260306.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
Friday, March 6, 2026, Vol. 27, No. 47
Headlines
A R G E N T I N A
PROVINCE OF CHACO: Fitch Affirms & Then Withdraws 'CC' LongTerm IDR
PROVINCE OF SALTA: Fitch Affirms 'CCC-' LongTerm IDRs
B R A Z I L
BRAZIL: Economy Cooled in 2025 Under Weight of High Interest Rates
TIDEWATER INC: Wilson Sons Transaction No Impact on Moody's B2 CFR
J A M A I C A
JAMAICA: Commuters to Brace for Higher Fares Amid US-Israel War
JAMAICA: Loan Stress After Melissa Milder Than Feared, BOJ Says
M E X I C O
ALPEK SAB: Fitch Lowers LongTerm IDRs to 'BB+', Outlook Neg.
LG PARENT: S&P Lowers ICR to 'CCC+', Outlook Negative
T R I N I D A D A N D T O B A G O
READYMIX (WEST INDIES): 'Shutdown a Logical Move'
- - - - -
=================
A R G E N T I N A
=================
PROVINCE OF CHACO: Fitch Affirms & Then Withdraws 'CC' LongTerm IDR
-------------------------------------------------------------------
Fitch Ratings has affirmed Province of Chaco's Long-Term Foreign
and Local Currency Issuer Default Ratings (IDRs) at 'CC'. Fitch has
also affirmed Chaco's step-up USD262.6 million senior unsecured
notes at 'CC'. At the same time, Fitch has withdrawn the ratings.
Fitch relied on its rating definitions to position the province's
ratings and Standalone Credit Profile (SCP). Chaco's SCP of 'cc'
reflects Fitch's expectations that actual debt service coverage
ratio (ADSCR) will remain below 1.0x in the next 12-24 months in
its scenario horizon. The rating affirmation considers Chaco's
short-term treasury bill program, which has significantly
increased, and Argentina's rating upgrade to 'CCC+'.
Fitch has chosen to withdraw Chaco's ratings for commercial
reasons. It will no longer provide ratings or analytical coverage
of the province.
Key Rating Drivers
Standalone Credit Profile
The 'cc' SCP results from the application of the Lower Speculative
Grade of Fitch's "International Local and Regional Government
Rating Criteria." Fitch qualitatively assesses the province's risk
of default, and the remaining margin of safety based on overall
performance and guided by rating definitions. The 'cc' SCP is
derived from a 'Vulnerable' Risk Profile and a 'aa' financial
profile score but also reflects that a default of some kind appears
probable. Consequently, in the next 12 months, Chaco could have
significant refinancing risks and high liquidity risk accompanied
by weak debt coverage metrics.
Risk Profile: 'Vulnerable'
The 'Vulnerable' assessment weighs the sovereign IDR below the 'B'
category rather than Argentina's implied operating environment of
'bbb'. The risk profile reflects the combination of six 'Weaker'
key risk factors, as outlined below.
Revenue Robustness: 'Weaker'
The assessment reflects the complexity and imbalance of the
national fiscal framework, dependence on 'CCC+' sovereign
counterparty risk for 82.9% (five-year average) of its total
revenue, which mostly stems from national automatic
co-participation tax transfers. Federal co-participation tax
transfers are a very important component of subnational fiscal
performance. At YE 2025, co-participation tax transfers showed an
accumulated 42.8% annual nominal term growth but a negative 1.2%
decrease in real terms. Fitch estimates that own-revenues could
increase 52% for the same period, for a total operating revenue
growth of 45.3%, amid a context of high inflation, where annual
average was 44%.
Revenue Adjustability: 'Weaker'
Chaco's ability to generate additional revenue in response to
possible economic downturns is limited, like all Fitch-rated
Argentine local and regional governments (LRGs). However, for Chaco
this is further exacerbated by its high reliance on national
automatic transfers. Tax revenue to total revenue averaged 11.1%
between 2020 and 2024 (9.6% in 2024).
Fitch considers local revenue adjustability low and challenged by
the country's large and distortive tax burden. Structurally high
inflation also constantly erodes real-term revenue growth and
affects affordability. Chaco's weak socioeconomic indicators are
below the national average and lag international peers, which also
weighs on the assessment of this key rating factor.
Expenditure Sustainability: 'Weaker'
In Fitch's view, spending decentralization could continue to rise
to keep Argentina's primary fiscal balance targets in a sustained
path. Since 2017, the province has turned its margins from negative
territory toward a positive operating balance averaging 15.4% from
2020-2024. For YE 2025 Fitch expects an operating margin of 5.6%
and then decreasing toward 3.0% in 2027. Budgetary risks remain
from the growing pension deficit weight and salary pressures due to
high inflation and weakening expenditure predictability.
On the pension front, Chaco is among the provinces that did not
transfer their pension scheme to the nation. As such, when
considering the weight of this additional burden, the operating
margin is approximately four percentage points lower. On Dec. 16,
2025, the Province of Chaco entered into a new agreement with the
National Social Security Administration for an advance payment of
capital corresponding to the final result of the pension system for
fiscal year 2025, in which ARS40 billion was transferred to the
province in a single payment in December 2025. This would reduce
the estimated pension deficit at the end of 2025 by -1.0 percentage
points per year.
Expenditure Adjustability: 'Weaker'
Fitch views Chaco's leeway or flexibility to cut expenses as weak
relative to international peers, considering an average of only
around 12.7% of consolidated provincial total expenditures going to
capex from 2020 to 2024, which decreased to 6.5% at YE 2024 from
12.5% in 2022. Similar to other Argentine peers, the province has
very high infrastructure needs; therefore, increasing capex does
not necessarily translate into economic growth due to the important
infrastructure lag, which also reflects minimal flexibility to
adjust capex.
Compared with international peers, Chaco has a high share of opex
to total expenditure with an 84.8% average for the last five years.
In 2024, staff expenses represented 45.8% of total expenses
(five-year average of 50.3%), which is high relative to
international peers. Chaco's socioeconomic indicators are below the
national average and further constrain its opex flexibility.
Liabilities and Liquidity Robustness: 'Weaker'
Direct debt increased by 44.9% in 2024 mainly due to short-term
debt and currency depreciation, totaling ARS529.2 billion. As of
3Q25, the outstanding amount stands at ARS462.3 billion;
approximately 70.1% of Chaco's direct debt is denominated in
foreign currency and is unhedged, mainly in U.S. dollars, which is
a rating risk in the current environment of high inflation and
currency volatility. However, 70% of its total debt has fixed
interest rates. The 'CC' IDRs reflect challenges ahead that could
hinder the province's repayment capacity. As other provinces have
recently done, Chaco could decide to tap the international capital
market for liability management purposes and to finance its capex
projects.
Liabilities and Liquidity Flexibility: 'Weaker'
Fitch perceives the Argentine national framework in place for
liquidity support and funding available to subnationals as 'Weaker'
as there are no formal emergency liquidity support or bail-out
mechanisms established. Argentine provinces rely mainly on their
own unrestricted cash for liquidity. Fitch expects total cash to
progressively shrink toward 2027 due to outturns and capex outlays
increasing above inflation.
The province has been tapping the local currency capital market by
issuing short-term treasury bills (letras) to cover seasonal cash
imbalances on a regular basis as well as to cover debt service of
their international notes. Chaco's short-term treasury bill program
has significantly increased to ARS140 billion in 2025 and 2026 from
ARS5 billion in 2022; in 2024 it stood at ARS80 billion. The
context of economic downturn coupled with expenditure pressures
would converge liquidity to structurally tight and weak levels in
the short term. In fact, in 2025, the province required a
cash-advancement from co-participation transfers, signaling large
liquidity needs.
Financial Profile: 'aa' category
Considering the current sovereign 'CCC+' rating level and
curtailment of the external market to the sovereign amid a volatile
regulatory context, Fitch is only projecting a rating case for YE
2025. Financial profile metrics are analyzed to evaluate Province
of Chaco-specific debt repayment capacity and its liquidity
position in the next 12 months.
Under Fitch's rating case scenario for 2025-2027, Chaco's debt
payback ratio (net adjusted debt to operating balance), the primary
metric of the financial profile, will be below 5.0x in 2027 at
3.0x. This corresponds to a 'aaa' assessment and is offset by an
estimated debt service coverage at 0.4x, which is at the 'b'
assessment category. The overall financial profile score in the
'aa' category reflects an override for a significantly weaker debt
service coverage ratio.
In Fitch's rating case, Fitch expects a progressive reduction of
the operating margin toward 3.0%, incorporating tax collection
growth below inflation against inflation-driven operating
expenditure and considering the unfunded pension burden. The
recurrent use of short-term treasury bills is explained by these
spending pressures.
Fitch classifies Chaco as a Type B LRG, as it covers debt service
from cash flow on an annual basis.
Derivation Summary
Debt Ratings
Chaco's step-up USD262.6 million senior unsecured notes
(restructured in 2021) are rated at the same level as the
province's IDR. The notes started amortization payments in 2024
(payments are due in Feb. 18 and Aug. 18). February's payment was
carried out using own-resources plus proceeds from short-term
treasury bills (letras), signaling large liquidity needs. Total
debt service from the province's senior unsecured notes will amount
to USD69.2 million in 2026, deceasing to USD64.3 million in 2027
before its maturity in 2028.
Peer Analysis
Chaco's 'CC' factors in national and international peer comparison,
in particular with the provinces of Entre Rios, Chubut and
municipality of Cordoba both rated 'CC' and Salta and Neuquen rated
'CCC-'. Chaco's SCP and IDRs compare well with that of 'CC' peers
as their low budgetary flexibility and weak liquidity metrics
underpinned the positioning of their SCPs.
Issuer Profile
Chaco is in the northeast region of Argentina and has a small, low
value-added economy. The estimated population is around 1.2
million, less than 3% of Argentina's population. GDP per capita is
estimated at USD8,720 in 2024 (below the national average of
USD13,500), and the poverty rate is at 48.1% (national average:
38.1%) as per first semester 2025 official figures.
The services (tertiary) sector represents 68.4% of the province's
gross domestic product, followed by manufacturing and construction
(secondary) sectors at 10.4%, and the agriculture, fishing and
mining at 21.2%. Cotton production is one of the most important
commodities, followed by sunflower seeds and soybeans.
Key Assumptions
Qualitative Assumptions
- Risk Profile: 'Vulnerable';
- Revenue Robustness: 'Weaker';
- Revenue Adjustability: 'Weaker';
- Expenditure Sustainability: 'Weaker';
- Expenditure Adjustability: 'Weaker';
- Liabilities and Liquidity Robustness: 'Weaker';
- Liabilities and Liquidity Flexibility: 'Weaker'.
- Financial Profile: 'aa' category.
- Support (Budget Loans): N/A
- Support (Ad Hoc): N/A
- Asymmetric Risk: N/A
- Rating Cap (Long-Term IDR): N/A
- Rating Cap (Long-Term Local Currency IDR): N/A
- Rating Floor: N/A
Quantitative Assumptions — Issuer Specific
Fitch's rating action is driven by the following assumptions for
reference metrics under its 2026-2027 rating case scenario:
- Payback ratio: 3.0x;
- Actual debt service coverage ratio: 0.4x;
- Fiscal debt burden: 8.9%.
In line with its LRG criteria, for an entity with base case
financial profile indicating an SCP of 'b' or below, the base case
analysis alone may be sufficient to evaluate the risk of default
and transition for the debt. Therefore, in the case of Chaco,
Fitch's base case is the rating case which already incorporates a
very stressful scenario. It is based on 2020-2024 figures, updated
figures as of 3Q25, and 2026-2027 projected ratios. The key
assumptions for the scenario include:
- Operating revenue average growth of 47% for 2025-2027, assuming
growth below average inflation toward the medium term;
- Operating expenditure average growth of 46% for 2025-2027,
assuming growth above average inflation toward the medium term to
assume real term expenditure re-composition and unfunded pension
burden;
- Average net capital balance of approximately negative ARS522
billion during 2025-2027 to be financed with operating margins,
capital grants and financing from recurrent issuances in the local
market, multilateral official creditors, and national agencies
considering the five-year average of capex to total expenditure of
12.7%;
- Cost of debt considers non-cash debt movements due to currency
depreciation with an average exchange rate of ARS1,240 per U.S.
dollar for 2025, ARS1,640 for 2026 and ARS1,895 for 2027, based on
Chaco's debt service profile and Fitch's sovereign team assumptions
for exchange rate;
- Consumer price inflation (annual average % change) of 44% for
2025, 25% for 2026, and 17% for 2027, based on Fitch's sovereign
team macroeconomic assumptions;
- Short-term debt: Treasury bills program revolving annually at
ARS140 billion.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Not applicable as the ratings have been withdrawn.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Not applicable as the ratings have been withdrawn.
ESG Considerations
Chaco, Province of has an ESG Relevance Score of '4' for Rule of
Law, Institutional & Regulatory Quality, Control of Corruption
reflecting the negative impact of a weak regulatory framework and
national policies have over the province, which has a negative
impact on the credit profile and is relevant to the rating in
conjunction with other factors.
Chaco, Province of has an ESG Relevance Score of '4' for Creditor
Rights as, in spite of the province's compliance with the
negotiated terms throughout 2021-2023, the 2021 DDE continues to
weigh on its credit profile and debt coverage is expected to remain
pressured, which has a negative impact on the credit profile and is
relevant to the rating in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Following the withdrawal of ratings, Fitch will no longer be
providing the associated ESG Relevance Scores for the issuer.
Entity/Debt Rating Prior
----------- ------ -----
Chaco, Province of
LT IDR CC Affirmed CC
LT IDR WD Withdrawn
LC LT IDR CC Affirmed CC
LC LT IDR WD Withdrawn
senior unsecured LT CC Affirmed CC
senior unsecured LT WD Withdrawn
PROVINCE OF SALTA: Fitch Affirms 'CCC-' LongTerm IDRs
-----------------------------------------------------
Fitch Ratings has affirmed the Province of Salta's Long-Term
Foreign- and Local Currency Issuer Default Ratings (IDRs) at
'CCC-'. Fich also assessed Salta's Standalone Credit Profile (SCP)
at 'ccc-' and its USD 357.4 million senior unsecured step-up notes
due in 2027 at 'CCC-', the same level as the province´s Long-Term
Foreign Currency IDR. Fitch relied on its rating definitions to
position Salta's ratings and SCP.
The rating considers Argentina's rating upgrade and improved
macroeconomic conditions, such as lower inflation and real exchange
appreciation. These rating actions are based on Fitch's assessment
that Salta has a "Substantial Credit Risk," as indicated by an
actual debt service coverage ratio (ADSCR). The ADSCR remains above
1.0x in 2026 and 2027, but some liquidity pressures are expected.
The affirmation also incorporates Salta's 2024 operating balance
(OB), broadly in line with Fitch's expectations, and the continued
improvement in the OB through September 2025, driven by tight
control of operating expenditure, even amid a real deterioration in
revenues. The financial profile is expected to remain at 'aa' over
the next 12-24 months; however, Fitch believes liquidity could come
under pressure to sustain historically consistent capex levels in
the absence of additional funding.
KEY RATING DRIVERS
Standalone Credit Profile
The 'ccc-' SCP results from the application of the 'Lower
Speculative Grade' of Fitch's International Local and Regional
Government Rating Criteria. Fitch qualitatively assesses the
province's risk of default, and the remaining margin of safety is
based on overall performance and guided by rating definitions. The
'ccc-' SCP indicates Salta has a substantial credit risk and a
default is possible due to exposure to refinancing needs
accompanied by weak debt coverage metrics (ADSCR above but close to
1x). The SCP considers comparison with peers, including the
Provinces of Neuquen and Chubut.
Risk Profile:
'Vulnerable'
The 'Vulnerable' assessment weighs the sovereign IDR below the 'B'
category rather than Argentina's implied operating environment of
'bbb'. The risk profile reflects the combination of six 'Weaker'
key risk factors, as outlined below.
Revenue Robustness:
'Weaker'
Salta is highly dependent on federal transfers, which averaged
72.4% of operating revenue from 2020 to 2024, originating from a
'CCC+' sovereign counterparty. These transfers are primarily
automatic and come from the co-participation tax-sharing regime. By
law, federal co-participation transfers have never been
interrupted.
In 2024, automatic revenue-sharing transfers posted a 12.9% real
decline nationwide, and Salta experienced almost the same
contraction (-12.3%). This drop, together with the near-elimination
of discretionary transfers (down 78.8% in real terms in 2024),
weighed on the province's operating revenues, which fell by 15.8%
in real terms in 2024. This occurred amid structurally high
inflation, which reached 117.8% at end-2024 and averaged 236.8%
over the year.
The decline in federal revenue sharing (-12.3%) is compounded when
considering own-source revenues, which contracted by 21.2% and have
represented only 27.6% of the province's operating revenues on
average over the past five years.
As of September 2025, federal transfers to Salta showed some real
recovery (+2%); however, at the national level they declined by 1%
in real terms by end-2025. For 2026 and 2027, Fitch expects a
moderate real recovery in automatic transfers, broadly in line with
the projected 3.5% economic growth in both years.
Revenue Adjustability:
'Weaker'
Fitch considers local revenue adjustability for Argentine LRGs to
be low, challenged by the country's significant and distortive tax
burden and high inflation that affects affordability. The weak
macroeconomic environment further restricts the ability of
subnational entities to increase tax rates and expand tax bases to
enhance local operating revenues.
Salta's local taxes accounted for a low average of 27.6% of
operating revenue from 2020 to 2024. Local tax revenue decreased by
12.2% year over year in real terms in 2024, and decreased 8.8% in
real terms as of September 2025. There were some changes to IIBB
(gross income tax) rates in 2024 and 2025, mainly exemptions for
certain productive sectors.
Expenditure Sustainability:
'Weaker'
Argentine LRGs face high expenditure responsibilities amid
structurally high inflation. The country's fiscal framework remains
imbalanced in terms of revenue-expenditure decentralization,
underpinning Fitch's 'Weaker' assessment of expenditure
sustainability.
In 2024, Salta's operating balance improved to 6.4% of operating
revenue, from 2.0% at end-2023, and Fitch expects it to increase to
7.5% in 2025. This improvement comes amid historically high
inflation and a weaker national operating environment, which
continues to create pressures on both revenue and spending. As of
September 2025, Salta's operating balance stood at 8.9%. Fitch
expects a slight deterioration in 2026 and 2027, with margins
returning closer to historical levels of around 7%.
Salary expenditure represents, on average, 63.1% of operating
expenditure. Over 2020-2024, the province recorded a 7% real
decline in salary spending. However, in 2023—an election year at
both the provincial and national levels—salary expenditure
increased by more than 8% in real terms. In 2024, the province
sharply reduced salary spending by 24% in real terms, although by
September 2025 (other electoral year) it had partially eased this
restraint, with salary spending rising 3.5% in real terms.
Budgetary risks remain due to potential expenditure pressures.
However, Salta is among the provinces that transferred its pension
system to the national government and therefore does not face
direct pressure from provincial pension deficits.
Expenditure Adjustability:
'Weaker'
Argentine subnationals face high infrastructure needs and
expenditure responsibilities, with limited flexibility to reduce
expenses. National capital expenditure (capex) is low and
insufficient to shift the capex burden to LRGs. Fitch considers the
province's flexibility to cut expenses to be weak compared to
international peers. In 2024, staff expenses accounted for a high
61% of Salta's operating expenditure (opex), with opex comprising
approximately 91.8% of total expenditure. From 2020 to 2024, an
average of only 6.6% of total expenditure was allocated to capex.
As of September 2025, capex remained at historically low
levels—around 4.8% of total expenditure—amid the
near-elimination of national capital transfers, which declined
95.6% in real terms in 2024, with only a modest real recovery in
2025. As a result, 2024 capex was funded almost entirely with own
resources. Going forward, investment execution will depend on the
availability of own resources and/or dedicated financing. Fitch
will continue to monitor the evolution of these drivers.
Liabilities and Liquidity Robustness:
'Weaker'
Exposure to unhedged foreign currency debt is a significant
weakness, exacerbated by a weak national framework for debt and
liquidity, as well as an underdeveloped local market. Fitch's
assessment also considers the impact of the 'CCC+' sovereign
rating, which restructured its debt in 2020, thereby limiting
external market access for LRGs.
By the end of 2024, debt had surged to ARS452.2 billion, reflecting
a decline of 4.2% in USD, continuing the trend from 2023 when it
fell by 16.2%. In local currency, it increased due to the nominal
rise in the exchange rate. By the end of 2024, 74.2% of the
province's debt was denominated in foreign currency and remained
unhedged.
From 2025, Salta faced an increasing debt capital amortization from
its USD357.4 million senior unsecured step-up notes, which were
restructured in February 2021. Total debt service for these notes
was USD79.8 million in 2024, USD110.2 million in 2025 and would be
USD 102.6 million in 2026 and 95 million in 2027.
Liabilities and Liquidity Flexibility:
'Weaker'
Fitch perceives the Argentine national framework in place for
liquidity support and funding available to subnationals as
'Weaker', as there are no formal emergency liquidity support or
bailout mechanisms. National capital controls are another risk
considered in the liquidity flexibility assessment, as the
imposition of exchange regulations could ultimately affect LRGs'
ability to fulfil their financial obligations.
Argentine provinces rely mainly on unrestricted cash for liquidity.
Fitch estimates that Salta's available unrestricted cash totaled
ARS198 billion at YE 2024. Fitch believes liquidity could come
under pressure to meet debt service and sustain historically
consistent capex levels in the absence of additional funding.
Financial Profile:
'aa' category
The score reflects a 'aaa' primary payback ratio of 1.5x for 2026
under Fitch's rating case. Additionally, the financial profile
factors in an override from the 'bb' ADSCR of 1.1x in 2026. In
2026, the province is expected to have debt service payments of USD
152.4 million (considering debt in ARS and USD at Fitch's average
exchange rate). The projected ADSCR for 2026 to 2027 averages of
1.4x.
Fitch classifies Salta as a Type B LRG and refers to a payback
ratio as a primary metric.
Other Rating Factors
Fitch does not apply any asymmetric risk or extraordinary support
from the upper-tier government. The rating is based on Fitch's
rating definitions.
Short-Term Ratings
Not applicable.
National Ratings
Not applicable.
Debt Ratings
Fitch affirms Salta's USD 357.4 million senior unsecured step-up
notes due in 2027 at 'CCC-', which is at the same level of the
province's LT FC IDR.
Peer Analysis
Salta's rating is derived from a 'Vulnerable' Risk Profile and a
'aa' Financial Profile score. The SCP considers comparison with
peers, including the Provinces of Chubut and Neuquen. Fitch does
not apply any asymmetric risk or extraordinary support from
upper-tier government. The rating is based on Fitch's rating
definitions.
Salta, Chubut and Neuquén share the same Risk Profile, with all
key rating factors (KRFs) assessed at 'Weaker'. However, Fitch
expects Salta—like Neuquén—to maintain debt service coverage
ratios (DSCR) above 1.0x over the next 12-24 months, unlike Chubut,
whose DSCR is projected to remain below 1.0x. At the same time,
both Salta and Neuquén continue to exhibit pressured liquidity.
Issuer Profile
Salta is located in northwestern Argentina. It has a small and weak
local economy concentrated in the tertiary sector, heavily weighted
in social services and the public sector. Salta's economy accounts
for about 1.8% of the national GDP. The province's population is
estimated at 1.4 million, roughly 3.1% of the national population.
Qualitative Assumptions
- Risk Profile: 'Vulnerable';
- Revenue Robustness: 'Weaker';
- Revenue Adjustability: 'Weaker';
- Expenditure Sustainability: 'Weaker';
- Expenditure Adjustability: 'Weaker';
- Liabilities and Liquidity Robustness: 'Weaker';
- Liabilities and Liquidity Flexibility: 'Weaker'.
- Financial Profile: 'aa' category.
- Support (Budget Loans): N/A
- Support (Ad Hoc): N/A
- Asymmetric Risk: N/A
- Rating Cap (Long-Term IDR): N/A
- Rating Cap (Long-Term Local Currency IDR): N/A
- Rating Floor: N/A
Risk Profile:
Revenue Robustness:
Revenue Adjustability:
Expenditure Sustainability:
Expenditure Adjustability:
Liabilities and Liquidity Robustness:
Liabilities and Liquidity Flexibility:
Financial Profile:
Asymmetric Risk:
Support (Budget Loans):
Support (Ad Hoc):
Rating Cap (LT IDR):
Rating Cap (LT LC IDR)
Rating Floor:
Quantitative assumptions - Issuer Specific
Fitch's rating action is driven by the following assumptions for
reference metrics under its 2025-2027 rating case scenario:
- payback ratio: 1.1x
- debt service coverage ratio: 1.1x
- fiscal debt burden: 10.8%
In line with its International Local and Regional Governments
Rating Criteria for entities with a base case financial profile
indicating an SCP of 'b' or below, the base case analysis alone is
deemed to be sufficient to evaluate the risk of default and
transition for debt. Therefore, in the case of Argentine LRGs,
Fitch's base case is the rating case.
Fitch's rating case is a through-the-cycle scenario, which
incorporates a combination of revenue, cost and financial risk
stresses. It is based on 2020-2024 figures and 2025-2027 projected
ratios. The key assumptions for the scenario include the
following:
- Operating revenue average growth of 28.8% for 2025-2027; assuming
growth in line with average inflation towards the medium term, and
considering performance as of September 2025.
- Operating expenditure average growth of 28.6% for 2025-2027;
assuming growth in line with inflation towards the medium term, and
considering performance as of September 2025.
- Average capital expenditure/total expenditure levels of around
5.9%; above 5.8% recorded in 2024 .
- Cost of debt considers non-cash debt movements due to currency
depreciation with an average exchange rate of ARS1,240 per U.S.
dollar for 2025 (year end 1,459), ARS1,640 for 2026 (year end
1,779), and ARS1,895 for 2027 (year end 2,011).
- Consumer price inflation (annual average % change) of 44.5% for
2025, 25.8% for 2026, 17.8% for 2027.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The IDR could be lowered if Salta's estimated actual DSCR drops
below 1.0x in tandem with a liquidity coverage ratio below 1.0x,
underpinned by lower operating margins and unrestricted cash,
regardless of whether the payback ratio remains below 5x.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- If the ADSCR remains in line with projections above 1x, along
with the sustainability of the operating margin, this could lead to
structural and sustainable liquidity metrics in a scenario of less
uncertainty. Additionally, it should compare adequately with
Argentine peers.
ESG Considerations
Salta, Province of has an ESG Relevance Score of '4' for Rule of
Law, Institutional & Regulatory Quality, Control of Corruption
reflecting the negative impact of a weak regulatory framework and
national policies have over the province, which has a negative
impact on the credit profile and is relevant to the rating in
conjunction with other factors.
Salta, Province of has an ESG Relevance Score of '4' for Creditor
Rights, despite the province's compliance with the negotiated terms
throughout 2021-2024, the 2021 DDE continues to weigh on its credit
profile and debt coverage is expected to remain pressured, which
has a negative impact on the credit profile and is relevant to the
rating in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Summary of Financial Adjustments
Fitch's net adjusted debt corresponds to the difference between
Fitch-adjusted debt and the LRGs' unrestricted cash. The latter
corresponds to the level of cash at the end of the year, excluding
cash that Fitch views as being earmarked for payables or
restricted. This calculation is applied to historical and available
information provided by the issuer.
Entity/Debt Rating Prior
----------- ------ -----
Salta, Province of
LT IDR CCC- Affirmed CCC-
LC LT IDR CCC- Affirmed CCC-
senior unsecured LT CCC- Affirmed CCC-
===========
B R A Z I L
===========
BRAZIL: Economy Cooled in 2025 Under Weight of High Interest Rates
------------------------------------------------------------------
Marcela Ayres at Reuters reports that Brazil's economy grew 2.3% in
2025, its weakest performance since during the COVID pandemic in
2020 as high interest rates squeezed consumption and investment,
official data showed.
Latin America's largest economy posted just 0.1% growth in the
fourth quarter from the previous three months, in line with a
Reuters poll. That reinforced expectations of imminent rate cuts
after the central bank signaled it would start monetary easing
when it meets later this month, despite above-target inflation,
according to Reuters.
Last year's economic slowdown came amid restrictive monetary
policy aimed at steering inflation - which stood at 4.1% in the 12
months to mid-February - toward the central bank's 3% target,
the report notes.
Economic growth last year slowed from a 3.4% expansion in 2024 and
marked the weakest performance since a 3.3% contraction in 2020,
the report relays.
In the fourth quarter, gross domestic product rose 1.8%, statistics
office IBGE said, in line with market expectations, the report
discloses.
Brazil's economy had proved slow to cool following stimulus
measures introduced when President Luiz Inacio Lula da Silva took
office in 2023, which boosted demand and helped growth outperform
earlier expectations, the report notes.
Central bank policymakers paused an aggressive tightening cycle
last July and have since kept the benchmark Selic rate at 15%,
the highest in nearly two decades, the report says. They signaled
in January their intention to begin cutting rates this month,
the report relays.
The central bank said in December it expected the economy to grow
2.3% in 2025 and slow further to 1.6% growth this year, the
report notes.
The Finance Ministry, however, reiterated in a statement that a
more upbeat forecast of 2.3% growth this year, arguing that a
stronger slowdown in agriculture would be offset by faster
expansion in industry and services, the report relays.
For the first quarter, the ministry's economic policy secretary
projected a "sharp acceleration" in quarter-on-quarter GDP growth,
close to 1%, the report discloses. Its outlook reflected the
rollout of an expanded income tax exemption for workers earning
up to 5,000 reais ($954.05) per month, a key pledge from
Lula, who is seeking re-election in October's general election, the
report says.
"Thereafter, activity growth should gradually slow, as the effects
of public policies fade and are only partly offset by lower
borrowing costs," the ministry said, the report notes.
Services Sector Slows
In 2025, growth in Brazil's services sector, the main engine of
its economy, slowed to 1.8% from 3.8% a year earlier, the report
relays.
Buoyed by a record harvest, particularly soy and corn, agriculture
expanded 11.7%, while industry grew 1.4%, supported by oil and gas
extraction, the report notes.
On the demand side, IBGE highlighted weaker growth in household
consumption, which rose 1.3% in 2025 compared with 5.1% in
2024, "mainly due to the adverse effects of contractionary
monetary policy," the report relates.
Government spending increased 2.1% last year, versus 2.0% in 2024,
while gross fixed capital formation, a proxy for long-term
investment, rose 2.9%, well below the 6.9% expansion seen the
year before, the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
In October 2024, Moody's Ratings upgraded the Government of
Brazil's long-term issuer and senior unsecured bond ratings to Ba1
from Ba2, the senior unsecured shelf rating to (P)Ba1 from (P)Ba2;
and maintained the positive outlook. S&P Global Ratings raised on
Dec. 19, 2023, its long-term global scale ratings on Brazil to
'BB' from 'BB-'. Fitch Ratings affirmed on Dec. 15, 2023, Brazil's
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with
a Stable Outlook. DBRS' credit rating for Brazil was last reported
at BB with stable outlook at July 2023.
TIDEWATER INC: Wilson Sons Transaction No Impact on Moody's B2 CFR
------------------------------------------------------------------
Moody's Ratings commented that Tidewater Inc.'s (Tidewater)
definitive agreement to acquire Brazilian offshore support vessel
(OSV) company Wilson Sons Ultratug Participacoes S.A. and its
affiliate Atlantic Offshore Services S.A. (collectively, "WSUT") is
credit positive but does not currently affect its ratings,
including its B2 Corporate Family Rating and B3 senior unsecured
notes rating, or its stable outlook. The proposed transaction
provides Tidewater with significant scale in the key Brazilian
offshore market and improves the company's competitive
positioning.
While Tidewater's net leverage will increase following the closing
the transaction, it remains within the company's stated financial
policies on a pro forma basis.
Under the announced agreement, Tidewater will purchase WSUT for
approximately $500 million in cash, including the assumption of
WSUT's existing debt of around $261 million as of September 30,
2025. WSUT's fleet consists of 22 platform supply vessels (PSV),
including 19 Brazilian-built vessels that receive priority to
operate in Brazil. The transaction will bring a meaningful increase
in Tidewater's market presence in the protected Brazilian OSV
market, one of the world's most important and dynamic offshore
drilling markets, and establish the company as one of the main
providers of Brazilian-built PSVs. The acquisition will add
significant scale to Tidewater's Brazilian fleet, providing a
strong competitive advantage in this highly-regulated market and
supporting its ability to maintain above average utilization and
contract rates through the cycle. Tidewater will also gain the
right to import additional international-flagged vessels into
Brazil under the Brazilian Special Registry ("REB") that would
enjoy the same preference status as Brazilian-built vessels and
allow the company to deploy its existing vessels to the Brazilian
market based on the evolution of supply and demand in its other
markets of operation.
Tidewater will pay the approximately $239 million cash portion of
the consideration using cash on hand. The acquisition will
initially increase Tidewater's leverage, with pro forma net
debt/EBITDA rising to around 1.1x, from 0.4x for the twelve months
to September 30, 2025. This is well within the company's financial
policy of maintaining net leverage below 2.0x following
acquisitions and close to the company's 1.0x net leverage target.
As such, the proposed transaction also contributes to building
Tidewater's track record of operating within its stated
conservative financial policies. The proposed transaction has been
approved by the board of directors of both companies and is
expected to close late in the second quarter of 2026, subject to
required regulatory approvals and other customary closing
conditions including approval from the Brazilian Antitrust
Authority (CADE).
Tidewater Inc. (NYSE: TDW) is a listed company providing supply and
support services to the offshore oil and gas and construction
industries. Pro forma for the acquisition, Tidewater will operate
231 marine offshore support vessels (OSVs), nearly all owned, and
generated approximately $700 million of combined EBITDA in the
twelve months to September 30, 2025.
=============
J A M A I C A
=============
JAMAICA: Commuters to Brace for Higher Fares Amid US-Israel War
---------------------------------------------------------------
RJR News reports that Egeton Newman, president of the Transport
Operators Development Services (TODSS) is warning the commuting
public to brace for an increase in fares because of the increase in
the price of fuel and accessories due to the current war between
the USA, Israel and Iran.
He also pointed out that the transport sector is still waiting on
the 16 per cent fare hike promised by the government two years ago,
while indicating that an application for another fare hike is now
due, according to RJR News.
He said he will be meeting with Transport Minister Daryl Vaz, the
report notes.
The transport sector accounts for approximately 8 per cent of GDP,
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: Loan Stress After Melissa Milder Than Feared, BOJ Says
---------------------------------------------------------------
Karena Bennett at Jamaica Observer reports that JAMAICA'S financial
system has weathered the shock of Hurricane Melissa better than
feared, with non-performing loans rising only modestly and
remaining well below levels that would threaten stability, the Bank
of Jamaica (BOJ) said.
New data presented by Governor Richard Byles show non-performing
loans increased to 2.8 per cent of total loans, up slightly from
2.5 per cent a year ago, but still far below the 10 per cent level
considered a threat to financial stability, according to Jamaica
Observer .
"2.8 per cent is well within the contours of the horizon of our
concerns," Byles said, noting that even with some deterioration,
loan quality remains strong, the report notes.
The update marks a shift from earlier assessments by the central
bank, which had warned that the hurricane shock could trigger a
sharp rise across the banking system, the report discloses.
One reason the feared spike did not materialise is the relatively
limited exposure of banks to the hardest-hit western parishes, the
report says.
"A lot of the loans of deposit-taking institutions are concentrated
in Kingston, St Andrew and St Catherine, not in western Jamaica,"
Byles said, adding that the bulk of the loan portfolio was
therefore shielded from the worst economic disruption, the report
notes.
The report relays that Deputy governor of the central bank Dr Jide
Lewis told journalists that the sectors most affected were tourism
and parts of the distributive trade, including pharmacies and
supermarkets, while the mortgage portfolio remained largely
stable.
He also pointed to swift policy intervention in the immediate
aftermath of the hurricane, including guidance that allowed banks
to grant temporary loan moratoria to affected borrowers, the report
notes.
So far, roughly $50 million in moratoria covering more than 2,000
individuals and businesses has been extended for six months, giving
borrowers time to recover before resuming normal repayment
schedules, the report says.
The strategy mirrors, though on a smaller scale, the broader
interventions used during the COVID-19 crisis, when widespread
moratoria and liquidity support were deployed across the financial
system to stabilise credit conditions and protect borrowers, the
report relays. The BOJ's 2020 annual report noted that the stock
of loans granted moratoria stood at $183.6 billion, representing
less than one-fifth or 20 per cent of total loans at the time, the
report recalls.
Under normal circumstances, loans that fall 90 days or more behind
on payments are classified as non-performing. However, when banks
grant moratoria - temporary payment suspensions - those loans are
not immediately treated as delinquent, the report notes.
Risks May Emerge As Relief Expires
But Dr Lewis cautioned that the full impact on credit quality will
take time to emerge. Loan delinquencies could still edge higher as
reconstruction pressures build and borrowers adjust to slower
income recovery following the economic contraction this fiscal
year, the report relates.
"It will take time for us to really understand what the impact
would be on credit. But even in the worst of scenarios, we are not
seeing non-performing loans doubling or approaching the 10 per cent
benchmark," he added.
The BOJ's recent decision to cut its policy rate to 5.50 per cent
was partly intended to support credit conditions and reduce
financial strain on borrowers, though the central bank cautioned
that lending rates may not decline immediately, the report notes.
"Twenty-five basis points may not mean you will see loan rates
falling tomorrow, but it is a signal . . . that we are going with
rates generally in the economy," Byles said, the report adds.
Policymakers say the easing move is part of a cautious strategy to
support recovery while monitoring both inflation and financial
stability risks, the report says.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea. Jamaica
is an upper-middle income country with an economy heavily dependent
on tourism. Other major sectors of the Jamaican economy include
agriculture, mining, manufacturing, petroleum refining, financial
and insurance services.
On Feb. 21, 2025, Fitch Ratings affirmed Jamaica's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB-', with a
positive rating outlook. In October 2023, Moody's upgraded the
Government of Jamaica's long-term issuer and senior unsecured
ratings to B1 from B2, and senior unsecured shelf rating to (P)B1
from (P)B2. The outlook has been changed to positive from stable.
In September 2024, S&P affirmed 'BB-/B' longterm foreign and local
currency sovereign credit ratings on Jamaica and revised outlook to
positive.
===========
M E X I C O
===========
ALPEK SAB: Fitch Lowers LongTerm IDRs to 'BB+', Outlook Neg.
------------------------------------------------------------
Fitch Ratings has downgraded Alpek, S.A.B. de C.V.'s (Alpek)
Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs)
and senior unsecured notes to 'BB+' from 'BBB-'. The Rating Outlook
is Negative.
The downgrade reflects Alpek's weaker operating performance and
higher leverage metrics as previously anticipated by Fitch amid a
challenging environment for the petrochemical sector. Alpek's gross
and net leverage, as calculated by Fitch, is projected to remain
high in 2026 and then to be close to 4.5x and 3.5x, respectively,
in 2027.
The Negative Outlook incorporates Fitch's expectation that global
oversupply conditions in the chemical sector and a softer demand
recovery could persists beyond 2027. This would further pressure
Alpek's profitability, cash flow generation and leverage metrics.
Key Rating Drivers
High Leverage: Alpek's EBITDA leverage and EBITDA net leverage
(pre-IFRS 16 and adjusted for dividends to minorities), as
calculated by Fitch, were 6.5x and 5.1x, respectively, at FY25, up
from 4.2x and 3.6x in FY24. The increase in leverage was mainly
driven by lower-than-expected EBITDA generation, which offset the
benefits of positive FCF, and modest debt reduction associated with
Alpek's strategic initiatives to improve its financial position.
Fitch projects Alpek's EBITDA leverage and EBITDA net leverage to
remain elevated in 2026 and then gradually decline to around 4.5x
and 3.5x in 2027, and below 4x and 3.5x in 2028, respectively. The
improvement incorporates a recovery in the company's EBITDA,
positive FCF generation, and total debt at around MXN35 billion.
Fitch's base case projections do not include the sale of non-core
assets, but using divestiture proceeds to pay down debt could
accelerate deleveraging.
Lower Profitability: Fitch expects a recovery in Alpek's
profitability in 2026 and 2027, although it will still be below
historical mid-cycle levels. Fitch projects EBITDA of close to
MNX7.3 billion (USD405 million) in 2026 and MXN8.1 billion (USD440
million) in 2027, with an EBITDA margin of around 6% from 5% in
2025. The improvement considers a modest increase in reference
margins (mainly Polyethylene Terephthalate, PET), a more benign
ocean freight cost environment, and Alpek's ongoing initiatives
related to efficiencies, cost reductions, and a focus on high
value-added products.
Positive FCF: Fitch forecasts positive FCF for Alpek in 2026 and
2027, assuming efficient management of net working capital
requirements and no extraordinary capex or dividend payments. Fitch
expects cash flow from operations to average about MXN3.1 billion
(USD172 million) annually, which is sufficient to cover projected
capex of around MXN2.3 billion (USD130 million) in 2026 and MXN2.6
billion (USD140 million) in 2027. Annual FCF is expected to be
average around MXN635 million (USD35 million) in 2026 and 2027.
Fitch's base case assumptions incorporate use of FCF to reduce debt
and maintain a minimum cash balance above USD200 million.
Strong Business Position: Alpek's ratings are supported by its size
and scale as a leading producer of chemical products in the
Polyester and Plastics & Chemicals segments. The company is one of
the largest integrated producers in the Americas of Purified
Terephthalic Acid (PTA), PET, PET sheet, recycled PET, and
Expandable Polystyrene (EPS), and the only producer of
Polypropylene (PP) in Mexico. Alpek also has a solid track record
of implementing strategies to maintain its market position and grow
its businesses in the highly cyclical chemical industry.
Diversified Operations: Alpek's ratings reflect its geographic and
product diversification and its end-market exposure. The company is
exposed to more resilient end markets such as food and beverage and
consumer goods, and to a lesser extent to the more volatile housing
and construction markets. Its Polyester segment contributes around
52% of Alpek's total EBITDA, while the Plastics & Chemicals segment
accounts for 45%. Alpek's main markets in 2025 were Mexico (41% of
total revenues), followed by the U.S. and Canada (31%), Latin
America (14%), the Middle East (12%), and the U.K. (2%).
Volatile Industry: Fitch expects continued supply-demand imbalance
in the PET market over the medium term, particularly from Asia.
Capacity rationalization in the industry has not progressed at the
pace necessary to normalize product oversupply. In addition,
uncertainty in trade policies continues to delay the recovery of
demand in key sectors. Fitch believes Alpek will continue
implementing strategies to mitigate sector headwinds and protect
its financial position.
Peer Analysis
Alpek's leading position in the Americas for its core PET and PTA
products, along with its consumer end market exposure, are credit
strengths that mitigate the commoditized nature of these
petrochemical products, which are characterized by volatile raw
material prices and price-driven competition. The risk of
overcapacity is a concern for commodity chemicals producers, as
excess supply can influence spreads over several years.
Alpek's business profile compares well with regional peers such as
Orbia Advance Corporation, S.A.B. de C.V. (BBB-/Stable), Cydsa,
S.A.B. de C.V. (BB+/Stable) and Braskem S.A. (CC). Alpek has
stronger scale and broader diversification than Cydsa. Alpek is
less exposed to more stable end markets such as food and beverage
and consumer than Braskem and Orbia, which have higher exposure to
infrastructure, construction, and automotive. This generally
results in more volatile demand and a more cyclical product mix.
Orbia's larger scale, higher vertical integration, less
commoditized product portfolio, and broader geographic
diversification are key differentiators relative to Alpek.
Alpek's financial profile is relatively weaker in terms of FCF
generation when compared to Orbia, and stronger when compared to
Braskem and Cydsa. Net leverage for Alpek is expected to be close
to 3.5x by 2027, while for Orbia and Cydsa is projected at around
3x and 2x, respectively.
Fitch’s Key Rating-Case Assumptions
- Low single-digit volume growth for polyester, plastics and
chemicals volume from 2026 to 2028;
- Polyester revenue growth of 2% in 2026, followed by mid-single
digits increase from 2027 to 2028;
- Plastic and chemicals revenue growth around mid-single digits
from 2026 to 2028;
- EBITDA margin at around 6% from 2026 to 2028;
- Capex of USD130 million in 2026 and around USD145 million in 2027
to 2028;
- No dividends payments from 2026 to 2028;
- Proactive liability management strategy to avoid refinancing
exposure.
Corporate Rating Tool Inputs and Scores
Fitch scored the issuer as follows, using its Corporate Rating Tool
(CRT) to produce the Standalone Credit Profile (SCP):
- Business and financial profile factors (assessment, relative
importance): Management (bbb, Lower), Sector Characteristics (bb+,
Moderate), Market and Competitive Positioning (bbb-, Moderate),
Diversification and Asset Quality (bbb, Higher), Company
Operational Characteristics (bb+, Moderate), Profitability (bb,
Moderate), Financial Structure (b, Moderate), and Financial
Flexibility (bb+, Moderate).
- The quantitative financial subfactors are based on custom CRT
financial period parameters: 10% weight for the historical year
2025, 30% for the forecast year 2026, 30% for the forecast year
2027 and 30% for the forecast year 2028.
- The Governance assessment of 'Good' results in no adjustment.
- The Operating Environment assessment of 'bbb' results in no
adjustment.
- The SCP is 'bb+'.
Fitch made no adjustments to the SCP, resulting in a Foreign and
Local Currency IDR of 'BB+'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Further increases of scale, product diversification and reduction
in cyclical cash flow risk;
- Sustained recovery in EBITDA margins above 8%;
- Maintain positive FCF through economic cycles and investment
periods;
- EBITDA leverage and EBITDA net leverage, as calculated by Fitch,
below 3.0x and 2.5x, respectively, throughout the petrochemical
cycle.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Prolonged reductions in volume, profitability and cash flows,
resulting in lower fixed-cost absorption and weaker credit
metrics;
- Negative FCF generation in 2026 or 2027 that pressures its
liquidity position;
- EBITDA leverage and EBITDA net leverage, as calculated by Fitch,
above 4.0x and 3.5x, respectively, by 2027 and beyond.
Liquidity and Debt Structure
As of Dec. 31, 2025, Alpek liquidity position is ample with MXN8
billion (USD448 million) of cash and cash equivalents and MXN1.8
billion (USD102 million) of short-term debt. Its liquidity position
is further enhanced by available committed credit facilities of
USD529 million that are due between 2026 and 2030 and the potential
proceeds of the planned sale of non-core assets in the short to
mid-term.
Fitch expects that Alpek continues proactively refinancing in
advance its next significant debt maturities of MXN4.2 billion
(USD235 million) in 2028 and MXN9 billion (USD500 million) in 2029.
The company's total debt was MXN37 billion (USD2.1 billion) as of
YE25, per Fitch's calculation.
Issuer Profile
Alpek is a leading producer of purified terephthalic acid and
polyethylene terephthalate worldwide. The company operates 31
plants in Mexico, the U.S., Brazil, Argentina, Canada, the U.K.,
Chile, Oman and Saudi Arabia with a total installed capacity of 7.6
million tons per year.
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.
Climate Vulnerability Signals
The results of its Climate.VS screener did not indicate an elevated
risk for Alpek.
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
----------- ------ -----
Alpek, S.A.B. de C.V.
LT IDR BB+ Downgrade BBB-
LC LT IDR BB+ Downgrade BBB-
senior unsecured LT BB+ Downgrade BBB-
LG PARENT: S&P Lowers ICR to 'CCC+', Outlook Negative
-----------------------------------------------------
S&P Global Ratings removed its ratings on U.S.-based LG Parent
Holdco Inc. from CreditWatch with negative implications and
downgraded its issuer credit rating to 'CCC+' from 'B-'.
S&P said, "Concurrently, we lowered our issue-level rating on the
company's first-lien term loan B to 'CCC+' from 'B-'. The recovery
rating on this debt remains '3', reflecting our expectation for
meaningful (50%-70%; rounded: 50%) recovery in the event of a
payment default."
The negative outlook reflects the potential for a lower rating if
demand and cost pressures continue to weigh on the company's credit
metrics and liquidity, increasing the risk of a default.
LG Parent Holdco Inc.'s (the parent of operating entity Libbey
Glass LLC) labor unions ratified new labor contracts, ending a
prolonged strike. The company is now ramping its U.S. operations
back to full capacity. Nonetheless, S&P expects Libbey will face
demand and cost pressure that will keep profits and credit measures
weak.
S&P said, "The downgrade reflects our expectation Libbey will face
demand and cost pressure, resulting in weak credit metrics in
2026.
While Libbey resolved its protracted labor strike, we expect it
will face continued top- and bottom-line pressure over the next
year. The company reported a 4.4% year-over-year revenue decline
during fiscal 2025 (ended Dec. 31, 2025). It has reported five
consecutive quarters of revenue declines.
"We believe Libbey will continue to experience demand pressure over
the near term given ongoing affordability headwinds for U.S.
consumers and slowing disposable income growth that could pressure
sales across its foodservice, retail, and business-to-business
channels. Consumer discretionary spending could decrease if the
labor market continues to weaken and inflation picks up. We
forecast revenues will be about flat in 2026 compared with last
year, with increased pricing offsetting higher U.S. import tariffs
and input costs offset by lower volumes."
In February, Libbey reached an agreement for new labor contracts
with certain labor unions from its Toledo, Ohio manufacturing and
distribution facilities that had been on strike since August 22,
2025. S&P believes the renewed labor contracts include terms that
will increase labor costs over the next few years. The company is
implementing various cost saving initiatives to offset these costs
but may not be able to fully offset them.
Moreover, it incurred strike-related, one-time costs through early
2026, including fixed-cost overhead, temporary labor,
restructuring, and security costs. S&P said, "We believe it will
also experience added costs and inefficiency as it ramps up its
furnaces to full capacity. We estimate lower demand and higher
costs could prevent a material improvement in profitability and
result in weak S&P Global Ratings-adjusted EBITDA to cash interest
coverage of about 1.4x this year."
Libbey imports a significant amount of its production from Mexico
for its U.S. business, which are currently exempt from tariffs
under the U.S.-Mexico-Canada Agreement (USMCA). The USMCA is up for
review in July 2026. A revised agreement could result in
significantly higher costs that could be difficult to pass on in a
weak demand environment. Higher U.S. import tariffs from the
renegotiation of the USCMA agreement are a risk to S&P's forecast.
S&P said, "We project free operating cash flow (FOCF) deficits will
persist in 2026, and Libbey faces refinancing risk. We believe
Libbey's working capital needs may increase this year to restore
inventory levels in certain products following the prolonged labor
strike. Moreover, the company may need to increase safety stock
ahead of furnace rebuilds. Libbey is implementing various
initiatives to improve working capital efficiency, but these could
take longer than expected or not fully generate expected benefits.
We forecast profitability pressure, working capital buildup, and
capital expenditure (capex) requirements will drive an FOCF deficit
this year, which would represent Libbey's third consecutive year of
negative FOCF generation.
"We believe Libbey has sufficient liquidity to cover its near-term
needs, including domestic cash on hand and asset-based lending
(ABL) availability totaling about $64 million as of Dec. 31, 2025.
Nonetheless, its $285 million senior secured term loan B matures on
Nov. 22, 2027, and becomes current before the end of this year.
While we believe the company will seek to extend the maturity on
its term loan before it becomes current, persistent FOCF deficits
could make it more difficult to refinance on current terms and
conditions.
"The negative outlook reflects the possibility we may lower our
ratings if demand and cost pressures continue to weigh on Libbey's
credit metrics and liquidity deteriorates."
S&P could lower its ratings on Libbey if it foresees a default
scenario over the subsequent 12 months. This could occur if:
-- Its term loan B becomes current;
-- It restructures its debt terms; or
-- Its FOCF continues to weaken and liquidity becomes constrained
such that it is unable to meet its debt service requirements.
S&P could take a positive rating action if the company restores
revenue and earnings growth, leading to EBITDA cash interest
coverage approaching 1.5x and sustained positive FOCF generation.
S&P believes this could happen if Libbey:
-- Can offset higher labor costs through pricing or cost savings
actions;
-- Expands organic sales in its key channels; and
-- Manages its working capital efficiently.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
READYMIX (WEST INDIES): 'Shutdown a Logical Move'
-------------------------------------------------
Vishanna Phagoo at Trinidad and Tobago Express reports that
President of the Joint Consultative Council for the Construction
Industry, Fazir Khan, believes Trinidad Cement Ltd's decision to
shut down Readymix (West Indies) Ltd was an attempt at portfolio
optimisation, and one which has wider implications for the
construction sector.
In an e-mail sent to the Express as a letter to the editor, Khan
noted that, over the last decade, the concrete ready mix market in
T&T became "crowded and highly competitive."
These other players, he said, are: Coosal's, Alescon, Junior Sammy,
NAMALCO, Advance Ready Mix, GEML, Lutchmeesingh, and other smaller
contractors, according to Trinidad and Tobago Express.
"This has inevitably compressed margins, particularly for a large
integrated operator carrying the fixed costs of multiple plants, a
sizeable truck fleet and quarrying operations. In such a
commoditised business, selling prices are driven down towards
variable cost, leaving limited room for an integrated group like
TCL to earn an adequate return on capital," said Khan, the report
notes.
The report discloses that he noted that from this perspective,
"TCL's move looks less like a retreat forced solely by 'rising
costs' and more like a portfolio optimisation."
The report relays that Khan explained that this means exiting a
structurally low-margin downstream segment to concentrate on
higher-return core cement production. "From a shareholder return
on investment standpoint, this is a rational reallocation of
capital away from a business line where the company no longer
enjoys a clear competitive advantage," he said, the report notes.
Khan noted that while the company may no longer enjoy the
competitive advantage, this decision has wider implications for the
construction sector and raises questions about TCL's future conduct
in its remaining core markets, the report relates.
"Having relinquished the burdens of the ready mix and aggregate
operations, TCL's cost base and risk profile will change. It is,
therefore, reasonable for contractors, developers and the national
community to expect TCL to review its cement pricing outlook in the
medium term. If the group is now leaner and more focused, then
part of the efficiency gain ought, in time, to be reflected in a
possible reduction or at least stabilisation of cement price
movements, particularly in a market that is effectively a
monopoly," the report notes.
Khan said the Readymix closure puts TCL's quarry and aggregate
assets into sharp focus, the report discloses.
"Good concrete depends on reliable supplies of quality aggregates,
and the country has already witnessed how sensitive infrastructure
and building projects are to disruptions in aggregate production
and licensing," he added.
Khan added that there appear to be two broad options for TCL's
aggregate assets:
-- Outright divestment at market value - TCL could sell its quarry
and aggregate facilities to another operator, realising an
immediate cash inflow and removing all operating, regulatory and
environmental risk from its balance sheet.
-- Lease or concession to third party operators - TCL could retain
ownership of the lands and major plant, but lease them to
specialised local quarrying companies on medium to long term
agreements, possibly with production linked royalties. This would
convert a volatile operating business into a more stable, asset
based income stream.
Khan argued that the lease or concession to third-party operators
appears more attractive, the report says.
"Smaller, focused aggregate producers should be able to operate
with lower overheads and greater nimbleness than a diversified
cement group, extracting more value per tonne while still paying a
fair lease or royalty. For TCL, this can mean recurring, inflation
linked income with far less operating risk than running the
quarries itself," he said, the report notes.
Khan said a leasing model could also be structured to soften the
social impact of Readymix’s closure, the report discloses.
"New operators can be encouraged, through contractual obligations
or tender criteria, to prioritise the rehiring of experienced
TCL/Readymix staff who already understand the deposits, equipment,
quality control and safety systems. This would preserve local
technical capacity, reduce retrenchment fallout and maintain the
continuity that the construction sector depends on," he added.
Khan said for the industry as a whole, keeping these quarries in
production under capable local operators was essential, the report
says.
"Without adequate aggregate supply, our ambitions in housing,
climate resilient infrastructure and economic diversification will
quickly run into hard physical constraints. Policymakers should
therefore view TCL's decision not only as a corporate restructuring
but also as a policy inflection point: an opportunity to strengthen
licensing, environmental performance and market transparency in the
quarrying and concrete value chains and, most importantly, to
address creeping monopolisation in the aggregate sub sector," he
said, the report relates.
The report notes that Khan said the JCC would like to see three
things - TCL communicates a clear strategy for its quarry and
aggregate assets; Government and regulators facilitate a smooth
transition that preserves legal, well regulated supply; and any
efficiency gains arising from TCL's restructuring are, in due
course, reflected in more sustainable cement pricing.
"The closure of Readymix can be viewed as an opportunity for the
construction sector. Handled thoughtfully, it could mark a
rebalancing: TCL focusing on what it does best; agile local firms
stepping up in aggregates and ready mix; and the national community
benefiting from a more efficient, competitive and resilient supply
chain for concrete and related materials," Khan said, the report
adds.
*********
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 * * *