/raid1/www/Hosts/bankrupt/TCRLA_Public/250416.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, April 16, 2025, Vol. 26, No. 76
Headlines
A R G E N T I N A
ARGENTINA: INDEC Reveals Uptick in Inflation, Prices up 3.7%
ARGENTINA: Renews Part of China Swap Ahead of Bessent Visit
B R A Z I L
BRAZIL: Inflation Hits Two-Year High Amid Rate Hike Debate
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Tourist Arrivals Fall Almost 10% in February
G U A T E M A L A
BANCO DE DESARROLLO: Fitch Affirms 'BB' Long-Term IDR, Outlook Pos.
BANCO G&T: Fitch Affirms 'BB' Long-Term IDR, Outlook Stable
M E X I C O
CREDITO REAL: Moves Forward With Bank Loans, Notes Cancellation
P U E R T O R I C O
NEW FORTRESS: Moody's Cuts CFR to 'Caa1', Outlook Remains Negative
- - - - -
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A R G E N T I N A
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ARGENTINA: INDEC Reveals Uptick in Inflation, Prices up 3.7%
------------------------------------------------------------
Buenos Aires Times reports that inflation in Argentina shot up
sharply in March, with consumer prices rising 3.7 percent -- the
highest monthly rate since September.
Consumer prices rose for a second consecutive month, following an
increase of 2.4 percent in February -- 0.2 points up on January's
2.2 percent, according to Buenos Aires Times.
Over the last 12 months, inflation -- which for the most part has
been tamed over the first 16 months of President Javier Milei's
government -- now totals 55.9 percent, with prices up 8.6 percent
since the turn of the year, the report notes.
Price hikes in March were driven by a huge increase in the cost of
education, which soared 21 percent, with rises at all age groups
due to the start of the school year, the report relays.
Food and non-alcoholic beverages, one of the most influential
categories, rose 5.9 percent, with notable increases for
vegetables, meat and related products, the report says.
The two divisions that recorded the smallest increases were
alcoholic beverages and tobacco (up 0.8 percent) and recreation and
culture (0.2 percent), the report discloses.
At category level, seasonal prices increased 8.4 percent, with core
inflation of 3.2 percent, the report notes.
The national figure from INDEC was published just a few days after
the Buenos Aires City government reported that consumer prices rose
3.2 percent in the capital last month, the report says.
Notable increases were seen in food and non-alcoholic beverages
(4.7 percent) -- with vegetables and legumes soaring 25.8 percent
-- and education (14.3 percent), the report relays.
The March figure will be met with some concern by the Milei
government, which is facing crucial midterm elections later this
year, the report discloses.
Private consultancy firms had predicted a slight acceleration of
inflation from the previous month, expecting a figure of 2.5
percent, but INDEC's final rate overshot those expectations, the
report says.
The most recent Central Bank survey of market expectations produced
an annual 2025 forecast of 27.5 percent, up 4.2 points on the
previous month, the report relays. The Milei administration
projects a figure of 18 percent for the year, the report notes.
INDEC's figure for March was released in the same week that the
International Monetary Fund confirmed details of a new
US$20-billion funding deal for Argentina, in addition to its
existing US$44-billion program, the report discloses.
The IMF had reached a preliminary agreement with Argentina on a
four-year loan arrangement to support a "comprehensive economic
program," the report relays.
It said the agreement built on "the authorities' impressive early
progress in stabilizing the economy, underpinned by a strong fiscal
anchor, that is delivering rapid disinflation and a recovery in
activity and social indicators," the report discloses.
The prospect of another IMF loan has caused a run on the peso,
prompted by fears -- which Milei has rebuffed -- that the new deal
could entail a possible currency devaluation, the report notes.
The loan was expected to be approved by the IMF executive board,
the report relays.
Argentine stocks on Wall Street and the domestic MERVAL index rose
in early trading in expectation of an announcement, the report
notes.
The MERVAL was up four percent, driven by increases for Pampa
Energia (4.9 percent), Loma Negra (4.7 percent), TGN (4.7 percent),
and Cresud (3.7 percent), among others, the report discloses.
Argentina's country risk rate, tracked by JP Morgan, stood at 914
points, 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.
ARGENTINA: Renews Part of China Swap Ahead of Bessent Visit
-----------------------------------------------------------
Patrick Gillespie, Kevin Simauchi & Manuela Tobias at Bloomberg
News report that Argentina renewed a portion of its US$18-billion
currency swap line with China, just days before US Treasury
Secretary Scott Bessent visits the nation to meet President Javier
Milei.
The activated part being extended for another 12 months amounts to
US$5 billion, according to a statement from Argentina's Central
Bank, notes Bloomberg News. In 2023, Milei's predecessors tapped a
portion of the swap amid a growing economic crisis to pay down
debts and imports, meaning China's monetary authority must choose
to renew the financing line, Bloomberg News relays.
The timing is crucial as Latin America has become a battleground
for influence between the US and China, especially in Argentina,
Bloomberg News says.
Before Bessent's arrival in Buenos Aires, the International
Monetary Fund's executive board is scheduled to vote on a new
US$20-billion program for the crisis-prone nation, which would be a
major sign of support from President Donald Trump's administration
since the US is the largest stakeholder at the IMF, Bloomberg News
notes.
News of the high-level visit was well-received by some on Wall
Street, stirring speculation that it could portend additional
support from Trump's team, Bloomberg News discloses.
"This sends a signal that agreements will keep coming, that they'll
be good, that the IMF will approve without any issues a program
that the market is interpreting as good for Argentina," Ernesto
Revilla, head of Latin America Economics at Citigroup, told
reporters on a conference call, Bloomberg News says.
Beyond an escalating and volatile trade war that's rattled global
markets in recent weeks, US and Chinese officials have traded barbs
over the swap line, Bloomberg News relays.
Mauricio Claver-Carone, the administration's special envoy to Latin
America, called the financial lifeline extortionary and said he
wanted it to end. China's Foreign Ministry hit back, calling on
the US to "get its perspective right" and saying it "makes more
tangible contributions to the development of Latin American and
Caribbean countries," Bloomberg News notes.
The growing rift between the world's two largest economies has put
Milei in a bind since he's outspokenly pro-US. After lashing out at
the communist government in Beijing during his election campaign,
the libertarian leader has softened his stance in office, calling
China a great trading partner, Bloomberg News relays.
Local media reported earlier, citing unnamed sources, that the US
government is exploring whether to extend a credit line to the
Milei administration as part of a broader package to bolster
Argentina's hard-currency reserves, Bloomberg News discloses. A
spokesperson for the US Treasury department declined to comment.
"Until there is certainty that there is a US line, which may have
to go through Congress, it's in Argentina's best interest to keep
all financing options open," Ramiro Blazquez, a Buenos Aires-based
strategist at trading firm StoneX Securities, said by text message,
notes the report. "But if there is US funding, Argentina should go
that route because the conditions would be better than those
available from China."
Created in 2009, the swap agreement means that the People's Bank of
China has an account in yuan at Argentina's Central Bank, and the
latter has an account in pesos in China, Bloomberg News 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 R A Z I L
===========
BRAZIL: Inflation Hits Two-Year High Amid Rate Hike Debate
----------------------------------------------------------
Buenos Aires Times reports that Brazil's annual inflation hit the
highest level in two years and economic activity rose more than
expected according to data published Friday, April 11, 2025,
pressuring central bankers as they mull the size of their next rate
hike.
Official data showed consumer prices rose 5.48 percent in March
from the year prior, just above the 5.45 percent median estimate of
analysts surveyed by Bloomberg. On a monthly basis, prices
increased 0.56 percent, down from February's rate of 1.31 percent,
according to Buenos Aires Times.
Brazil's economic activity index, a proxy of gross domestic
product, rose past expectations in February, gaining 0.44 percent
on the month, according to a separate release from the Central
Bank, the report notes. The increase was above the 0.3 percent
forecast, the report relays.
The surge in inflation has the central bank poised to take the key
rate, now at 14.25 percent, even higher to tame price pressures,
the report discloses. Its efforts to get cost-of-living increases
under control are being blunted by wild swings in Brazil's currency
and hot household demand, the report notes.
All of the groups of the goods and services monitored by the
statistics agency became more expensive in March, the report says.
Food and beverages drove the price increases with a 1.17 percent
monthly jump in costs, the report relays.
Annual inflation is climbing further above the three-percent target
despite the bank's three-straight full-percentage point rate hikes
and growing warnings about a global economic slowdown, the report
notes. Central bankers have pledged a borrowing cost increase of a
smaller size at their next meeting in May, the report discloses.
The stubbornness of price increases within Brazil coupled with the
uncertainty caused by US President Donald Trump's trade war has
left investors debating just how much higher the benchmark Selic
needs to go, the report says.
A strong jobs market and rising wages are driving underlying gauges
of inflation that strip out volatile items - like food and fuel -
and are closely monitored by central bankers, the report relays.
The lingering pressures "will keep policymakers at the central bank
in a hawkish mood," Jason Tuvey, Deputy Chief Emerging Markets
Economist at Capital Economics, wrote in a research note, the
report discloses.
On the ground, the one-two punch of hefty borrowing costs and
soaring grocery bills, pushed up by bad weather, has Brazilian
consumers fuming at President Luiz Inacio Lula da Silva, the report
notes. Even with government efforts softening the blow, the
leftist leader's approval ratings have tumbled in recent months,
the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
In October 2024, Moody's Ratings upgraded the Government of
Brazil's long-term issuer and senior unsecured bond ratings to Ba1
from Ba2, the senior unsecured shelf rating to (P)Ba1 from (P)Ba2;
and maintained the positive outlook. S&P Global Ratings raised on
Dec. 19, 2023, its long-term global scale ratings on Brazil to
'BB' from 'BB-'. Fitch Ratings affirmed on Dec. 15, 2023, Brazil's
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with
a Stable Outlook. DBRS' credit rating for Brazil was last reported
at BB with stable outlook at July 2023.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Tourist Arrivals Fall Almost 10% in February
----------------------------------------------------------------
Dominican Today reports that The Dominican Republic has become one
of the leading vacation destinations in the Caribbean due to its
attractive white sandy beaches, potential for luxury and sports
tourism, and its Colonial City, an intangible heritage of
humanity.
However, after four years of "records", as the Minister of Tourism,
David Collado, has called the growth of the tourism industry and
its contribution to the gross domestic product (GDP), the data show
a drop in arrivals of almost 10% in the first months of the year,
according to Dominican Today.
In February 2025, authorities recorded that 588,212 non-resident
passengers crossed the Dominican Republic's air terminals, a drop
of 9.85 % from the same month of 2024, when the country received
755,832 foreigners, the report notes.
The Tourism Intelligence System (Situr) indicated that 167,620
non-residents stopped arriving in the DR as tourists during
February of this year, the report relays.
Breaking down the data by region, the Americas stopped issuing
141,717 tourists, going from 652,487 to 510,770 in February 2024
and February 2025, for a negative inter-annual variation of 21.71%,
the report says.
In the case of Europe, the continent that became the second largest
source of tourists to the Dominican Republic, passenger arrivals
decreased by 25.2% when comparing February 2025 (75,305) and
February 2024 (100,804), whose loss has been previously explained
by the suspension of long-haul flights, fuel costs and the war
between Russia and Ukraine, the report discloses.
The Asian continent concentrated 0.2% of air arrivals to the
Dominican Republic during February of this year, the report notes.
That is, 1,740 Asians out of the 588,212 non-resident passengers
registered by Situr. The segment also presented a difference of
13.8% between February 2024 and the same month of 2025, the report
relays.
Situr recorded that tourists from Oceania varied from 227 to 154,
that is, 73 fewer passengers as tourists, according to Acento, the
report notes.
Mitur said non-resident passenger arrivals were 1,348,141 between
January and February this year, the report says. This represents a
10% inter-annual decrease, with 149,920 fewer tourists registered
compared to the same period in 2024, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the
island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis
Rodolfo
Abinader Corona is the current president of the nation.
S&P Global Ratings affirmed its 'BB' long-term foreign
and local currency sovereign credit ratings on the
Dominican Republic on December 3, 2024. The outlook remains
stable. S&P also affirmed its 'B' short-term sovereign
credit ratings and kept the transfer and convertibility
(T&C) assessment unchanged at 'BBB-'.
Fitch, on November 26, 2024, affirmed the Dominican Republic's
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-'.
The Rating Outlook is Positive.
Moody's credit rating for Dominican Republic was last set at Ba3
in August 2023 with the outlook changed to positive.
=================
G U A T E M A L A
=================
BANCO DE DESARROLLO: Fitch Affirms 'BB' Long-Term IDR, Outlook Pos.
-------------------------------------------------------------------
Fitch Ratings has upgraded Banco de Desarrollo Rural, S.A.'s
(Banrural) Government Support Rating (GSR) to 'bb' from 'bb-'.
Fitch has also affirmed Banrural's Long-Term Local and Foreign
Currency Issuer Default Ratings (IDRs) at 'BB', Short-Term Local
and Foreign Currency IDRs at 'B', and Viability Rating (VR) at
'bb'. The Rating Outlook on the Long-Term IDRs is Positive.
The GSR's upgrade is aligned to the sovereign rating. The rating
action is driven by Fitch's perception that the government's
propensity to support the bank is very high due to its systemic
importance being the second largest bank in the system by customer
deposit market share, its ample interconnectivity within the
financial system, and its 30% ownership by the government.
Key Rating Drivers
IDRs aligned to both the VR and GSR: Banrural's IDRs are primarily
driven by its creditworthiness. This is reflected in its 'bb' VR,
which is in line with its implied VR level. The IDRs are also
aligned to Banrural's GSR, which is now in line with the sovereign
rating. Banrural's VR is supported by its business profile marked
by a sound market position in Guatemala and capitalization levels
that surpass most of those of its local peers.
The ratings also consider the bank's strong earnings generation,
good deposit franchise and asset quality metrics that are in line
with its risky business model. The Positive Outlook reflects
Fitch's expectation that an improving banking system's operating
environment (OE) will enhance the bank's credit profile, as its
strong market position is anticipated to continue benefiting its
financial performance.
Sound Market Position: Banrural's business profile score of 'bb'
with positive trend is underpinned by its dominant domestic
franchise, notably as a leader in productive loans and retail
banking, which has helped to generate consistent earnings over the
past few years. Fitch expects this trend to continue over the
medium term. The bank's robust market position in riskier yet more
profitable segments has resulted in Total Operating Income (TOI).
That ranks highest within the Guatemalan banking industry, although
it remains relatively limited on a global scale. At YE 2024, the
TOI increased 7.8% year over year in local currency, averaging
USD979.2 million from 2021 to 2024.
Good Risk Framework: Banrural's risk profile score was upgraded to
'bb' from 'bb-' due to its consistent underwriting standards,
particularly due to its focus on higher-risk customers. Fitch
considers that effective risk management has supported the bank's
earnings, maintaining controlled credit costs and growing business
volume. The bank has kept reasonable asset quality metrics with
single-name concentration below that of most of its largest
domestic peers. The agency also considers the ongoing strengthening
of the bank's risk framework, which is well-adapted to the scale
and complexity of its business profile.
Contained Asset Quality Deterioration: Banrural's asset-quality
score's positive trend reflects Fitch's expectation that the bank's
prudent underwriting standards and solid business profile will
benefit its impaired-loan metrics. This is anticipated within an
expected better OE. The bank's impaired-loan ratio increased to
3.7% as of YE 2024 from 3.1% in 2023. This captures higher
impairments in the commercial book while also remaining above the
2.5% sector average. Reserve coverage of impaired loans remains
strong, above 200% at YE 2024. Single-borrower concentration stood
at 0.9x the bank's Fitch Core Capital (FCC), albeit below that
reported by local peers.
Strengthened Earning Performance: The operating
profit/risk-weighted assets (RWA) ratio stood at 5.5% in 2024 and
outperformed local peers. Fitch expects the bank's earnings to
remain strong, as the net interest margin (NIM) is likely to
benefit from its focus on more profitable segments, lower cost of
funding, and moderate loan growth. Lower loan impairment charges
and controlled operational expenses (50.8% of gross revenue) also
contribute to the bank's earnings. This supports the earnings and
profitability score's outlook revision to positive from stable.
Good Capital Buffers: The FCC to RWA ratio of 19.2% in 2024
maintains a good loss absorption capacity despite a 12.5% RWA
increase in 2024 and dividend payments. Steady earnings should help
the bank maintain the ratio broadly commensurate with the
capitalization and leverage score of 'bb+' in the rating horizon.
Solid Deposit Base: Banrural maintains a robust funding and
liquidity profile that is supported by its ample deposit base. It's
primarily composed of demand deposits, which has helped manage
funding costs effectively. Banrural's loans-to-deposits ratio has
risen over the past four years, driven by loan growth, reaching 60%
in 2024 (with a 2021-2023 average of 53.9%); however, this ratio
remains the lowest within the banking system. Fitch expects the
ratio to remain competitive compared to rated peers, bolstered by
its strong franchise within the banking system.
Systemic Importance: Despite the lack of recent history of
Guatemalan government support for systemically important banks,
Fitch considers the authorities' propensity to support Banrural is
high to avoid contagion risks. Banrural's 'bb' GSR reflects its
high systemic importance. It ranks the second largest bank in the
system with a market share of 22.7% in deposits. This also reflects
its ample interconnectivity within the financial system due to its
significant role in financial inclusion, and the participation of
the government in the ownership of the bank.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The bank's IDRs, VR and GSR would mirror any negative action on
Guatemala's sovereign ratings and Country Ceiling or a downward
revision of Fitch's assessment of the OE;
- Banrural's VR could be affected by a weakened business profile
that materially deteriorates its financial profile;
- Banrural's GSR is sensitive to a reduced government's propensity
to provide support.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Banrural's IDRs, VR and GSR would mirror any positive action in
the Guatemala's sovereign ratings, while maintaining a consistent
financial profile.
VR ADJUSTMENTS
- The OE score of 'bb-' has been assigned above the 'b' category
implied score due to the following adjustment reason: Sovereign
Rating (positive).
- The Earnings & Profitability score of 'bb+' is assigned below the
'bbb' category implied score due to the following adjustment
reason: Historical and Future Metric (negative).
Summary of Financial Adjustments
Prepaid expenses and other deferred assets were reclassified as
intangible assets and were deducted from equity since the agency
considers these to have low capacity to absorb potential losses.
Equity interests in insurance companies were also deducted from
equity.
Public Ratings with Credit Linkage to other ratings
Banrural's GSR is linked to the sovereign Foreign Currency IDR of
Guatemala.
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 de Desarrollo
Rural, S.A. LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Viability bb Affirmed bb
Government Support bb Upgrade bb-
BANCO G&T: Fitch Affirms 'BB' Long-Term IDR, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Banco G&T Continental S.A.'s (G&TC)
Foreign and Local Currency Long- and Short-Term Issuer Default
Ratings (IDRs) at 'BB' and 'B', respectively, Viability Rating (VR)
at 'bb', and Government Support Rating (GSR) at 'bb-'. The Rating
Outlooks on G&TC's Long-Term IDRs are Stable.
Key Rating Drivers
Ratings Driven by Intrinsic Creditworthiness: G&TC's IDRs are
driven by its intrinsic creditworthiness, as reflected in its VR of
'bb'. The VR is aligned with the bank's implied VR level and
reflects its good business profile and prudent risk profile that
have underpinned its stable and reasonable financial profile
through the cycle.
Good Business Profile: Fitch's business profile assessment for G&TC
is 'bb-' with Positive trend due to its relevant market position
that allows it to continue to benefit from Guatemala's positive
macroeconomic dynamics. As of February 2025, G&TC was the
third-largest bank by assets, loans and deposits. Its proven
business model across the cycle supports a reasonable and stable
financial profile.
G&TC's business model is focused on the corporate segment, ensuring
a prudent risk profile that underpins its adequate asset quality.
However, it has been diversifying into midsize companies and retail
segments. The bank's four-year average (2021-2024) total operating
income (TOI) was USD361.4 million, commensurate with the 'bb' range
score. At YE 2024, the TOI grew 16.7% yoy in local currency.
Good Asset Quality: Country's high inflation and interest rates
have pressured G&TC's asset quality profile. The nonperforming
loans (NPL) and charge-offs increased, while lower loan loss
allowances (LLA) coverage was present mainly due to consumer
portfolio deterioration across the Guatemalan industry.
Fitch expects G&TC's asset-quality metrics to stabilize around the
current levels, which are commensurate with the assigned score. The
asset-quality metrics also compare favorably with its closest peers
and are better than the Guatemalan banking industry. At YE 2024,
the NPL ratio was 1.3%, while the LLAs to impaired loans ratio was
186.3%, both comparing unfavorably with its four-year average of
1.0% and 335.9% respectively, but still better than closest local
peers.
Revenues Growing but Earnings Reduced: The bank's revenues
increased due to a greater loan portfolio and an enhanced net
interest margin. However, a substantial increase in loan impairment
charges and greater non-interest expense due to larger investments
in technological infrastructure reduced its profitability.
Fitch expects the bank´s profitability to modestly improve as it
continues to incur higher loan impairment charges to adhere to
regulatory changes. The operating profit to risk-weighted assets
(RWA) ratio was 2.1% at YE 2024, which is the lowest level in the
last four years, but close to the average of 2.5% for this period.
Adequate Capitalization: G&TC's adequate capitalization is
reflected in its Fitch Core Capital (FCC) to RWA ratio of 13.0% as
of YE 2024. The bank's capitalization has been relatively pressured
by dividends, which represented 75.3% of the year's net income and
RWAs that grew 9.9% as of YE 2024 that increased capital
requirements. Fitch expects G&TC's capitalization to remain above
current levels and to maintain adequate loss absorption capacity as
a result of consistent earnings and LLAs fully covering NPLs.
Sound Funding and Liquidity Profile: The bank's funding and
liquidity profile remained sound at YE 2024, with a funding
structure mainly comprised of deposits that fully covered the
credit portfolio. Fitch believes G&TC's funding and liquidity will
remain sound, as demand deposits continue to be the main funding
source and easy access to wholesale funding sources continues. The
gross loans to customer deposits ratio was a still-sound 73.7% at
YE 2024, although it compares unfavorably with its four-year
average of 64.1%. Liquid access coverage of short-term liabilities
fell below 50% to 46.7% at YE 2024, but remains sound in Fitch's
view.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The IDRs and VR would mirror any negative action on Guatemala's
sovereign ratings and Country Ceiling or a downward revision of
Fitch's assessment of the OE;
- IDRs and VR could be downgraded from a sustained deterioration of
the bank's financial performance, reflected in an increase of
impairment levels, weakened profitability (operating profit to RWA
consistently below 2%) and erosion of capital cushions, with a FCC
to RWA ratio consistently below 12.0%.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- IDRs and VR have limited upside potential. In the medium-to-long
term, these ratings could be upgraded due to a material business
profile improvement while maintaining a good financial profile.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
Systemic Importance: G&TC's 'bb-' GSR reflects its high systemic
importance. As of YE 2024 G&TC's market share in customer deposits
was 12.8%. Due to its market share, Fitch considers the
authorities' propensity to support as high to avoid contagion
risks. However, Fitch also considers the uncertainty of the
Guatemalan sovereign to provide support due to the lack of recent
history of government support for systemically important banks.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead To Negative
Rating Action/Downgrade
- GSR is sensitive to a downgrade of the sovereign rating, as well
as its propensity to provide support.
Factors That Could, Individually or Collectively, Lead To Positive
Rating Action/Upgrade
- GSR could be upgraded if Guatemala's sovereign rating is
upgraded.
VR ADJUSTMENTS
G&TC's OE score of 'bb-' has been assigned above the 'b' category
implied score due to the following adjustment reason: Sovereign
rating (positive).
Summary of Financial Adjustments
Fitch reclassified prepaid expenses and other deferred assets as
intangible assets and deducted them from total equity since the
agency believes they have low capacity to absorb losses.
Public Ratings with Credit Linkage to other ratings
G&TC's GSR is linked to the sovereign FC IDR of Guatemala.
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 G&T
Continental S.A. LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB Affirmed BB
LC ST IDR B Affirmed B
Viability bb Affirmed bb
Government Support bb- Affirmed bb-
===========
M E X I C O
===========
CREDITO REAL: Moves Forward With Bank Loans, Notes Cancellation
---------------------------------------------------------------
Valentine Hilaire of Bloomberg Law reports that Credito Real has
completed payments as part of its restructuring plan, the company
stated.
A trust has been established, and the firm is in the final stages
of transferring assets for sale, with proceeds allocated to
unsecured creditors.
The Troubled Company Reporter, citing Angelica Serrano-Roman of
Bloomberg Law, previously reported that a Delaware bankruptcy judge
has agreed to recognize the foreign restructuring of Mexican lender
Creditor Real SAB de CV, despite objections citing last 2024's US
Supreme Court ruling that invalidated nonconsensual liability
releases.
Judge Thomas M. Horan of the US Bankruptcy Court for the District
of Delaware announced during a March 11, 2025, hearing
that he would approve the cross-border plan under Chapter 15 of the
US Bankruptcy Code, which addresses foreign restructurings with US
connections.
The judge granted recognition of the plans, which includes
liability releases for nonbankrupt third parties, despite concerns
raised by two US federal agencies referencing the Supreme Court's
decision.
About Credito Real SAB
Credito Real SAB de CV SOFOM ENR is a Mexico-based company that
provides consumer financing. Credito is Mexico's biggest payroll
lender and second largest non-bank lender after Real Unifin.
Credito Real provides loans, either by providing direct financing
to consumers or by establishing financing programs with consumer
financing dealers that sell to Credito Real the collection rights
from consumer financing products. It also provides financing
directly to individuals that are employed by corporations with
payroll deduction agreements with consumer financing dealers
authorized by Credito Real. Credito Real operates through a number
of subsidiaries, including AFS Acceptance LLC.
Three alleged creditors signed a petition to send Credito Real to
Chapter 11 bankruptcy on June 22, 2022 (Bankr. S.D.N.Y. Case No.
22-10842). Institutional Multiple Investment Fund LLC, of Boston,
Massachusetts; Banco Monex, S.A., of Mexico, and Solitaire Fund, of
Liechtenstein, who claim to own an aggregate $8 million of
unsecured bond debt, signed the involuntary Chapter 11 petition.
David H. Botter, Esq., at Akin Gump Strauss Hauer & Feld LLP is
advising the three bondholders.
Despite efforts by bondholders to force the company to pursue a
Chapter 11 restructuring in the U.S., the Debtor opted to pursue
proceedings in Mexico instead. On June 28, 2022, Angel Francisco
Romanos Berrondo, one of the Debtor's shareholders and the former
CEO of Credito Real, filed a petition, in his capacity as a
shareholder, with the Mexican Court seeking to commence the
Mexican Liquidation Proceeding.
On June 30, 2022, the Mexican Court entered an order commencing the
dissolution and liquidation proceedings for the Company and
appointing Mr. Fernando Alonso-de-Florida Rivero as the Mexican
Liquidator.
The liquidator for Credito Real filed a Chapter 15 bankruptcy
petition (Bankr. D. Del. Case No. 22-10630) on July 14, 2022, to
seek U.S. recognition of the Mexican proceedings. The petition was
signed by Robert Wagstaff, the foreign representative of the
liquidator. Richards, Layton & Finger, P.A., led by John
HenryKnight, is counsel in the U.S. case.
=====================
P U E R T O R I C O
=====================
NEW FORTRESS: Moody's Cuts CFR to 'Caa1', Outlook Remains Negative
------------------------------------------------------------------
Moody's Ratings downgraded the ratings of New Fortress Energy Inc.
(NFE), including its corporate family rating to Caa1 from B2,
probability of default rating to Caa1-PD from B2-PD, its senior
secured term loans B to B3 from B2 and rated $425 million add on
senior secured term loan B B3 and downgraded legacy 2026 and 2029
senior secured notes to Caa2 from B3. Concurrently, Moody's also
downgraded the senior secured notes under NFE Financing LLC to B3
from B2. The Speculative Grade Liquidity rating is downgraded to
SGL-4 from SGL-3. The outlook remains negative.
RATINGS RATIONALE
The downgrade of NFE's CFR reflects Moody's views that financial
risks remain high, signified by high absolute amount of debt,
leverage and interest costs relative to its EBITDA and operating
cash flow. Taking into account NFE's updated EBITDA guidance that
was lowered to about $1 billion in 2025, Moody's do not expect NFE
to generate sufficient operating cash flows to maintain solid debt
service coverage, while the company continues to borrow to fund its
capex and plans to raise funds from divestments to meet its
maturities in 2025-2026 and to reduce debt.
NFE's high governance risks were an important consideration in this
rating action and are reflected in its revised G-5 score and CIS-5
credit impact score. These scores are linked primarily to its
financial policy with additional risks arising from a complex
organizational structure. Debt-funded expansion keep the leverage
consistently above the levels targeted by its stated financial
policy.
After a period of rapid expansion substantially funded by
borrowing, NFE is focusing on optimizing its asset footprint and on
debt reduction. Over the last 6 months, NFE took steps to extend
its maturities and raised cash through borrowing and placement of
equity. In 2025, the company is actively pursuing divestments of
some of its cash producing assets to reduce debt and debt service
costs in order to achieve a sustainable capital structure. While
Moody's counts on successful execution of the divestment strategy,
Moody's also takes into account execution risks associated with
this strategy, as timing and valuations of such transactions are
inherently uncertain.
NFE's CFR is underpinned by its significant energy infrastructure
assets, including its operating FLNG facility in Mexico and natural
gas terminals and several generation facilities, operating and
under construction in Brazil, Puerto Rico, Nicaragua and Jamaica.
The company plans to reduce its capex in 2025 but will continue to
invest to complete its core projects, including the construction of
its second FLNG facility and its projects in Brazil, and will
continue to expand its operations in Puerto Rico.
The negative outlook on the ratings recognizes execution risks
associated with divestment-led deleveraging strategy and reflects
uncertainty about NFE's ability to improve debt service coverage
and achieve a tenable capital structure through divestments.
NFE has weak liquidity and will rely on its significant cash
balances, committed borrowing facilities and expected proceeds from
various claims to support its liquidity amid limited operating cash
flow available after debt service payments in 2025. At the end of
2024, NFE reported $493 million in unrestricted cash. In March
2025, NFE renegotiated terms of one of its supply contracts in
Puerto Rico and will receive further $110 million in cash proceeds
as part of this settlement.
At the end of 2024, the company had no availability under its $1
billion senior secured revolver facility. The maturity of the
revolver facility was extended to October 2027 in the amount of
$900 million, with $100 million maturing in April 2026. NFE also
agreed to reduce the outstanding balance under the revolver by $270
million by September 30, 2025.
In November, 2024 NFE placed PortoCem Debentures due 2040 to fund
the completion of the PortoCem Power plant in Brazil. In Q1 2025,
NFE completed $425 million add-on term loan B facility with
proceeds to be used to fund completion of the second FLNG facility
and for some other corporate needs.
Moody's also notes that NFE may receive additional one-off payments
from insurance and other settlements, as well as through short-term
supplier credit or sales of LNG cargoes. At the end of 2024, NFE
reported $180 million outstanding under its LNG repurchase short
term funding arrangements. NFE continues to pursue a $659 million
compensation claim from FEMA in recognition of its forgone revenue
resulting from the reorganization of the emergency power supply
contracts in Puerto Rico. The timing and amount of the ultimate
settlement on this claim are inherently uncertain.
The company's next maturity is $509 million notes in September
2026, that will follow the aforementioned maturities under the
Revolver facility in 2025 and 2026. NFE's term loan B facilities
mature in 2028. However, the maturity will accelerate to July 2026,
in advance of the 2026 secured notes maturity, if these notes
remain outstanding.
The recently exchanged senior secured 2029 notes are rated B3, one
notch higher than the Caa1 CFR. These debt instruments benefit from
several significant security and guarantees packages that provide
greater collateral coverage and support better recovery
expectations for these instruments, which is why Moody's views the
B3 rating as more appropriate than the lower rating suggested by
Moody's Loss Given Default for Speculative-Grade Companies
Methodology model. The legacy 2026 and 2029 notes are rated Caa2,
reflecting their lower collateral coverage and recovery
expectations.
NFE recently executed the second amendment to its Term Loan
agreement, that comprised the addition of $425 million of add-on
senior secured term loan B commitments, rated B3, which Moody's
views as a more appropriate rating given its collateral coverage.
All undrawn commitments under term loan A were canceled. The
amendment of the term loan B agreement kept the existing terms,
including cross default provisions, annual amortization requirement
and cash sweep provisions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Failure to reduce debt and significantly improve debt service
affordability and coverage, including a delay in execution of
divestment strategy resulting in 2026 notes becoming current, would
result in a downgrade of the CFR. Rising cash requirements in
operations or capital investments resulting in accelerated use of
available cash balances and delay in debt reduction may also lead
to the downgrade of the ratings. Finally, ratings on the
instruments may be downgraded if Moody's views on the availability
and value of pledged collateral change.
An upgrade of the CFR depends on strong execution of the
deleveraging plan and significant reduction in financial risks. The
upgrade of the CFR would require a substantial reduction in debt
and interest costs, and some improvement in recurring operating
earnings, such that interest coverage improves with EBITDA /
Interest sustained at around 1.5x. An upgrade will also require NFE
to build financial flexibility, reduce reliance on debt by
generating some FCF and to maintain an adequate liquidity
position.
New Fortress Energy Inc. is a US-listed, high growth energy
infrastructure company with liquefaction, regasification and
distribution natural gas operations in Puerto Rico, Mexico,
Jamaica, Nicaragua and Brazil.
The principal methodology used in these ratings was Midstream
Energy published in February 2022.
*********
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