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251015.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, October 15, 2025, Vol. 26, No. 206 Headlines A R G E N T I N A ARGENTINA: La Nina Forecast Raises Early Alarm Bells For Milei ARGENTINA: Washington Launches Financial Rescue as US Buys Pesos B E R M U D A CARNIVAL BERMUDA: Fitch Withdraws BB+ LongTerm IDR B R A Z I L BANCO FIBRA: Fitch Alters Outlook on 'B+' LongTerm IDR to Stable MINAS GERAIS: S&P Upgrades ICR to 'B-' on Better Fiscal Execution [] BRAZIL: Strong Credit Growth Despite High Policy Rates, IMF Say C O L O M B I A AVIANCA GROUP: Moody's Raises CFR to B1 & Alters Outlook to Stable COLTEL: S&P Affirms 'B+' ICR & Alters Outlook to Stable D O M I N I C A N R E P U B L I C [] DOMINICAN REPUBLIC: Financial Assets Surpass 4 Trillion Pesos J A M A I C A MONTEGO BAY AIRPORT: S&P Upgrades Ratings to BB+ P U E R T O R I C O INCAR GROUP: Seeks Court Approval to Tap Tamarez CPA as Accountant U R U G U A Y ACI AIRPORT: Fitch Affirms 'BB+' on Secured Notes Due 2032 & 2034 - - - - - ================= A R G E N T I N A ================= ARGENTINA: La Nina Forecast Raises Early Alarm Bells For Milei -------------------------------------------------------------- Jonathan Gilbert & Brian K Sullivan at Bloomberg News report that a weather-changing La Nina has emerged in the Pacific Ocean, increasing the risk of drought in California and crop-growing regions in Brazil and Argentina while also bringing cold to the US Midwest and a milder winter to New York and the US East Coast. The development of the phenomenon is setting off alarm bells in Argentina, where this weather pattern can cause heat waves and droughts that affect the country's main soybean and corn crops, according to Bloomberg News. Although La Niña is expected to be weak, its mere appearance poses a risk to the agricultural region of La Pampa, where producers are preparing for planting, Bloomberg News notes. Bloomberg News says that droughts caused by La Niña in 2018 and 2023 contributed to the fall of two previous governments in Argentina, the world's leading supplier of soybean meal and oil and the third largest global exporter of corn. There is a lot at stake this harvest season. Economic activity has weakened on a quarterly basis, and President Javier Milei, whose government desperately needs foreign currency, will depend next year on agricultural export revenues of around US$30 billion annually, Bloomberg News relays. "There will be dry spells," said German Heinzenknecht, an agricultural meteorologist in Tandil, Buenos Aires province. But he added that high soil moisture levels should help farmers. Of course, it is impossible to predict how the season will unfold at this stage. Just remember Argentina's last harvest: La Niña seemed to put the fields at risk, but in the end the rains came and saved the soybeans, Bloomberg News notes. "It's not good news that La Niña is coming," said Leonardo De Benedictis, a meteorologist at the AZ Group agricultural consultancy in Buenos Aires. "But the weaker it is, the better," Bloomberg News discloses. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. In March 2022, the International Monetary Fund (IMF) approved a 30-month arrangement under an Extended Fund Facility for Argentina in the amount of SDR 31.914 billion (equivalent to US$44 billion, or 1000 percent of quota) -- with an approved immediate disbursement of an equivalent of US$9.65 billion. Argentina's IMF-supported program sought to improve public finances and start to reduce persistent high inflation through a multi-pronged strategy. On April 11, 2025, the IMF further approved a 48-month Extended Fund Facility (EFF) arrangement for Argentina totaling US$20 billion (or 479 percent of quota), with an immediate disbursement of US$12 billion, and a first review planned for June 2025 with an associated disbursement of about US$2 billion. The program is expected to help catalyze additional official multilateral and bilateral support, and a timely re-access to international capital markets. Fitch Ratings, on May 12, 2025, upgraded Argentina's Long-Term Foreign-Currency and Local-Currency Issuer Default Rating (IDR) to 'CCC+' from 'CCC'. The upgrade reflects the launch of a new IMF program, among other things. S&P Global Ratings, in February 2025 lowered its local currency sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and its national scale rating to 'SD' from 'raB+'. Moody's Ratings, in January 2025, raised Argentina's local currency ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1 from Caa3. DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local Currency Issuer Ratings to B (low) from CCC in November 2024. ARGENTINA: Washington Launches Financial Rescue as US Buys Pesos ---------------------------------------------------------------- Buenos Aires Times reports that the United States rushed to stabilise Argentina's economy, offering US$20 billion in financing and carrying out a rare intervention in currency markets to prop up the peso after weeks of sharp declines. Washington has finalised a US$20-billion currency swap framework with Argentina's Central Bank, Treasury Secretary Scott Bessent said in a social media post, according to Buenos Aires Times. The US also directly purchased pesos, he said, a move that follows unsuccessful efforts by Argentine authorities to stabilise the exchange rate on their own, the report notes. Trump and Bessent are making a bet on a nation that's defaulted and devalued repeatedly over the past several decades, the report relays. The goal is to help their political ally President Javier Milei notch a win in the October 26 midterm elections and calm markets unsettled by fears of his leftist rivals returning to power, the report discloses. "The US Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets," Bessent added. Buenos Aires Times discloses that Milei welcomed the intervention, thanking Bessent and President Donald Trump in a post on X. "Together, as the closest of allies, we will make a hemisphere of economic freedom and prosperity," he said. 'Illiquidity' Trouble Bessent characterised Argentina's woes as "a moment of acute illiquidity," suggesting he doesn't see a fundamental issue with its ability to make good on its debt, Buenos Aires Times relays. It isn't immediately clear what the US is asking of Argentina in return for its aid. Milei has denied that the US asked Argentina to get rid of a separate US$18-billion swap line with China, Buenos Aires Times notes. The report relays that while speculation had risen before Bessent's announcement that the US might press Argentina to allow a free float of the peso, the Treasury chief said the country's "exchange rate band remains fit for purpose." "Argentina's policies, when anchored on fiscal discipline, are sound," Bessent said, the report discloses. He also said he discussed potential investment incentives for US companies who may want to do business in Argentina, the report says. Argentina's dollar bonds jumped across the curve, with some of the nation's most liquid notes up more than four cents on the dollar to session highs, the report relays. Summit Coming Buenos Aires Times notes that Trump and Milei will meet at the White House October 14. in their second sit-down, after they held talks on the sidelines of the United Nations General Assembly in New York in September. The announcements follow several days of US discussions with Argentina's economic team, including Economy Minister Luis Caputo, who had also met with International Monetary Fund Managing Director Kristalina Georgieva. Argentina is by far the Fund's biggest debtor, owing some US$55 billion after a string of bailouts, the report relays. The new bilateral "swap" would likely be different from the swap lines that the Federal Reserve has with other developed-economy central banks, and more reminiscent of tools used by Washington to bail out Mexico three decades ago, Buenos Aires Times discloses. Although the US help may help stabilise Argentina's volatile markets for now, it's already been questioned on both sides of the aisle in Washington for conflicting with Trump's "America First" agenda, the report relays. For his part, Milei has repeatedly said government isn't the solution while wielding a chainsaw to symbolise federal spending cuts in Argentina, the report notes. After promising to close his Central Bank during his campaign two years ago, the currency swap line now runs through it, the report discloses. Trump's financial lifeline for Milei comes on top of the US supporting a separate US$20-billion April agreement for Argentina with the IMF, the report relays. That was Argentina's third bailout from the fund since Trump's first term, the report adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Javier Milei is the current president of Argentina after winning the November 19, 2023 general election. He succeeded Alberto Angel Fernandez in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. In March 2022, the International Monetary Fund (IMF) approved a 30-month arrangement under an Extended Fund Facility for Argentina in the amount of SDR 31.914 billion (equivalent to US$44 billion, or 1000 percent of quota) -- with an approved immediate disbursement of an equivalent of US$9.65 billion. Argentina's IMF-supported program sought to improve public finances and start to reduce persistent high inflation through a multi-pronged strategy. On April 11, 2025, the IMF further approved a 48-month Extended Fund Facility (EFF) arrangement for Argentina totaling US$20 billion (or 479 percent of quota), with an immediate disbursement of US$12 billion, and a first review planned for June 2025 with an associated disbursement of about US$2 billion. The program is expected to help catalyze additional official multilateral and bilateral support, and a timely re-access to international capital markets. Fitch Ratings, on May 12, 2025, upgraded Argentina's Long-Term Foreign-Currency and Local-Currency Issuer Default Rating (IDR) to 'CCC+' from 'CCC'. The upgrade reflects the launch of a new IMF program, among other things. S&P Global Ratings, in February 2025 lowered its local currency sovereign credit ratings on Argentina to 'SD/SD' from 'CCC/C' and its national scale rating to 'SD' from 'raB+'. Moody's Ratings, in January 2025, raised Argentina's local currency ceiling to B3 from Caa1 and the foreign currency ceiling to Caa1 from Caa3. DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local Currency Issuer Ratings to B (low) from CCC in November 2024. ============= B E R M U D A ============= CARNIVAL BERMUDA: Fitch Withdraws BB+ LongTerm IDR -------------------------------------------------- Fitch Ratings has placed Carnival Corporation and Carnival plc's (together Carnival) 'BB+' Long-Term Issuer Default Ratings (IDRs) and senior unsecured notes 'BB+' Long-Term Ratings with a Recovery Rating of 'RR4' on Rating Watch Positive (RWP). Fitch affirmed Carnival's senior secured notes at 'BBB-'/'RR1' and rated its new revolver and proposed 2029 senior unsecured notes 'BB+'/'RR4' on RWP. The RWP reflects Carnival's proposed note transaction. Proceeds will be used to refinance the 6.0% senior unsecured notes due 2029. The refinancing completes the steps necessary to remove high-yield covenants that would release guarantees across the unsecured bonds. If two agencies assign investment-grade corporate issuer ratings, Carnival can release the secured debt collateral. Carnival's EBITDA leverage is also currently below Fitch's positive sensitivity and is likely to improve further. Fitch will resolve the RWP upon transaction close and upgrade the IDRs and senior unsecured debt to 'BBB-'. Fitch has withdrawn Carnival Holdings (Bermuda) II Limited's 'BB+' IDR and its RCF as there is no longer debt at the entity. Additionally, Fitch has withdrawn Carnival Corporation's 2027 and 2028 senior secured term loans, which have been prepaid. Key Rating Drivers Cruise Demand Remains Strong: Cruise companies benefit from offering a better value proposition relative to resort vacations and having a large base of repeat customers. Carnival, along with Royal Caribbean Inc. (not rated) and Norwegian Cruise Lines Holdings Ltd. (not rated), has announced historically high bookings for both 2025 and 2026. The long-term nature of cruise bookings provides strong visibility, as cancellations are not typically material. Fitch forecasts net yield growth to rise by approximately 5.0% (constant currency) in 2025. Continued Debt Reduction: Carnival's gross debt (excluding issuance costs and discounts) materially increased during the coronavirus pandemic to fund ship deliveries and cover operating costs. Fitch expects debt will decline to $27 billion in 2025 from $35.6 billion in 2022. Fitch also expects FCF growth and management's commitment to investment-grade metrics to lead to a rapid improvement in credit metrics. The decline in new ship deliveries over the next three years should lead to greater FCF growth and further debt reduction. Carnival also have called the $1.1 billion convertible notes, which will be settled with a combination of $500 million in cash and shares. Increased FCF Growth: Fitch expects EBITDA growth, lower interest costs from debt reduction, and lower growth capex to result in higher FCF through the forecast horizon. Fitch estimates FCF will grow to $1.6 billion in 2025 and materially thereafter. Carnival should also benefit from higher customer deposits given the continued growth in bookings. Fitch does not anticipate any material shareholder returns until the company achieves investment-grade status. Leader in Cruise Industry: Carnival is the world's largest cruise operator with multiple brands. Due to its brands acceptance and market leading capacity, the company holds the top market share in the North American and European markets, which contribute most of its EBITDA. Historically, the company's scale has been a credit positive, but pandemic-related disruptions severely impacted Carnival due to its high fixed-cost structure and resulted in delayed ship deliveries. Under normal cruise operating conditions, Fitch considers Carnival's scale a positive factor. Moderate Industry Capacity Growth: Fitch expects capacity growth to be somewhat muted over the next several years given the reduction of new ship orders during the pandemic, as industry credit metrics weakened. However, Fitch believes lower supply growth will support net yield growth in the near term. Recent announcements of new ship builds will mostly not affect the market until the end of the decade, although capacity growth would still be modest. Favorable Industry Dynamics: The top players in the cruise line industry benefit from high barriers to entry due to significant ship capex spend, low global market penetration rates relative to other leisure activities, mobile assets that allow companies to move to other markets when existing markets are facing uncertain economic or geopolitical issues, and favorable tax treatment given their incorporation outside the U.S. Peer Analysis Carnival is the largest cruise ship operator in terms of berths and passengers carried compared to Royal Caribbean Inc. (BBB-/Positive) and Norwegian Cruise Line Holdings, Ltd. (not rated). Carnival is also compared to other high 'BB' category and low 'BBB' category leisure credits, such as Hyatt Hotels Corporation (BBB-/Stable) and Wyndham Hotels & Resorts Inc. (BB+/Stable). Carnival has materially greater scale and geographic diversification than its comparable peers, although leverage is higher. Fitch believes Carnival's scale and FCF generation will result in materially improved credit metrics that will be more indicative of an investment-grade credit over the forecast horizon. Key Assumptions - Passengers carried expected to grow in the low-single digits during the forecast horizon. Occupancy expected to increase to 106% in 2026 and beyond; - Net yields are expected to increase 5% in 2025 and in the low -to mid-single digits over the remainder of the forecast horizon, which is below management guidance; - Adjusted cruise costs per available lower berth days, excluding fuel, are forecast to increase in the low- to mid-single digits over the forecast horizon; - Capex including new ship deliveries are expected to drop to $3.7 billion in 2025 and $3.6 billion in 2026; - There are no assumptions for share repurchases, common dividends, acquisitions or asset sales; - Fitch expects FCF to be applied to debt reduction through the forecast horizon. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA Leverage sustaining above 4.5x; - Economic or geopolitical event that lasts for an extended period and results in a deterioration of the capital structure (e.g., increased debt, use of secured or priority guaranteed financing); - A more aggressive financial policy that includes accelerated shipbuilding plans or increased shareholder allocations, which could make credit metrics vulnerable during a weaker economic environment. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Sustainable positive FCF with application to debt payment; - EBITDA leverage approaching 4.0x; - The company has taken necessary steps to achieve an unsecured capital structure; - Cash flow from operations (CFO) minus capex to debt is greater than 10%. Liquidity and Debt Structure As of Aug. 31, 2025, Carnival had $1.8 billion of cash and $8.7 billion of undrawn export credit facilities to fund ship deliveries planned through 2033, although the company drew $0.8 billion in September to fund the Sun Princess II ECA facility. The company also has $4.5 billion available under its current RCF, maturing in June 2030. Fitch expects Carnival to be FCF positive through the forecast horizon, which further enhances liquidity. Fitch believes debt reduction, potential conversion of convertible debt exchanged into shares and refinancing opportunities should allow the company to address its debt repayment schedule. Fitch expects new ship deliveries to decline over the forecast horizon. The company plans no ship additions in 2026 and will add one each in 2027 and 2028. The company recently announced three new ships for the Carnival brand and two ships for the AIDA brand, but the first delivery is not until 2029. Issuer Profile Carnival is the largest global cruise company and is among the largest leisure travel companies, with a portfolio of world-class cruise lines. Macroeconomic Assumptions And Sector Forecasts Fitch's latest quarterly Global Corporates Sector Forecasts Monitor 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 Recovery Prior ----------- ------ -------- ----- Carnival plc LT IDR BB+ Rating Watch On BB+ senior unsecured LT BB+ New Rating RR4 senior unsecured LT BB+ Rating Watch On RR4 BB+ Carnival Corporation LT IDR BB+ Rating Watch On BB+ senior unsecured LT BB+ New Rating RR4 senior secured LT WD Withdrawn BBB- senior secured LT BBB- Affirmed RR1 BBB- senior unsecured LT BB+ Rating Watch On RR4 BB+ senior unsecured LT BB+ Affirmed RR4 BB+ Carnival Holdings (Bermuda) II Limited LT IDR WD Withdrawn BB+ senior secured LT WD Withdrawn BB+ =========== B R A Z I L =========== BANCO FIBRA: Fitch Alters Outlook on 'B+' LongTerm IDR to Stable ---------------------------------------------------------------- Fitch Ratings has affirmed Banco Fibra S.A.'s (Fibra) Long-Term (ST) and Short-Term (ST) Local and Foreign Currency Issuer Default Ratings (IDRs) at 'B+' and 'B', respectively. Fitch has also affirmed Fibra's Viability Rating (VR) at 'b+' and its National LT and ST ratings at 'BBB+(bra)' and 'F2(bra)', respectively. Fitch has revised the Rating Outlooks on the LT IDRs and on the LT National Ratings to Stable from Negative. The Outlook revision reflects reduced risks at its current rating, primarily due to modestly higher capital buffers and early signs of earnings stabilization. Fibra has posted two consecutive semesters of positive operating results. These developments reduce risks on an international scale and improve Fibra's relative domestic standing, even as the ratings remain constrained by its short track record and modest capitalization compared to those of peers. Key Rating Drivers Business, Risk Profile Drive Ratings: Fibra's IDRs and National Ratings are driven by its intrinsic strength, as reflected in its 'b+' VR. Fibra's main rating weakness are its limited history of sustained core profits and modest capital buffers relative to higher-rated peers. These constraints are offset by its low-risk lending focus, which supports stable asset quality, and its adequate funding and liquidity profile. Business Profile Developments: Fitch has revised the Outlook on Fibra's Business Profile assessment to Stable from Negative and affirmed the assessment at 'b+'. The bank has realigned its core corporate and small and medium-sized enterprise (SME) franchise and is strengthening ties to group-linked ecosystems, particularly the Companhia Siderúrgica Nacional (CSN; BB/AAA(bra)/Negative) supplier network. Fitch expects growth in non-credit revenues, supported by fee-based products such as insurance, guarantees and client derivatives, to diversify earnings without materially increasing capital consumption or operational complexity. Continued execution across these fronts will be critical to sustaining the Business Profile score and supporting a more resilient earnings structure. Signs of Stabilizing Profitability: In 1H25, operating profit to risk-weighted assets (RWA) rose to 1.0% from 0.5% in 2024 and a four-year average of -0.2%, helped by portfolio sales and provision reversion. Efficiency remains weak, with a high cost-to-income ratio of 107% in 1H25, and results were partly supported by asset divestment gains. Still, structurally lower funding costs, margin expansion due portfolio reshaping and stable credit quality are expected to underpin recurring earnings over the medium to long term. Fitch has revised the Outlook on Fibra's 'b-' Earnings and Profitability assessment to Stable from Negative. Modest Capitalization: Capitalization remains modest for the rating level, constrained by BRL1.1 billion in deferred tax assets. However, the common equity Tier 1 (CET1) ratio improved to 9.9% at June 2025 from 8.7% at YE 2024, strengthening loss-absorption capacity and lowers the risk that weak profitability will pressure capital. More stable earnings, measured loan growth, and disciplined RWA management are expected to sustain capital levels going forward and justify Fitch's Outlook revision of Fibra's 'b-' Capitalization and Leverage score to Positive from Stable. Low-Risk Lending Profile: Fibra's asset-quality indicators compare well with the peer average, supported by a low-risk lending book focused on corporates, SMEs and agribusiness. Fitch assumes these aspects will remain unchanged in the medium term. As of June 2025, stage 3 loans made up 3.8% of the total portfolio, while the nonperforming loan (NPL) ratio (90+ days overdue) was low, at 1% compared to 0.65% in 2024. The bank has adequate coverage, with loan loss allowances corresponding to 75% of impaired loans. Fitch believes that Fibra can absorb credit deterioration despite portfolio concentration, as its top 20 borrowers make up around 50% of the loan portfolio. Fibra's position to absorb credit deterioration is adequate, and concentration risk is mitigated given the well-collateralized nature of its lending receivables. Adequate Funding and Liquidity: Fibra's funding profile has been reshaped through disciplined repricing, reduced reliance on concentrated distributors, and longer-tenor issuance. Deposits from retail brokerage channels are the main source of funding, complemented by wholesale deposits. Liquidity is adequate, with BRL1.1 billion in liquid assets in June 2025 and a gross loan-to-deposit ratio of 69%, consistent with conservative balance-sheet management. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - The ratings would be downgraded if the bank fails to maintain positive profitability levels, evidenced by negative operating profit to RWA ratios; - A sustained deterioration in the bank's CET 1 ratio below 9%, either due to rapid credit growth or weak internal capital generation. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - National Ratings could be supported by continued earnings momentum and stronger capital buffers (CET1 near 10%), provided the bank maintains a stable, unchanged risk profile; - Upside for the International Ratings is limited in the near term. Over time, any upward rating momentum would depend on a stable business model with broader revenue diversification and continued development of core franchises leading to a higher TOI base; improved profitability, evidenced by operating profit to RWA consistently above 1.25%; and capital and asset quality ratios sustained at current levels. 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 Fibra S.A. LT IDR B+ Affirmed B+ ST IDR B Affirmed B LC LT IDR B+ Affirmed B+ LC ST IDR B Affirmed B Natl LT BBB+(bra) Affirmed BBB+(bra) Natl ST F2(bra) Affirmed F2(bra) Viability b+ Affirmed b+ Government Support ns Affirmed ns MINAS GERAIS: S&P Upgrades ICR to 'B-' on Better Fiscal Execution ----------------------------------------------------------------- S&P Global Ratings, on Oct 10, 2025, raised the ratings on the state of Minas Gerais to 'B-' from 'CCC+'. The outlook is stable. Outlook S&P said, "The stable outlook on Minas Gerais reflects our expectation that its finances will gradually improve while it receives substantial, though declining, debt relief from the central government. Our view reflects the emerging signs that the state's is committed to improve its fiscal profile under the Fiscal Recovery Regime (FRR), established in 2017 to assist states in severe financial distress." Downside scenario S&P could lower its ratings on Minas Gerais in the next 12 months if setbacks in its fiscal consolidation put federal debt relief at risk. This would likely occur if Minas Gerais fails to comply with the targets and obligations under the FRR. Upside scenario S&P could upgrade the state of Minas Gerais in the next 12 months if it takes further steps to strengthen its fiscal profile. This could include, for example, fiscal surpluses that permit a gradual build-up in liquidity and the ability to access new borrowings. Higher-than-expected economic growth could support improvements in the state's fiscal profile and its upgrade. Rationale S&P's 'B-' ratings reflect Minas Gerais' progress in generating fiscal results under the FRR. At the same time, the ratings incorporate vulnerabilities in the state's fiscal profile that continue to require substantial federal debt relief. The ratings incorporate timely repayments of debt for the next 12 months despite the state's still weak cash flow and liquidity, as well as its high debt burden. Debt payments will rise in the coming years as the federal government phases out debt relief under the FRR, and the state will need to maintain fiscal correction measures to keep its debt repayment capacity. Minas Gerais has been demonstrating commitment and capacity to compensate for lower debt relief despite its challenging fiscal profile Maintaining fiscal correction measures is paramount for Minas Gerais to accommodate rising debt service under the FRR terms, amid other spending pressures. The emerging signs of the state's commitment and capacity to comply with the FRR goals have improved visibility on the effects of fiscal consolidation measures over time, which is key for strengthening Minas Gerais' creditworthiness. Such efforts are reflected in its budgetary performance as of August 2025, which is in line with that of August 2024, already incorporating an increase in debt service. In addition, the state has complied with all FRR targets and obligations, which were approved by the central government in the last semi-annual review. Minas Gerais' accounts payable have plummeted over the past years, and the state plans to keep them low, forcing fiscal consolidation to finance eventual slippages. On Jan. 6, 2025, the state of Minas Gerais formally joined the FRR. The ratification of the program by the central government followed a prior judicial decision to waive the approval of the state's FRR plan by the state legislature and implementation of a spending ceiling through a decree by the governor. The spending ceiling stipulates that expenditure growth should not surpass inflation, and that any slippage should be absorbed by the executive branch if other powers don't comply. Strengthened by formal participation in the FRR, continued access to debt relief is key for the state to avoid default. Under the FRR--in effect until 2033--Brazil's central government is responsible for repaying all debt installments owed by the state. The FRR also requires the central government to make timely debt payments, to be reimbursed or incorporated in the state's intergovernmental debt stock. Minas Gerais is negotiating with the central government to join the State Debt Payment Program (PROPAG), which aims to renegotiate state debts with the federal government and that could enhance its fiscal profile. Timely debt repayments for the next 12 months are contingent on the state's access to debt relief. Considering debt relief through FRR, we estimate Minas Gerais' average operating surplus of 7% of operating revenue and deficit after capital expenditure of 2% of total revenue in 2025-2027, compared with the averages of 9% and 4% surpluses, respectively, in 2023-2024. The rising debt service--Brazilian real (R$) 7.5 billion in 2025, R$9.1 billion in 2026, and R$11.4 billion in 2027--will weigh on Minas Gerais' cash flow. The phaseout of debt relief annually increases the debt service by 11.11% of the original debt service that the state owes to the central government. The fiscal deficits projected from 2025 to 2027 will result from capex financed by settlement payments that the state has been receiving following dam disasters. However, with effects of fiscal measures continuing to kick in, its cash flow slippage should gradually narrow and be balanced by 2028. Nevertheless, Minas Gerais' 2024 fiscal results were favorable because of a delay in resumption of debt service, better-than-expected tax revenue collection, settlement payment for dam disasters, and containment in capex. S&P said, "Nonetheless, we view Minas Gerais' unfunded pension system as one of its key budgetary constraints. Pension fund deficits are still high despite the approval of the 2020 pension reform. We expect annual pension fund deficits to continue to account for 20% of operating revenue, as in 2024." Weak liquidity and high debt burden to persist amid moderate economic growth in line with Brazil and a rigid fiscal framework S&P expects liquidity to remain low and a key rating vulnerability. It expects the state to generate cash flow only sufficient to cover debt service over the next two years, but not to accumulate liquidity. As budgetary execution gradually improves, liquidity should as well by 2028. Under the FRR, the state's access to new borrowings is limited to technical assistance that supports fiscal consolidation. Despite restrictions on new borrowings low debt service payments afforded by the FRR will result in high debt levels for the forecast period. S&P said, "We incorporate the share of debt service rescheduled through the FRR into Minas Gerais' debt stock, the Brazilian real's depreciation, and the monetary update coefficient for the largest share of the state's debt, which it owes to the federal government. Therefore, we forecast Minas Gerais' debt at about 180% of operating revenue in 2025-2027. Interest payments to be about 4.1% of operating revenue during the same period and will edge up to 4.9% by 2027 as the debt relief is phased out." S&P said, "We estimate that the state's GDP per capita is $9,300 for 2025, compared with Brazil's $10,500. Minas Gerais generates about 10% of the national GDP. Most of the state's economy is based on the services sector, but mining activities have important indirect effects. We expect Minas Gerais' economy to generally perform in line with the sovereign's in 2025-2027. We expect the state's real GDP growth of 2.3% in 2025, but to average 1.9% in 2026 and 2027." In addition, the state operates under a volatile and unbalanced institutional framework. The rigidities of Brazil's intergovernmental system continue to prevent local and regional governments from structurally balancing their finances. Nonetheless, S&P believes the system have a certain degree of predictability and transparency, with enhanced oversight over local and regional governments' finances and adherence to fiscal discipline. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Rating Component Scores above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. Ratings List Upgraded; Outlook Action To From Minas Gerais (State of) Issuer Credit Rating B-/Stable/-- CCC+/Positive/-- [] BRAZIL: Strong Credit Growth Despite High Policy Rates, IMF Say ------------------------------------------------------------------ An IMF article by Swarnali A. Hannan, Daniel Leigh, and Rui Xu explains strong credit growth in Brazil despite high policy rates. Higher income and fintech expansion boosted credit growth, even as monetary policy remained effective, the article noted. At 15 percent, Brazil's monetary policy interest rate (called Selic) is one of the highest among major economies. Yet in 2024, bank credit grew by 11.5 percent and corporate bond issuance rose by 30 percent. This credit expansion - in the face of high policy rates - benefited many individuals, households, and companies. But it also raised questions about the effectiveness of monetary policy itself. In other words, why did the central bank's efforts to cool down the economy, by making financing more expensive, seem not to be working? Our analysis, in the context of Brazil's latest yearly economic review (the Article IV consultation), shows that concerns have been largely unwarranted and that monetary policy transmission in Brazil remains effective. Indeed, recent data indicates that credit growth is starting to slow down. So, what exactly has been happening? Even as monetary policy was doing its job as intended, we saw two other factors playing a critical role: strong income growth and the country's success in expanding financial inclusion. These factors boosted the demand for credit and its supply. A Committed Central Bank Brazil's was the first major central bank to hike rates during the pandemic. After a period of easing, it started a new tightening cycle in September 2024. These decisions have been appropriate and guided by the need to bring inflation and inflation expectations down to its 3 percent target. The country's twelve-month inflation rate reached 5.1 percent in August, down slightly from the previous month, but still well above target this year. Inflation expectations are also projected to stay above target over an eighteen-month horizon. This explains the rise in policy rates since the pandemic, in line with standard inflation-targeting principles. How Effective is Monetary Policy Transmission? To gauge the effectiveness of Brazil's monetary policy tightening, IMF's report estimates how changes in the central bank's policy interest rate pass through to bank lending rates paid by households and businesses. IMF finds that a 1 percentage point increase in the policy rate raises lending rates by around 0.7 percentage point after four months. To raise average lending rates in the economy by one percentage point, the monetary policy rate must increase by about 1.4 percentage points, since roughly 40 percent of total credit is comprised of government-directed loans that are less responsive to policy rate changes. The analysis also suggests that since 2020, corporate lending rates have become more responsive to changes in the basic rate. This may in part result from the 2018 reform of Brazil's large development bank, BNDES, which aligned its lending rates with long-term market rates. Bank-level analysis shows corporate loans adjust faster than consumer loans, likely due to tighter margins and more experienced borrowers. In turn, payroll-backed consumer loans are the least responsive because of rate caps. What Drove Credit Growth Although Brazil's monetary policy is working, credit growth has been strong over the past few years. This was due to both cyclical factors and structural changes. On the cyclical side, Brazil's economy has grown faster than expected, with low unemployment and rising incomes driving higher credit demand. Moreover, Brazil has been making significant structural changes that have increased financial inclusion and credit availability. The rapid expansion of fintech lenders gave more people access to credit. In 2024, digital banks and other fintech lenders accounted for a quarter of the credit card market and over 10 percent of non-payroll personal loans. Increased competition reduced banking-sector concentration and lowered average lending rates of incumbent banks. In addition, bond-market financing for corporates as a share of GDP tripled in the last decade, driven by tax-exempt debentures. All these factors supported credit growth. With a 15 percent basic rate, Brazil's central bank has administered a strong dose of monetary tightening to temper credit growth and return inflation and expectations to target. New loan volumes have been falling since April, further suggesting that the treatment is working. More broadly, Brazil's economy is showing signs of moderation amid tight monetary and fiscal policies and elevated global policy uncertainty. Overall, IMF's research shows that concerns about the lack of effectiveness of monetary are proving to be largely unwarranted and that monetary policy transmission in Brazil remains active. Daniel Leigh is IMF mission chief for Brazil, Swarnali A. Hannan is a deputy division chief in the IMF’s Western Hemisphere Department, and Rui Xu is an economist in the Monetary and Capital Markets Department. 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. =============== C O L O M B I A =============== AVIANCA GROUP: Moody's Raises CFR to B1 & Alters Outlook to Stable ------------------------------------------------------------------ Moody's Ratings has upgraded the corporate family rating of Avianca Group International Limited ("Avianca") to B1 from B2. At the same time, Moody's upgraded Avianca MidCo 2 PLC's backed Senior Secured ratings to B1 from B2. The upgrade reflects Avianca's continued operational and financial improvements, robust liquidity, and successful execution of its business strategy, as well as a supportive operating environment in Colombia and the broader airline sector. Moody's also changed the outlook to stable from positive for both issuers. RATINGS RATIONALE The upgrade to B1 recognizes Avianca's strong operating performance since 2021, significant deleveraging, and prudent capital allocation. As of 2Q 2025, Avianca delivered one of its highest-ever quarterly EBITDAR of $355 million at a margin of 25.5%, with liquidity reaching $1.35 billion (24.1% of LTM revenue) and net leverage declining to 2.8x. The company's disciplined approach to cost management has supported EBITDAR margin expansion and reinforced business resilience. The upgrade also considers the positive environment in Colombia, Avianca's key domestic market, and in the overall airline sector. Despite some deceleration in private consumption, Colombia's labor market remains tight, supporting household income growth and consumer sentiment. Globally, the airline sector outlook has turned stable, with operating profit for 2026 forecast to increase by about 20% worldwide and 12% in Latin America. In the region, robust air travel demand and rationalizing competition are supporting higher airfares and enabling profitability, even as supply-chain bottlenecks and fiscal limitations persist. Moody's expects that Avianca's cost discipline and route expansion outside Colombia will further enhance its profitability. Avianca's recent strategy has focused onoptimizing its route network, capturing growing passenger demand, enhancing operational efficiency, and driving revenue growth. Avianca continues to maintain leadership in strategic markets and expanding its international footprint. In 2025, the airline launched ten new international routes and announced three more for the second half of the year, expanding its network to 175 routes and 83 destinations. The airline has expanded its point-to-point network by adding new direct routes from key Colombian cities and increasing connectivity across the Americas. Avianca remains the #1 non-US carrier at JFK and Miami by frequency and holds a leading seat share in South America's largest airports. The company's business class rollout and LifeMiles loyalty program expansion are driving premium revenue and customer loyalty. Avianca Cargo, the second largest cargo carrier in Latin America, continues to grow, with more than 60 destinations in over 30 countries. The stable outlook reflects Moody's views that Avianca's financial flexibility will continue to support its business strategy, allowing for further improvements to its credit profile through 2027. The company is expected to maintain adequate financial policies and strong liquidity, with internal sources and cash generation comfortably covering requirements through 2027. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of Avianca's rating would stem from sustained increase in passenger demand that allow the company to sustain revenue growth and improve credit metrics as planned. Quantitatively an upgrade would require adjusted leverage (measured by total debt / EBITDA) below 3.5x and interest coverage (measured by (FFO + interest expense) / interest expense) above 3.5x, all on a sustained basis. The maintenance of an adequate liquidity profile would also be required for an upgrade. The rating could be downgraded if credit metrics' recovery falls behind Moody's expectations, with adjusted leverage remaining above 4.5x and interest coverage (FFO plus interest/interest) remaining below 2.5x on a sustained basis. A deterioration in the company's liquidity profile or additional shocks to demand or profitability that lead to cash burn could also result in a downgrade of the rating. The principal methodology used in these ratings was Passenger Airlines published in August 2024. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. COLTEL: S&P Affirms 'B+' ICR & Alters Outlook to Stable ------------------------------------------------------- S&P Global Ratings revised its outlook on Colombian telecom operator Colombia Telecomunicaciones S.A. E.S.P. (Coltel) to stable from positive and affirmed its 'B+' issuer credit and issue ratings on the company. S&P said, "The stable outlook reflects our expectation that Coltel's operating performance will improve in the second half of 2025 and that over the next 12 months, it will maintain its ability to refinance its short-term debt obligations. Our base case assumes that Millicom's transaction will close in the next four to six months and will likely have a positive impact on Coltel's competitive position." Coltel underperformed its expectations in the first half of 2025. High working capital requirements, resulting in cash flow deficits and a relatively low cash position compared with its increased short-term debt obligations, have strained liquidity. However, Millicom's offer to acquire a 67.5% stake in Coltel is still in progress, and we believe, once it's closed, it could strengthen Coltel's business. Financial performance weakened during the first half of the year as a result of higher debt. The company increased its consolidated debt to Colombian peso (COP) 6.743 trillion, resulting in an increase in net leverage to 4.7x as of the second quarter of 2025, from COP5.381 trillion and 3.6x in December 2024. The increase in debt was mainly as a result of higher working capital needs, leases, and spectrum payments. Consequently, the company addressed these requirements by obtaining a loan for approximately COP211 billion from Telefonica Hispam and by increasing its reliance on bank loans. S&P said, "Our base-case scenario assumes the company's leverage will drop slightly toward 4.0x by 2025, based on improved operating performance during the second half of the year, which we expect to enhance revenue, profitability, and cash balance." Coltel has struggled to grow revenues amid stiff competition in Colombia. The company reported a revenue decline of 5.3% as of June 30, 2025, mainly due to lower revenues in the B2B segment with lower revenues from installations, network deployments, cybersecurity services, and licensing, associated with reduced demand for corporate projects. Good performance in prepaid and postpaid services and fixed services through fiber somewhat mitigated this decline while also increasing end-customer access, mainly for mobile services. As a result, S&P anticipates the company's revenue will slightly improve based on the cyclicality of the industry during the second half of the year, leading to growth of about 0.5% during 2025. Increased short-term debt maturities have weakened Coltel's liquidity. S&P said, "We now expect Coltel's liquidity to weaken in the next 12 months due to lower cash flow generation and higher short-term obligations. Although the company has rolled over most of its short-term debt, it faces about COP344 billion in maturities for the next 12 months, compared with COP140 billion in cash as of June 30,2025. Coltel has historically maintained ample access to bank lending; therefore, we believe that the company will successfully refinance its short-term debt obligations, alleviating liquidity pressures for the next 12 months." S&P said, "The stable outlook reflects our expectation that Coltel's operating performance will improve in the second half of 2025 and that over the next 12 months, it will maintain its ability to refinance its short-term debt obligations. Our base case also assumes that Millicom's transaction will close in the next four to six months and will likely have a positive impact on Coltel's competitive position." S&P could downgrade Coltel in the next 12 months if: -- The company fails to strengthen operating cash flows during the second half of the year, with debt to EBITDA near 4.0x and free operating cash flow to debt remaining below 10%; -- Liquidity pressures continue from short-term debt maturities, cash shortfalls, or higher-than-expected cash expenses, leading the company to rely on higher debt or refinancings, which could suggest weaker risk management or unsustainable debt; or -- The acquisition by Millicom is completed through material incremental debt, hindering the group credit profile. S&P could upgrade Coltel in the next 12-18 months if: -- Debt to EBITDA reaches 3.0x or below while free operating cash flow to debt strengthens to above 10%; -- Coltel posts higher-than-expected operating revenue that suggests favorable business dynamics; and -- Coltel demonstrates business efficiencies through consistently higher EBITDA, maintains adequate liquidity sources, and covers capex and working capital needs without requiring additional debt or reducing its cash balance. =================================== D O M I N I C A N R E P U B L I C =================================== [] DOMINICAN REPUBLIC: Financial Assets Surpass 4 Trillion Pesos ---------------------------------------------------------------- Dominican Today reports that by July 2025, the Dominican financial system reported assets exceeding RD$4 trillion, with uninterrupted growth of 85.6%, representing an annual increase of 13.2%. The credit portfolio grew from RD$1.3 trillion to RD$2.3 trillion, averaging 12.9% annual growth, reflecting the oversight and regulatory work of the Superintendency of Banks (SB), according to Dominican Today. President Luis Abinader highlighted the SB's role in promoting market development, banking access, and financial stability, the report notes. Bank Superintendent Alejandro Fernandez reported that more than 2.6 million people now have access to credit, adding 622,000 new borrowers over the last five years, contributing to economic development and empowerment, the report relays. The Global Findex 2025 report from the World Bank shows that adults with financial accounts or mobile banking access rose from 51% in 2021 to 65% in 2024, demonstrating progress in financial inclusion, the report says. The system's solvency ratio reached 18.4% by June 2025, well above the regulatory minimum of 10% and pre-pandemic levels of 16.5%, surpassing the regional average of 15.6%, placing the Dominican Republic among the strongest financial systems in the region, the report notes. Delinquency and provisions remain low at 1.94%, below the historical average of 2.05%, reflecting a stable and well-managed sector, 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. TCR-LA reported in April 2019 that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic was raised to 'BB' in December 2022 with stable outlook. Moody's credit rating for Dominican Republic was last set at Ba3 in August 2023 with the outlook changed to positive. Fitch, in December 2023, affirmed the Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' and revised the outlook to positive. ============= J A M A I C A ============= MONTEGO BAY AIRPORT: S&P Upgrades Ratings to BB+ ------------------------------------------------ RJR News reports that Standard and Poor's (S&P), the world's leading credit ratings agency - recently increased the ratings of Montego Bay Airport Revenue Finance and King Air to BB+, which is one notch above Jamaica's rating. The agency also stressed that this upgrade was an expression of confidence in the entities' ability to withstand a hypothetical sovereign stress, according to RJR News. That would include a 10 per cent dip in passenger arrivals, a five per cent increase in operating and maintenance costs and 50 per cent fall in the value of the Jamaican dollar in relation to the US dollar, the report notes. King Air and Montego Bay Airport Finance are special purpose vehicles, which were used by the Government of Jamaica to borrow money using the fees due to it from both airports as collateral, the report relays. King Air raised US$480 million in September of 2024, while Montego Bay Airport Revenue Finance raised US$63.8 million in July of 2025, the report says. The Air bond, which is due in 2036 attracts a rate of interest of 6.75% per annum, while Montego Bay Airport Revenue bond, which matures in 2035, is offering a rate of 6.60% per annum, the report adds. ===================== P U E R T O R I C O ===================== INCAR GROUP: Seeks Court Approval to Tap Tamarez CPA as Accountant ------------------------------------------------------------------ Incar Group, LLC seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Tamarez CPA, LLC as accountant. The firm will provide these services: (a) reconcile financial information to assist the Debtor in the preparation of monthly operating reports; (b) reconcile and clarify proofs of claim filed and amounts due to creditors; (c) provide advice in general accounting and tax services; and (d) assist the Debtor and its counsel in the preparation of supporting documents for the Chapter 11 Reorganization Plan. The firm will be paid at these hourly rates: Albert Tamarez-Vasquez, CPA, CIRA $165 CPA Supervisor $110 Senior Accountant $90 Staff Accountant $70 The firm received a post-petition retainer of $5,200 from the Debtor. Mr. Tamarez-Vasquez disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Albert Tamarez-Vasquez, CPA, CIRA Tamarez CPA, LLC First Federal Saving Building 1519 Ave. Ponce De Leon, Suite 412 San Juan, PR 00909 Telephone: (787) 795-2855 Facsimile: (787) 200-7912 About INCAR Group LLC INCAR Group LLC is a construction contractor based in Cidra, Puerto Rico. INCAR Group LLC sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.P.R. Case No. 25-03067) on July 1, 2025. In its petition, the Debtor reports estimated assets up to $50,000 and estimated liabilities between $500,000 and $1 million. The Debtor tapped Carlos A. Ruiz Rodriguez, Esq., as counsel and Tamarez CPA, LLC as accountant. ============= U R U G U A Y ============= ACI AIRPORT: Fitch Affirms 'BB+' on Secured Notes Due 2032 & 2034 ----------------------------------------------------------------- Fitch Ratings has affirmed the 'BB+' ratings of ACI Airport SudAmerica, S.A.'s USD246.2 million senior secured notes (2021 notes) due in 2034 and USD14.6 million senior secured notes (2015 and 2020 notes) due in 2032. The Rating Outlook is Stable. RATING RATIONALE The ratings are driven by Carrasco International Airport's (MVD) strategic but modest traffic base and its strong origin and destination (O&D) profile. Traffic volatility is considered high, and Fitch expects passenger traffic to grow at a low annual rate. The airport's capex plan is limited and will be supported by cash flow generation. The notes' scheduled and target amortization provide flexibility to the transaction in case of additional stress. It benefits from a six-month debt service reserve account (DSRA), which is funded with cash and letters of credit (LOCs). The debt is at the holdco level and benefits from a springing guarantee from the opco. Under Fitch's rating case, minimum and average debt service coverage ratios (DSCRs) are 0.9x (2026) and 1.6x, respectively. The DSCRs below 1.0x in 2025 and 2026 are mitigated by existing liquidity and USD15 million available in an unsecured working capital facility. Although average DSCR is commensurate with higher ratings, the DSCRs up to 2026 are below 1x which, combined with the sufficient but limited liquidity, currently constrains the rating. KEY RATING DRIVERS Main Uruguayan Airport, Modest Catchment Area Located in Uruguay's capital city of Montevideo, MVD is the main international gateway to Uruguay, handling approximately 85% of the country's flights and serving a catchment area of 3.4 million people. International passengers from Argentina, Chile, Brazil and Spain comprise the majority of the airport's traffic. MVD operates almost exclusively as an O&D airport, with less than 1% of passengers transferring to other destinations. The carrier concentration is moderate, with LATAM Airlines Group S.A. (LATAM; Long Term [LT] Issuer Default Rating: BB/Positive; National LT Rating: A(cl)/Positive) and Copa Airlines (not rated) accounting for 23% and 18% of passengers, respectively. The new six regional airports added to the concession are not expected to increase the overall traffic base. Inflation and Exchange Adjusted Tariffs Revenue is 95% USD-denominated. Regulated passenger tariffs are adjusted by a global index that considers foreign exchange and inflation rates. Tariffs cannot decrease under the concession adjustment scheme and increases must be approved by Uruguay's government pursuant to a decree. However, commercial revenue derived from the airport's duty-free, restaurants and other concessions is not regulated, but influenced by traffic patterns. Well-Defined Capex Plan for Regional Airports The concession includes six regional airports and certain investment obligations that are expected to be funded with Montevideo's cash flow generation. According to the technical advisor analysis, the investments simple and caps them at USD67 million per the concession contract extension. The concession agreement obligates the company to build a new taxiway in MVD, which is expected to either be triggered by volume or to be completed by 2033. MVD's current capacity of 4.5 million passengers per year exceeds Fitch's rating case forecast over the next 10 years. The concession was amended in 2024 to add an investment in a landing system, which will be compensated through a tariff adjustment. Apart from that, no other significant mandatory investments are required as per the concession. Fully Amortizing Debt at HoldCo Level The notes are fixed rate and fully amortizing over the life of the debt and benefit from a springing guarantee. Debt benefits from a six-month DSRA. The notes benefit from a legal amortization schedule complemented by a partial cash sweep up to a target debt balance. Failure to meet the target debt balance is not an event of default, therein providing flexibility to the transaction if certain years perform below original expectations. Financial Profile Under the rating case, the project's DSCR profile (considering mandatory amortizations only) from 2025 to 2034 is strong, with an average DSCR of 1.6x. Although Fitch expects DSCRs to fall below 1.0x in 2025 and 2026, the Fitch expects that available liquidity will be sufficient to cover such short falls without tapping DSRA or working capital facilities. Average DSCR has slightly decreased from Fitch's previous review, driven mainly by higher projected opex due to macroeconomic factors and by increased capital expenditures reflecting mandatory investments and items approved by bondholders. Despite a strong average DSCR, the rating remains limited at its current level. Coverage ratios below 1.0x through 2026 create a fragile reliance on liquidity in the short term. PEER GROUP The closest peer in Fitch's portfolio is Sociedad Concesionaria Operadora Aeroportuaria Internacional, S.A. (OPAIN; Senior Secured LT Rating: BBB-/Stable), the concessionaire of El Dorado International Airport in Bogota. Both airports are the main gateways in their respective countries, but OPAIN has a Stronger volume risk assessment, a larger O&D base and less dependence on international traffic. OPAIN's minimum and average DSCRs of 1.4x and 1.5x, respectively, explain the higher rating. Fitch projects a strong DSCR for ACI of above 1.3x from 2027 onward. However, its short-term metrics, limited liquidity and weaker volume-risk assessment justify a rating below OPAIN's. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Traffic volume trend close to 2.0 million passengers in 2026, which could lead to deterioration of liquidity; - Operational costs growth consistently above inflation; - Increase in capex plan, from base case, that leads to the usage of liquidity facilities. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Traffic volume trend close to 2.2 million passengers in 2025, improving project's liquidity in the short term; - Medium-term debt service coverage ratios above 1.3x. SECURITY The security package supporting the 2021 notes is typical for project finance and includes a pledge of the shares of the opco, a pledge of the shares of Cerealsur S.A., direct owner of PDS' shares, and a guarantee from the entity, all of the issuer's shares, and all present and future payments, proceeds and claims of any kind with respect to the foregoing on a pari passu basis with the remaining 2015 and 2020 notes, and a pledge over account into which all dividends and distributions from PdS to Cerealsur and from Cerealsur to the issuer are deposited. The 2021 notes benefit from a six-month DSRA, funded by a standby letter of credit. The 2021 notes also enjoyed a prefunded interest payment account, which was fully depleted in November 2023. 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 ----------- ------ ----- ACI Airport SudAmerica, S.A. ACI Airport SudAmerica, S.A./Airport Revenues – First Lien/1 LT LT BB+ Affirmed BB+ ACI Airport SudAmerica, S.A./Airport Revenues - Subordinate Lien/2 LT LT BB+ Affirmed BB+ ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2025. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *