Better credit conditions to create infrastructure in Latin America, predicts Moody’s

The reduction in interest rates will favor the access of the Latin American infrastructure sector to the debt markets and will alleviate the financial pressure of the participants, highlights a report from the rating agency Moody’s, which adds that the better credit conditions will maintain the momentum for companies and project financing in the remainder of 2026.

“Credit conditions for rated infrastructure issuers in Latin America will remain broadly stable at least through early 2027, supporting refinancing and investment at more manageable costs,” he said.

However, he admitted that risk sources related to political changes, digital disruption and climate change are emerging.

He indicated that more than three quarters of almost 100 qualified infrastructure companies in Latin America have a stable outlook.

Meanwhile, most of the companies with a negative rating outlook are based in countries where government bonds also faced rating pressures, “in particular, the governments of Mexico and Panama. The outlook of those companies aligns with those of their respective sovereign sponsors due to strong financial and operational ties.”

However, the financial institution considered that, beyond the political changes, “the government of Mexico is implementing regulatory changes that would benefit private investment in the electricity sector.”

AI-based digital capacity grows

The rating agency highlighted that Latin America is entering a new phase of digital infrastructure growth based on artificial intelligence (AI), with increasing competition, rapid expansion of capacity and strong alignment between technology investment and national development priorities. “The initial phase of the investment cycle suggests new large-scale plans, which will accelerate during 2027-2032 with a growing pipeline of major projects.”

He said countries in the region are now competing to attract AI inference and cloud infrastructure through tax incentives, benefits for renewable energy generation and accelerated permitting for hyperscaler campuses.

He detailed that in Argentina, hyperscale data center projects have been announced, with the 500 megawatt (MW) Stargate Patagonia campus by OpenAI, while in Brazil there is a 300 MW project by the Chinese company ByteDance and Rio AI City, of 3.2 gigawatts.

Meanwhile, Mexico and Chile have Amazon Web Services projects.

“These new technologies will generate multiple interconnected benefits in Latin America’s credit landscape and will create a virtuous circle in which innovation, private credit growth and energy demand mutually support each other,” he noted.