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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

          Thursday, December 12, 2024, Vol. 25, No. 249

                           Headlines



A N T I G U A   A N D   B A R B U D A

LIAT: To Issue Bond for Severance Payments to Former Employees


A R G E N T I N A

PAN AMERICAN: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable


B R A Z I L

NATURA & CO: Avon Gets Green Light to Sell for $125-Mil.


C O L O M B I A

COLOMBIA: Corruption Scandal Adds to Pressure on Finance Minister


D O M I N I C A N   R E P U B L I C

KINGTOM ALUMINIO: US Customs to Seize Aluminum Made w/ Forced Labor


E L   S A L V A D O R

EL SALVADOR: IDB OKs $190M Loans to Drive Digital Transformation


J A M A I C A

JAMAICA: Gov't Spent Less Than Budgeted for April to October
JAMAICA: NIR Declined in November, BOJ Says


P E R U

PERU: IDB OKs $300 Million Loan to Expand Access to Social Housing
VOLCAN COMPANIA: Moody's Confirms 'Caa1' CFR, Outlook Positive

                           - - - - -


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A N T I G U A   A N D   B A R B U D A
=====================================

LIAT: To Issue Bond for Severance Payments to Former Employees
--------------------------------------------------------------
RJR News reports that Prime Minister Gaston Browne says Antigua &
Barbuda will be issuing a bond to cover the estimated EC$16.7
million in severance payments to former employees of the bankrupt
LIAT 1974 Limited.

Mr Browne who was presenting a EC$1.43 billion national budget to
Parliament, said the government is determined to address the
concerns of former LIAT 1974 workers, especially the more than 400
employees who were stationed in Antigua, according to RJR News.

He said as a demonstration of this commitment, the government will
make good on its promise to cover its share of the severance owed
to these workers, based on Antigua and Barbuda's 32 per cent
shareholding in LIAT 1974 Ltd, the report notes.

                         About LIAT

LIAT Ltd., formerly known as Leeward Islands Air Transport
or LIAT, is an airline headquartered on the grounds of V. C. Bird
International Airport in Antigua.  It operates high-frequency
inter-island scheduled services serving 15 destinations in the
Caribbean.  The airline's main base is VC Bird International
Airport, Antigua and Barbuda, with bases at Grantley Adams
International Airport, Barbados and Piarco International Airport,
Trinidad and Tobago.

The airline is owned by seven Caribbean governments, with three
being the major shareholders: Barbados, Antigua & Barbuda and St.
Vincent and the Grenadines along with Dominica(94.7 %); other
Caribbean governments, private shareholders and employees (5.3%).

In the last few years, LIAT has been challenged with financial
difficulties, often needing additional funding as the airline
dealt with the high cost of operations.  In November 2016, the
Barbados government defended LIAT's operations, even as opposition
legislators called for a cessation of the business.  In early
2015, LIAT offered early retirement packages to employees in
efforts to downsize.  In 2014, LIAT knew it had to deal with
unprofitable routes to make operations viable.  In the third
quarter of 2013, the airline's top management was shaken, with
news Chief Executive Officer Captain Ian Brunton's sudden
resignation.



=================
A R G E N T I N A
=================

PAN AMERICAN: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed Pan American Energy S.L.'s (PAE)
Long-Term Foreign Currency Issuer Default Rating (IDR) and
Long-Term Local Currency IDR at 'BB-'. The Rating Outlook is
Stable. Fitch has also affirmed the ratings for the senior secured
and unsecured notes issued by Pan American Energy, S.L., Argentine
Branch, which are guaranteed by Pan American Energy S.L. at 'BB-'.

PAE's 'BB-' ratings reflect its stable production track record,
large reserve base, and low leverage. The applicable Country
Ceiling is Argentina's 'B-' rating.

The Foreign Currency IDR is three-notches above the Country Ceiling
given that cash held abroad by the company, and cash flows from its
Mexican and Bolivian operations, adequately cover the next 24
months of debt service by a ratio in excess of 1.5x. Fitch
estimates EBITDA from Mexico and Bolivia represent 8% and 3% of
total EBITDA, respectively.

Key Rating Drivers

Rating Above the Country Ceiling: PAE's cash flow generation is
concentrated in Argentina (CCC). The Long-Term Foreign Currency IDR
is not constrained by Argentina's Country Ceiling (B-) given the
company's ability to cover hard currency debt service with export
revenue and cash held abroad, while maintaining a foreign currency
debt service coverage ratio above the threshold of 1.5x for at
least three years. This enables an uplift of up to three notches
above the Country Ceiling, in accordance with Fitch's "Corporate
Rating Criteria".

Integrated Business Model: PAE's energy business model in Argentina
gives the company flexibility to optimize profitability. It
operates the country's largest privately-owned oil and gas (O&G)
business, with 15% market share in oil production and 14% in gas
production, and is the third largest refiner with 14% market share.
PAE has a strong and stable production profile consistent with a
higher rating category. Fitch's base case assumes production will
average 221kboe/d over the rating horizon. PAE reported 1,647MMboe
in 1P reserves as of FY2023, consistent with the 'BBB' rating
category.

Strong Financial Profile: Fitch projects EBITDA leverage will
remain below 2.0x over the rating horizon, with gross debt at or
below USD3.0 billion. On a boe basis, Fitch estimates debt to 1P of
close to $2/boe in FY 2024. PAE's strong financial flexibility
allows it to mitigate the risks associated with its high-risk
operating environment. Fitch forecasts negative free cash flow
(FCF) between 2025 and 2026, as the company deploys an aggregate
capex plan close to USD3.4 billion.

Strong Ownership: PAE is rated on a standalone basis. Per Fitch's
parent-subsidiary criteria, it views the legal, strategic and
operational incentive from its shareholders as low. The company's
primary shareholders are a 50/50 strategic alliance between BP plc
(A+/Stable) and BC Energy Investments Corp. (BC Energy). BC Energy
is also a 50/50 joint venture between Bridas Energy Holdings Ltd.
and CNOOC International Ltd, a subsidiary of CNOOC Limited
(A+/Negative). However, PAE's ratings are not affected by its
shareholders ratings. The company benefits from its industry and
international expertise and relationships with global creditors.

Derivation Summary

PAE's Foreign Currency IDR remains constrained by the Argentine
Operating Environment (OE) of 'b'. However, its integrated business
profile, with a medium production size of 222kboed and strong 1P
reserve life of close to 19 years, compares favorably to other 'BB'
rated oil and gas E&P producers. These peers include Murphy Oil
Corporation (BB+/Positive) with 188kboed and YPF SA (CCC) with
514kboed. Further, PAE reported 1,647 million boe of 1P reserves at
the end of 2023 equating to a reserve life of 19.4 years, higher
than Murphy Oil's at 10.5 years.

Fitch estimates PAE's 2024 EBITDA gross leverage to be close to
2.0x, higher than Murphy Oil of 0.6x. On debt to 1P reserve basis,
Fitch PAE's debt as of 2023 to 1P reserves at USD1.40boe lower than
Murphy Oil at USD1.84boe and YPF at USD6.50boe.

PAE's operations are concentrated in Argentina, which is a limiting
factor for its rating as the operating environment poses higher
risks compared to its peers. This is the same case for Vista Energy
Argentina S.A.U (BB-/Stable), whose rating is also constrained by
the Argentine operating environment, and has a lower geographic
diversification than PAE.

Key Assumptions

- Fitch's price deck is applied at USD80bbl in 2024, USD70bbl in
2025, USD65bbl in 2026 and 2027;

- A reserve replacement ratio of 102% per annum;

- Domestic gas price of USD3.7MMBTU over the rated horizon;

- Average gross production of 221kboe/d between 2024-2027;

- Production cost of $13boe between in 2024;

- Royalties of $7.0boe in 2024;

- SG&A of $6.0boe in 2024;

- Annual consolidated capex averaging of USD1,600 million per year
from 2024-2027;

- No dividend payments.

RATING SENSITIVITIES

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

- Downgrade of the Country Ceiling of Argentina;

- PAE's ratings could be negatively affected if hard-currency
liquidity is weakened by capital controls;

- Inability to renew hard-currency committed credit lines from
highly rated international banks.

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

- Cash flows from operations in Mexico adequately covering hard
currency gross interest expense by at least 2.5x for 12 months,
while maintaining hard currency debt service coverage ratio above
1.5x.

Liquidity and Debt Structure

Fitch believes PAE can comfortably service debt with cash on hand
and cash flows through the rating horizon in the event the company
faces a challenging financing environment due to the Argentina's
capital controls. PAE also has a strong track record of tapping
local and international markets and accessing capital at
competitive rate.

Issuer Profile

PAE is a leading integrated energy company with upstream and
downstream operations in Argentina; upstream operations in Bolivia
and Mexico; plus 587MW in renewables installed capacity. It is the
second largest O&G producer in Argentina and the largest exporter
of oil.

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

Pan American Energy, S.L. has an ESG Relevance Score of '4' for GHG
Emissions & Air Quality due to the growing importance of policies
designed to limit the greenhouse gas (GHG) emissions from the
production of oil and gas and potentially lessening demand, which
has a negative impact on the credit profile, and is relevant to the
rating[s] 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
   -----------                     ------           -----
Pan American  
Energy, S.L.              LT IDR    BB-  Affirmed   BB-
                          LC LT IDR BB-  Affirmed   BB-

Pan American Energy,
S.L., Argentine Branch

   senior unsecured       LT        BB-  Affirmed   BB-

   senior secured         LT        BB-  Affirmed   BB-



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B R A Z I L
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NATURA & CO: Avon Gets Green Light to Sell for $125-Mil.
--------------------------------------------------------
Alex Wittenberg of Law360 reports that a Delaware bankruptcy judge
announced his intent to approve a settlement between Avon Products
Inc. and its Brazilian parent company, Natura, paving the way for
the struggling cosmetics giant to be sold to Natura for $125
million.

               About Natura & Co Holding S.A.

Natura is one of the largest conglomerates in the global CF&T
segment, consisting of two iconic brands, Natura and Avon.
Company's founders control approximately 38% of shares, while
the remainder are listed on the Brazilian stock exchange.

As reported in the Troubled Company Reporter-Latin America on
April
5, 2024, Fitch Ratings has upgraded Natura &Co Holding S.A.
(Natura) and Natura Cosmeticos S.A.'s Long-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) to 'BB+' from 'BB' and
National Scale Rating to 'AAA(bra) from 'AA+(bra)'. Fitch has also
upgraded Natura & Co Luxembourg Holdings S.a.r.l's unsecured notes
to 'BB+' from 'BB'. In addition, Fitch has affirmed Avon Products,
Inc. and its unsecured notes at 'BB'. Rating Outlook is Stable.
In August 2024, Fitch affirmed its ratings.

On Aug. 13, 2024, S&P Global Ratings lowered its issuer credit
rating on Avon Products Inc. (API), a subsidiary of Natura & Co
Holding S.A, to 'D' from 'BB-'. At the same time, S&P lowered its
issue rating on API's debt to 'D' from 'BB-'.

               About AIO US and Avon Products

AIO US Inc., Avon Products Inc, and some of its affiliates are
manufacturers and marketers of beauty, fashion, and home products
with operations and customers across the globe.

AIO US and its affiliates sought relief under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 24-11836) on
Aug. 12, 2024. In the petition filed by Philip J. Gund as chief
restructuring officer, AIO US disclosed $1 billion to $10 billion
in assets and debt.

Richards, Layton & Finger, P.A. and Weil, Gotshal & Manges LLP are
counsel to the Debtors. Ankura Consulting Group LLC serves as
restructuring advisor to the Debtors. Rothschild & Co US Inc is
the Debtors' investment banker and financial advisor. Epiq
Corporate Restructuring LLC acts as claims and noticing agent to
the Debtors.



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C O L O M B I A
===============

COLOMBIA: Corruption Scandal Adds to Pressure on Finance Minister
-----------------------------------------------------------------
Bloomberg News reports that Colombia's finance chief has been hit
with fresh accusations in an alleged corruption scandal, adding to
complications for President Gustavo Petro just as the government
tries to navigate a deepening fiscal crisis.

Finance Minister Ricardo Bonilla, who has just a month to secure
approval for higher taxes meant to cover a 12 trillion peso ($2.7
billion) shortfall in next year's budget, is now facing significant
opposition in Congress, with lawmakers calling for his resignation,
according to the report.

Bonilla has denied any wrongdoing and the president has publicly
defended him, notes Bloomberg News. Lawmakers from the independent
Green Alliance and opposition Radical Change party have said
Bonilla should step aside from his government post to defend
himself. The president of Congress, meanwhile, argues Petro's
administration must improve its budget execution before pushing for
tax reform.

According to Bloomberg News, Petro, Colombia's first leftist
leader, has warned that the Andean nation risks defaulting on its
debt if Congress rejects the government's financing bill.

Concerns over fiscal stability have become paramount for creditors,
relates the report. In November, the finance ministry announced a
spending cut of 28.4 trillion pesos to comply with the fiscal rule,
after the government failed to meet its tax revenue targets.

As reported in the Troubled Company Reporter on Aug. 7, 2024, Fitch
Ratings has affirmed Colombia's Long-Term Foreign Currency Issuer
Default Rating (IDR) at 'BB+' with a Stable Rating Outlook.



===================================
D O M I N I C A N   R E P U B L I C
===================================

KINGTOM ALUMINIO: US Customs to Seize Aluminum Made w/ Forced Labor
-------------------------------------------------------------------
Dominican Today reports that U.S. Customs and Border Protection
issued a Finding against Kingtom Aluminio S.R.L., the first
Chinese-owned entity in the Dominican Republic, based on
information that reasonably indicates the use of forced labor in
violation of 19 U.S.C. Section 1307 in the production of that
merchandise.

Effective immediately, CBP personnel at all U.S. ports of entry
will seize aluminum extrusion and profile products manufactured by
Kingtom Aluminio S.R.L. Aluminum extrusions and profiles are used
widely to build transportation and construction products,
furniture, electronics, and more, according to Dominican Today.

CBP identified the following International Labour Organization
forced labor indicators during its investigation of Kingtom
Aluminio S.R.L.: abuse of vulnerability, intimidation and threats,
deception, withholding of wages, physical and sexual violence,
restriction of movement, and excessive overtime, the report notes.

"Trading in goods that were manufactured at the expense of the
health, safety, and freedom of another human being is completely
antithetical to American values and the American way of life," said
CBP Senior Official Performing the Duties of the Commissioner Troy
A. Miller, the report relays.

"With this action, we are sending a message to those entities that
continue to attempt to circumvent U.S. trade laws - your goods are
not welcome in the United States," said Executive Assistant
Commissioner of CBP Office of Trade, AnnMarie R. Highsmith, the
report discloses.

The Finding against Kingtom Aluminio S.R.L. is the latest action
CBP has taken to address forced labor and other human rights abuses
around the world, the report says.  With this Finding issuance, CBP
currently oversees and enforces 51 withhold release orders and nine
Findings under 19 U.S.C. Sec 1307, the report notes.

The International Labour Organization estimates that nearly 28
million workers suffer under conditions of forced labor worldwide,
the report discloses.  Forced labor exposes vulnerable populations
to inhumane working conditions and hurts American workers and
law-abiding businesses that cannot compete with forced labor goods
that are sold below market value, the report relays.

19 U.S.C. Sec1307 prohibits the importation of "all goods, wares,
articles, and merchandise mined, produced, or manufactured wholly
or in part in any foreign country by convict labor or/and forced
labor, or/and indentured labor, including forced or indentured
child labor," the report discloses.  When CBP has information
reasonably indicating that imported goods are made by forced labor
in violation of 19 U.S.C. Sec 1307, the agency will order personnel
at U.S. ports of entry to seize shipments of those goods, the
report relates.  Such shipments will be excluded or subjected to
seizure and forfeiture if the importer fails to demonstrate proof
of admissibility in accordance with applicable regulations, the
report notes.

CBP receives allegations of forced labor from a variety of sources
including private citizens, government agencies, media,
non-government organizations, and witnesses, the report discloses.

Any person or organization that has reason to believe merchandise
produced with the use of forced labor is being, or is likely to be,
imported into the United States, can report detailed allegations by
contacting CBP through the e-Allegations Online Trade Violation
Reporting System or by calling 1-800-BE-ALERT, the report adds.



=====================
E L   S A L V A D O R
=====================

EL SALVADOR: IDB OKs $190M Loans to Drive Digital Transformation
----------------------------------------------------------------
The Inter-American Development Bank (IDB) approved two loans
totaling $190 million to spur technological transformation and
innovation and bolster the energy transition at micro, small and
medium-sized enterprises (MSMEs) in El Salvador.

One of the loans, for $130 million, funds the Program to Support
the Technological and Digital Transformation of MSMEs, while the
other, for $60 million, is for the Financing Program for Energy
Efficiency and Renewable Energies in Salvadoran MSMEs.

The first program aims to give approximately 700 MSMEs access to
credit so they can adopt advanced digital technologies and gain a
more competitive edge on the global market. The second operation
will provide medium- and long-term financing to approximately 450
MSMEs to boost their energy efficiency. It will also include
technical support to establish a baseline for determining energy
savings and greenhouse gas reductions.

MSMEs are a cornerstone of El Salvador's economy. The country has
an estimated 500,000 MSMEs, which create 66% of all jobs and
generate 43% of the country's gross domestic product. But these
businesses face significant hurdles like limited access to
financing, making it difficult for them to upgrade their
technology, adapt to climate change and become more productive and
competitive on global markets.

The programs, which have been approved by the IDB Board of
Executive Directors, will give these businesses access to the
financing they need to overcome these obstacles. The first loan's
resources will be channeled through Banco de Desarrollo de El
Salvador, which will then distribute them through commercial
banks.

"These two new programs underscore the IDB's commitment to
sustainable and inclusive development in El Salvador. They support
MSMEs as they shift toward more competitive, efficient and
resilient business models, while at the same time fostering a more
sustainable and equitable productive sector in the country," said
Olga Gómez, the IDB Country Representative for El Salvador.

Both projects will include methods for identifying and promoting
financing for women-led or women-owned enterprises, which have more
difficulty accessing financial resources, especially for innovation
and upgrading their technology.

Both loans have a 23.5-year repayment term, a seven-year grace
period and an interest rate based on the Secured Overnight
Financing Rate (SOFR).




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J A M A I C A
=============

JAMAICA: Gov't Spent Less Than Budgeted for April to October
------------------------------------------------------------
RJR News reports that data released by the Ministry of Finance and
the Public Service revealed that the government spent $591.95
billion during the period April to October of this fiscal year.

This was $6.19 billion or 1% less than the $598.15 billion budgeted
for, according to RJR News.

Capital expenditure ran at $29.3 billion which was $1.26 billion or
4.1% less than the $30.54 billion budgeted for in the first
supplementary estimates, the report relays.

The Finance Ministry is also reporting that the fiscal deficit or
the difference between what it collects in total revenue and grants
and what it spends was $3.39 billion during the period April to
October, the report discloses.

This is 151% more than the deficit of $6.55 billion budgeted for in
the first supplementary estimates, the report notes.

The primary balance or total revenue and grants minus total
non-debt expenditure was running at $107.57 billion, the report
says.

This was $10.13 billion or 10.4% more than the $97.44 billion
projected in the first supplementary estimates, 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.

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 2023, S&P Global Ratings raised its long-term foreign
and local currency sovereign credit ratings on Jamaica to 'BB-'
from 'B+', and affirmed its short-term foreign and local currency
sovereign credit ratings at 'B', with a stable outlook.  In
September 2024, S&P affirmed 'BB-/B' sovereign ratings on Jamaica
and revised outlook to positive.  

In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'.  The Rating Outlook
is Stable.


JAMAICA: NIR Declined in November, BOJ Says
-------------------------------------------
RJR News reports that the Bank of Jamaica is reporting that the
country's net international reserves (NIR), or the difference
between its foreign assets and foreign liabilities, tumbled by
US$187 million to US$5.4 billion in November.

This is down from the $5.59 billion reported in October, according
to RJR News.

The decline was due to the heavy central bank intervention in the
foreign exchange market to stabilise the dollar during the month of
November, the report notes.

                       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.

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 2023, S&P Global Ratings raised its long-term foreign
and local currency sovereign credit ratings on Jamaica to 'BB-'
from 'B+', and affirmed its short-term foreign and local currency
sovereign credit ratings at 'B', with a stable outlook.  In
September 2024, S&P affirmed 'BB-/B' sovereign ratings on Jamaica
and revised outlook to positive.  

In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'.  The Rating Outlook
is Stable.



=======
P E R U
=======

PERU: IDB OKs $300 Million Loan to Expand Access to Social Housing
------------------------------------------------------------------
The Inter-American Development Bank (IDB) has approved a $300
million loan to give Peruvian families in the low and
lower-middle-income brackets greater access to loans for proper
housing.

The Global Credit Program approved by the IDB's Executive Board of
Directors will benefit over 17,000 households with loans for
purchasing or improving a home. At least 50% of the financing will
be earmarked for women heads of household.

The program's resources will expand the MIVIVIENDA Fund's mortgage
portfolio, exclusively targeting households that earn less than
four times the monthly minimum wage. The MIVIVIENDA Fund will
channel the program's funding to eligible financial institutions
via sub-loans.

At least 39% of the loan's resources will be allocated to sub loans
for purchasing green homes that cut down consumption of energy,
water, and embodied energy in building materials by a minimum of
20%.

The program will also provide financing for home improvement loans
to close the housing quality gap. An estimated 30% of urban
households in Peru live in substandard dwellings that lack basic
infrastructure (water, sewage, electricity) or are built from
poor-quality materials.

This initiative complements efforts by the Ministry of Housing,
Construction, and Sanitation and by the MIVIENDA Fund to close the
housing gap and develop a more inclusive formal housing market. The
program is designed to reduce poverty and bolster economic
recovery.

The IDB loan has an 11.5-year repayment term and a 7.5-year grace
period.


VOLCAN COMPANIA: Moody's Confirms 'Caa1' CFR, Outlook Positive
--------------------------------------------------------------
Moody's Ratings has confirmed Volcan Compania Minera S.A.A. y
Subsidiarias ("Volcan")'s Caa1 Corporate Family Rating and the Caa1
rating on its senior secured notes due in January 2030. Moody's
have also confirmed Volcan's Caa2 rating of its 4.375% Senior
Unsecured notes due in February 2026, with a positive outlook.
Previously, the ratings were on review for upgrade. This rating
action concludes the review for upgrade initiated on July 25,
2024.

The change in outlook to positive reflects the company's improved
cost position, the execution of asset sales and working capital
facilities which improves the company's liquidity and cash flow
generation. While Moody's recognize these improvements in the
company's credit profile, Volcan has not fully secured the funding
needed to repay its 2026 maturities and to develop its Romina
project. The company's cash generation has improved; however, under
debt documentation, any excess cash above $70 million is split
between the term loan repayment and the Romina cash reserve
accounts, leaving limited liquidity to repay the company's $68
million in senior unsecured notes maturing in February 2026.

The positive outlook reflects Moody's view that Volcan will be able
to sustain or even improve its cash flow generation and that the
company will be able to fund the 2026 maturities in advance and
will complete the Romina project on time and on budget.

RATINGS RATIONALE

Going forward, Moody's expect Volcan to generate negative free cash
flow of $150 million in 2025-2026 period, driven by growth capex
related to Romina, which is not expected to contribute cash flows
before 2026. Therefore, the company will need to incur additional
debt to fund the construction of this project, with Moody's
adjusted leverage peaking at 3.5x in 2026. Under the company's term
loan agreement, Volcan is allowed to increase debt for $125 million
to fund Romina and $70 million for working capital purposes.

Volcan managed to sell two hydroelectric plants in 2024; using
these funds ($74 million) to reduce debt and boost liquidity. Other
sources of liquidity include the company's working capital
facilities and commercial prepaids for $63 million, maturing during
the first half of 2025, and out of which $30 million is available.
Additionally, Volcan is looking to sell non-core assets; however,
it remains unclear when these potential transactions would be
concluded.

Volcan's cash generation improved on lower cost per metric ton (MT)
at around $50, down from the $54 per MT in 2022, as well as
sustained production, and higher zinc and silver prices supporting
positive free cash flow (FCF) generation of $20 million and debt
reduction in 2024. Moody's expect Moody's adjusted EBIT margin to
be at 15% and leverage at 3x in 2024 from 2.3% and 4.4x,
respectively in 2023.

Volcan's Caa1 CFR incorporates a material reduction of Volcan's
refinancing risk, although the company still faces the refinancing
risk of the $68 million in senior unsecured notes maturing in
February 2026 together with the negative FCF expected in the
period. The CFR also incorporates Volcan's high earnings volatility
because of its exposure to commodity prices, historically tight
liquidity and aggressive financial policies, as well as its modest
scale compared with that of its global peers.

At the same time, Volcan's Caa1 CFR reflects the company's limited
operational diversification in terms of metals produced and assets,
with seven mines located in one country (Peru).

In May 2024, Transition Metals AG, a subsidiary of the Argentine
group Integra Capital, reached an agreement with Glencore plc (A3
stable) to acquire its controlling stake in Volcan. Transition
Metals AG has been supportive of the liability management process
and current management team, which Moody's expect to remain in
place.

The Caa2 rating on the senior unsecured notes, one notch below CFR,
reflects its senior unsecured nature and subordination in the
payment waterfall.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Positive pressure on Volcan's ratings would be subject to the
company's ability to further improve its liquidity profile by
sustaining or even improving its cost structure and secure the
funding needed to repay its 2026 maturities and develop its Romina
project. Quantitatively, Moody's would consider an upgrade if the
company maintains EBIT margin above 6%, interest coverage ratio of
at least 1.5x and leverage, as adjusted by us, remains below 4.0x
at different commodity prices points.

Negative pressure could occur, should the company fails to secure
external sources to repay its 2026 senior unsecured notes or fund
the negative FCF. Delays in the startup of Romina that lead to
additional investments, decline in production, higher costs or
lower than expected cash flow generations could also lead to a
downgrade.

The principal methodology used in these ratings was Mining
published in October 2021.

Volcan Compania Minera S.A.A. y Subsidiarias (Volcan) is a Peruvian
mining company that primarily produces zinc and lead concentrate
and some copper concentrate, all with high silver content. The
company operates through five operating units including seven
operating mines, five concentrator plants and one leaching plant
for silver oxide production. All of Volcan's operations are located
in Peru, and it reported revenue of $889 million for the 12 months
that ended September 2024. Volcan is a holding company listed on
the stock exchanges of Lima, Santiago and Madrid (Latibex). Since
May 2024 Transition Metals AG, subsidiary of Integra Capital, holds
a controlling stake of 55.028% in Volcan's Class A voting shares,
which is equivalent to a 23.3% economic interest in Volcan.

Integra Capital is a diversified firm with investments in
education, energy, media and telecom, mining, technology, wine,
food and drinks. Its mining business includes lithium exploration
activities in Argentina and investments in uranium and copper.


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