/raid1/www/Hosts/bankrupt/TCRLA_Public/250317.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
Monday, March 17, 2025, Vol. 26, No. 54
Headlines
A R G E N T I N A
ARGENTINA: Milei Signs Executive Decree to Back New IMF Program
ARGENTINA: Poverty Rate Reached 41.6% in 2024, UCA Observatory Says
ARGENTINA: President Says New IMF Deal Will Wipe Out Inflation
B E R M U D A
BORR DRILLING: Moody's Affirms 'B3' CFR, Alters Outlook to Stable
INVESTMENT ENERGY: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
C O S T A R I C A
REVENTAZON FINANCE: Fitch Alters BB+sf Notes Rating Outlook to Pos.
J A M A I C A
JAMAICA: BOJ Generates $6.16 Billion in Net Profits
M E X I C O
ACCURIDE CORP: Completes Restructuring With Interim CEO, New Owner
KUO SAB: Fitch Affirms 'BB' Long-Term IDR, Alters Outlook to Pos.
P E R U
TELEFONICA DEL PERU: Moody's Cuts CFR & Sr. Unsec. Debt Rating to C
P U E R T O R I C O
BED BATH: Investors Fail in Bid to Restore Class Status
LUCENA DAIRY: Court Extends Cash Collateral Access to March 31
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Faces Challenges if Gas Deal Collapses
- - - - -
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A R G E N T I N A
=================
ARGENTINA: Milei Signs Executive Decree to Back New IMF Program
---------------------------------------------------------------
Manuela Tobias at Bloomberg News reports that President Javier
Milei signed an emergency executive decree to mandate a new deal
between Argentina and the International Monetary Fund, signaling
that a staff-level agreement is closer than ever.
Under Argentine law, Congress has to approve of any new IMF
program. But rather than send lawmakers a bill for their approval,
as his predecessor did, Milei issued an executive order that will
go into effect unless it is overturned by both chambers of
Congress, according to Bloomberg News. Approval in a single
chamber will also cement it into law, Bloomberg News notes.
The government argues that because the funding will be used to pay
off the Central Bank's debt to the Treasury, the loan will actually
reduce the country's debt load, Bloomberg News says. It also said
the country's grave economic situation justified borrowing from the
IMF by decree instead of obtaining congressional approval,
Bloomberg News discloses.
Negotiations over a new program are still underway, although the
executive order sends a strong signal they're nearing their end,
Bloomberg News relays. In a recent interview, Economy Minister
Luis Caputo said his team and IMF staff had already agreed on a sum
and program details, but that the new agreement still had to be
approved by the fund's executive board. He also said that the
program would be finalized by the end of April, Bloomberg News
discloses.
Argentina is the fund's biggest debtor and a new deal with the fund
would be its 23rd such accord, the most by any country with the
international lender, Bloomberg News relays.
The new program holds the key to Argentina's ability to lift
capital controls, which would draw much-needed investment into the
country, Bloomberg News notes. Asked whether a rejection in
Congress would be frowned upon by the IMF, chief spokeswoman Julie
Kozack said the process was a matter of local law, Bloomberg News
says.
"Strong ownership and broad support are key to the program's
success. Here I want to emphasize, though, that securing
congressional support is a decision of the authorities as
legislated in Argentine domestic law," she said during a regular
press conference, Bloomberg News relates.
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 authorities 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.
On Feb. 17, 2025, S&P Global Ratings lowered its local currency
sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and
its national scale rating to 'SD' from 'raB+'. At the same time,
S&P affirmed its 'CCC/C' foreign currency sovereign credit ratings
on Argentina. The outlook on the long-term foreign currency rating
remains stable.
On Jan. 8, 2025, Moody's Ratings raised Argentina's local currency
ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1
from Caa3. Moody's said the decision to raise the local and
foreign currency ceilings reflects the increased predictability and
the greater consistency in economic policy that has led to a rapid
reduction in monetary and fiscal imbalances that were stoking very
high inflation.
On Nov. 15, 2024, Fitch Ratings upgraded Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CC',
and its Long-Term Local-Currency IDR to 'CCC' from 'CCC-'.
Argentina's upgrade to 'CCC' from 'CC' reflects developments that
have improved Fitch's confidence in the authorities' ability to
make upcoming foreign-currency bond payments without seeking relief
of some sort.
DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency Issuer Ratings to B (low) from CCC on November 25, 2024.
The trend on all ratings is Stable.
ARGENTINA: Poverty Rate Reached 41.6% in 2024, UCA Observatory Says
-------------------------------------------------------------------
Agustina Bordigoni at Buenos Aires Times reports that in a recent
speech to Congress, President Javier Milei claimed that ten million
people had been lifted out of poverty during his administration. He
cited data from institutions such as the Universidad Torcuato Di
Tella and the Universidad Catolica Argentina (UCA), explaining that
poverty "on a biannual frequency, fell from 56 percent to 33
percent," according to Buenos Aires Times.
However, UCA's prestigious Observatorio de la Deuda Social (Social
Debt Observatory of the Catholic University of Argentina, ODSA-UCA)
puts these results into perspective: poverty has indeed fallen, but
only to the levels of 2023, after a significant rise in the first
quarter of 2024, the report notes.
For the poverty watchdog, consumption levels and saving capacity do
not align with a meaningful reduction in poverty, the report
relays. When considering other factors such as food security,
access to healthcare, decent employment, education, public
services, and housing, "the current picture is different:
multidimensional poverty increased year-on-year from 39.8 percent
to 41.6 percent," said ODSA-UCA in a recent study, the report
discloses.
The report relates that the government's official poverty
calculation, tracked by the INDEC national statistics bureau,
"measures household income and whether it is sufficient to cover
the cost of a basic basket of goods," explained Juan Ignacio
Bonfiglio, a researcher at the institution. However, "it may be
that a household's income surpasses the poverty or extreme poverty
threshold, but those earnings still do not allow the household to
eat properly, afford medication, or receive adequate healthcare,"
warned the experts, the report relays. "These are some of the
components considered when defining multidimensional poverty," he
added.
The ODSA-UCA report, titled 'Social debts on the waiting list:
Social balance 2024,' indicates that while poverty and extreme
poverty rates reached 38.3 percent and 9.2 percent respectively in
the third quarter of 2024, "there are reasons to believe these
figures are overestimated," the report notes.
If poverty is measured by income, Bonfiglio continued, "when there
is strong volatility, as we have seen since mid-2023 and in the
early months of 2024, short-term distortions can lead to a sharp
rise in poverty, potentially overstating the increase," the report
discloses.
"When this process stabilizes, as has now happened, the poverty
rate may appear to decline significantly," the expert said, noted
the report. "The drop in poverty, according to available data
projections, could also be overstated."
Amid a context of the devaluation of the peso, removal of price
controls and budget-slashing austerity measures, the UCA report
explains "poverty increased year-on-year from 38.7 percent to 54.9
percent, while extreme poverty rose from 8.9 percent to 20.3
percent," the report relays. These surges are used as reference
points to present a subsequent decline in the indicators, the
report notes.
"A structural floor of chronic poverty remains, difficult to break
without more and better jobs with improved wages, especially for
poor informal workers," the report details. However, the number of
"working poor" (those below poverty line with formal jobs)
increased: the third quarter of 2024 closed with an average of 29
percent (nearly one percentage point higher than the same period in
2023, when it stood at 28.1 percent), after peaking at 44.6 percent
in the first quarter of 2024, the report recalls.
According to data from INDEC, the proportion of workers without
pension contributions increased from 35.8 percent in the third
quarter of 2023 to 36.7 percent in the same period of 2024, the
report discloses.
On this point, the UCA states that "it is worth noting a return to
pre-austerity crisis unemployment levels as a result of an increase
in employment, albeit mostly informal and more precarious," Buenos
Aires Times notes.
It concludes: "Statistical poverty and extreme poverty levels in
the third quarter of 2024 were similar to those of the third
quarter of 2023, and even with expectations that the biannual
average for 2024 will be lower than that of the previous year's
final semester," paradoxically, "mass consumption levels do not
seem to reflect this trend," the report relays.
The report concludes that structural deprivation has also worsened.
"A crucial aspect is that the disproportionate rise in public
service costs has increased the burden of fixed household expenses
over variable expenses," it reads, the report relays.
This explains why, "despite similar poverty and extreme poverty
levels to a year ago," problems like "multidimensional poverty,
food insecurity, lack of access to medication or healthcare
services, unpaid debts and the inability to repair homes have
continued to rise," the report notes.
"We can question the real impact of the decline in poverty. There
remain several aspects that are still severely lagging. We need a
long-term analysis to determine whether, as the macroeconomic
crisis subsides, this translates into a genuine improvement in
people's living standards," said Bonfiglio, the report says.
Data from the UCA's social statistics platform shows that children
and adolescents, aged 0 to 17, have been the most affected by
ongoing economic turmoil the report discloses. Child poverty
reached 65.5 percent in the third quarter of 2024 - the highest
level in 20 years, according to UCA data, the report relays. In
2005, the level stood at 67.5 percent; for comparison, the lowest
level was in 2011, at 35.7 percent. From that point on, it has
risen, the report notes.
The percentage of people experiencing food insecurity also
increased, rising from 32.2 percent to 35.5% between the fourth
quarter of 2023 and the same period in 2024, the report recalls.
UCA defines this as the proportion of children and adolescents
living in households "where food consumption has been reduced in
the past 12 months due to economic difficulties," the report says.
However, one indicator that showed improvement was child labour,
which declined from 9.5 percent in 2023 to 8.8 percent in 2024,
adds the report.
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 authorities 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.
On Feb. 17, 2025, S&P Global Ratings lowered its local currency
sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and
its national scale rating to 'SD' from 'raB+'. At the same time,
S&P affirmed its 'CCC/C' foreign currency sovereign credit ratings
on Argentina. The outlook on the long-term foreign currency rating
remains stable.
On Jan. 8, 2025, Moody's Ratings raised Argentina's local currency
ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1
from Caa3. Moody's said the decision to raise the local and
foreign currency ceilings reflects the increased predictability and
the greater consistency in economic policy that has led to a rapid
reduction in monetary and fiscal imbalances that were stoking very
high inflation.
On Nov. 15, 2024, Fitch Ratings upgraded Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CC',
and its Long-Term Local-Currency IDR to 'CCC' from 'CCC-'.
Argentina's upgrade to 'CCC' from 'CC' reflects developments that
have improved Fitch's confidence in the authorities' ability to
make upcoming foreign-currency bond payments without seeking relief
of some sort.
DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency Issuer Ratings to B (low) from CCC on November 25, 2024.
The trend on all ratings is Stable.
ARGENTINA: President Says New IMF Deal Will Wipe Out Inflation
--------------------------------------------------------------
Buenos Aires Times reports that President Javier Milei says that a
new agreement with the IMF will clean up the accounts of the
country's Central Bank and wipe out inflation.
In an op-ed published in theLa Nacion daily, the head of state said
the impending deal would allow the government to pay off its debts
to the bank, according to Buenos Aires Times.
The president blames Argentina's persistently high inflation rate
on an excess money supply partly caused by the deterioration of
Central Bank (BCRA) assets, the report notes.
"Thus, the money received from the IMF will be used by the Treasury
to cancel part of its debt with the Central Bank," he wrote, the
report relays. "Therefore, the agreement with the IMF seeks to
restore the assets of the BCRA, so that inflation is only a bad
memory of the past."
The day before Milei's article appeared, Economy Minister Luis
Caputo again said a new finance program had been agreed between
Argentina and IMF staff, the report notes. He described its need
as "urgent."
"The program and the amount have been defined with the staff [of
the IMF]. The staff agreed and now what they are doing is taking
it to the board, which is ultimately the one that decides whether
to sign the agreement," Caputo said in an interview with the LN+
channel, the report says.
The deal must now go to the executive board of the IMF, which is
the world's lender of last resort and plays a stabilizing function
in the world economy, the report discloses.
An IMF spokeswoman had confirmed that negotiations with Argentina
"continue constructively" but remain under discussion, the report
relays.
Argentina is hoping to conclude the deal in the first quarter of
the year, and local media reports estimate it will represent a loan
of around US$10 billion, the report notes. Wall Street analysts
say it could be as high as US$20 billion, the report says.
IMF spokeswoman Julie Kozack said that "broad political and social
support" could "improve the implementation of the program" but is
not a requirement of the Fund, the report notes.
Milei said the government would send a decree to Congress - and not
a bill - to obtain support for a future deal, Buenos Aires Times
discloses.
"If there is one thing we can justify, it is that this agreement is
of necessity and urgency," Caputo said, arguing that a debate in
both chambers would delay the program, notes the report. "We can't
go round in circles,' he added, assuring that the IMF "is not
asking for a devaluation" of the peso.
Argentina has one of the highest inflation levels in the world,
amounting in January to 84.5 percent year-on-year, the report
relays.
But since Milei took office promising to cut spending and address
government debt, price rises have slowed, with inflation dropping
from 211.4 percent in 2023 to 117.8 percent in 2024, 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 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 authorities 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.
On Feb. 17, 2025, S&P Global Ratings lowered its local currency
sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and
its national scale rating to 'SD' from 'raB+'. At the same time,
S&P affirmed its 'CCC/C' foreign currency sovereign credit ratings
on Argentina. The outlook on the long-term foreign currency rating
remains stable.
On Jan. 8, 2025, Moody's Ratings raised Argentina's local currency
ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1
from Caa3. Moody's said the decision to raise the local and
foreign currency ceilings reflects the increased predictability and
the greater consistency in economic policy that has led to a rapid
reduction in monetary and fiscal imbalances that were stoking very
high inflation.
On Nov. 15, 2024, Fitch Ratings upgraded Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CC',
and its Long-Term Local-Currency IDR to 'CCC' from 'CCC-'.
Argentina's upgrade to 'CCC' from 'CC' reflects developments that
have improved Fitch's confidence in the authorities' ability to
make upcoming foreign-currency bond payments without seeking relief
of some sort.
DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency Issuer Ratings to B (low) from CCC on November 25, 2024.
The trend on all ratings is Stable.
=============
B E R M U D A
=============
BORR DRILLING: Moody's Affirms 'B3' CFR, Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Ratings affirmed Borr Drilling Limited's (Borr) B3
corporate family rating, B3-PD probability of default rating and
the B3 rating on the backed senior secured notes issued by Borr's
wholly-owned subsidiary, Borr IHC Limited. Concurrently, Moody's
changed the outlook on both entities to stable from positive.
RATINGS RATIONALE
The rating action reflects Moody's expectations that lower
contractual coverage over the next 12 – 18 months will hinder
Borr's ability to deleverage in line with Moody's previous
expectations, leading to credit metrics that will continue to
position the company adequately within the B3 rating category.
Borr demonstrated solid performance in 2024, with a 31% revenue
growth and gross leverage (Moody's-adjusted) of 4.2x, down from
4.7x in 2023. Nevertheless, the deleveraging trajectory is slower
than Moody's had initially expected due to significant additional
debt drawn to finance the acquisition of two newbuild rigs in 2024.
Furthermore, contract suspensions by Saudi Arabian Oil Company
(Aramco, Aa3 Stable) and the resulting overcapacity in rig supply
have adversely affected Borr's current utilisation levels and
future re-contracting prospects.
Issues with receivables collection last year from Petroleos
Mexicanos (PeMex, B3 Negative) had a $150 million negative impact
on free cash flow (FCF) generation. However, the company has
confirmed that at least 75% of these receivables will be recovered
at the beginning of 2025, hence Moody's largely see it as a timing
impact.
Borr ended the year with a highly negative FCF of $408 million,
affected by the aforementioned receivables collection issues,
alongside expenditures on the delivery of two new rigs and several
special periodic surveys.
Moody's expects softened trading conditions to persist through the
first half of 2025, with heightened re-contracting risks due to
current overcapacity, but also uncertainty around the restart of
drilling activities in Mexico, after PeMex suspended a number of
contracts with Borr in January 2025. Moody's expects the slowdown
in re-contracting activity to be temporary, with underlying market
fundamentals remaining supportive, backed by robust oil and gas
prices and the need for producers to replace reserves.
There is still limited visibility into Borr's 2025 revenues, with
three out of 24 rigs remaining uncontracted, three rigs receiving
temporary suspensions from PeMex, and another three units
exhausting their backlog over the course of the year. Contract
visibility further declines into 2026, with only 23% of the fleet
being contracted at this stage. Moody's projects Moody's-adjusted
EBITDA to remain broadly flat in 2025 and 2026 at around $500
million, assuming the company reaches around 75%-80% contracted
coverage. As a result, gross leverage (Moody's-adjusted) is
expected to be around 3.8x. FCF is expected to be around $260
million in 2025, positively impacted by the recovery of the delayed
PeMex payments, lower capital investment requirements, and modest
shareholder remuneration.
Borr's rating continues to reflect the company's relatively large
and high-quality fleet of jack-up rigs, as well as its global
presence in major hydrocarbon-producing basins. At the same time,
the rating considers the cyclical nature of offshore drilling
activities, a high debt quantum with a demanding amortisation
profile, customer concentration on PeMex, and a still limited track
record of adhering to stated financial policy commitments.
LIQUIDITY
Borr's liquidity is adequate. Moody's assessments reflects:
-- Expected retention of cash balances commensurate with the needs
of the business
-- Expected sustained positive FCF generation from 2025 onwards
-- Access to a $150 million (excluding $45 million reserved to
letters of credit) committed revolving credit facility (RCF),
currently undrawn
-- Tight net leverage covenant headroom under Moody's base case
-- Absence of assets readily available for disposal
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
ESG considerations have a discernible impact on the current rating,
which is lower than it would have been if ESG risks did not exist.
The negative impact of ESG considerations on Borr's rating is
higher than for an issuer scored CIS-3 and is driven by high
environmental, social and governance risks. Borr's earnings and
cashflow generation solely depend on continued exploitation of
hydrocarbon resources, which is a source of environmental and
social risks in the context of energy transition.
Governance considerations incorporated into Borr's ratings reflect
risks primarily arising from tolerance for high leverage in the
context of inherently very volatile offshore drilling industry.
There is public commitment to a more conservative set of financial
policies, including prioritising balance sheet strength over
shareholder remuneration and retention of cash balances that are
commensurate with the needs of the business at all times. Despite
the clearly communicated targets, a track record of abiding by the
stated financial policy framework remains still relatively short.
STRUCTURAL CONSIDERATIONS
Borr's capital structure includes $1,890 million outstanding senior
secured notes, $150 million super senior RCF (respectively, issued
and borrowed by Borr IHC Limited) and $250 million of senior
unsecured convertible bond due February 2028 (issued by Borr
Drilling Limited). The RCF ranks super senior in an enforcement
scenario. The senior secured notes are rated in line with CFR at B3
because the instrument represents the majority of the capital
structure. The convertible bond ranks behind the senior secured
notes, given its status as unsecured and unguaranteed liability
subject to structural subordination.
OUTLOOK
The stable outlook reflects Moody's expectations that Borr will
maintain credit metrics at levels commensurate with the current
rating guidance by successfully re-contracting its rigs, generating
sufficient free cash flow to satisfy debt servicing requirements,
and managing its balance sheet conservatively by prioritising debt
reduction over shareholder remuneration.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Borr's ratings could be upgraded as a result of:
-- Material reduction in gross debt from current levels so that
its credit metrics are less sensitive to a deterioration in
financial performance
-- Sustained high fleet utilisation, growing revenue backlog and
visibility in an improving industry environment
-- Moody's-Adjusted Debt / EBITDA sustainedly below 3.5x and
-- Longer track record of adhering to the stated financial policy,
and
-- Achievement and maintenance of a strong liquidity position
Conversely, Borr's ratings could be downgraded following:
-- Difficulty in re-contracting rigs or new contracts are signed
at significantly lower day-rates
-- Sustained negative free cash flow generation, for instance as a
result of a deterioration in operating performance or aggressive
financial policies
-- Moody's-Adjusted Debt / EBITDA sustainedly above 4.5x
-- Interest coverage falling below 1.5x, or
-- Weakening liquidity
RATING METHODOLOGY
The principal methodology used in these ratings was Oilfield
Services published in January 2023.
PROFILE
Borr provides worldwide offshore contract drilling services to the
oil and gas industry. It owns and operates a modern fleet of 24
jackup rigs. In 2024, Borr generated revenue of $1,011 million and
Moody's-Adjusted EBITDA of $498 million (based on preliminary
results). Operational since 2018, the company is listed on the New
York Stock Exchange. As of March 11, 2024, Borr had a market
capitalisation of around $580 million.
INVESTMENT ENERGY: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Investment Energy Resources Limited's
(IERL) Long-Term Issuer Default Rating (IDR), Local Currency IDR
and senior secured notes at 'BB'. The Rating Outlook is Stable.
IERL's ratings reflect the credit risk of off-takers from its
diversified portfolio of generation assets, with around 60% of
EBITDA derived from distribution companies (discos) rated 'BB-' or
above. The ratings also account for the operational and financial
volatility typical of a purely renewable asset base. Additionally,
the ratings consider a 4.5x average leverage (gross debt/EBITDA)
profile, solid liquidity, and sound command of geographic and
operational challenges.
Key Rating Drivers
Generation Exposure Risk: IERL's fully renewable resource mix
exposes it to cash flow risk during periods of weaker hydrological,
wind and or solar production. Total generation declined in each of
the past two years, including 13.5% yoy decrease in 2024, largely
due to sustained drought in Guatemala and temporary Guatemalan
hydro asset outages. This led to increased spot market purchases at
historically high prices, reducing EBITDA by 19% yoy, increasing
leverage (gross debt/EBITDA) to 5.4x, and driving negative net
income.
Fitch expects leverage to improve to 4x and below on a sustained
basis, driven by improved hydrology, EBITDA growth, annual debt
amortization and reduced interest costs. Liquidity should remain
above USD80 million, and EBITDA interest coverage exceed 3x.
Off-Taker Profiles Supports Ratings: IERL's ratings also reflect
the off-taker risk profiles of six operating environments, all of
which improved over the past year. EBITDA generated by the largest
off-taker, Guatemala-based Energuate (BB/Positive), generally
covered hard currency interest payments, positioning IERL's ratings
below Guatemala's 'BBB-'Country Ceiling.
Honduras (30% of EBITDA, not rated) poses the company's biggest
off-taker risk due to the repeated accumulation of accounts
receivable by the country's distributor. IERL mitigates this risk
by maintaining robust and flexible cash reserves and reducing debt
through multi-year lump payments, for example USD70 million in
2023.
Contracted Cash Flows: IERL maintains predictable cash flows
supported by long-term U.S. dollar-denominated contracts and a low
marginal cost of production from renewable assets. On average, 83%
of the company's hydroelectricity generation capacity and 100% of
its solar and wind capacity are contracted under power purchase
agreements (PPAs) with a weighted average remaining life of 11
years. Off-takers for the solar and wind take-or-pay contracts are
obliged to purchase 100% of generation, providing solid revenue
stability amid generation variability.
Diversified Business Portfolio: IERL's diversified portfolio
comprises 846MW of utility-scale renewable generation assets across
Central America and the Dominican Republic. This includes 38%
hydroelectricity, 24% solar, and 38% wind, through full ownership
and 50% joint venture stakes, with the latter including solar units
in the Dominican Republic and El Salvador. Fitch expects ongoing
generation of 2.5 terawatt hours, subject to change given
hydrological production trends.
Strong Shareholder Group: IERL is rated on a standalone basis;
however, its business profile and regional name recognition benefit
from the reputational and logistical strength of its parent company
Corporacion Multi Inversiones (CMI, not rated). CMI is a
family-owned multinational conglomerate and with operations in 16
countries across agribusiness, restaurants, real estate,
electricity generation, and finance. CMI has shown commitment to
developing its energy business unit and has made significant
investments in this industry, while providing back-office support
and access to credit to CMI Energia.
Peer Analysis
IERL's 'BB' rating reflects its diversified and complementary asset
portfolio, supported by long-term U.S. dollar-denominated contracts
that mitigate exposure to weak off-takers in challenging operating
environments. IERL maintains a comparatively stronger EBITDA margin
of around 50% due to its low variable cost from a pure-renewable
asset base. However, it has a smaller scale of operations compared
to Kallpa Generación S.A. (BBB-/Stable) and AES Panama Generation
Holdings, S.R.L. (AESPGH; BB+/Stable).
Kallpa and AESPGH maintain thermal assets that mitigate periodic
volatility from their renewable hydro and solar resources, driving
EBITDA margins of around 40%. IERL has greater geographic
diversification than both companies; however, each company has
similar leverage expectations.
IERL's leverage profile of 4.5x and below aligns well with Orazul
Energy Peru S.A. (BB/Stable), a single-asset hydroelectric facility
in Peru. Both companies expect only modest capex investments.
Key Assumptions
- Improved yoy resource availability from 2024 to 2025, with an
average generation of 2,500 GWh per year through 2028.
- Around 83% contracted generation for the hydroelectric assets and
100% contracted for solar and wind assets through the cycle.
- Average monomic price (the combined price of energy and capacity)
of around USD101/MWh over 2025-2028.
- Ongoing annual amortization of USD16.3million in 2025 through
2027 and a balloon repayment in 2028.
- A material increase in annual year-end cash balances after
dividends, barring no large investments.
- Total maintenance capex at USD43 million for 2025-2028.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action:
- A material deterioration in the company's operating environment
and/or applicable Country Ceiling;
- Total debt/EBITDA of 5.0x on a sustained basis;
- Significant lag in collections that weakens the company's
liquidity position;
- Sustained disruptions in generation capacity due to either
technical or climatological issues.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action:
- A material improvement in the company's operating environment;
- Sustained gross leverage below 4.0x through the rating cycle.
Liquidity and Debt Structure
Cash equivalents totaled an estimated USD82 million as of Dec. 31,
2024, including a USD25 million revolver credit line. Fitch expects
increased year-end cash balances barring further investments in new
projects, and for the company to be FCF positive through the rating
cycle, sustaining this strong overall liquidity position.
Issuer Profile
Investment Energy Resources Limited (IERL) is the entity through
which the Corporacion Multi Inversiones corporate group (the CMI
Group) owns the largest and most diversified private renewable
energy portfolio in Central America and the Caribbean.
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
Investment Energy Resources Limited has an ESG Relevance Score of
'4' [+] for GHG Emissions & Air Quality due to the company's
advantage as a renewable generation company in Central America,
which has a positive 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 Prior
----------- ------ -----
Investment Energy
Resources Limited LT IDR BB Affirmed BB
LC LT IDR BB Affirmed BB
senior secured LT BB Affirmed BB
===================
C O S T A R I C A
===================
REVENTAZON FINANCE: Fitch Alters BB+sf Notes Rating Outlook to Pos.
-------------------------------------------------------------------
Fitch Ratings has affirmed Reventazon Finance Trust's USD135
million fixed-rate notes at 'BB+sf'. The Rating Outlook has been
revised to Positive from Stable.
The rating action follows Fitch's revision of Instituto
Costarricense de Electricidad's (ICE) Outlook to Positive from
Stable, which mirrors the recent revision of Costa Rica's sovereign
Outlook to Positive. For further details, please see "Fitch Revises
Costa Rica's Outlook to Positive; Affirms IDR at 'BB' dated Feb.
25, 2025 and "Fitch Revises Instituto Costarricense de
Electricidad's Outlook to Positive, Affirms 'BB' IDR" dated Feb.
27, 2025,.
Fitch's rating addresses timely payment of interest and ultimate
principal at legal maturity.
Entity/Debt Rating Prior
----------- ------ -----
Reventazon Finance
Trust
Notes 76138QAA5 LT BB+sf Affirmed BB+sf
Notes REGS USG75463AA02 LT BB+sf Affirmed BB+sf
KEY RATING DRIVERS
Repayment of Notes Reliant on ICE Lease Payments
The notes are backed by 100% participation interest on the
Inter-American Development Bank's (IDB) B-loan acquired through a
participation agreement, which gives the right to receive payments
under IDB's B-loan. ICE's lease payments from a non-cancellable
financial lease agreement for the operation and maintenance of the
hydropower plant will cover all payments on the loan.
Transaction Rating Linked to ICE's Issuer Default Rating (IDR)
Given the unconditional and irrevocable nature of the lease
payments, Fitch views the credit risk of these payments as linked
to ICE's credit quality. On Feb. 27, 2025, Fitch affirmed ICE's
Foreign and Local Currency IDRs at 'BB' and revised the Outlook to
Positive from Stable. Grupo ICE's ratings are supported by its
linkage to Costa Rica's sovereign rating (BB/Positive - Outlook
revised on Feb. 25, 2025), which stems from the company's
government ownership and the implicit and explicit expectation of
government support.
Lease Payment Obligation Supported by IDB as Lender of Record
To determine the strength of the lease payment obligation, Fitch
considered the role of IDB as lender of record of the obligation
being covered by ICE's payments, tied to ICE's ownership structure.
As the IDB will continue to be the lender of record and administer
IDB's B-loan, Fitch believes the holders of the rated notes will
benefit from the B-loan preferential, de facto, status provided by
IDB. Because of this, the credit quality of the payment obligation
is considered in line with other obligations of Costa Rica with the
IDB, and therefore, was notched upward (one notch) from ICE's IDR.
Noteholders Benefit from IDB's Preferred Creditor Status
Historically, sovereigns have prioritized certain obligations, such
as obligations from multilateral development banks, when the
government cannot service all of the country's external debt. While
the B-loan is not a direct obligation of the sovereign, Fitch
believes treatment of the IDB as a preferred creditor extends to
ICE as the debtor, since ICE is a strategic government-owned entity
that receives underlying sovereign support.
Although Costa Rica has defaulted in the past (1981), neither the
sovereign nor ICE have ever defaulted on debt issued by a preferred
creditor. Currently, IDB's share of Costa Rica's external debt is
approximately 13%, in line with historical figures, which makes it
an essential preferred creditor for the country.
Adequate Liquidity Present
The rated notes benefit from a debt service reserve account
equivalent to the next principal and interest payment due amount.
This liquidity provides certainty in case the transaction is
exposed to temporary liquidity shock. As of November 2024, the
account had sufficient liquidity to cover debt service on the
issued notes payment due in May 2025.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The notes' ratings are linked to ICE's Long-Term Foreign Currency
IDR; hence, a downgrade of ICE's IDR would trigger a downgrade of
the rated notes in the same proportion;
- Changes in Fitch's view of the treatment of the IDB as a
preferred creditor may trigger a rating action on the notes;
- Although the IDB (AAA/Stable) has an operational role in the
transaction by collecting payments due on the A/B-loans and then
transferring the B-loan portion of the proceeds to the transaction
account bank, Fitch currently deems this exposure immaterial.
However, should the IDB's credit quality deteriorate below the 'AA'
category, Fitch will reassess the exposure that the IDB poses to
the transaction.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The notes' ratings are linked to ICE's Long-Term Foreign Currency
IDR; hence, an upgrade of ICEs IDR would trigger an upgrade of the
rated notes in the same proportion.
CRITERIA VARIATION
Fitch's "Single- and Multi-Name Credit Linked Notes Rating
Criteria," dated Dec. 18, 2023, establishes that the credit quality
of the risk presenting entity (RPE) in a credit-linked notes
transaction is typically determined by an IDR assigned by Fitch.
However, in some situations, a committee would consider using the
actual bond rating (e.g. senior unsecured rating, subordinate
rating) of an asset in place of the IDR.
For this transaction, Fitch has determined that the RPE's credit
quality is not commensurate with the IDR or any particular bond
rating of the obligor, as sovereign ratings do not directly address
all forms of obligations. To determine the credit quality of the
sovereign obligation and its notching from the sovereign IDR, Fitch
incorporated perspectives from its sovereign group. During the
analysis, it was determined that the appropriate notching uplift
from the primary risk contributor would be one notch.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The ratings are linked to the credit risk of ICE as measured by its
Long-Term Foreign Currency IDR.
=============
J A M A I C A
=============
JAMAICA: BOJ Generates $6.16 Billion in Net Profits
---------------------------------------------------
RJR News reports that the Bank of Jamaica (BOJ) is reporting that
it generated net profits of $6.16 billion for the year to date.
The bank, which is now independent, is also reporting that its
total assets climbed to $1.16 trillion as at the end of February
compared with $1.05 trillion for the similar period in 2024,
according to RJR News.
The central bank also says this was due to a jump in its foreign
assets to $870.4 billion from $753.27 billion, the report notes.
Its local assets dipped to $291.45 billion from $297.1 billion,
adds the report.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea. Jamaica
is an upper-middle income country with an economy heavily dependent
on tourism. Other major sectors of the Jamaican economy include
agriculture, mining, manufacturing, petroleum refining, financial
and insurance services.
On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a
positive rating outlook. In October 2023, Moody's upgraded the
Government of Jamaica's long-term issuer and senior unsecured
ratings to B1 from B2, and senior unsecured shelf rating to (P)B1
from (P)B2. The outlook has been changed to positive from stable.
In September 2024, S&P affirmed 'BB-/B' longterm foreign and local
currency sovereign credit ratings on Jamaica and revised outlook to
positive.
===========
M E X I C O
===========
ACCURIDE CORP: Completes Restructuring With Interim CEO, New Owner
------------------------------------------------------------------
Tonya Garcia of Bloomberg Law reports that Accuride has
successfully completed its Chapter 11 restructuring, appointing
Geoff Bruce as interim CEO and transitioning to new ownership,
including KKR and Caspian.
The restructuring eliminates over $400 million in funded debt and
restructures approximately $170 million in additional obligations.
Existing investors have provided new financing, including a $70
million asset-based lending facility and a $95 million+ exit
facility, according to Bloomberg Law.
Former CEO Robin Kendrick is retiring immediately but will remain
on the board as a director.The company's new board consists of
five
directors. Accuride plans to accelerate investments and innovation
in its core steel and aluminum product lines, the report states.
Manufacturing operations will continue across its U.S. and Mexico
facilities, the report relays.
About Accuride Corp.
Accuride Corporation and its affiliates are a global leader in
steel and aluminum wheels and wheel-end components and assemblies,
supplying innovative products to over 1,000 customers in the
commercial vehicles, passenger cars, agriculture, construction and
industrial equipment markets.
Headquartered in Livonia, Michigan, the Debtors are part of a
global enterprise that employs approximately 3,600 individuals at
facilities in the United States, Canada, Mexico, Germany, France,
Turkey, Russia, and China.
Accuride's U.S. entities first filed for Chapter 11 protection in
October 2009, also in Delaware, to restructure in excess of $675
million in debt. The Court confirmed the Company's Plan of
Reorganization in February 2010.
On Oct. 9, 2024, Accuride Corp. and its U.S. entities filed
voluntary petitions for protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Lead Case No. 24-12289). Accuride
reported $500 million to $1 billion in assets and liabilities as
of the bankruptcy filing.
In the new chapter 11 cases, the Debtors tapped Kirkland & Ellis
LLP as bankruptcy counsel, Young Conaway Stargatt & Taylor, LLP,
as local bankruptcy counsel, and Perella Weinberg Partners LP as
investment banker. Alvarez & Marsal North America, LLC is the CRO
provider. Omni Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
KUO SAB: Fitch Affirms 'BB' Long-Term IDR, Alters Outlook to Pos.
-----------------------------------------------------------------
Fitch Ratings has affirmed KUO, S.A.B. de C.V.'s (KUO) Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) and
unsecured senior notes at 'BB'. In addition, Fitch has affirmed
KUO's National Scale Long-Term rating at 'A(mex)'. The Rating
Outlook was revised to Positive from Stable.
The Positive Outlook reflects Fitch's expectations that KUO will
maintain a strong financial position after the reduction of around
USD210 million of debt using proceeds from the recent aftermarket
business divestiture. The Outlook will be resolved if the company
successfully addresses challenges from U.S. tariffs on Mexican
imports, navigates a difficult macroeconomic environment, and
achieves recovery in its chemical businesses.
The ratings reflect KUO's business portfolio, which is expected to
be concentrated in the consumer sector, its leading market
positions, and its joint ventures (JVs) with recognized market
participants. The ratings are constrained by KUO's exposure to
demand volatility and input costs across its businesses.
Key Rating Drivers
Debt Prepayment Strengthens Financial Profile: Fitch forecasts
KUO's pro forma net debt to EBITDA (pre IFRS-16), including
non-recourse factoring and debt from its JVs, to be around 2.0x for
the next 24 months. This ratio considers the debt prepayment with
the proceeds from the divestiture and an estimated EBITDA margin of
around 8.0%. For analytical purposes, Fitch incorporates KUO's
financial information under the proportional consolidation of its
JVs (pro forma), and the reported consolidated figures under the
equity method (consolidated).
Fitch believes that prepayments improved KUO´s financial profile
and strengthened its financial flexibility, as the company has no
significant maturities until 2027. Fitch anticipates that KUO will
be in a better financial position to face a more challenging
economic environment in 2025.
Leading Market Positions: KUO's businesses hold significant market
positions in their industries. The pork business is the largest in
Mexico, with vertically integrated operations serving the domestic
market and exporting to Asia and the U.S. Through its Herdez Del
Fuerte JV, KUO has highly recognized brands with leading market
shares in Mexico, including products like tomato paste and mole.
This JV also has operates in the U.S. as a producer and distributor
of guacamole and Hispanic brands.
Its transmissions business is a leading producer of rear-wheel
transmissions in North America for the high-performance segment. In
addition, the company is the largest producer of synthetic rubber
in Mexico through its JV with Dynasol. It is also the main producer
of polystyrene in the country. Exports across the whole business
portfolio accounted for around 52% of total sales in 2024.
U.S. Import Tariffs Uncertainty: U.S. tariffs on Mexican exports
risk impacting KUO as the company generates around 30% of its
revenues from the U.S. Tariffs could result in higher prices for
consumers and lower sales volumes, pressuring its operating
performance. Fitch believes general tariffs would pose greater
risks to KUO's automotive business, which primarily serves the U.S.
market, and to its Herdez Del Fuerte JV in terms of packaged food
exports. A more competitive exchange rate, increased cost
pass-through to customers, and other initiatives and negotiations
could mitigate tariff impacts.
Consumer-Oriented Portfolio: Fitch estimates that the contribution
from KUO's consumer business (pork and packaged food) will
represent around 70% of EBITDA in the next two years. The stability
of the consumer business through the Herdez del Fuerte JV, which is
focused on the more stable consumer segment, has partially offset
the cyclicality in the chemicals and automotive segments, as well
as the volatility of raw materials in the pork business.
Diversification in the consumer, automotive and chemical industries
allows KUO to mitigate economic and industry cycle volatilities.
Negative FCF Expected: Fitch forecasts KUO's FCF on a pro forma
basis to be negative for 2025 and 2026, considering dividends at
around MXN550 million for the next two years and an extraordinary
dividend in 2025 related to the aftermarket business divestiture.
Fitch expects capex to be around 5% of revenues for the next two
years, related to investments in farms and plants in the pork
business, as well as efficiencies in the synthetic rubber plants in
Mexico and Spain.
Peer Analysis
KUO's credit profile is comparable with other packaged food
companies as Grupo Bimbo, S.A.B. de C.V. (Bimbo; BBB+/Stable),
Gruma, S.A.B. de C.V. (BBB+/Stable), Sigma Alimentos, S.A. de C.V.
(BBB/Stable) and BRF S.A. (BB+/Stable). Fitch considers KUO's
business positions as weaker, given its smaller scale and
geographic diversification.
Sigma and Bimbo have geographically diversified operations and
strong portfolios of diversified products and brands. KUO's
profitability is weaker, with a pro forma EBITDA margin of around
8%, compared to its peers' margins above 10%. Its profitability is
also more volatile than peers' due to the cycles of its non-food
businesses. KUO´s financial profile, with an expected pro forma
net debt to EBITDA of around 2x, compares well with that of Sigma
at 2.5x and Bimbo at 2.0x.
Key Assumptions
On a pro forma basis, including proportional consolidation of JVs:
- Revenue growth of 6% average in 2025-2026;
- EBITDA margin of around 8% in 2025-2026;
- Capex around 5% of revenues in 2025-2026;
- Dividends around MXN550 million for the next two years;
Fitch's key assumptions on a consolidated basis, accounting the JVs
under the equity method, include:
- Revenue growth of 6% average in 2025-2026;
- EBITDA margin of around 7% in 2025-2026;
- Capex around 4.5% of revenues in 2025-2026;
- Dividends around MXN550 million for the next two years;
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Lower volatility in the consumer portfolio, mainly in the Pork
business;
- Neutral to positive FCF through the economic cycle;
- Maintaining a strong liquidity position;
- Sustaining lower leverage ratios for pro forma total debt to
EBITDA and net debt to EBITDA of around 2.5x and 2.0x,
respectively.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Higher-than-expected negative FCF over the next two years;
- A weak liquidity position;
- Sustained deterioration in operating performance across the
company's businesses, leading to pro forma total debt to EBITDA and
net debt to EBITDA consistently above 3.0x and 2.5x, respectively.
The Outlook could be revised to Stable if operational performance
and key credit metrics are weaker than Fitch's expectations.
Liquidity and Debt Structure
KUO's strong liquidity reflects the debt prepayments that allowed
the company to improve its debt maturity profile. Additionally, the
company complements its liquidity with available committed credit
lines for USD300 million. Fitch considers KUO to have good access
to capital markets and bank loans, and its debt maturity schedule
is manageable, with around 88% maturing in 2027 and thereafter,
which corresponds to its MXN8.7 million senior notes (USD450
million).
Other debt includes around MXN0.7 billion at its JV and MXN0.5
billion from nonrecourse factoring. KUO´s YE 2024 cash balance on
a pro forma basis was MXN3.6 billion, with short-term debt of
MXN0.8 billion, including nonrecourse factoring.
Issuer Profile
KUO is a Mexican conglomerate with a diversified portfolio of six
strategic business units operating in the consumer, automotive and
chemical industries, with a strong presence in international
markets through operations located outside Mexico.
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
----------- ------ -----
KUO S.A.B. de C.V. LT IDR BB Affirmed BB
LC LT IDR BB Affirmed BB
Natl LT A(mex) Affirmed A(mex)
senior unsecured LT BB Affirmed BB
=======
P E R U
=======
TELEFONICA DEL PERU: Moody's Cuts CFR & Sr. Unsec. Debt Rating to C
-------------------------------------------------------------------
Moody's Ratings has downgraded Telefonica del Peru S.A.A. (TdP)'s
corporate family rating and senior unsecured ratings to C from
Caa3. The outlook was revised to stable from negative.
Following the actions, all TdP's ratings will be withdrawn, in
accordance with Moody's Policy for Withdrawal of Credit Ratings.
Moody's views TdP's bankruptcy procedure filing as a default on all
its debt.
RATINGS RATIONALE
The downgrade follows TdP's filing for Ordinary Bankruptcy
Procedure (PCO) before the National Institute for the Defense of
Competition and the Protection of Intellectual Property (Indecopi)
to restructure its financial obligations and tax commitments with
Superintendencia Nacional de Aduanas y de Administración
Tributaria (SUNAT). Moody's views that losses to existing unsecured
creditors could be higher than 50%.
According to the General Law of Bankruptcy System, Indecopi has a
maximum period of 90 business days to approve or deny the company's
petition. Under Peruvian bankruptcy law, the PCO petition does not
immediately suspend the company's debt obligations. The stay will
apply once Indecopi approves the request. Until then, the company
must continue to operate as usual and is required to fulfill its
financial obligations. However, given TdP´s fragile liquidity
position and no indication of support from its ultimate parent,
Telefonica S.A. (Baa3 stable), there is a high likelihood of either
a debt restructuring or a distressed debt exchange in the near
term, resulting in losses to creditors.
Telefonica del Peru's liquidity position has deteriorated
significantly over the past years due to the combination of the
company's persistently weak operating performance and the sizable
tax liability currently in the process of being settled with the
Peruvian tax authority, SUNAT. Despite having received liquidity
support from Telefonica Hispanomérica to address the tax
settlement with SUNAT and other operating cash needs, liquidity
remains under pressure. TdP's ultimate parent, Telefonica, has
explicitly declared that the additional PEN1.55 billion in
liquidity support approved in February must be used strictly for
operational cash needs. Moody's estimates Telefonica del Peru's
free cash flow generation to remain negative at least until 2026,
further pressuring liquidity.
The downgrade also reflects governance considerations as key
drivers of the rating action including the company's operating
track record, which has been impacted by loss of profitability and
market share since 2014, resulting in extreme liquidity
deterioration and high refinancing risk. These factors are
reflected in the company's Financial Strategy and Risk Management
assessment of 5, and the overall exposure to governance risks
(Issuer Profile Score or "IPS") of G-5. The ESG Credit Impact Score
is CIS-5, since ESG considerations are a constraint for the
rating.
The stable outlook reflects the extended restructuring process
initiated by the PCO filing, which will require time to achieve a
more sustainable capital structure. Additionally, given TdP's
precarious liquidity situation and expected weak cash flow
generation, the expected recovery rate is not anticipated to change
in the short term.
Although Telefonica del Peru benefits from its scale as the largest
telecommunications operator in Peru, the company faces significant
competitive and operational challenges. Despite significant efforts
to improve profitability over the last three years, while
experiencing a decrease in fixed line services due to competition
against HFC, operating costs continue to increase, mainly due to
the efforts to convert its copper and HFC network to fiber and have
not been followed by improvement in revenues. Moody's-adjusted
EBITDA margin dropped to about 7.6% as of year-end 2024, which
negatively compares with the 25.6% achieved as of year-end 2023.
Moody's adjusted leverage has increased to 7.4x as of December 2024
up from 2.3x at year-end 2023, mainly due to the significant EBITDA
deterioration over the period.
Since 2019, Telefonica del Peru's ultimate parent company,
Telefonica S.A., has prioritized markets where it perceives
long-term sustainable growth and has worked to reduce its exposure
to businesses in Hispano America, including Telefonica del Peru.
Given this context, the rating incorporates no financial support
from the parent.
Telefonica del Peru is the largest telecommunications company in
Peru, with a mobile market share of around 27.5% and 32.3% in the
fixed internet segment as of September 2024, according to the
Peruvian telecommunications regulator — OSIPTEL. The company is
an integrated telecommunications service provider offering mobile,
fixed, pay-TV and business-to-business services through its
Movistar brand. Telefonica del Peru is Peru's largest
telecommunications company in terms of revenue, and a leader in all
segments, with more than 12.6 million revenue-generating units
(RGUs) in mobile and almost 3.3 million RGUs in fixed broadband and
pay TV. For full year 2024, the company generated revenue of around
PEN6.0 billion ($1.6 billion). Telefonica del Peru is controlled by
Telefonica Hispanoamerica which indirectly holds 99% of its shares.
The remaining are traded on the Lima Stock Exchange — Bolsa de
Valores de Lima.
Subsequent to the actions, all Telefonica del Peru´s ratings will
be withdrawn as Moody's considers the filing for bankruptcy
procedure as a default by TdP in all of its debt.
The principal methodology used in these ratings was
Telecommunications Service Providers published in November 2023.
=====================
P U E R T O R I C O
=====================
BED BATH: Investors Fail in Bid to Restore Class Status
-------------------------------------------------------
Martina Barash of Bloomberg Law reports that a federal court has
reaffirmed that Bed Bath & Beyond Inc. investors cannot pursue
class status in their market manipulation lawsuit against activist
investor Ryan Cohen.
U.S. District Judge Trevor N. McFadden ruled March 6, 2025, that
the lead investor's request for reconsideration relied
on arguments that were either forfeited or merely repeated.
Belgian investment firm Bratya SPRL and other shareholders sued
Bed Bath & Beyond, its CEO Sue Gove, Cohen, and his firm, RC
Ventures LLC, alleging that Cohen and RC Ventures acquired nearly
10% of the retailer's stock as part of a market manipulation
scheme.
About Bed Bath & Beyond
Bed Bath & Beyond Inc., together with its subsidiaries, is an
omnichannel retailer selling a wide assortment of merchandise in
the Home, Baby, Beauty & Wellness markets and operates under the
names Bed Bath & Beyond, buybuy BABY, and Harmon, Harmon Face
Values. The Company also operates Decorist, an online interior
design platform that provides personalized home design services.
At its peak, Bed Bath & Beyond operated the largest home furnishing
retailer in the United States with over 970 stores across all 50
states, consistently at the forefront of major home and bath
trends. Operating stores spanning the United States, Canada,
Mexico, and Puerto Rico, Bed Bath & Beyond offers everything from
bed linens to cookware to electric appliances, home organization,
baby care, and more.
Bed Bath & Beyond closed over 430 locations across the United
States and Canada before filing Chapter 11 cases, implementing
full-scale wind-downs of their Canadian business and the Harmon
branded stores.
Left with 360 Bed Bath & Beyond, and 120 buybuy BABY stores, Bed
Bath & Beyond Inc. and 73 affiliated debtors on April 23, 2023,
each filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code to pursue a wind-down of operations.
The cases are pending before the Honorable Vincent F. Papalia and
requested joint administration of the cases under Bankr. D.N.J.
Lead Case No. 23-13359.
Kirkland & Ellis LLP and Cole Schotz P.C. are serving as legal
counsel, Lazard Frares & Co. LLC is serving as investment banker,
and AlixPartners LLP is serving as financial advisor. Bed Bath &
Beyond Inc. has retained Hilco Merchant Resources LLC to assist
with inventory sales. Kroll LLC is the claims agent.
LUCENA DAIRY: Court Extends Cash Collateral Access to March 31
--------------------------------------------------------------
Lucena Dairy Inc. and Luna Dairy Inc. received another extension
from the U.S. Bankruptcy Court for the District of Puerto Rico to
use cash collateral.
The order signed by Judge Edward Godoy extended the companies'
authority to use cash collateral from Feb. 28 to March 31 and
authorized the companies to make an additional payment of $20,000
to their secured creditor, Condado 4, LLC, by March 27.
The hearing to consider the permanent use of cash collateral is
set for March 31.
About Lucena Dairy Inc.
Lucena Dairy Inc. is engaged in the production of cows' milk and
other dairy products and in raising dairy heifer replacements.
Lucena Dairy sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. P.R. Case No. 23-02835) on September 8,
2023. Its affiliate, Luna Dairy Inc., filed Chapter 11 petition
(Bankr. D. P.R. Case No. 23-02837) on September 9, 2023. Jorge
Lucena Betancourt, president, signed both petitions.
At the time of the filing, Lucena Dairy reported $1,905,560 in
assets and $11,464,130 in liabilities while Luna Dairy reported
$4,102,639 in assets and $11,316,130 in liabilities.
Judge Edward A. Godoy oversees the cases.
Carmen D. Conde Torres, Esq., at C. Conde & Associates, represents
the Debtors as legal counsel.
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T R I N I D A D A N D T O B A G O
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TRINIDAD & TOBAGO: Faces Challenges if Gas Deal Collapses
---------------------------------------------------------
RJR News reports that Prime Minister of Trinidad & Tobago Dr Keith
Rowley has warned that the fortunes of the twin-island state would
be in jeopardy if the Dragon gas deal with Venezuela does not
materialize.
Prime Minister Rowley expressed confidence that his country is on
solid footing with respect to its agreements for the gas
exploration agreement but cautioned that meeting its financial
obligations would be at risk if the US revokes the license for the
gas deal or if Venezuela pulls out of the arrangement, according to
RJR News.
Dr Rowley has warned that the country faces future problems without
energy deals, the report notes.
Trinidad & Tobago is due to run out of natural gas in eight years
time, the report says.
Dr. Rowley said between now and then, the problem of insufficient
gas supply would affect revenue, resulting in the country facing
challenges in paying its bills, the report adds.
*********
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