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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 26, 2024, Vol. 25, No. 259

                           Headlines



A R G E N T I N A

ARGENTINA: Takes Steps to Speed up Milei's Dollarization Strategy


B R A Z I L

BRAZIL: Market Rout Risks a Crisis as Lula Resists Austerity Push
BRAZIL: Plans to Unlock Economic Potential of Mineral Riches
STATE OF ALAGOAS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable


C A Y M A N   I S L A N D S

AUB SUKUK: Fitch Hikes Sr. Unsec Debt Rating to 'BB(xgs)'


C H I L E

CHILE: Delivers Hawkish Interest Rate Cut


J A M A I C A

JAMAICA: Private Sector Call for Banks to Respond to BOJ Rate Cuts


M E X I C O

FIDEICOMISO IRREVOCABLE: S&P Affirms 'BB+' Rating on A-1 USD Notes


P A R A G U A Y

UENO BANK: S&P Assigns 'BB' Long-Term ICR, Outlook Stable

                           - - - - -


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A R G E N T I N A
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ARGENTINA: Takes Steps to Speed up Milei's Dollarization Strategy
-----------------------------------------------------------------
Buenos Aires Times reports Argentina's government is racing against
time as it works with major banks and payment firms to advance
Javier Milei's dollarisation strategy even as pesos are in high
demand.

To do so, the government plans to take two key steps -- launch the
first dual-currency debit card, so that Argentines can make dollar
payments despite ongoing exchange rate controls, and allow banks to
provide dollar loans in sectors that are currently excluded from
such financing, according to Buenos Aires Times.

The initiatives aim to capitalise on the recent surge of dollar
inflows stemming from the government's tax amnesty, the report
notes.  Over the past five months, Argentines deposited more than
US$20 billion in local banks, the report relays.  That flow of
foreign cash, combined with a move by the government to limit the
supply of local currency, has helped the peso strengthen more than
20 percent in parallel markets since it hit a record low in July.

Now, with a stabilised peso, dollar usage is set to increase,
including in everyday transactions, President Milei said, the
report discloses.  "From now on, every Argentine will be able to
buy, sell and invoice in dollars, or in the currency he/she
considers; except for the payment of taxes," he said on national
television on December 10, relates the report.

Officials are urging the country's main payment processors to
develop a mechanism to allow debit card purchases in dollars,
according to three people who declined to share the names of the
companies involved in the talks, the report relays.

Economy Minister Luis Caputo wants the card to launch in January,
but the companies think it might take until March, the people said,
the report says.  Under the plan, Argentine consumers will be able
to use the dollars they deposit into their accounts without going
through the foreign exchange market first, contrary to the current
system that only allows them to use pesos.

In addition, the Argentine government is pushing banks to extend
dollar loans to more sectors, the report discloses. Caputo said he
wants business loans and mortgages to be offered in the US
currency. Current regulations only give access to dollars to those
companies that generate revenues in foreign currency.  He also
pointed to ongoing conversations with real-estate companies to
establish dollar-denominated mortgage programs during his remarks,
the report notes.

"We aim to remonetise the economy, both in pesos and dollars," he
said in a speech in September, the report relays.  "We want people
to use their dollars because that reactivates the economy,
generates more income and allows us to lower taxes."

Milei promised to shut down Argentina's Central Bank during his
presidential campaign and adopt the dollar as the country's
currency. Once in office, he changed strategy, the report notes.
The approach, dubbed endogenous dollarisation, involves restricting
the supply of pesos, forcing Argentines to use their dollar
holdings to pay for regular expenses, the report says.

                          First Steps

Some supermarkets, manufacturers and even bars have begun accepting
payments in dollars but financial institutions are still in the
process of putting in place the necessary infrastructure to process
such transactions, the report relays.

"Dollar transactions will continue to rise in 2025 and we have to
keep developing new products to meet the demand," said Camila
Gallelli, a portfolio manager at Santander Asset Management in
Buenos Aires, the report notes.

That is particularly challenging in the financial technology space
as it requires approval from the Central Bank for a uniform virtual
key, or CVU, in dollars, the report says.  Fintech firms have asked
the monetary institution to approve it but the Central Bank wants
to level the playing-field between fintech firms and banks first, a
spokesman said, the report discloses.

"The challenge is to provide more transactions in dollars. It is a
general request from the fintech industry but today we are not so
close," the report quotes Mariano Biocca, executive director at the
Argentine fintech chamber, as saying. The Central Bank could give
its approval in mid-2025, she said. "It will become an industry
standard, because you can't not have it."

For the time being, both banks and fintech firms are offering
alternatives to saving in dollars, in an attempt to put those tax
amnesty dollars to use, the report relays.  One of the largest
Argentine fintechs, Uala, has already received approval from CNV, a
regulator, to launch a dollar fund that will pay an annual yield
similar to US Treasuries, according to a person with direct
knowledge, the report says.

Santander Asset Management also launched a dollar fund, which is
set to be followed by others in 2025. "We're sensing an exponential
growth in our dollar funds," said Santander Asset Management's
Gallelli, who already manages US$430 million in this fund and
doubled his share this year, the report notes.

Still, analysts doubt that the steps will be sufficient to lay the
foundations for the president's dollarisation strategy, the report
notes.  

"Dollarisation is going to take time. It needs more structural
reforms that will make Argentina a normal country again," said
Alejo Czerwonko, UBS Group AG's chief investment officer for
Americas emerging markets, in an interview, the report discloses.
"Maximising this one-time flow of dollars that Argentina received
may be useful to achieve the objectives and is welcome. But by
itself it is not enough," he added.

                          About Argentina

Argentina is a country located mostly in the southern half of
South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.

Argentina has the third largest economy in Latin America.  The
country's economy is an upper middle-income economy for fiscal
year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.

In March 2022, the International Monetary Fund (IMF) approved a
new
30-month arrangement under an Extended Fund Facility for Argentina
in the amount of SDR 31.914 billion (equivalent to US$44 billion,
or 1000 percent of quota).  The IMF Executive Board's decision
allowed the authorities an immediate disbursement of an equivalent
of US$9.65 billion in March 2022.

Argentina's IMF-supported program seeks to improve public finances
and start to reduce persistent high inflation through a
multi-pronged strategy, involving a gradual elimination of
monetary
financing of the fiscal deficit and enhancements in the monetary
policy framework.

In June 2024, the IMF Board completed an eighth review of the
Extended Arrangement under the Extended Fund Facility for
Argentina.  The IMF Board's decision enabled a disbursement of
around US$800 million to support the authorities' efforts to
entrench the disinflation process, rebuild fiscal and external
buffers, and underpin the recovery.

On Nov. 15, 2024,  Fitch Ratings has upgraded Argentina's
Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC'
from 'CC', and its Long-Term Local-Currency IDR to 'CCC' from
'CCC-'.  Argentina's upgrade to 'CCC' from 'CC' reflects
developments that have improved Fitch's  confidence in the
authorities' ability to make upcoming  foreign-currency bond
payments without seeking relief of some  sort.

S&P, in March 2024, raised its local currency sovereign credit
ratings on Argentina to 'CCC/C' from 'SD/SD' and its national
scale
rating to 'raB+' from 'SD'. S&P also raised its long-term foreign
currency sovereign credit rating to 'CCC' from 'CCC-' and affirmed
its 'C' short-term foreign currency rating.  The S&P ratings have
been affirmed as of August 2024.  S&P said the stable outlook on
the long-term ratings balances the risks posed by pronounced
economic imbalances and other uncertainties with recent progress
in
making fiscal adjustments, reducing inflation, and undertaking
structural reforms to address long-standing microeconomic
weaknesses that have contributed to poor economic performance for
many years that it would likely consider to be distressed.

Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings.  The outlook remains stable.  The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.

DBRS, Inc. upgraded Argentina's Long-Term Foreign and Local
Currency
Issuer Ratings to B (low) from CCC on November 25, 2024. The
trend on all ratings is Stable.



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B R A Z I L
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BRAZIL: Market Rout Risks a Crisis as Lula Resists Austerity Push
-----------------------------------------------------------------
Buenos Aires Times reports that as the currency craters in Brazil,
thrusting the country's markets into the international spotlight
for the first time in years, a grim reality is setting in for top
economic aides to President Luiz Inacio Lula da Silva.  They are,
they fear, powerless to do much to stop the panic, according to
Buenos Aires Times.

Lula, convalescing at his home in Sao Paulo after back-to-back
emergency brain surgeries, has no interest in adding to an
austerity package that could, if executed boldly enough, calm
investors' worries about soaring debt and stem the capital flight
that has sent the currency to record lows, the report notes.

His advisers had to plead with him for weeks to do it in the first
place, the report relays.  And lawmakers, they note, are opposed to
it, too. The tweaks they're making to the bill as it wends its way
through Congress are aimed at weakening the package of cost cuts,
the report discloses.

It'd been years, dating all the way back to the run-up to Lula's
very first election in 2002, since Brazilian markets were convulsed
by fears of a debt crisis, the report says.  And while this one may
still pale in comparison to that one -- the country's foreign bonds
yield a fraction of what they did back then, and there's a lot less
dollar debt outstanding now -- in its essence, that's what it is,
the report notes.  Just like in France, investors are no longer in
the mood to finance deficits that exploded during the pandemic and
barely inched back lower in the years since, the report says.

And so regardless of how fast the Brazilian Central Bank pushes up
interest rates, offering ever-juicier returns on local assets,
investors will just keep pulling money out until they're confident
the deficit will be brought down, the report relays.  There will be
starts and stops in the outflows, analysts say, but the concerns
are too real to paper over with 15% percent bond yields, the report
discloses.

"The government lacks credibility," said Daniela Da Costa-Bulthuis,
who helps oversee EUR200 billion (US$207 billion) of assets at
Robeco Institutional Asset Management, notes Buenos Aires Times.
"The stock market and the real are starting to price in a very
complicated economic situation that will be difficult to resolve."

Lula's aides are doing what they can. Finance Minister Fernando
Haddad has been publicly talking up the government's spending cuts,
and dangled the idea of enhancements to come, the report says.  And
the government's main liaison to Congress is making reassuring
statements about his intention to persuade reluctant lawmakers to
accept the austerity, the report discloses.

But according to people close to the highest ranks of the leftist
government, who asked not to be identified discussing internal
debates, Lula's view is that his proposal to slash 70 billion reais
(US$11.2 billion) of spending through 2026 by limiting growth in
the minimum wage and tightening rules on welfare payments is more
than enough, the report relays.  Analysts disagree, saying the
package could free up a little over half that, according to a
Central Bank survey, the report says.

The intransigence even as the markets convulse is raising concerns
among traders that the country may be heading toward a scenario
known as fiscal dominance, the report discloses.  In fact, such
speculation is all the rage at banks in Sao Paulo and trading
floors in Rio de Janeiro, the report notes.

A growing chorus of Brazil watchers, from veteran investor Luis
Stuhlberger and former central banker Arminio Fraga to Goldman
Sachs and Morgan Stanley, is warning of the country falling into a
trap in which fiscal expansion undercuts the impact of the central
bank's attempt to tighten policy with higher interest rates, the
report discloses.

The Central Bank is one of few worldwide to be raising borrowing
costs, the report says.  This month, Governor Roberto Campos Neto
boosted rates by a full percentage point to 12.25 percent and the
board of directors -- in a unanimous decision -- signalled two
additional, similar hikes by March, in a message that surprised
even the most hawkish of the predictions, the report relays.

But traders continued to dump Brazil assets -- calling for concrete
action from the government to address the fiscal side, the report
relays.  The real extended year-to-date losses to 23 percent, while
yields on local government bonds climbed to the highest levels
since former president Dilma Rousseff was impeached in 2016, the
report discloses.  What's more, the local curve of swap rates sold
off, with longer-dated maturities being hit harder, the report
notes.

Fiscal dominance is "becoming part of the conversation," said
Katrina Butt, a senior economist at AllianceBernstein in New York.
"Fiscal policymaking is clearly affecting monetary policy decision
making."

The problems plaguing Brazil also have a lot in common with an
old-fashioned, emerging-market debt crisis, the report relays.  The
country is running an annual budget gap equivalent to about 10
percent of gross domestic product -- one of the widest across the
globe -- while its gross debt has started expanding again, recently
reaching 78.6 percent of GDP, the report notes.

Some economists say it's too soon to declare the Central Bank's
tools have completely lost their effectiveness, the report
discloses.  They point out that Gabriel Galipolo, soon to take over
the helm of the bank, is pledging to tighten policy as much as
needed to tame inflation, the report says.

The government thinks so too. Brazil's economic team doesn't see
fiscal dominance happening now, the report notes.  They say
monetary policy is effective and will slow down economic growth,
the report relays.

Yet others say the risks of a monetary policy flop are on the rise,
the report says.

In a recent letter to investors, hedge fund manager Stuhlberger
said Brazil policymakers are now acting "under the shadow" of the
fiscal-dominance risk, the report discloses.  To Alberto Ramos, the
chief economist for Latin America at Goldman, the country is
"flirting" with such a scenario, the report says.  Morgan Stanley
strategist Ioana Zamfir wrote in a note earlier this month that the
real could plunge as much as as 11 percent from current levels to
seven per US dollar if the Central Bank isn't effective, adds the
report.

Central bankers have pushed back against those fears for the past
few months, saying monetary policy hasn't lost its power and they
won't remain passive as the scenario gets more adverse, the report
relays.  Above-goal estimates for inflation cause "discomfort"
among all board members and "must be tamed," they wrote in minutes
to their latest rate decision, the report notes.

They also warn about the effects of excessive government spending,
especially the social support programmes that transfer money to the
poor, the report says.  Emerging research reviewed by the Central
Bank shows those cash transfers can fan the economy more than
previously understood, the report notes.

"The slowdown in structural reform efforts and fiscal discipline,
the increase in earmarked credit, and uncertainties over the public
debt stabilisation have the potential to raise the economy's
neutral interest rate, with deleterious impacts on the power of
monetary policy," board members wrote in their most recent monetary
statement, the report discloses.

Even with the rate hikes, Brazil's economy has continued to grow,
with unemployment near record lows and wages gaining, the report
notes.  And fears of a default are limited by the fact the country
boasts about US$360 billion in international reserves and little
foreign debt, the report relays.  But inflation expectations have
deteriorated significantly -- with economists forecasting that
price increases will remain above the country's target through
2027, the report discloses.

Of course it's possible that Lula will come around should the
market rout grow untenable, the report notes.  There's some
speculation that the president could make some conciliatory remarks
on the matter as soon, when he's scheduled to hold a ministerial
meeting. But it's likely any measures won't be enough to change how
markets see his government, the report relays.

Investors, many of whom were burned by bullish wagers on Brazil
assets throughout the year, aren't willing to give him the benefit
of the doubt, the report says.

"It's certainly a worry for everybody that we are on the path of
fiscal dominance," said Pramol Dhawan, head of the emerging markets
team at Pacific Investment Management Co, the report discloses.
"And in a country like Brazil, you don't need to be there. You just
need to smell the cooking in the kitchen for people to start
worrying," he added.

                          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 has 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.


BRAZIL: Plans to Unlock Economic Potential of Mineral Riches
-------------------------------------------------------------
Arkady Petrov at Rio Times Online reports that Brazil's government
plans to unlock its vast mineral riches.  The country aims to
attract investments and boost its economy through extensive
geological mapping.

According to the report, this initiative focuses on critical
minerals like niobium, lithium, and cobalt. The Ministry of Mines
and Energy developed the Decennial Plan for Basic Geological
Mapping (PlanGeo 2025-2034), the report relays.

Rio Times says this plan targets minerals crucial for low-carbon
technologies.  It includes lithium, copper, graphite, rare earth
elements, nickel, niobium, cobalt, and aluminum, the report says.

Brazil's Geological Survey leads PlanGeo's execution, the report
relays.  The plan identifies strategic areas for systematic
geological mapping over a 10-year period, the report discloses.

It aims to generate knowledge, create jobs, and ensure public
participation in decision-making, the report relays.  PlanGeo's
development involved unprecedented public consultation, the report
notes.

It gathered input from mineral research companies, universities,
and public institutions, the report discloses.  The preliminary
version identified 60 priority mapping blocks across several
Brazilian states, the report relays.

                 Brazil's Geological Mapping

Currently, only 49% of Brazil's continental territory has been
mapped at a 1:250,000 scale, the report notes.  A mere 27% has been
mapped at the more detailed 1:100,000 scale, the report discloses.
These figures highlight the need for expanded mapping efforts, the
report says.

Expanded geological mapping will attract both domestic and foreign
investments, the report relays.  It reduces risks for companies
interested in mineral exploration, the report notes.

Better quality information increases confidence and the likelihood
of new mineral ventures, the report discloses.  The federal
government aims to establish the Geological Survey of Brazil as a
national reference, the report relays.

It seeks to intensify knowledge of the subsoil and stimulate
geological survey projects, the report says.  The plan also ensures
the sharing of geological data during mineral research phases, the
report notes.

Geological mapping extends beyond the mineral sector, the report
discloses.  It can increase water availability in Brazil's
semi-arid regions, the report relays.  It also helps identify
agricultural inputs to ensure food quality and competitiveness, the
report says.

Reducing dependence on imported fertilizers could lower
agricultural costs, the report notes.  PlanGeo represents a
strategic commitment to Brazil's sustainable development, the
report says.

It combines science, technology, and natural resources, the report
relays.  By expanding knowledge of its soil and subsoil, Brazil
positions itself competitively on the global stage, 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 has 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 repor

STATE OF ALAGOAS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
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Fitch Ratings has affirmed the State of Alagoas' Long-Term Foreign
and Local Currency Issuer Default Ratings (IDRs) at 'BB'. The
Rating Outlook is Stable. In addition, Fitch has affirmed Alagoas'
Short-Term Foreign and Local Currency IDRs at 'B', National
Long-Term Rating at 'AAA(bra)'/Stable Outlook, and National
Short-Term Rating at 'F1+(bra)'. Fitch also lowered Alagoas
Standalone Credit Profile (SCP) to 'b+' from 'bb-'.

Alagoas' ratings and Outlooks are supported by Brazil's (BB/Stable)
ratings, because the federal government is the state's most
important creditor. Debt owed to the federal government corresponds
to around 64.6% of the state's direct debt. Fitch views
intergovernmental debt as more favorable as it can be used as an
instrument of support by the sovereign in periods of distress,
leading to a two-notch uplift from the state's SCP of 'b+'.

Fitch lowered Alagoas' SCP to 'b+' from 'bb-' due to the
deterioration of the state's actual debt service coverage ratio
(ADSCR). The Supreme Court issued a final decision on a judicial
process (ACO 1726) between Alagoas and the federal government,
which led to a BRL1.2 billion addition to intergovernmental debt.
Additionally, higher interest rates in the domestic market and the
end of the grace period for a few commercial loans contributed to
the higher debt service in Fitch's rating horizon. The
deterioration was mitigated by Alagoas' strong revenue performance
and a fiscal framework designed to control operating expenditure
growth.

KEY RATING DRIVERS

Risk Profile: 'Weaker'

The assessment reflects Fitch's view there is a high risk of the
issuer's ability to cover debt service with the operating balance
weakening unexpectedly over the scenario horizon (2024-2028) due to
lower revenue, higher expenditure or an unexpected rise in
liabilities or debt service requirements.

Revenue Robustness: 'Weaker'

Fitch evaluates this factor as 'Weaker' due to the state's moderate
dependence on transfers from a 'BB' rated counterpart (the
sovereign).

The Brazilian tax collection framework transfers to states and
municipalities a large share of the responsibility to collect
taxes. Constitutional transfers exist as a mechanism to compensate
poorer entities. For that reason, a high dependency towards
transfers is considered a weak feature for a Brazilian local and
regional governments (LRG).

The primary metric for key risk factors Revenue Robustness is the
transfers ratio (transfers to operating revenues). LRGs that report
a transfer ratio above or equal to 40% are classified as weaker,
while others with a ratio below 40% are classified as 'Midrange'.
The State of Alagoas reports a moderate dependency towards
transfers, what drives this factor to 'Weaker'. Transfers
represented 48.5% of operating revenues for the average of the
2019-2023 period.

Historically, revenue growth performed above GDP growth. Taking the
period of 2019-2023, Fitch observes CAGR of 5.8% in real terms for
operating revenues, compared to average annual GDP growth of 1.5%

Revenue Adjustability: 'Weaker'

Fitch evaluates this factor as 'Weaker' due to Brazilian states'
reliance on a small number of taxpayers and the history of federal
intervention in state tax policy.

Fitch believes Brazilian states and municipalities to have low
capacity to increase revenue during a downturn. Tax tariffs are
close to the constitutional national ceiling, and a small number of
taxpayers contribute a large share of tax collection, making
additional taxation unaffordable. Brazil also has a history of
federal intervention in subnational taxation. In July 2022, the
National Congress set a ceiling on the ICMS tariff over fuels and
electricity, causing revenue losses across states and
municipalities, which were only partially reversed later.

Alagoas raised the average basic ICMS tariff in the state to 19%
from 17% in May 2023. The increase in the basic tariff, aligned
with measures to boost tax collection efficiency, resulted in
substantial growth for tax collection up to October 2024 (17.5%
year-to-date). Alagoas' tax collection growth performance is the
highest among Brazilian states.

The most significant tax, the ICMS, has a concentrated taxpayer
base. The state reports that its 10 largest tax payers corresponded
to 34.4% of total ICMS tax collection in 2023.

Expenditure Sustainability: 'Midrange'

Fitch evaluates this factor as 'Midrange' due to adequate operating
margins during the last few years.

Responsibilities for states are moderately countercyclical because
they handle healthcare, education and law enforcement. Expenditure
grows with revenues due to earmarked revenues. States and
municipalities must allocate a share of revenues to health and
education, causing procyclical behavior in good times; high revenue
growth leads to increased spending. However, the significant weight
of personal expenditures and salary rigidity means downturns do not
see similar drops in expenditures despite lower revenues.

Alagoas reports moderate control over expenditure growth, with
sound margins. Operating margins averaged 17.4% in the 2019-2023
period and 11.6% by the end of 2023. The state is current on its
payroll bill and has no significant delays for the payment of
suppliers. Operating expenditure CAGR was 6.3% in real terms
between 2018-2023, above operating revenues CAGR of 5.8%.

Alagoas has enacted a new fiscal framework through Law No. 9.324 of
July 19, 2024. The framework will contribute to sustain fiscal
sustainability by limiting expenditure growth below primary revenue
growth because it sets a ceiling for primary expenditure growth.
The goal is to sustain the state's assessment under the National
Treasury CAPAG (Capacidade de Pagamento) system at 'B'.

Expenditure Adjustability: 'Weaker'

Fitch evaluates this factor as 'Weaker' due to budget rigidity and
the limited ability to lower expenditures.

Brazilian local governments have a rigid cost structure, leading to
a 'Weaker' assessment. The Brazilian constitution limits the
ability to reduce expenditures, especially for the payroll and
pensions Consequently, when revenues drop unexpectedly, operating
expenditure do not automatically decrease.

In 2023, personal expenditures for the State of Alagoas accounted
for 53.2% of total spending. Due to salary rigidity and limited
control over human resources or pensions expenses, this category
has little flexibility for adjustments. Other operating
expenditures made up 30.6% of total spending in 2023 and has some
flexibility, but constitutional mandates on health and education
still limit adjustments. Capex represented 12.4% of total
expenditures in 2023 and averaged 12.1% between 2019 and 2023.
Alagoas CAPEX ratio is high for Brazilian standards. Still, the
international peer comparison and the large needs for expanding
public services coverage to attend pressing social demands and
infrastructure limit the assessment to 'Weaker'.

Liabilities & Liquidity Robustness: 'Weaker'

Fitch assess this factor as 'Weaker' due to the underdeveloped
credit market and the presence of off-balance sheet risks related
to pensions and judicial liabilities.

Access to new loans is restricted as Brazilian LRGs are not allowed
to access the market through bond issuances and private banks
rarely engage with subnationals. Lenders consist mainly of public
commercial and development banks and multilateral organizations.
Loans are often guaranteed by the federal government, especially
for foreign currency loans. For this reason, the federal government
has strict control over new lending to LRGs.

There is a moderate national framework for debt and liquidity
management since there are prudential borrowing limits and
restrictions on loan types. Under the Fiscal Responsibility Law of
2000, Brazilian LRGs must comply with indebtedness limits.
Consolidated net debt for states cannot exceed 2x, or 200%, of net
current revenue. Alagoas reported a debt ratio of 70.3% as of YE
2023 (69.2% as of August 2024). The law sets limits for guarantees
at 22% of net current revenue. Alagoas reported a 1.34% ratio as of
YE 2023 (1.13% as of August 2024).

As of December 2023, external debt totaled BRL1.8 billion (BRL 2
billion as of August 2024), corresponding to 13.8% of direct debt.
External debt is largely owed to multilateral organizations and has
federal government guarantees. Debt directly owed to the federal
government was 64.6% of direct debt in December 2023 (63.4%).
Intergovernmental debt has more favorable terms, such as debt
service relief in periods of economic distress. Such was the case
in 2020 and early 2021.

The Supreme Court issued a final decision on a judicial process
(ACO 1726) between Alagoas and the federal government, which led to
a BRL1.2 billion addition to intergovernmental debt. The amount had
been excluded from the state's intergovernmental debt back in 2018,
but it was then reversed, leading to an upward adjustment of
intergovernmental data both in 2023 and 2022 (revised data).

There is moderate off-balance-sheet risk stemming from the pension
system, which is a burden for most Brazilian LRGs, especially for
states given a mandate over education and public security. Pension
payments represent a significant share of opex. According to the
National Treasury, the pension deficit of Alagoas cost the state's
treasury 16.9% of net current revenue in 2022.

Liabilities & Liquidity Flexibility: 'Midrange'

Fitch evaluates this factor as 'Midrange' due to adequate cash in
the last three-years.

A framework exists for providing emergency liquidity support from
the federal government via the granting of extended maturity over
the prevalent federal debt portion. Fitch assesses the entity's
available liquidity to differentiate between 'Weaker' and
'Midrange' for liabilities and liquidity flexibility.

Fitch liquidity rate for Brazilian LRGs is defined as short-term
financial obligations to net cash, such as set by the previous
version of the CAPAG system by the Brazilian National Treasury. The
CAPAG, or Capacidade de Pagamento, assesses which entities qualify
for federal government guarantees.

Fitch has set a threshold of 100% for the average of the last three
years (2021-2023 year-end) and for the last year-end results
available (December 2023), which would result in a 'Midrange'
assessment for this factor.

Alagoas reported a three-year average liquidity ratio of 51.9%. As
of December 2023, the metric reached 80.9%, corroborating with the
'Midrange' assessment.

Financial Profile: 'a category'

Alagoas's Financial Profile is assessed at 'a'. Fitch's rating case
forward-looking scenario indicates that the payback ratio (net
adjusted debt to operating balance), the primary metric for the
financial profile assessment, will reach an average of 5.9x for the
2026-2028 period, which is aligned with a 'aa' assessment. The
actual debt service coverage ratio (ADSCR), the secondary metric,
is projected at an average of 1.2x for 2026-2028, aligned with an
'a' assessment. Fitch applies an override to the overall financial
profile considering that the secondary metric is two categories
below the primary metric. Fiscal debt burden is projected at 65.4%
for the same period.

Debt metrics deteriorated from the previous annual review on the
back higher debt and debt service burden. The projected coverage
metric lowered to 1.2x from 1.6x.

Derivation Summary

Fitch assesses Alagoas' SCP at 'b+', reflecting a combination of a
'Weaker' risk profile and financial profile assessed in the 'a'
category under Fitch's rating case scenario. The SCP also reflects
the peer comparison. Alagoas' 'BB' IDR benefits from a two-notch
uplift from its SCP because the federal government is Alagoas' most
significant creditor. Approximately 64.6% of Alagoas debt is owed
directly to the federal government, resulting in an enhanced
payback ratio around 2.1x and an enhanced DSCR above 2x. This would
suggest an enhanced DS score in the 'aaa' category. Per criteria,
the uplift from the SCP to the IDR through intergovernmental
finance support cannot lead beyond the lending government rating
(the sovereign).

Key Assumptions

Risk Profile: 'Weaker'

Revenue Robustness: 'Weaker'

Revenue Adjustability: 'Weaker'

Expenditure Sustainability: 'Midrange'

Expenditure Adjustability: 'Weaker'

Liabilities and Liquidity Robustness: 'Weaker'

Liabilities and Liquidity Flexibility: 'Midrange'

Financial Profile: 'a'

Asymmetric Risk: 'N/A'

Support (Budget Loans): '2'

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

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 2024-2028 projected
ratios. The key assumptions for the scenario include:

- Yoy 6% increase in operating revenue on average in 2024-2028,
which results of a combination of growth assumptions for taxes
(linked to inflation plus spread), transfers (linked to nominal
GDP), and other operating revenues (linked to inflation). The
rating case includes a 100 bps annual negative shock to taxes and
transfers;

- Yoy 7.4% increase in tax revenue on average in 2024-2028,
reflecting the adjustment to Alagoas average ICMS basic tariff in
May 2023 and projected inflation plus spread going forward;

- Yoy 6.3% increase in operating spending on average in 2024-2028,
which reflects actual data up to October 2024 and the expectation
that opex will grow above inflation in 2024-2028 in Fitch's rating
case;

- Net capital balance of BRL 1,862 million on average in 2024-2028,
capex is projected to sustain historical values in real terms and
to absorb excess cash generation through the projection horizon;

- Long-term debt considers new loan disbursements as shared by the
government minus projected amortization of non-intergovernmental
debt;

- Cost of debt: 6.3% on average in 2024-2028, which reflects
government projections for debt service payments. For the rating
case, Fitch applies a 50 bps shock to apparent cost of debt.

Quantitative assumptions - Sovereign Related

Figures as per Fitch's sovereign actual for 2023 and forecast for
2024-2026, respectively (no weights and changes since the last
review are included as none of these assumptions was material to
the rating action).

Liquidity and Debt Structure

Net adjusted debt includes BRL12.99 billion of direct debt and
unrestricted cash of BRL1 billion as of YE 2023. Fitch estimates
that close to 13.8% of debt is external debt with federal
guarantees. Debt owed to the federal government corresponds to
64.6% of total debt.

Issuer Profile

The State of Alagoas is home to 3.1 million people, equal to around
1.5% of the Brazilian population, with below average socioeconomic
indicators. Revenue sources mainly consist of transfers from the
federal government in addition to taxes. Main spending
responsibilities cover education, healthcare and law enforcement.

Rating Sensitivities

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

- A negative rating action on Brazil's IDR would lead to a
corresponding rating action for Alagoas, given the uplift between
Alagoas' SCP and IDR is limited by the sovereign rating.

- Alagoas's IDRs would be downgraded if its enhanced payback ratio,
after accounting for federal support, is projected above 5x and the
coverage ratio is projected below 2x.

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

- A positive rating action on Brazil's IDR could lead to a
corresponding rating action for Alagoas, given the uplift between
Alagoas' SCP and its IDR is limited by the sovereign rating.

ESG Considerations

Estado de Alagoas has an ESG Relevance Score of '4' for Population
Demographics due to the negative weight the municipality's poverty
rate has on its revenue raising ability, which has a negative
impact on the credit profile, and is relevant to the rating in
conjunction with other factors.

Estado de Alagoas has an ESG Relevance Score of '4' for Human
Development, Health and Education due to its Human Development
Index (calculated as a geometric average of health, education and
income) at the bottom of the ranking among Brazilian states, 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.

Public Ratings with Credit Linkage to other ratings

Alagoas' ratings are uplifted to the sovereign rating through
intergovernmental finance support.

   Entity/Debt                 Rating              Prior
   -----------                 ------              -----
Estado de Alagoas     LT IDR    BB      Affirmed   BB
                      ST IDR    B       Affirmed   B
                      LC LT IDR BB      Affirmed   BB
                      LC ST IDR B       Affirmed   B
                      Natl LT   AAA(bra)Affirmed   AAA(bra)
                      Natl ST   F1+(bra)Affirmed   F1+(bra)



===========================
C A Y M A N   I S L A N D S
===========================

AUB SUKUK: Fitch Hikes Sr. Unsec Debt Rating to 'BB(xgs)'
---------------------------------------------------------
Fitch Ratings has upgraded Ahli United Bank B.S.C. (c)'s (AUB)
Long-Term (LT) Issuer Default Rating (IDR) Ex-Government Support
(xgs) to 'BB(xgs)' from 'BB-(xgs)'.

Fitch has also upgraded AUB's senior unsecured debt and sukuk,
issued via AUB Sukuk Limited (AUBSL), a wholly owned special
purpose vehicle, to 'BB(xgs)' from 'BB-(xgs)'. Fitch has affirmed
AUB's Short-Term (ST) IDR (xgs) and the senior unsecured ST debt
rating (xgs) at 'B(xgs)'. Other ratings are not affected by this
rating action.

This follows the LT IDR (xgs) upgrade of AUB's parent, Kuwait
Financial House (KFH; see 'Fitch Upgrades Kuwait Finance House
Viability Rating to 'bbb-'; Affirms IDR at 'A'', dated 12 December
2024).

Key Rating Drivers

AUB's LT IDR (xgs) is two notches below the parent KFH's LT IDR
(xgs) of 'BBB-(xgs)', based on support considerations. Fitch views
KFH as having a high propensity to provide support to AUB, given
the bank's full ownership by the parent and its notable role in the
group, close operational parent-subsidiary integration, and a high
reputational risk for KFH from an AUB default. At the same time,
the shareholder's ability to support the bank is undermined by
AUB's considerable size relative to the parent (end-3Q24: 23% of
KFH's consolidated assets).

AUB's senior unsecured debt and sukuk are rated in line with the
bank's IDRs (xgs). This reflects Fitch's view that default on these
senior unsecured obligations would equal a default of AUB, in
accordance with Fitch's ratings definitions.

The bank's ST IDR (xgs) is mapped to its LT IDR (xgs).

Rating Sensitivities

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

AUB's LT IDR (xgs) would be downgraded if KFH's Long-Term IDR (xgs)
is downgraded. Its ST IDR (xgs) is sensitive to a downgrade of its
LT IDR (xgs).

The senior unsecured ratings (xgs) would be downgraded if AUB's
IDRs (xgs) are downgraded.

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

AUB's LT IDR (xgs) would be upgraded if KFH's LT IDR (xgs) is
upgraded. Its ST IDR (xgs) is sensitive to an upgrade of AUB's LT
IDR (xgs).

The senior unsecured ratings (xgs) would be upgraded if AUB's IDRs
(xgs) are upgraded.

Public Ratings with Credit Linkage to other ratings

AUB's IDRs (xgs) are linked to KFH's IDRs (xgs).

ESG Considerations

As an Islamic bank, AUB needs to ensure compliance of its entire
operations and activities with sharia principles and rules. This
entails additional costs, processes, disclosures, regulations,
reporting and sharia audit. This results in an ESG Governance
Structure Relevance Score of '4' for the bank, which has a negative
impact on the bank's credit profile and is relevant to the rating
in combination with other factors.

In addition, Islamic banks have an ESG Relevance Score of '3' for
exposure to social impacts, above sector guidance for an ESG
relevance score of '2' for comparable conventional banks, which
reflects certain sharia limitations being embedded in Islamic
banks' operations and obligations, although this only has a minimal
credit impact on the entities.

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
   -----------                    ------              -----
Ahli United
Bank B.S.C. (c)       LT IDR (xgs) BB(xgs) Upgrade    BB-(xgs)
                      ST IDR (xgs) B(xgs)  Affirmed   B(xgs)
   senior unsecured   ST (xgs)     B(xgs)  Affirmed   B(xgs)
   senior unsecured   LT (xgs)     BB(xgs) Upgrade    BB-(xgs)

AUB Sukuk Limited

   senior unsecured   LT (xgs)     BB(xgs) Upgrade    BB-(xgs)



=========
C H I L E
=========

CHILE: Delivers Hawkish Interest Rate Cut
-----------------------------------------
Bloomberg News reports that Chile's central bank cut its key
interest rate by a quarter point for the third meeting and
delivered a stern warning on short-term inflation challenges,
raising the odds of a coming pause to its easing cycle.

Policymakers led by Rosanna Costa voted unanimously to lower
borrowing costs to 5%, as expected by all analysts in a Bloomberg
survey except three who forecast no change, according to the
report.  Rates have tumbled from 11.25% in mid-2023, the report
notes.

In an accompanying statement, policymakers wrote that the inflation
outlook has become more daunting, the report relays. Chile's
consumer price dynamics have come under pressure from factors
including a weaker peso, rising electricity tariffs and higher
labor costs that include "significant" wage gains.



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

JAMAICA: Private Sector Call for Banks to Respond to BOJ Rate Cuts
------------------------------------------------------------------
RJR News reports that the leaders of the Private Sector
Organisation of Jamaica (PSOJ), Jamaica Manufacturers and Exporters
Association (JMEA) and the Jamaica Chamber of Commerce (JCC) are
calling for commercial banks to respond to the cut in interest
rates, recently announced by the Bank of Jamaica.

In a joint release, the business leaders said there is an urgent
need for commercial banks to reduce their lending rates in order to
stimulate economic activity, according to RJR News.

The Jamaican economy climbed by 1.40% during the first quarter of
this year, flatlined during the second quarter, and declined by
2.80% during the third quarter, the report notes.

The Planning Institute of Jamaica is also projecting a further
decline of 0-1.5% during the fourth quarter which ends soon, the
report.

The BOJ announced a further rate cut of 25 basis points to 6% per
annum from 6.25% per annum, 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.




===========
M E X I C O
===========

FIDEICOMISO IRREVOCABLE: S&P Affirms 'BB+' Rating on A-1 USD Notes
------------------------------------------------------------------
S&P Global Ratings affirmed its long-term global and national scale
ratings on Fideicomiso Irrevocable y Traslativo de Dominio Numero
2400's class A-1 and A-2 notes and removed them from CreditWatch
with negative implications.

The notes are backed by a first-lien perfected security interest in
a portfolio of nine properties developed by Grupo GICSA S.A.B. de
C.V. (GICSA; mxB/Stable) and managed by its subsidiary,
Desarrolladora 2054 S.A.P.I. de C.V. (Desarrolladora 2054; not
rated), which are located in Mexico and as of September 2024 had a
combined gross leasable area of 431,844 square meters of retail,
office, and mixed-use space.

The rating actions follow the recent rating actions taken on GICSA,
which was recently lowered to 'SD' and subsequently raised to
'mxB'after the company completed the restructuring on its senior
unsecured debt, GICSA 16U.

S&P said, "We affirmed our ratings on the notes and removed them
from CreditWatch with negative implications, reflecting our view
that the pressures stemming from the company's creditworthiness,
which could in turn affect our assessment of the deal's operational
risk, have been mitigated. The aforementioned is based on the
recent upgrade on the issuer credit rating on GICSA.

"The ratings on the notes remain capped at their current levels
based on our operational risk assessment. This reflects our view of
a "moderate" severity risk and "high" portability and disruption
risks. Our assessment also considers the potential additional risks
derived from the company's current creditworthiness, which could
further increase our view on disruption risk.

"The securitized portfolio continues to maintain a stable
performance in line with our expectations. According to the latest
servicer's reports, as of September 2024, the overall vacancy of
the portfolio was of 8.8%, below our current assumption of 12.6%.
On the other hand, reported annualized net operating income (NOI)
was MXN 1.48 billion, higher than our assumption of MXN 1.23
billion. In addition, the notes continue to make their principal
and interests payments according to the payment schedule.

"We will continue to monitor the performance of the portfolio and
of the servicer. A downgrade on the company could lead us to review
our operational risk assessment and imposing a lower cap to the
ratings. Also, vacancy levels above our expectations could lead us
to revise our valuation of the properties, which could pressure the
ratings downwards."


  Ratings Affirmed And Removed From CreditWatch Negative

  Fideicomiso Irrevocable y Traslativo de Dominio Numero 2400

  Class Senior A-1 MXN to 'BB+ (sf)' from 'BB+ (sf)/Watch Neg'
  Class Senior A-1 MXN to 'mxAA- (sf)' from 'mxAA- (sf)/Watch Neg'
  Class Senior A-1 USD to 'BB+ (sf)' from 'BB+ (sf)/Watch Neg'
  Class Senior A-1 USD to 'mxAA- (sf)' from 'mxAA- (sf)/Watch Neg'
  Class Senior A-2 MXN to 'BB+ (sf)' from 'BB+ (sf)/Watch Neg'
  Class Senior A-2 MXN to 'mxA+ (sf)' from 'mxA+ (sf)/Watch Neg'

  MXN--Mexican pesos.
  USD--U.S. dollars.




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

UENO BANK: S&P Assigns 'BB' Long-Term ICR, Outlook Stable
---------------------------------------------------------
S&P Global Ratings assigned its 'BB' long-term issuer credit rating
on Paraguayan bank Ueno Bank S.A. The outlook is stable.

S&P said, "We expect the bank's capital base, along with the
capitalization of earnings, to support the execution of its
business plan, with a forecast risk-adjusted capital (RAC) ratio of
approximately 5.5% for the next 12-24 months, calculated according
to S&P Global Ratings' methodology. Our analysis considers Ueno
Bank's growth strategy—both organic and inorganic—along with
the associated risks from Vision Banco's loan portfolio."
Furthermore, the rating reflects a stable, diversified, and
geographically dispersed deposit base that is consistent with other
banks in the system.

The adjustment considers the group's experience in the financial
sector and the synergies with other companies within the group,
which boost the bank's business and risk profiles. The synergies
among companies enable the bank to access a customer base,
providing valuable information that facilitates cross-selling
opportunities. This approach helps mitigate credit risks by
enhancing the bank's understanding of its clients. Grupo Vazquez
has been operating in Paraguay since 1945 in various economic
sectors through equity participations and financial support to
associated entities. The group has five business units: financial
services, technology, retail, agribusiness, and real estate.
Additionally, it has been active in the credit market since 1984
through Credicentro and it acquired Financiera El Comercio in 2021,
which has since been integrated into Ueno Bank.

Following a series of acquisitions and organic growth, the bank
received a banking license in 2023. As of September 2024, it ranks
as the ninth-largest entity in the Paraguayan banking system in
terms of credit and sixth in terms of deposits, with market shares
of 4.2% and 5.9%, respectively, a notable increase from 1.2% and
1.3% in 2023 prior to its acquisition of Vision Banco. The
corporate and SME lending segments represent the bank's largest
business line, comprising 71% of its loan portfolio, followed by
consumer loans at 20% and mortgages at 9%.

Approximately half of its revenue comes from net interest income,
followed by fees and services (25%), and other operating revenues
(25%). S&P views the bank's customer base as substantial and loyal,
which it expects to enhance the fee income in the coming years,
driven by the significant volume of credit cards issued and
associated fees (such as acquiring and payment operations). Ueno
Bank's profitability is similar to that of its peers, reporting
return on equity of 22% and 14% as of September 2024 and December
2023, respectively, compared to the peer averages of 18% and 17%.
Furthermore, the bank benefits from its affiliation with Grupo
Vazquez, which provides significant advantages through
cross-selling opportunities. This integration encompasses an
insurance division, a broker-dealer, an asset management firm, a
fiduciary business, and a digital payment processing network, all
operating within a cohesive digital banking platform.

To evaluate banks' capitalization levels, S&P Global Ratings
applies a globally consistent risk-adjusted capital framework,
independent of regional regulations and internal risk measures. Our
RAC methodology compares total adjusted capital to risk-weighted
assets, providing a more comparable risk metric than traditional
regulatory ratios. S&P's forecast incorporates the following
base-case scenario assumptions:

-- Loan growth of approximately 320% in 2024, driven by the
integration of Vision Banco and organic gowth, followed by 35%
growth in 2025 and 20% in 2026.

-- Lower margins during 2024-2026 due to loans under special
treatment, as these loans do not accrue interest while they are in
this category.

-- Return on average adjusted assets (ROAA) of 1.5%-2.0%.

-- Nonperforming assets of 1.5%-2.0%, with net charge-offs in
single digits, supported by high levels of loan-loss reserves.

-- A gradual impact of losses from loans under special treatment,
mainly in the next three years.

-- No dividend distributions until the regulatory transitory
measures are concluded.

Additionally, Ueno Bank reported solid regulatory capitalization
metrics of 17.0% as of September 2024, significantly exceeding the
regulator's minimum capital requirement of 12.0%.

S&P assesses Ueno Bank's asset quality as moderate, primarily due
to the risks stemming from rapid growth—both organic and
inorganic—and the challenges linked to Vision Banco's loan
portfolio, which is undergoing a special treatment.

Ueno Bank anticipates that the loans under special measures will be
amortized in the next six to seven years, a time is shorter than
the tenor established with the central bank. And the bank expects
manageable amortization of losses. As of September 2024, the
nonperforming loan (NPL) ratio remained below the industry average;
however, delinquencies from loans under the regulatory transitory
measures are not classified as NPLs. S&P has observed some
weakening of the repossessed assets, which are legacy assets from
Vision Banco and are expected to be sold in the short to medium
term. Prior to the acquisition, Ueno Bank's loan portfolio
demonstrated strong performance, benefiting from origination models
and data derived from the group's experience operating in the
financial sector.

S&P said, "We anticipate Ueno Bank's asset quality to slip due to
its rapid expansion into more risky lending segments. Additionally,
the bank's NPL coverage ratio was 978% as of September 2024,
compared with 127% as of December 2023, while the industry averages
were 132% and 122%, respectively. We believe that Ueno Bank's loan
portfolio is diversified in terms of single-name concentration,
with the 20 largest loans constituting 19% of its total portfolio
and 1.16x its tangible equity as of September 2024."

As of September 2024, deposits remained the primary funding source,
constituting approximately 92% of total funding. The remaining
funding sources consisted of credit lines from financial
institutions (5%) and subordinated debt (3%).

Ueno Bank's stable funding ratio was 131% in September 2024,
averaging 119% for the past three fiscal years ending December 31.
While Ueno Bank has the largest number of depositors within the
banking system, it ranks eighth in terms of total deposit volume.
The entity has a manageable concentration of deposits. The 20
largest deposits accounted for 25% of total deposits (about 10% are
deposits from the country's pension fund, same percentage as for
industry peers). For the next 12 to 18 months, S&P anticipates that
Ueno Bank will continue to rely on deposits as a key funding
source, while also diversifying its funding strategy through the
incorporation of bank lines and debt issuance in both domestic and
international markets.

In terms of liquidity, Ueno Bank is well-positioned, with broad
liquid assets covering 2.5x its short-term wholesale funding as of
September 2024, and the coverage ratio of averaging 1.1x for the
past three years. Most of liquid assets are allocated in government
bonds and high-quality instruments.

S&P assesses that Ueno Bank is effectively ring-fenced from its
parent, Grupo Vazquez which owns 84% of the bank. As a condition
for the acquisition of Vision Banco, the central bank of Paraguay
approved a regulatory transitory plan that requires Ueno Bank to
retain all profits for capitalization purposes for the plan's
duration. Consequently, the bank can't distribute dividends until
the loans under special treatment have been fully amortized which
limits the capacity of the group to negatively influence the
creditworthiness of the bank.

S&P said, "On the other hand, we consider Ueno Bank to be a
moderately important institution in the Paraguayan financial
system, ranking as the ninth-largest bank in the country. The
bank's market share is in mid-single digits, characterized by a
significant share of retail deposits and number transactions and
participation in the payment system in the country. In this
context, we anticipate that a default on Ueno Bank's senior secured
obligations would have a negative impact on the Paraguayan
financial system. We assess the Paraguayan government's propensity
to support banks as uncertain. This, combined with the factors
mentioned above, leads us to conclude that there is a low
likelihood of extraordinary government support for Ueno Bank, as
well as other systemic banks in the country, in the event of
financial distress. Consequently, we do not forecast any notch
uplift in the rating on the bank for support."



                           *********


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 2024.  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
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Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

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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,
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.


                  * * * End of Transmission * * *