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Bond Market News
LATAM Airlines Upgraded to BB+ by S&P
September 22, 2026
LATAM Airlines Group was upgraded by a notch to BB+ from BB by S&P. The upgrade reflects the company’s robust business model and competitive cost structure. LATAM Air absorbed an 80% YoY increase in all-in fuel prices, while passenger revenue rose 27.9% and revenue per available seat kilometer (RASK) increased 17.5% in 2Q2026. S&P projects RASK to grow 9-10% in 2026, supporting adjusted EBITDA of ~$4.3bn. LATAM Air’s diversified revenue base, combined with a competitive cost structure and strong cargo operations should support EBITDA margins of 25-28% through 2028. The company is expected to generate positive free operating cash flows of ~$1.3bn in 2026 and $1.9bn in 2027, with adjusted debt-to-EBITDA maintained at 1.5x-1.6x through 2028, according to S&P. Key risks include competitive pressures in Brazil, and the need for additional E2 aircraft capacity to translate into sustainable yields and healthy load factors.
Its 7.625% 2031s were higher by 0.1 points to 100.8, yielding 7.4%
– Vandit P
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