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260304.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, March 4, 2026, Vol. 27, No. 45 Headlines A R G E N T I N A ENTRE RIOS: Moody's Assigns First Time 'Caa1' Issuer Rating YPF SA: US Backs Argentina in Discovery Fight in US$18BB Case B O L I V I A ARETHUSA OFF-SHORE: Denial of Douglas May's Proof of Claim Upheld D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Rare Elements Could be Non-Tax Revenue Source DOMINICAN REPUBLIC: Tourism Sector Recipient of Investment Funds J A M A I C A BANK OF JAMAICA: Incurs $14BB Net Loss on Total Assets of $1.3-TT JAMAICA: JMEA Calls for Stronger Support for Producers & Exporters JAMAICA: To Allocate $30BB to Address Hurricane Melissa Damage N I C A R A G U A NICARAGUA: Moody's Affirms 'B2' Issuer Ratings, Outlook Stable - - - - - ================= A R G E N T I N A ================= ENTRE RIOS: Moody's Assigns First Time 'Caa1' Issuer Rating ----------------------------------------------------------- Moody's Ratings has assigned a first time Caa1 (Global Scale foreign currency) Issuer Rating and caa1 Baseline Credit Assessment (BCA) to the Province of Entre Rios (Entre Rios). At the same time, Moody's assigned a Caa1 rating to the up to $500 million Senior Unsecured Notes to be issued by Entre Rios, with final maturity in 2033 (New Notes). The outlook is stable. The assigned rating is subject to receipt of final documents, the terms and conditions of which are not expected to change in any material way from the draft documents that Moody's have reviewed. RATINGS RATIONALE Entre Rios' caa1 BCA and Caa1 long-term issuer ratings incorporate the province's historically volatile cash financing balances due to weak fiscal buffers and high sensitivity to Argentina's operating environment, while also recognizing the prospect for a moderate improvement in its fiscal position over the next few years. This improvement is expected to be supported by a gradual normalization in the country's macroeconomic conditions and a more consistent fiscal management approach that could help strengthen budget execution and cash flow predictability. The ratings also take into consideration the province's midsize economy, anchored in agro-industry, which supports a relatively stable production base compared with other Argentine regional and local government peers more narrowly concentrated. The Caa1 rating on the proposed $500 million senior unsecured notes aligns with the Province of Entre Rios' foreign-currency Issuer Rating of Caa1 because the New Notes do not include structural protections or credit enhancements that would differentiate their credit risk from the province's general senior unsecured credit risk profile. The notes will constitute direct, general, unconditional and unsecured obligations of the province and will rank pari passu with all other present and future unsecured and unsubordinated obligations. The proposed issuance is part of Entre Rios's broader liability-management strategy, primarily to refinance its outstanding 2028 notes in the amount of $233 million. The New Notes will pay a semiannual coupon, but the amortization profile is back-loaded, with principal payable in three equal annual installments toward maturity and an expected tenor of approximately seven years. Hence the transaction will smooth the province's overall debt maturity profile, strengthen its liquidity position and ease near-term debt-service pressures. Leverage will also increase, but at a level that remains strong for the rating category. Following the planned liability management, Moody's baseline scenario considers that total consolidated debt will rise to about 28% of operating revenue in 2026 from 20.9% as of September 2025, with manageable refinancing needs over the next 12–24 months. The liability-management strategy depends on market access and meaningful participation of noteholders in the tender offer for the 2028 notes. Moody's base case assumes a minimum 70% participation ratio, along with up to $500 million of the planned new issuance at an interest rate of less than 10% per year. If the province cannot complete the planned issuance under the proposed terms and conditions, or if tender participation is materially below Moody's expectations, the intended debt reduction would be less significant. In that scenario, Entre Rios would face higher credit risks not fully captured by the rating. Constraining Entre Rios' ratings is the relatively weak fiscal buffers and high sensitivity to Argentina's operating environment. In the last 12 months through September 2025, the cash financing deficit amounted to 2.55% of total revenue, compared to deficits of 1.21% in 2024 and 6.09% in 2023. Limiting the fiscal flexibility is the province's heavy reliance on transfers from the central government to compensate for its relatively weak own-source revenue base. In 2024, national transfers accounted for 61.5% of operating revenues. As a result, there are strong institutional and financial linkages between the province's credit quality and that of the Government of Argentina (Argentina, Caa1 stable). Spending rigidity further limits the province's capacity to absorb shocks: personnel costs represent roughly 47% of operating spending, while pension-related outlays represent about 10% of operating revenue. Partially mitigating these risks is the lower leverage and interest burden relative to global peers, as illustrated by a reported debt and an interest burden of 23.2% and 2.25%, respectively, in 2024. Moody's expects continued transfers from the central government to partly compensate Entre Rios' pension deficits, offsetting related negative cash-flow impacts. Ongoing negotiations with the national social-security agency (ANSES) could result in an updated pension-financing mechanism that would further ease negative pressures on operating results over time. However, this benefit was not considered in the baseline rating scenario because the timing and magnitude of any relief remain uncertain, pending negotiations with the central government. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS Entre Rios' ESG Credit Impact Score of CIS-3 indicates that ESG considerations have a limited impact on the current rating, with potential for greater negative impact over time. This reflects the province's moderate credit exposure to governance risks and high credit exposure to environmental and social risks. The Environmental Issuer Profile Score (IPS) of E-4 reflects high credit exposure to physical climate risks and water stress, particularly given the importance of agriculture to the local economy. The Social IPS of S-4 reflects high credit exposure to labor and income conditions and limited access to basic services. The Governance IPS of G-3 reflects moderate credit exposure to foreign-currency debt, a challenging operating environment and strong macroeconomic and financial linkages with the Government of Argentina. Governance considerations are a key driver of this initial rating assignment. RATING OUTLOOK The stable outlook for the Province of Entre Rios' ratings is aligned with the stable outlook for the sovereign rating and captures Moody's expectations that economic and financial pressure faced by the province will not change materially over the next 12-18 months. The outlook also incorporates Moody's expectations that bondholders will not face losses exceeding those captured in the Caa1 rating category in a distressed event. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the strong macroeconomic and financial linkages between the Government of Argentina and the Province of Entre Rios, an upgrade of Argentina's sovereign rating that is reflective of an improvement of the operating environment or that reduces the province's idiosyncratic risks would support an upgrade of the province's ratings. Over time, a sustained track record of stronger fiscal and operating performance, supported by prudent financial management and adequate liquidity, would also support upward rating momentum. Conversely, a downgrade of Argentina's ratings or further systemic deterioration would exert downward pressure on the ratings. Higher idiosyncratic risks, or material deviation from Moody's baseline assumptions that weaken liquidity or increase refinancing risk, would also lead to downward pressure. RATING METHODOLOGY The principal methodology used in these ratings was Regional and Local Governments published in May 2024. YPF SA: US Backs Argentina in Discovery Fight in US$18BB Case ------------------------------------------------------------- Buenos Aires Times reports that the US government urged a federal judge not to find Argentina in contempt for allegedly failing to turn over officials' texts and emails to former YPF SA shareholders seeking to collect a US$18-billion judgment against the Latin American country. Backed by litigation funder Burford Capital, the former shareholders won a 2023 ruling that Argentina violated their rights in a 2012 nationalisation of oil company YPF. But the plaintiffs have struggled to collect the award, according to Buenos Aires Times. They have been seeking texts and emails by officials they say may show that Argentina’s state-owned banks and airline are "alter egos" for the government subject to attachment, the report notes. In a court filing, the US Justice Department called the discovery request improper, saying many of the assets held by those entities are immune from collection, the report relays. The US government also expressed concern that allowing "burdensome and intrusive" discovery on foreign officials "could lead to reciprocal adverse treatment of the United States and its officials in foreign courts," the report notes. The US government has previously backed Argentina in the case, urging courts not to allow the plaintiffs to seize the Latin American country's majority stake in YPF, the report discloses. As reported in the Troubled Company Reporter-Latin America in December 2025, Fitch Ratings affirmed YPF S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'CCC+'. Fitch also affirmed YPF's outstanding senior unsecured notes at 'CCC+' with a Recovery Rating of 'RR4'. The company's Standalone Credit Profile (SCP) is 'b', and its ratings are aligned with Fitch's "Government Related Entities (GRE) Criteria," reflecting its government ownership and strategic importance. ============= B O L I V I A ============= ARETHUSA OFF-SHORE: Denial of Douglas May's Proof of Claim Upheld ----------------------------------------------------------------- The Hon. Alfred H. Bennett of the U.S. District Court for the Southern District of Texas adopted the Bankruptcy Court's May 30, 2024, Memorandum Decision and Order denying Appellant Douglas Tyrone May's proof of claim against Arethusa Off-Shore, LLC. Arethusa Off-Shore, LLC (formerly Arethusa Offshore Company) is an affiliated debtor associated with Diamond Offshore Drilling, Inc. that filed for Chapter 11 bankruptcy on April 26, 2020, in the Southern District of Texas. It was part of a group of 14 affiliates involved in the restructuring case. A copy of the Court's Order dated February 19, 2026, is available at http://urlcurt.com/u?l=wBPoJLfrom PacerMonitor.com. About Diamond Offshore Diamond Offshore Drilling, Inc., provides contract drilling services to the energy industry worldwide. The company operates a fleet of 15 offshore drilling rigs, including 4 drillships and 11 semi-submersible rigs. It serves independent oil and gas companies, and government-owned oil companies. The company was founded in 1953 and is headquartered in Houston, Texas. Diamond Offshore Drilling is a subsidiary of Loews Corporation. The company has major offices in Australia, Brazil, Mexico, Scotland, Singapore, and Norway. Diamond Offshore Drilling, Inc., along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-32307) on April 26, 2020. The petitions were signed by David L. Roland, senior vice president, general counsel, and secretary. As of Dec. 31, 2019, the Debtors disclosed $5,834,044,000 in total assets and $2,601,834,000 in total liabilities. The case is assigned to Judge David R. Jones. Paul, Weiss, Rifkind, Wharton & Garrison LLP and Porter Hedges LLP are acting as the Company's legal counsel and Alvarez & Marsal is serving as the Company's restructuring advisor. Lazard Freres & Co. LLC is serving as financial advisor to the Company. Prime Clerk LLC is the claims and noticing agent. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Rare Elements Could be Non-Tax Revenue Source ----------------------------------------------------------------- Dominican Today reports that historic record achieved by Dominican mining and assured that the exploration of rare earth elements is progressing with increasingly optimistic results, projecting itself as a future strategic source of income for the country. During his accountability report, the president stated that the mining sector exceeded US$2.6 billion in exports, a 52% increase compared to the previous year, consolidating itself as one of the main generators of foreign exchange, according to Dominican Today. In parallel, he referred to the exploration of rare earths, minerals considered key for the manufacture of technologies such as cell phones, semiconductors, the space industry, and military applications, the report notes. “With each passing day, the information on the quantity and quality of the 17 elements that make up the so-called rare earths is more optimistic,” he stated, the report relays. He explained that, to date, gross deposits exceeding 150 million tons have been confirmed, with levels of purity and feasibility of exploitation that he described as among the best in the world, supported by international laboratories, the report discloses. He indicated that the formal determination of mineral resources will be ready this year and that the certification of reserves will be completed in the first quarter of next year, after which the exploitation and refining phase will begin, the report says. The president asserted that, in addition to the strategic value of these minerals, the revenues derived from their exploitation could become the country’s main non-tax source of income, the report notes. Regarding foreign investment, he noted that between January and September, mining attracted more than US$556 million, while the energy sector received more than US$1.01 billion, with both sectors accounting for around 40% of total foreign direct investment during that period, 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. DOMINICAN REPUBLIC: Tourism Sector Recipient of Investment Funds ---------------------------------------------------------------- Dominican Today reports that eighteen percent of the total pension fund portfolio in the Dominican Republic is invested in investment funds. Of that percentage, 34% is allocated to the tourism sector, which is the primary recipient within that category. This statement was made by the Superintendent of Pensions, Francisco Torres, who also said that "approximately RD$70,720 million are invested in the tourism sector, in some 25 projects distributed throughout the country," according to Dominican Today. He also indicated that total investment through investment funds grew by about RD$60 billion last year, the report notes. In fact, Torres noted that the majority of Dominican workers’ pension funds are invested in tourism, followed by energy and industry, the report says. When asked about financial instruments or real estate investment funds for tourism in emerging destinations such as Miches or Pedernales, the official stated that AFI Popular and AFI Reservas have already established funds for investment in Pedernales, the report discloses. "We, the workers, are the largest institutional investors in the Dominican tourism sector. We are also the main beneficiaries, since the more tourism activity increases, the better the returns we get on those savings," he emphasized, the report adds. According to the official, the success of tourism as a destination for Dominican retirement savings is due to its current capacity to generate secure returns. However, the official emphasized that the future of workers’ savings lies in diversification, according to El Dinero, the report relays. 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 ============= BANK OF JAMAICA: Incurs $14BB Net Loss on Total Assets of $1.3-TT ----------------------------------------------------------------- RJR News reports that the Bank of Jamaica is reporting a net loss of $14 billion during the period January 1 to February 11, 2026. The bank also said that these losses were recorded on total assets of $1.3 trillion, according to RJR News. The bank's total foreign assets jumped by 26 per cent to $1.1 trillion in February of this year, the report notes. Meanwhile, its local assets fell $32 billion to $246 billion in February of this year compared with last year, the report notes. The bank's total demand liabilities also increased by 22 per cent to $791 billion this year over last year, the report says. JAMAICA: JMEA Calls for Stronger Support for Producers & Exporters ------------------------------------------------------------------ RJR News reports that Vice President of the Jamaica Manufacturers and Exporters Association (JMEA), Cecil Foster, says the government must consult with members of the investing community before implementing its policies. Speaking in an interview on Real Business on Power 106FM against the background of the 8.1 per cent fall in exports during the first 10 months of last year, Foster suggested that faster economic growth is the only solution to the country's economic problems, according to RJR News. Mr. Foster conceded that the trade deficit is a manifestation of the country's overconsumption, particularly of imported goods and services and underproduction for both the domestic and export markets, the report notes. The JMEA vice president argued the government must implement the policy to buy 20 per cent of its goods and services from local producers in order to drive local production, the report relays. Mr. Foster stressed that the government must provide more incentives to exporters, particularly as it relates to the cost of capital and energy in order to drive exports, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a positive rating outlook. In October 2023, Moody's upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to B1 from B2, and senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has been changed to positive from stable. In September 2024, S&P affirmed 'BB-/B' longterm foreign and local currency sovereign credit ratings on Jamaica and revised outlook to positive. JAMAICA: To Allocate $30BB to Address Hurricane Melissa Damage -------------------------------------------------------------- RJR News reports that the government said it will allocate about $30 billion from its $99.7 billion capital budget to address infrastructure damage caused by Hurricane Melissa. The Category 5 hurricane caused an estimated US $8.8 billion or more than J$1 trillion in damage to national infrastructure, according to RJR News. This represents roughly 41 per cent of Jamaica's 2024 gross domestic product (GDP) before adjustments for inflation, the report notes. In addition to central government spending, self-financing public sector agencies have been allocated a combined $105 billion capital budget. This brings the total capital sector budget programmed to $205 billion, equivalent to 5.3 per cent of GDP, the report relays. However, analysts are cautioning that effective recovery and economic growth will depend on the government resolving long-standing procurement challenges. They argue that unless these bottlenecks are addressed, the full capital budget may not be spent, the report discloses. Over the last five years, both the central government and self-financing public bodies have consistently failed to fully utilise their capital allocations, the report says. Analysts say this underperformance has been a major contributor sluggish economic growth and weaker revenue collection, underscoring the urgency of improving project execution as the country rebuilds after Hurricane Melissa, the report adds. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a positive rating outlook. In October 2023, Moody's upgraded the Government of Jamaica's long-term issuer and senior unsecured ratings to B1 from B2, and senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has been changed to positive from stable. In September 2024, S&P affirmed 'BB-/B' longterm foreign and local currency sovereign credit ratings on Jamaica and revised outlook to positive. ================= N I C A R A G U A ================= NICARAGUA: Moody's Affirms 'B2' Issuer Ratings, Outlook Stable -------------------------------------------------------------- Moody's Ratings has affirmed the Government of Nicaragua's B2 long-term foreign-currency and domestic currency issuer ratings. The outlook remains stable. The affirmation of the B2 ratings reflects heightened geopolitical and sanctions-related risks, the sovereign's low income levels and small economic size, and a weak institutional framework shaped by the erosion of checks and balances and rising political risks that constrain Nicaragua's credit profile. These credit weaknesses are partially offset by a strong fiscal performance characterized by consecutive general government surpluses, declines in the debt burden, and the continued accumulation of sizable fiscal buffers, which together underpin improving fiscal strength. In addition, Nicaragua's consecutive current account surpluses and the build-up of foreign-exchange reserves bolster its capacity to absorb external shocks. The stable outlook reflects the balance between elevated geopolitical and sanctions risks that pose material downside risks to overall macroeconomic stability, and the authorities' demonstrated commitment to maintaining prudent macro-fiscal policies. The persistent risk of an intensification or broadening of sanctions or trade-related measures represents a key source of downside risk, particularly given Nicaragua's continued heavy dependence on remittances from the US and its exposure to US trade policy. Continued fiscal and external surpluses, ample liquidity buffers and efforts to diversify financial and economic ties toward China and other partners support Moody's views that Nicaragua's credit profile will remain resilient in the face of geopolitical pressures. Nicaragua's local-currency country ceiling remains unchanged at Ba3, while the foreign-currency country ceiling remains at B1. The two-notch gap between the local-currency ceiling and the sovereign rating reflects weak predictability and reliability of institutions, moderate external imbalances, and elevated domestic political risks. The one-notch gap between the foreign-currency ceiling and the local-currency ceiling reflects the high share of government debt relative to the country's total external indebtedness, low capital account openness on a global basis, and a moderate level of policy effectiveness. RATINGS RATIONALE RATIONALE FOR THE AFFIRMATION OF THE B2 RATINGS WEAK INSTITUTIONS AND ELEVATED GEOPOLITICAL RISKS CONSTRAIN THE B2 RATING Nicaragua's B2 ratings are constrained by weak institutions and elevated political and geopolitical risks, which outweigh the sovereign's strong fiscal and external balance sheet metrics. The country's low income levels per capita of $8,709 on a purchasing power parity basis, small economic size with a nominal GDP of $19.7 billion, and limited economic diversification further limit economic strength and increase vulnerability to external shocks. The economy's dependence on commodity-producing and exporting sectors and its substantial reliance on the US market as an important source of remittances and export destination inhibit economic strength, both of which would be negatively affected if international sanctions were tightened. Governance risks remain high and are a central rating constraint, reflecting a weak institutional framework marked by the erosion of checks and balances and the concentration of power within the executive branch. Geopolitical and sanctions-related risks further constrain the credit profile. Nicaragua remains subject to targeted sanctions imposed by the US, the EU, the UK, and Canada, which, while not directly affecting exports or remittances, continue to weigh on investor sentiment and financing conditions. The persistent risk of an intensification or broadening of sanctions — including trade-related measures — represents a key source of downside risk, particularly given Nicaragua's continued heavy dependence on remittances from the US and its exposure to US trade policy despite efforts to diversify economic ties toward China and other partners. Political risks have intensified following constitutional and legal reforms enacted in 2024-25, which subordinated legislative, judicial, and electoral institutions to the executive. In Moody's views, these developments have significantly weakened institutional counterweights, reduced accountability, and heightened the risk of abrupt policy or enforcement shifts driven by political considerations rather than economic objectives. While economic institutions have thus far retained the capacity to safeguard macro-fiscal stability, governance weaknesses materially constrain the scope for further credit improvement. STRONG FISCAL AND EXTERNAL BUFFERS PARTIALLY OFFSET STRUCTURAL CREDIT CONSTRAINTS These structural and institutional weaknesses are partially offset by Nicaragua's large and growing fiscal and external buffers, a favorable debt maturity profile, and very strong debt affordability relative to peers. General government surpluses since 2022 have driven a firm downward trend in public debt ratios and supported the continued accumulation of government deposits. At the general government level, surpluses remained at around 2% in 2025, above prior expectations. These surpluses have been achieved by design, reflecting conservative revenue assumptions, stable revenue performance at around 29% of GDP, and high expenditure execution rates of 97-98% of approved budgets. All levels of government, including the social security system, have remained in surplus, reinforcing the strength of the public sector balance sheet. As a result of these surpluses, government deposits at the central bank reached a record 13.5% of GDP as of September 2025, covering approximately 38% of outstanding government debt. The accumulation of liquid fiscal assets materially reduces financing and liquidity risks and provides the authorities with significant shock-absorption capacity, particularly in an environment of constrained external financing options. Public debt dynamics have improved meaningfully. General government debt declined to an estimated 35.4% of GDP in 2025 from 36.9% in 2024. Gross financing needs remain low, estimated at 0.9% of GDP in 2025 and rising only modestly in 2026-27 as surpluses decline. Debt affordability remains among the strongest in the 'B' rating category, supported by low interest costs, declining reliance on more expensive domestic borrowing, and continued access to concessional external financing, despite some moderation in multilateral disbursements. External buffers have also strengthened. Persistent current account surpluses, driven largely by robust remittance inflows, have supported the accumulation of very high foreign-exchange reserves. Remittances now exceed 25% of GDP and have offset persistent trade and income deficits, contributing to a current account surplus estimated at 2.0% of GDP in 2025. Foreign-exchange reserves reached around 36% of GDP in 2025 and will remain above 30% of GDP through 2027, among the highest levels in Latin America, providing strong coverage against external shocks and supporting exchange-rate stability under the crawling peg regime. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects the balance between elevated geopolitical and sanctions risks that pose material downside risks to overall macroeconomic stability, and the authorities' demonstrated commitment to maintaining prudent macro-fiscal policies. Downside risks stem from the threat of economic sanctions that could pose downside risks for economic stability should they disrupt investment and financing flows, as well as constrained access to multilateral or other external funding. Beyond sanctions, additional downside risks stem from commodity price volatility, weaker global growth, and global shifts in trade and immigration policies, which could weigh on exports, remittance inflows, and near-term economic activity. Sustained and higher than expected fiscal surpluses arising from continued overcompliance with fiscal targets constitute the main upside risks. Larger surpluses than Moody's currently assume would lead to faster declining debt ratios, and the continued accumulation of large government deposits that provide Nicaragua with enhanced shock-absorption capacity. Should these buffers continue to grow, they would materially reduce near-term refinancing and liquidity risks, even under highly adverse financing conditions. ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG) CONSIDERATIONS Nicaragua's ESG Credit Impact Score (CIS-4) indicates the credit rating is lower than it would have been if ESG risk exposures did not exist. For Nicaragua, this reflects social and governance risks as a result of persistent geopolitical and weak political institutions despite the authorities' capacity to respond to shocks. Environmental risks also weigh on Nicaragua's rating. Nicaragua's E-4 exposure to environmental risks score stems from physical climate, water management and natural capital risks. Nicaragua's geography is dominated by a region known as the Dry Corridor, characterized by recurrent drought and heavy precipitation events that lead to flooding and landslides, or in dry periods, wildfires. The steady rise in the frequency and severity of drought and other climate-related shocks poses a moderate threat to Nicaragua's agricultural sector, which employs nearly 30% of the country's population and accounts for about 15% of GDP. Nicaragua's S-4 exposure to social risks issuer profile score reflects its exposure to a variety of social risks including pressures related to labor and income, education, housing, health and safety and access to basic services. Social considerations have played a role in increasing political risk in the country. While Nicaragua does not experience gang-related violence as other neighbors in the region, the country's domestic politics were embroiled in a national political conflagration in 2018-19 following the government's attempt to reform the pension system in April 2018, with violent protests disrupting economic activity. Although the protests ceased in 2019, Moody's assessments of social risks remains elevated. Nicaragua's G-4 governance issuer profile score reflects of the sovereign's ongoing challenges with respect to the weak rule of law and control of corruption, issues that Moody's expects to persist over the medium term. These challenges more than offset the benefits from more than a decade-long record of prudent monetary and fiscal policy, which was partly cultivated through strong relationships with the IMF and multilateral creditors. GDP per capita (PPP basis, US$): 8,709 (2024) (also known as Per Capita Income) Real GDP growth (% change): 3.6% (2024) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 2.8% (2024) Gen. Gov. Financial Balance/GDP: 2.3% (2024) (also known as Fiscal Balance) Current Account Balance/GDP: 4.2% (2024) (also known as External Balance) External debt/GDP: 79.8% (2024) Economic resiliency: b1 Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On February 18, 2026, a rating committee was called to discuss the rating of the Nicaragua, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutions and governance strength have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has materially increased. The issuer's susceptibility to event risks has not materially changed. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A lifting of international sanctions that unlocks Nicaragua's economic potential and sustains higher growth rates, or a continued increase in fiscal and external buffers and reduction in public debt that further mitigates the impact of potentially stricter sanctions, could lead to an upgrade. Progress on structural reforms that support economic strength through a quicker diversification of trade partners, decreasing dependence on the US, or a softening of geopolitical tensions would enhance the sovereign's creditworthiness. Downward pressure on the sovereign's credit profile would emerge if a material escalation in geopolitical or sanctions developments significantly disrupts external investment and financing flows, trade performance, or remittances. A prolonged period of weak economic activity derived from social or political tensions would substantially weaken Nicaragua's credit profile and could lead to a rating downgrade. A stronger than expected weakening of fiscal metrics that substantially erodes fiscal buffers could also exert downward pressure. The principal methodology used in these ratings was Sovereigns published in November 2022. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2026. All rights reserved. ISSN 1529-2746. 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 * * *