Rating (GSR) at 'ns'. Key Rating Drivers IDRs and VR Operating Environment with Strong Influence: Austro's VR underpins its IDR. However, the ratings are capped by Fitch's assessment of the operating environment (OE) score of 'ccc+'. Ecuador's sovereign rating and broader OE considerations highly influence the bank's VR. Heightened sovereign political, fiscal and financing risks, along with the potential for renewed social unrest, could lead to an increase in non-performing loans (NPL), thereby limiting the bank's profitability and internal capital-generation capacity. Moderate Franchise and Business Model: Austro is the eighth largest bank in Ecuador in terms of gross loans (3.5%), assets (4.1%) and deposits (4.5%). The Ecuadorian financial system is highly concentrated, with the six largest private banks holding approximately 80.3% of total assets as of 3Q24. Austro's loan portfolio is fairly diversified, with consumer loans representing 60.8% of total loans, commercial 35.6% and mortgages 3.7%. The business model has been stable through economic cycle. Asset Quality Metrics, Mitigating Deterioration: Austro's regulatory impaired loan ratio, which is more conservative than the 90-day delinquency measure, stood at 3.6% as of 3Q24, remaining stable compared to YE23 (3.6%). However, it is above its four-year average (2020-2023) of 3.1%, primarily due to the expiration of regulatory flexibility to delay the recognition of deteriorated loans at the beginning of 2023 and ongoing operating environment risks. To address this deterioration, the bank has reduced its growth appetite, resulting in a lower growth rate of its loan portfolio compared to the market since YE23. Fitch does not rule out additional pressures on asset quality metrics, driven by a challenging operating environment, weakened investment prospects, low economic growth, and the potential for renewed social unrest. For 2024, Fitch expects the NPL ratio to remain similar to what was seen as of 3Q24, while for 2025 it expects a slight recovery, driven by higher economic growth compared to 2024. Pressured Profitability: As of 3Q24, the operating profit to risk-weighted assets (RWA) ratio decreased to 0.7% from 1.2% as of YE23 (YE22: 1.7%), driven by a lower net interest income (NIM) due to higher interest expenses and increased impairment charges. Net income also experienced a decline due to a higher tax burden. Fitch expects profitability levels to remain pressured for the remainder of 2024, with a slight recovery in 2025 driven by higher credit demand due to increased economic growth and lower funding costs. Lower Capitalization Levels: Austro's Fitch Core Capital (FCC) to RWA ratio of 10.2% and the regulatory capital ratio of 11.5% as of 3Q24 remain adequate. In 3Q24, the bank's capitalization ratios decreased due to lower profitability and current regulations, which allow only 50% of realized net profits during the year to be included in regulatory capital. Fitch does not anticipate material deterioration in capitalization ratios, as growth is expected to be moderate and the bank is committed to retaining a minimum of 80% of profits to support growth. Adequate Funding Structure: Austro's funding structure is adequate, although less diversified than that of the largest banks, with customer deposits representing 93.1% of total funding as of 3Q24. The loans to deposits ratio remains sound at 70.9% as of 3Q24, and continues to compare favorably among its peers and the system's average (88.3%). Fitch doesn't expect any material changes to the bank's funding and liquidity metrics. Government Support Rating Austro's GSR is 'ns' because it is not considered a domestic systemically important bank (D-SIB), and therefore there is no reasonable assumption that such support will be available. Ecuador has limited financial flexibility to support Austro, and the bank does not have a lender of last resort. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade For the IDRs and VR: - The IDRs are sensitive to changes in the sovereign rating, or further deterioration within the local operating environment; - The IDRs and VR could be downgraded if there is significant deterioration in the banks' intrinsic credit profile, although downside potential due to intrinsic financial deterioration is somewhat limited, given the low VR level imposed by the sovereign constraint. For the GSR: - The GSR has no downgrade potential, as it is at the lowest possible level. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade For the IDRs and VR: - Austro's upside potential is limited. In the long term, a rating upgrade would require improved prospects for the operating environment, a meaningful and sustained increase in the bank's core profitability, and enhancements in the bank's credit quality and capitalization. For the GSR: - Ecuador's propensity or ability to provide timely support to Austro is not likely to change given the sovereign's low sub-investment-grade IDR. As such, the GSR has no upgrade potential. VR ADJUSTMENTS The VR of 'ccc+' has been assigned below the 'b-' implied VR due to the following adjustment reason: Operating Environment (negative). Fitch has assigned an Operating Environment score of 'ccc+' that is below the 'b' category implied score due to the following adjustment reason: Sovereign Rating (negative). ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Banco del Austro S.A. LT IDR CCC+ Affirmed CCC+ ST IDR C Affirmed C Viability ccc+ Affirmed ccc+ Government Support ns Affirmed ns ===================== P U E R T O R I C O ===================== GOLDEN TRIANGLE: Commences Bankruptcy Proceeding ------------------------------------------------ Golden Triangle Realty S.E. filed Chapter 11 protection in the District of Puerto Rico. According to court documents, the Debtor reports between $10 million and $50 million in debt owed to 1 and 49 creditors. The petition states funds will not be available to unsecured creditors. About Golden Triangle Realty S.E. Golden Triangle Realty S.E. is engaged in activities related to real estate. Golden Triangle Realty, S.E. filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-04514) on Oct. 21, 2024. In the petition signed by David Santiago Martinez, president, the Debtor disclosed $19,811,659 in assets and $47,255,382 in liabilities. Judge Maria De Los Angeles Gonzalez oversees the case. Alexis Fuentes-Hernandez, Esq., represents the Debtor as counsel. GOLDEN TRIANGLE: Seeks to Hire Alexis Fuentes-Hernandez as Counsel ------------------------------------------------------------------ Golden Triangle Realty, SE seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Alexis Fuentes-Hernandez, Esq., an attorney practicing in San Juan, Puerto, to handle its Chapter 11 case. The attorney will be paid at his hourly rate of $250 plus reimbursement for expenses incurred. The attorney also received a retainer of $15,000. Mr. Fuentes-Hernandez disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Alexis Fuentes-Hernandez, Esq. P.O. Box 9022726 San Juan, PR 00901 Telephone: (787) 722 5216 Facsimile: (787) 722 5206 Email: fuenteslaw@icloud.com About Golden Triangle Realty Golden Triangle Realty, S.E. filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.P.R. Case No. 24-04514) on Oct. 21, 2024. In the petition signed by David Santiago Martinez, president, the Debtor disclosed $19,811,659 in assets and $47,255,382 in liabilities. Judge Maria De Los Angeles Gonzalez oversees the case. Alexis Fuentes-Hernandez, Esq., represents the Debtor as counsel. ===================================== T R I N I D A D A N D T O B A G O ===================================== NCB FINANCIAL: S&P Assigns 'B-/B' ICRs, Outlook Stable ------------------------------------------------------ S&P Global Ratings assigned its 'B-' long-term and 'B' short-term issuer credit ratings to NCB Financial Group Ltd. (NCBFG). The outlook is stable. The company benefits from business and geographic diversification, offering a wide variety of banking operations through its direct bank subsidiaries, National Commercial Bank Jamaica Ltd. (NCBJ; BB-/Stable/B) and Clarien Group Ltd. (not rated), domiciled in Jamaica and Bermuda, respectively. In addition, the Group has insurance operations through its Trinidad and Tobago-based subsidiary, Guardian Holdings Ltd. (GHL; not rated): NCBJ and its subsidiaries constitute NCBFG's largest operating subsidiary, representing about half of the Group's assets. NCBJ is the leading player in the Jamaican banking industry and benefits from solid brand recognition. It provides a wide variety of banking products and services, mostly in Jamaica. Clarien represents nearly 10% of the Group's assets and conducts banking, investment, and trust business in Bermuda. In June 2024, the Group, as part of its optimization strategy, announced that it entered a share purchase agreement to sell part of its equity stake in Clarien. The transaction that is subject to regulatory approvals, should not have a material impact on NCBFG's future earnings. GHL, which makes up just under 40% of the Group's assets, underwrites a large variety of life and non-life insurance products--mostly individual life, health, annuities, auto, and traditional property/casualty insurance--in several Caribbean islands. Also, after the restructuring in operations last year, we expect the Group to focus on obtaining operational and capital efficiencies and synergies, improving cross-selling in the jurisdictions where it operates, and improving customers' experience. Management is implementing enhancements in governance as part of its strategy. Nonetheless, NCBFG's capital and earnings still show a limited capacity to withstand a stress scenario of credit losses, according to our risk-based capital model. S&P said, "We base our assessment of NCBFG's capital and earnings on its projected average risk-adjusted capital (RAC) ratio of about 3.5% for 2024-2025, up from 2.6% at fiscal year ended September 2023, given that GHL's incorporation somewhat pressured capital adequacy by adding insurance risks to the Group's balance sheet." Banking and insurance subsidiaries benefit from good regulatory capital buffers, which would help them to face potential stress scenarios. The latter growth will stem from investment income and growth in insurance contracts. We incorporate equity issuances from fiscal year 2024 and the implementation of International Financial Reporting Standard 17 in the insurance segment, which changes the recognition and measurement of insurance contracts mainly in the life, health, and pension business unit. S&P said, "The rapid external growth strategy in recent years could increase risks that our RAC framework doesn't currently fully capture. On the other hand, the incorporation of Clarien and GHL has diversified risks in the Group by growing the customer base and diversifying the investment portfolio. GHL also introduces certain risks to the Group, such as a large position in equity securities as part of its strategy to match insurance liabilities, as well as foreign exchange risks due to asset-liability mismatch in some of the currencies in which it holds asset and liability positions. However, we don't think such risks significantly affect NCB's creditworthiness." Clarien continues to influence the Group's asset quality. The Bermudan bank has a loan portfolio with lower credit quality than that of NCBJ. Metrics improved after the pandemic and have remained stable since then. The reduction in the exposure to Clarien at NCBFG and the sale of NCB Cayman at NCBJ could improve consolidated asset quality metrics at the Group level. The Group's credit portfolio is still somewhat concentrated in high-risk segments that are more vulnerable to soft economic conditions, such as tourism and construction. NCBFG is working on reducing concentrations, with a decline in larger and more cyclical sectors and an increase in retail and enterprises. Customer deposits represented 57% of the Group's funding base on average over the past three fiscal years. The company also uses funding instruments such as interbank loans, repurchase agreements, and securitization arrangements. NCBFG's stable funding ratio averaged 111% over the past three fiscal years, indicating more than enough stable funding sources to fully cover its funding needs. The ratio of broad liquid assets to total short-term wholesale funding averaged 2.9x over the past three fiscal years. S&P said, "We think the Group's large base of liquid assets and stable funding structure would allow it to successfully manage its liquidity even under stressful conditions. Moreover, we expect the Group to maintain effective liquidity risk controls and conservative liquidity management." Meanwhile, GHL has solid liquidity and good earnings capacity to cover its insurance-related liabilities and financial obligations on its own. Double leverage -- measured as investments in subsidiaries over shareholders' equity at the unconsolidated holding company level -- was 125% by the end of September 2023 and 115% as of June 2024. S&P believes NCB has sufficient cash inflows from dividends to meet its financial obligations and holding expenses. ********* 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 2024. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *