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       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

          Monday, November 11, 2024, Vol. 25, No. 226

                           Headlines



A R G E N T I N A

PROVINCE OF CHUBUT: Fitch Affirms 'CC' LongTerm IDRs
PROVINCE OF NEUQUEN: Fitch Affirms ‘CC’ LongTerm IDRs


P A R A G U A Y

AGENCIA FINANCIERA: S&P Raises ICR to 'BB+', Outlook Stable

                           - - - - -


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A R G E N T I N A
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PROVINCE OF CHUBUT: Fitch Affirms 'CC' LongTerm IDRs
----------------------------------------------------
Fitch Ratings has affirmed the Province of Chubut's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'CC'.
Chubut's Standalone Credit Profile (SCP) is assessed at 'cc'. Fitch
has also affirmed Chubut's senior secured step-up notes of USD650
million due in 2030 (Bocade) at 'CC'.

Chubut's SCP of 'cc' reflects Fitch's expectations that actual debt
service coverage ratio (ADSCR) will remain below 1x in the next 12
months in Fitch's scenario horizon. The province faces maturity
concentration of its Bocade bonds in 2025-2027. For 2025, the first
quarterly instalment of approximately USD32 million capital and
interest payments is due by January 2025. The bonds count with
pledged royalties' revenues as collateral. Chubut's rating
considers the current context of macroeconomic vulnerability,
history of high volatility in operating margins, and a high share
of dollar denominated debt. Fitch relied on its rating definitions
to position the province's SCP and ratings.

KEY RATING DRIVERS

Risk Profile: 'Vulnerable'

The assessment reflects Fitch's view that there is a very high risk
of the issuer's ability to cover debt service with the operating
balance weakening unexpectedly over 2024-2026 due to lower revenue,
higher expenditures or an unexpected rise in liabilities or debt
service requirements.

Revenue Robustness: 'Weaker'

The 'Weaker' assessment of this KRF considers the province's local
revenue dependency on the hydrocarbon sector — a highly cyclical
economic activity — and the country's complex and imbalanced
fiscal framework for LRGs.

Chubut's revenue structure highlights a moderate fiscal autonomy,
reliance on cyclical oil and gas royalties, and transfers from a
'CC' sovereign. The more balanced revenue composition relative to
Argentine peers is undermined by the dependency on commodity sales,
which is highly cyclical.

Transfers represented on average of 42.3% operating revenues
between 2021-2023. Interim data for June 2024 indicates the ratio
decreased to 38.7% in the first semester, reflecting the overall
performance of national GDP as well as the discontinuation of some
discretionary transfers by the federal government. The overall
effect over operating revenues has been offset by the performance
of local tax collections and royalties.

Chubut is heavily dependent on the oil sector, with royalties
representing 25.3% of operating revenues on average in 2021-2023.
The favorable performance of royalties in the last year was driven
by the change in Argentina's pricing approach to oil, which has
become more aligned with international markets. Nonetheless, the
positive trend should not continue. After a sizable devaluation of
the peso in the beginning of Milei's mandate, the government has
adopted a crawling peg, with the peso depreciating at a lower rate
when compared to inflation. Therefore, royalty's growth should be
below inflation in 2024-2025, considering the real appreciation of
the peso and a small but gradual reduction in production volumes.

Revenue Adjustability: 'Weaker'

Fitch perceives local revenue adjustability for Argentine LRGs as
low and challenged by the country's large and distortive tax
burden, and by high inflation that affects affordability.

The negative macroeconomic environment further limits the
subnational's ability to increase tariffs and expand the tax base
to boost local operating revenues. Structurally high inflation also
constantly erodes real-term revenue growth and affects
affordability. In its rating case, Fitch expects operating revenues
to increase below the average inflation rate for 2023-2025.

Expenditure Sustainability: 'Weaker'

Argentine provinces have high expenditure responsibilities,
including healthcare, education, security, social security and
inter-urban transportation. The country's fiscal regime is
structurally imbalanced due to revenue-expenditure
decentralization, which leads to Fitch's 'Weaker' assessment of its
expenditure sustainability.

Chubut's budgetary performance has been volatile across the years
due to its commodity-based economy and high inflationary
environment. Operating margins averaged 10% between 2019 and 2023,
but ranged from a minimum of -5.5% in 2020 to a maximum of 20.4% in
2021. The high inflationary environment leads to constant pressures
to adjust wages, its main expenditure item. Still, as of 2023, OPEX
was 12.3% below the level recorded in 2017. The province has
committed to wage adjustments in 2024 that should lead to real
growth of OPEX in 2024. Fitch estimates the province's operating
balance will average 8.6% for 2024-2026.

Expenditure Adjustability: 'Weaker'

Argentine subnational' infrastructure needs and expenditure
responsibilities are high, with low leeway or flexibility to cut
expenses. National capex is low and insufficient to translate capex
burdens to LRGs. Fitch views the flexibility to cut expenses for
the province as weak relative to international peers.

Chubut's capex-to-total expenditure ratio averaged at 10.2% for
2019-2023. As of 2023, staff costs corresponded with 61.6% of total
expenditures, translating into high expenditure rigidity for the
province. This further limits the province's ability to perform
expenditure cuts. Chubut reports one of the highest ratios of
personal expenditures to total expenditures among Argentine
provinces.

Liabilities & Liquidity Robustness: 'Weaker'

There is a weak national framework for debt and liquidity
management and an underdeveloped local financial market, which led
Argentine LRGs to issue debt in foreign currency, causing a
structural reliance on external markets for financing.

The Province of Chubut's direct debt totalled ARS649 billion at YE
2023. Approximately 64% of debt is denominated in foreign currency.
Exposure to FX risk and capital controls are a significant
fragility of Argentine LRGs.

There is significant maturity concentration in 2024-2028. The DDE
of Chubut's senior secured bonds created some fiscal space for
2021-2022, but starting in 2023 capital repayments became more
sizable. The province will perform capital payments of USD 100
million annually for its foreign bonds between 2024-2027 and USD 78
million in 2028. These bonds count with pledged royalty revenues as
collateral. The province made capital payments of USD100 million in
2024 with the last quarterly instalment as of October 26, 2024.
There were also extraordinary amortizations of USD3 million
triggered by high coverage ratios, per the bond agreement.

Liabilities & 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. National capital controls are another risk
captured 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 their own unrestricted cash for liquidity.

Financial Profile: 'a category'

The Province of Chubut's Financial Profile assessment improved to
'a' from 'bb' in the previous annual review due to a significant
improvement in operating margins. The primary metric of the
financial profile, the payback ratio, is projected at 8.0x for 2025
under Fitch's rating case, aligned with the 'aa' category. The
secondary metric, the actual debt service coverage ratio (ADSCR),
is projected at 0.9x in 2025, aligned with the 'b' category. Fitch
applies an override to the overall financial profile given the
significantly weaker coverage ratio. Fiscal debt burden is
projected at 61.9% in 2025.

Operating margins strengthened to 19.2% in 2023 from 13.7% in 2022
on the back of increased revenues from royalties and tax
collection. The performance of royalties was driven by the change
in Argentina's pricing approach to oil, which is now more aligned
with international markets. In terms of expenditure, OPEX has grown
at 116.2% in 2023, below the average annual inflation of 127.9%.

Fitch expects that pressures to adjust salaries to the lagged
effects of inflation and the less benign revenue environment will
bring operating margins to 7.8% by 2025. After a sizable
devaluation of the Peso in the beginning of Milei's mandate, the
government has adopted a crawling peg, with the peso depreciating
at a lower rate when compared to inflation. Therefore, royalty
growth should be below inflation in 2024-2025, considering the real
appreciation of the peso and a small but gradual reduction in
production volumes.

Derivation Summary

The 'cc' SCP results from the application of the Lower Speculative
Grade rationale in 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 indicates that Chubut has a very high level of credit risk
and a default of some kind appears probable, particularly if there
are indications that a default or a distressed debt exchange is
likely to occur in the next 12 months.

The SCP considers comparison with peers, including the Provinces of
Neuquen and Salta. Fitch does not apply any asymmetric risk or
extraordinary support from the upper-tier government. Fitch
classifies the Province of Chubut as a type B LRG, as it covers
debt service from cash flow annually.

Debt Ratings

Province of Chubut's USD650 million step-up senior secured notes
due in 2030 (Bocade notes) are rated 'CC'. The bonds are rated at
the same level as the province's IDRs and are secured by pledged
royalty revenues.

Key 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: 'a'

Asymmetric Risk: 'N/A'

Support (Budget Loans): 'N/A'

Support (Ad Hoc): 'N/A'

Rating Cap (LT IDR): 'N/A'

Rating Cap (LT LC IDR) 'N/A'

Rating Floor: 'N/A'

Quantitative assumptions - Issuer Specific

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 2019-2023 figures and 2024-2026 projected
ratios. The key assumptions for the scenario include the
following:

- Operating revenue average growth of 117.9% for 2024-2026;
assuming growth below average inflation towards the medium term.

- Operating expenditure average growth of 132.2% for 2024-2026;
assuming growth above average inflation towards the medium term.

- Average capital expenditure/total expenditure levels of around
2.2%; below the 2019-2023 historical average of 10.2% due to the
financing needs that the entity faces to sustain higher levels of
investment.

- Cost of debt considers non-cash debt movements due to currency
depreciation with an average exchange rate of ARS1,005.4 per U.S.
dollar for 2024 (year end 1,400), ARS1,873.1 for 2025 (year end
2,213.5), and ARS2,674.7 for 2026 (year end 2,932.6);

- Consumer price inflation (annual average percentage change) of
256.4% for 2024, 117.3% for 2025, 49.8% for 2026.

Quantitative assumptions - Sovereign Related

Figures as per Fitch's sovereign actual for 2023 and forecast for
2026, respectively. (No weights and changes since the last review
were included as none of these assumptions were material to the
rating action.)

Issuer Profile

The Province of Chubut is located in the Patagonian region of
Argentina, where socioeconomic indicators tend to be better than
the national average. The province is in a strategic geographic
position and is the country's largest oil-producing province. The
total population is approximately 590,000 or 1.3% of the national
population.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade

- Signs of deeper liquidity stress that could compromise debt
repayment capacity in the short term include evidence of increased
refinancing risk in both local and foreign currency debt, as well
as any regulatory restrictions on access to foreign exchange (FX).

- If there are indications of any credit event that reflects a
near-default situation, including a Distressed Debt Exchange (DDE)
under Fitch's rating definitions.

Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade

- A reduction in the perceived refinancing risk, combined with an
improvement in the liquidity position and debt service coverage
above 1.0x in Fitch's rating case.

ESG Considerations

Chubut, Province of has an ESG Relevance Score of '4' for Rule of
Law, Institutional & Regulatory Quality, Control of Corruption due
to the negative effect the weak regulatory framework and national
policies of the sovereign have over the province, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.

Chubut, Province of has an ESG Relevance Score of '4' for
Biodiversity and Natural Resource Management due to the province's
significant economic and financial exposure to the hydrocarbon
sector, which has a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.

Chubut, Province of has an ESG Relevance Score of '4' for Creditor
Rights. Chubut concluded its DDE in December 2020 and complied with
negotiated terms throughout 2021-2024. The DDE continues to weigh
on its credit profile and is relevant to the rating, which has a
negative impact on the credit profile, and is relevant to the
ratings 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.

   Entity/Debt                 Rating          Prior
   -----------                 ------          -----
Chubut, Province of   LT IDR    CC  Affirmed   CC
                      LC LT IDR CC  Affirmed   CC

   senior secured     LT        CC  Affirmed   CC


PROVINCE OF NEUQUEN: Fitch Affirms ‘CC’ LongTerm IDRs
---------------------------------------------------------
Fitch Ratings has affirmed the Province of Neuquen's (PN) Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'CC'.
In addition, Fitch has assessed the PN's Standalone Credit Profile
(SCP) at 'cc'. Fitch relied on its rating definitions to position
the province's ratings and SCP.

Fitch has also affirmed at 'CC' the province's issue ratings, which
include TICADE senior secured step-up notes for an original
USD348.69 million due May 12, 2030 and an outstanding of USD233.61
million as of June 30, 2024, and TIDENEU senior unsecured step-up
notes for an original USD366 million and a current outstanding of
USD348.15 million due April 27, 2030. The bonds are rated at the
same level as the province's IDRs.

The rating affirmation considers Argentina's macroeconomic
vulnerabilities and a deteriorating operating environment that
result in debt refinancing risks remaining high, which is reflected
in an actual debt service coverage ratio (ADSCR) expected to remain
below 1x in the next 12 months and in Fitch's rating case 2024-2026
horizon. The PN'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 Salta.
Fitch does not apply any asymmetric risk or extraordinary support
from upper-tier government.

As of June 2024, a very strong increase in budgetary results
(operating and financial) has been observed, driven by a 3%
increase in operating income (boosted by an 22.5% real improvement
in royalties) and a strong containment of opex (-11.6% in real
terms), stemming from a 9.4% real containment in personnel
expenditure. This results in an operating and financial outcome of
around 21.6% and 16.7%, respectively, up from 8.6% and -3.7%,
respectively, in the same period of 2023.

Key Rating Drivers

Risk Profile: 'Vulnerable'

Fitch evaluated the PN's Risk Profile as 'Vulnerable,' reflecting
the combination of six Key Risk Factors (KRFs) assessed as
'Weaker'. The 'Vulnerable' assessment for all Argentine local and
regional governments (LRGs) weighs the sovereign IDR below the B
category, rather than Argentina's implied operating environment of
'bb'. This assessment reflects Fitch's view of a very high risk
that the issuer may struggle to cover debt service if the operating
balance weakens unexpectedly due to lower revenue, higher
expenditure, or an unexpected rise in liabilities or debt-service
requirements.

Revenue Robustness: 'Weaker'

The 'Weaker' assessment of this KRF considers the province's local
revenue dependency on the hydrocarbon sector (highly cyclical
economic activity) and the country's complex and imbalanced fiscal
framework for LRGs.

The PN has a lower reliance on federal transfers stemming from the
co-participation regime, with transfers approximating 21.9% of
total revenue at YE 2023 from a 'CC' sovereign counterparty. On the
other hand, local tax collection accounted for 27% of total
revenue, and royalties approximately 45%. Federal transfers
decreased by 1.6% due to the economic recession in 2023.

As of June 2024, automatic revenue-sharing registered a real
decrease of 11.8%. Both effects (real drop of 11.8% in federal
automatic revenue-sharing) and the virtual elimination of
discretionary transfers (-68.6% in real terms) are impacting the
province's operating income (+3% in real terms). The decline is
being offset by the robust dynamics of the province's own tax
revenue (+8.7% in real terms) within the context of satisfactory
economic activity driven by its concentration in hydrocarbons, a
certain increase in IIBB tax rates on financial activities, and a
real increase in royalties (+22.5% in real terms due to a price
recomposition and a strong increase in activity).

Revenue Adjustability: 'Weaker'

For Argentine LRGs, local revenue adjustability is perceived as
low, and challenged by the country's large and distortive tax
burden and high inflation that impacts affordability. The negative
macroeconomic environment further limits the subnational's ability
to increase tax rates and expand tax bases to boost local operating
revenue.

PN has increased its gross income tax rates on financial
activities, construction and telecommunications in 2024 (within the
framework allowed by the Fiscal Pact). As a consequence, as of June
2024, its own taxes have increased 8.7% in real terms.

Hydrocarbon royalties represented 38% of the PN's YE 2023 operating
revenue. Commodity-based revenue adds cyclicality and volatility to
the PN's finances because local taxes are also highly concentrated
in the sector. This revenue is influenced by exogenous
determinants, such as local and external market conditions and
national regulation. An increase in production and productivity
during 2023 led to an approximately 18.5% real increase (24.9% real
increase in 2022) in hydrocarbon royalty revenue. As of June 2024,
the real increase in royalties is 22.5%.

Expenditure Sustainability: 'Weaker'

Argentine LRGs have high expenditures during structurally high
inflation. The Argentine fiscal regime's revenue expenditure
decentralization is structurally imbalanced, which led to Fitch's
'Weaker' assessment of its expenditure sustainability. Spending
during the last five years was influenced by high inflation and
high spending responsibilities. The PN's budgetary performance is
volatile due to its commodity-based economy and track record of
operating expenditures (opex) growing close to and above average
inflation in most years.

The entity's operating balance slightly weakened from 11.6% in 2022
to 10.4% in 2023 due to a real increase in operating income of
7.2%, which was lower than the 8.7% real increase in opex, in a
context of high inflation and provincial and national elections.
The PN shows the highest real wage recovery compared to other LRGs
in Argentina, with a recovery of 22 real points in the period
2017-2023, including an increase of 9.1% in 2023. Fitch estimates
the province's operating balance will average 6.7% for 2024-2026
(10% average from 2019-2023).

The PN is among the provinces that did not transfer its pension
scheme to the nation. Considering the weight of this additional
burden, the operating balance has compressed by an average of 4.2%
over the last five years. However, since 2024, employer and
personal contributions have been increased, resulting in a balanced
social security fund as of June 2024. Fitch will monitor whether
this situation remains balanced and alleviates pressure on
provincial finances.

Expenditure Adjustability: 'Weaker'

For Argentine subnationals, infrastructure needs and expenditure
responsibilities are deemed as high, with leeway or flexibility to
cut expenses viewed as low. National capex is low and insufficient
in translating capex burdens to LRGs. Fitch views the flexibility
to cut expenses for the province as weak relative to international
peers.

The PN's percentage of staff expenses in its opex structure was
high at 66.1% in 2023, with opex totaling approximately 87.4% of
total expenditure. A low average of 9.8% of total expenditure
corresponded to capex in 2019-2023. High infrastructure needs mean
there is not much leeway to adjust capex as infrastructure works
are relevant for hydrocarbon sector development.

In the rating scenario, even assuming a capex of 5% of total
spending (below the 8.9% recorded in 2020 during the pandemic), the
PN would face substantial liquidity pressions and would therefore
require additional financing. In this context, the province has
enacted special legislation (Law 3426 and 3434) authorizing
borrowing up to USD550 million. Of this amount, USD50 million would
be allocated for penitentiary projects, USD350 million for general
public works, and USD150 million for debt refinancing. The PN's
ability to execute capex will depend on securing the necessary
financing.

Liabilities and Liquidity Robustness: 'Weaker'

Unhedged foreign currency debt exposure is an important weakness
considered, along with the weak national framework for debt and
liquidity and underdeveloped local market. The assessment also
considers a 'CC' sovereign that restructured its debt during 2020,
thus curtailing external market access to LRGs. However,
hydrocarbon royalties (linked to the exchange rate) represented 38%
of the PN's YE 2023 operating revenue.

Debt relief from the PN's 2020 distressed debt exchanges (DDEs)
resulted in improved ADSCRs above 1.0x from YE 2021 to YE 2023.
However, short- to medium-term liquidity and refinancing risks
remain due to higher debt amortization and interest step-ups in
2023 and rising in 2024 on, which will pressure debt coverage. Due
to expected lower operating balances and FX pressures, Fitch
projects the ADSCR to average approximately 0.9x in the 2024-2026
period. This signals refinancing risks and influences the
qualitative positioning of the PN's rating.

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 established. The current context of national capital
controls is another risk captured in the liquidity flexibility
assessment, as the imposition of exchange regulations could
ultimately affect LRGs' ability to fulfil their financial
obligations.

Although the entity continues to show ADSCRs below 1x in the
projected period, strong liquidity pressures are observed in the
rating scenario due to the high concentration of debt services in
the 2025-2026 period. The liquidity position turns negative, even
when considering historically low levels of capex. If capex remains
at historical levels, the entity would face significant liquidity
pressures.

Financial Profile — 'aa' Category:

The score reflects a 'aaa' primary payback ratio of 2.7x for 2025
under Fitch's rating case. Also, the financial profile factors in
an override from the 'b' actual debt service coverage ratio (ADSCR)
of 0.8x in 2025. In 2025, the province will have debt service
payments of USD326 million (considering debt in ARS and USD at
Fitch's average exchange rate). The projected ADSCR for 2024-2026
has an average of 0.9x, aligned with the province's 2019-2023
average of 1.1x.

Derivation Summary

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
indicates that Neuquen has a very high level of credit risk and a
default of some kind appears probable, particularly if there are
indications that a default or a distressed debt exchange is likely
to occur in the next 12 months.

The SCP considers comparison with peers, including the Provinces of
Chubut and Salta. Fitch does not apply any asymmetric risk or
extraordinary support from the upper-tier government. Fitch
classifies the PN as a type B LRG, as it covers debt service from
cash flow annually.

Key Assumptions

Risk Profile: 'Vulnerable, Unchanged with Medium weight'

Revenue Robustness: 'Weaker, Unchanged with Medium weight'

Revenue Adjustability: 'Weaker, Unchanged with Medium weight'

Expenditure Sustainability: 'Weaker, Unchanged with Medium weight'

Expenditure Adjustability: 'Weaker, Unchanged with Medium weight'

Liabilities and Liquidity Robustness: 'Weaker, Unchanged with
Medium weight'

Liabilities and Liquidity Flexibility: 'Weaker, Unchanged with
Medium weight'

Financial Profile: 'aa, Unchanged with Medium weight'

Asymmetric Risk: 'N/A, Unchanged with Medium weight'

Support (Budget Loans): 'N/A, Unchanged with Medium weight'

Support (Ad Hoc): 'N/A, Unchanged with Medium weight'

Rating Cap (LT IDR): 'N/A, Unchanged with Medium weight'

Rating Cap (LT LC IDR) 'N/A, Unchanged with Medium weight'

Rating Floor: 'N/A, Unchanged with Medium weight'

Quantitative Assumptions — Issuer Specific

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 2019-2023 figures and 2024-2026 projected
ratios. The key assumptions for the scenario include:

- Operating revenue average growth of 123.3% for 2024-2026,
assuming growth below average inflation toward the medium term;

- Operating expenditure average growth of 127.6% for 2024-2026,
assuming growth above average inflation toward the medium term;

- Operating margin average of 6.7% for 2024-2026, incorporating tax
collection growth below inflation against inflation-driven
operating expenditure;

- Average capex/total expenditure of around 5%, below the 2019-2023
historical average of 9.8%;

- Cost of debt considers non-cash debt movements due to currency
depreciation with an average exchange rate of ARS1,005 per U.S.
dollar for 2024, ARS1,873 for 2025 and ARS2,675 for 2026;

- Consumer price inflation (annual average percentage change) of
256.4% for 2024, 112.6% for 2025 and 47.3% for 2026.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade

- Signs of deeper liquidity stress that could compromise debt
repayment capacity in the short term include evidence of increased
refinancing risk in both local and foreign currency debt, as well
as any regulatory restrictions on access to foreign exchange (FX);

- If there are indications of any credit event that reflects a
near-default situation, including a Distressed Debt Exchange (DDE)
under Fitch's rating definitions.

Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade

- A reduction in the perceived refinancing risk, combined with an
improvement in the liquidity position and debt service coverage
above 1.0x in Fitch's rating case.

Liquidity and Debt Structure

Debt Structure: Direct debt at YE 2023 totaled ARS948.6 billion,
mostly denominated in foreign currency, and total debt grew 352%
relative to 2022 mainly due to currency depreciation (352% from ARS
183.25 per USD to ARS 828.25).

The PN's Títulos de Cancelación de Deuda Publica (TICADE) notes
are secured with hydrocarbon royalties, which are linked to the
U.S. dollar and payable monthly in Argentine pesos. TICADE's
coverage has increased from an average of 2.4x in 2021 and 3.2x in
2022 to 3.7x in 2023 and 3.8x in the progress of 2024.

Liquidity: In December 2023, the province totaled liquidity
equivalent to ARS 153.664 billion (including a countercyclical fund
of ARS 42.088 billion). The province created the stabilization and
development fund in 2021, according to Law No. 3269, which became
effective on Jan. 1, 2022. The countercyclical fund is being used
to pay debt services (principal and interest).

As of June 30, 2024, the province's liquidity amounts to 257.448
billion, plus the countercyclical fund of ARS 59.518 billion
(totaling 316.966 billion). This fund is supplemented by the
surplus financial result for the first half of the year (before
capital debt payment) amounting to ARS 263.942 billion. However,
Fitch will monitor its sustainability in the second half of 2024.
This liquidity is a consequence of the exceptionally low level of
investment as a percentage of total expenditure in the first half
of 2024, which stood at 5.3% compared to a historical average of
9.8% over the past five years.

Issuer Profile

The PN is located in southwest Argentina. The province's economy is
highly concentrated in the hydrocarbon sector. As of June 2024, the
PN remains the country's main crude oil and gas producer with 53%
and 64%, respectively, of the national total.

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.

MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS

Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.

ESG Considerations

The PN 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 on the province's governance, which negatively
affects the credit profile and is relevant to the rating in
conjunction with other factors.

The PN has an ESG Relevance Score of '4' for Biodiversity and
Natural Resource Management due to the province's significant
economic and financial concentration in the volatile hydrocarbon
sector, which negatively influences the credit profile and is
relevant to the rating in conjunction with other factors.

The PN has an ESG Relevance Score of '4' for Creditor Rights as
despite the entity´s improved willingness to service and repay its
debt obligations, the 2020 DDE continues to weigh on its credit
profile and debt coverage is expected to remain pressured,
therefore, the issue of Creditor Rights remains 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.

   Entity/Debt                  Rating          Prior
   -----------                  ------          -----
Neuquen, Province of   LT IDR    CC  Affirmed   CC
                       LC LT IDR CC  Affirmed   CC

   senior unsecured    LT        CC  Affirmed   CC

   senior secured      LT        CC  Affirmed   CC




===============
P A R A G U A Y
===============

AGENCIA FINANCIERA: S&P Raises ICR to 'BB+', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings raised its long-term issuer credit rating on
Agencia Financiera de Desarrollo to 'BB+' from 'BB'. The outlook is
stable.

Paraguay's BICRA

The average return on equity (ROE) for Paraguayan banks for the
past 10 years was roughly 18%, with a low of about 13% in 2020,
amid the COVID-19 pandemic, and a high close to 22% in 2014. This
elevated ROE even in times of economic malaise, weather shocks, and
higher inflation demonstrates the resilience of the Paraguayan
financial system's profitability. Banks' capitalization has also
remained solid, while lending has grown moderately at 11% on
average over the past 10 years, which S&P considers signs of
adequate risk appetite. During the same period, annual losses have
averaged 2%, with a peak of 2.3% in 2016, and the stock of
restructured loans has been significant but manageable.

The midyear ROE was 18.6%, and S&P predicts ROE will end the year
at 18%-19%, the highest since 2019. Margins and cost of risk have
improved amid sound origination, boosting profits. Cheap funding
for larger retail banks, with demand deposits representing about
one-third of funding sources in the system, has continued to
benefit margins. Loan loss expenses fell to about 1.7% of total
loans in the first half of 2024, from 2.2% in full-year 2022.

S&P said, "As a result, we revised upward our anchor (the starting
point for assigning an issuer credit rating) for banks operating
primarily in Paraguay to 'bb' from 'bb-'. The trend for industry
risk is stable, reflecting our view that banks will maintain sound
profitability though challenges persist. For instance, although
regulation has been improving, its alignment with international
standards remains in process. Moreover, we believe the prevalence
of cooperatives and credit companies limits the supervisory scope
of the central bank of Paraguay and introduces market distortions.
We view Paraguay's economic risk trend as stable.

"Paraguay's economic performance is still dependent on weather
conditions, although less so than in the past. That said, we assume
drought from La Niña will be moderate and the impact on
agricultural exports should be limited in 2025. A history of
macroeconomic stability, low taxation, and excess supply of
renewable energy are attracting investments and should sustain
gradual economic diversification. We estimate GDP per capita at
US$7,200 this year and US$8,200 by 2027. The most recent census
showed a drop in population, resulting in higher GDP per capita.
While declining fertility and the lower-than-expected population,
due to emigration, will drag on long-term growth and fiscal
performance, we also believe the Paraguayan economy has improved.

"In our view, the banking system faces high credit risk because of
its considerable exposure to dollar-denominated loans and to
cyclical sectors such as agriculture and cattle. The share of
dollar-denominated loans has generally remained 45%-50%, close to
the share of dollar-denominated deposits. Additionally, while
banks' overall loan mix has been diversifying in Paraguay, loans to
cyclical sectors still represented about 28% of total loans as of
August 2024."

Agencia Financiera de Desarrollo

S&P said, "Our ratings continue to reflect AFD's role as the only
second-floor state-owned bank in Paraguay--it's a key loan grantor
to other financial institutions in the country. AFD also has robust
capitalization ratios, which we view as a relative strength, and
benefits from the government's ongoing support, with most of its
financial obligations having the explicit guarantee of the
government.

"As a result, we expect the risk-adjusted capital (RAC) ratio
should improve to 20%-22% by year-end 2024, against our previous
forecast of 15%-16%. Nonetheless, AFD's capital and earnings were
already at our highest assessment, such that the RAC improvement
did not affect the rating."



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