/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/250131.mbx 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 Friday, January 31, 2025, Vol. 26, No. 23 Headlines A R G E N T I N A ARGENTINA: Moody's Hikes Issuer Ratings to 'Caa3', Outlook Positive B E R M U D A BERKING RE: A.M. Best Cuts Financial Strength Rating to B-(Fair) B R A Z I L AMBIPAR LUX: Fitch Rates Up to $500MM of Proposed Green Notes 'BB-' BRAZIL: Bankruptcy Filings Hit Record High in 2024 BRAZIL: Supports Gol-Azul Merger to Strengthen Airline Sector CIELO SA: Moody's Withdraws 'Ba2' Corporate Family Rating C A Y M A N I S L A N D S NATURAL CAPITAL: Chapter 15 Case Summary C O L O M B I A EMPRESA DE TELECOMUNICACIONES: Fitch Affirms BB+ IDRs, Outlook Neg. G U A T E M A L A INGENIO MAGDALENA: Fitch Affirms BB- LongTerm IDRs, Outlook Stable J A M A I C A JAMAICA: Remittance for Jan.-Oct. 2024 Declines 0.1% JAMAICA: Urges to Lower Cost of Banking P E R U COMPANIA DE MINAS: Fitch Assigns BB- Rating on Sr. Unsecured Notes P U E R T O R I C O PUERTO RICO: Mediators Hire PJT Partners for Debt Talks - - - - - ================= A R G E N T I N A ================= ARGENTINA: Moody's Hikes Issuer Ratings to 'Caa3', Outlook Positive ------------------------------------------------------------------- Moody's Ratings has upgraded the Government of Argentina's long-term foreign currency and local currency issuer ratings to Caa3 from Ca. The outlook has been changed to positive from stable. The upgrade of the ratings to Caa3 reflects Moody's view that the government's forceful policy shift has enabled fiscal and monetary adjustment that is helping to address economic imbalances and to stabilize external finances, decreasing the likelihood of a credit event. Significant risks to the country's ability to cover upcoming external debt payments remain, including those related to a removal of capital and exchange controls or from negative shocks that could lead to a credit event with material losses on bondholders. The positive outlook reflects upside potential for the ratings as Argentina continues to move toward the next phase of its macroeconomic adjustment. An orderly transition to a more open capital account would be consistent with higher ratings. Concurrently, Moody's have withdrawn (WR) Argentina's short-term foreign currency and local currency issuer ratings, both previously at Not-Prime (NP), its foreign currency and local currency senior unsecured ratings, previously at Ca, as well as its foreign currency senior unsecured shelf program, previously at (P)Ca, for Moody's own business reasons. Argentina's local and foreign currency country ceilings remain at B3 and Caa1, respectively. The three-notch gap between the local currency ceiling and the Caa3 sovereign rating balances the increasing predictability of government actions and institutions and a decreased footprint of the government in the economy and the financial system, against weak external balance of payments stability. The one-notch gap between the foreign currency ceiling and local currency ceiling reflects improved policy effectiveness and relatively low external indebtedness, balanced by low capital account openness. Country ceilings and sovereign ratings do not necessarily move in lockstep. RATINGS RATIONALE RATIONALE FOR THE UPGRADE TO Caa3 FORCEFUL MACROECONOMIC STABILIZATION SUPPORTED BY A FISCAL ANCHOR Argentina's credit fundamentals have improved over the past year, as a result of the effective and forceful policy adjustments that have led to a stabilization of the macroeconomic environment. President Javier Milei's administration took office on December 10, 2023, inheriting spiraling inflation, depleted international reserves, and extensive economic imbalances, conditions that led to a very high probability of a credit event. Decisive fiscal adjustment, alongside measures to halt monetary financing were put in place and have proven effective in addressing imbalances. A five percentage point of GDP fiscal adjustment operated as the main policy anchor. The drastic improvement in the fiscal accounts was driven by widespread cuts to spending that involved substantial reductions in public investment, transfers to state-owned enterprises and provinces, and to the public wage bill. The headline central government deficit through November 2024 reached a cumulative year-to-date 0.1% of GDP surplus, compared with a 4.4% shortfall by November of 2023. Strong fiscal outcomes have led to a major reduction in the government debt burden after it increased sharply in 2023 reaching 156% of GDP. Moody's estimate government debt stood at 77% of GDP last year and will continue to decline, moving towards 50% of GDP by 2026. Debt affordability has stabilized and Moody's project the interest-to-revenue ratio will gradually decrease moving to 18.7% in 2026 from 20% in 2024. The drastic correction of the fiscal accounts took a heavy toll on economic activity. Moody's estimate real GDP contracted 3.5% in 2024, but Moody's forecast the economy will rebound next year with growth of around 3% in 2025. The fiscal adjustment, allowed the central bank to strengthen its balance sheet and to adopt a restrictive monetary policy stance which helped to reduce inflation from very high levels. After peaking at 25.5% in December 2023, monthly inflation fell to single digits in March 2024 and has consistently slowed coming to 2.4% as of November 2024, and Moody's project annual inflation to be in the order of 40% in 2025. EXTERNAL ACCOUNTS HAVE STABILIZED, DECREASING THE LIKELIHOOD OF A CREDIT EVENT Increased foreign exchange liquidity and the rebalancing of the current account have eased external liquidity pressures. Argentina's external liquidity has increased on the back of a tax amnesty that helped bring nearly $20 billion (approximately 3% of GDP) in assets held abroad, and measures to attract additional foreign currency inflows are in place, allowing the authorities to gradually build up international reserves. The forceful shift in fiscal and monetary policies, the stabilization of external finances, and adoption of market-oriented reforms have boosted domestic private sector confidence and rekindled dynamism in domestic credit and financial markets. Additionally, the sovereign's EMBI spread has fallen below 600 basis points, increasing the likelihood that the government can regain access to external markets, allowing for increased financial inflows and the diversification of funding sources. SIGNIFICANT EXTERNAL VULNERABILITY RISKS REMAIN As Argentina moves to the next phase of the macroeconomic adjustment period, which will involve the removal of capital and exchange controls, new challenges will emerge that could compromise progress made to date, including balance of payments risks to which the authorities will have to respond. The inherent complexity of removing these controls without stoking financial inflows that would create new imbalances, capital outflows that would exacerbate existing ones, or the risk of excessive import growth, could jeopardize balance of payments sustainability. If excessive positive domestic sentiment overstimulates the nascent economic recovery, import demand could strengthen, increasing the vulnerability to an economic or political shock that could derail the ongoing adjustment of the country's external accounts. RATIONALE FOR THE POSITIVE OUTLOOK The positive outlook reflects upside risks to the ratings as the government continues to make progress on its macroeconomic stabilization program. The possibility of Argentina entering into a new program with the International Monetary Fund (IMF) would further support the country's external liquidity position. This would help anchor domestic and foreign investors' sentiment which could allow the sovereign to regain external market access and diversify funding sources. An acceleration of foreign investment inflows related to various projects in the energy sector to tap into the country's vast natural hydrocarbon resources, would improve Argentina's medium-term export and growth prospects, further strengthening the sovereign credit profile. RATIONALE FOR WITHDRAWING THE NP, Ca and (P)Ca RATINGS Moody's have decided to withdraw the rating(s) for Moody's own business reasons. ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS Argentina's ESG Credit Impact Score (CIS-5) indicates that ESG considerations, particularly weak governance, are material to the rating and weigh heavily on the sovereign's credit profile. Argentina's exposure to environmental risks (E-3 issuer profile score) is relatively limited and mainly arises from physical climate risks, carbon transition, water stress and threats to natural capital. In 2018 a major drought was a key driver of that year's economic recession, a shock that once again took place in 2023 with strongly negative implications for export earnings from the crucial agricultural sector. Heat and water risks will remain a credit challenge for the foreseeable future given the economy's heavy reliance on the agricultural sector that is the main earner of foreign currency for the country through the export of cereals and grains. Argentina's exposure to social risks (S-4 issuer profile score) is driven by labor and income trends that have deteriorated markedly owing to macroeconomic instability that has led to declining income levels and increased poverty rates within a highly rigid labor market. Wealth disparities and declining incomes exacerbate social tensions and increase political risks despite favorable demographics and comparatively strong educational outcomes. Governance risks (G-5 issuer profile score) weigh heavily on Argentina's credit profile due to long-standing challenges that have in the past led to inconsistent policymaking and debt defaults. Years of unpredictable and unsustainable fiscal and monetary policy frameworks have repeatedly resulted in fiscal and external imbalances that leave the economy prone to recession. GDP per capita (PPP basis, US$): 29,336 (2023) (also known as Per Capita Income) Real GDP growth (% change): -1.6% (2023) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 211.4% (2023) Gen. Gov. Financial Balance/GDP: -5.9% (2023) (also known as Fiscal Balance) Current Account Balance/GDP: -3.2% (2023) (also known as External Balance) External debt/GDP: 44.5% (2023) Economic resiliency: b1 Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On January 21, 2025, a rating committee was called to discuss the rating of the Argentina, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have materially increased. The issuer's institutions and governance strength, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has materially increased. The issuer has become less susceptible to event risks. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's would upgrade the sovereign's rating if a steady increase in international reserves is observed, leading to a sustained and material improvement of the country's external liquidity position. Evidence that long-term FDI-related inflows make a significant contribution to balance of payments sustainability could support a higher rating. Electoral gains by President Milei's party in the mid-term congressional elections that increase political support for the government's policy agenda and enhance the government's ability to adopt additional reforms, would strengthen Argentina's credit profile and could lead to an upgrade. Conversely, the outlook could be changed to stable if balance of payments, political and policy developments associated with a scenario that would lead to a rating upgrade do not materialize over the next 12-18 months. Moody's would downgrade Argentina's rating if political or economic shocks undermine macroeconomic stability, or increased financial volatility impairs the sovereign's ability to repay its external debt, leading to bondholder losses that exceed those consistent with a Caa3 rating. Inability to navigate the eventual elimination of capital controls while preserving long-term balance of payments sustainability could lead to a downgrade. An abrupt adjustment of the exchange rate that reinstates a vicious inflation-devaluation cycle, disrupting progress made on the macroeconomic stabilization front, may also result in a rating downgrade. The principal methodology used in these ratings was Sovereigns published in November 2022. The net effect of any adjustment applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable. ============= B E R M U D A ============= BERKING RE: A.M. Best Cuts Financial Strength Rating to B-(Fair) ---------------------------------------------------------------- AM Best has downgraded the Financial Strength Rating to B- (Fair) from B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) to "bb-" (Fair) from "bb+" (Fair) of Berking Re Limited (Berking Re) (Bermuda). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications. The ratings reflect Berking Re's balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM). The rating downgrades reflect a deterioration in Berking Re's balance sheet strength fundamentals, as well as ERM assessment. Berking Re's capital base weakened in 2024, driven by its limited initial capital size and accumulation of operating losses. The company's risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), is exposed to heightened potential volatility arising from the weaker-than-expected capital base along with the increase in risk exposure. In addition, the company has experienced a delay in the compilation of financial information for written business, which inhibits the preparation of timely business records, as well as the effectiveness of financial performance review and governance. AM Best expects Berking Re to take proactive actions to mitigate this shortcoming, as well as continue to bolster its corporate governance and risk management framework. The under review with negative implication status reflects AM Best's uncertainty regarding the capital position of Berking Re, which depends on the execution of capital plans by the parent company, PFY Health Technology Co., Ltd (PFY Cayman or PFY Group), and a clearer visibility into the company's latest financial performance for full-year 2024. Based on the information provided by the company, PFY Cayman is in the process of fund raising, followed by a planned material capital injection to Berking Re in the near term. In the event that PFY Cayman fails to successfully execute its capital plan without alternative contingent capital support, AM Best expects Berking Re's capital position to exhibit a fast deteriorating trend and no longer be supportive of its current balance sheet strength assessment. Moreover, AM Best views Berking Re as being exposed to potential contagion risk stemming from its parent group, given that PFY Cayman and its major operating subsidiary, PFY Health Technology (Shanghai) Co., Ltd, have exhibited capital erosion from sustained operating losses and adverse deviation from business and capital plans. The ratings will remain under review with negative implications pending the execution of PFY Cayman's capital plans in the near future and more visibility into Berking Re's audited financial performance for 2024. AM Best will continue to hold discussions with PFY Group's management team on its financial performances and capital plan execution to assess the impact to Berking Re's credit profile. AM Best also will continue to monitor the situation and provide updates as conditions warrant. =========== B R A Z I L =========== AMBIPAR LUX: Fitch Rates Up to $500MM of Proposed Green Notes 'BB-' ------------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to Ambipar Lux S.a.r.l.'s (Ambipar Lux) proposed senior unsecured green notes of intermediate tenor for up to $500 million that are unconditionally and irrevocably guaranteed by Ambipar Participações e Empreendimentos S.A. (Ambipar), Environmental ESG Participações S.A. (Environmental) and Ambipar Emergency Response (Emergency). Proceeds will be used for liability management. Fitch rates Ambipar's Foreign Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs) 'BB-'/Outlook Positive. Ambipar's ratings reflect its solid position in the environmental services industry, growth potential and geographic revenue diversification. The company benefits from a track record of contract renewals and reasonable margin protection from contractual cost pass-through mechanisms. The ratings are constrained by high consolidated gross leverage and significant cash flow consumption due to interest expenses. The Positive Outlook reflects Fitch's expectation that Ambipar will successfully implement its deleveraging strategy by focusing on organic growth, reducing debt and improving operating efficiency. Key Rating Drivers Strong Business Model: Ambipar's business model includes service provisions in its two main operating segments: environment (mainly waste management and recovery) and response (mitigation of environmental damage from accidents). The environment segment (in which the Environmental subsidiary operates) represents around 50% of the revenue. The segment benefits from agreements averaging five years in duration and low contractual exposure to volume risk. The response segment (where the subsidiary Emergência operates) corresponds to around 50% of revenue and is supported by renewable contracts lasting around three years. Approximately 25% of this revenue is from subscriptions, and the remainder is related to the number of occurrences. The company's current strategy, focused on organic growth, reduces its exposure to acquisition execution risks. Geographic Diversification: Ambipar's international activities are mainly in low-risk countries in Latin America, in addition to North America and Europe, which represent around 15%, 25% and 5% of its revenues, respectively. The historical renewals rate, above 95%, reflects reduced competition within similar geographic coverage and service offering, which gives Ambipar a competitive advantage. The company's strategy focuses on working mainly with private clients and expanding its operations through complementary service in an evolving industry with low penetration, high competitiveness and significant growth potential. Moderate Profitability: Fitch expects Ambipar's EBITDA margins to improve to around 30% from 27% in 2021-2023, as the company continues to benefit from economies of scale and synergies from past acquisitions. The expenses associated with fleet rental should reduce the margin expansion, despite some cost savings (e.g. fleet maintenance). About 70% of the cost structure is variable and mostly accounts for personnel, allowing greater flexibility to adjust and protect margins in periods of weak demand. Service provision contracts allow the pass through of payroll and other non-manageable costs. Increasing EBITDA: The base scenario considers increases in Ambipar's EBITDA to BRL1.8 billion in 2025 and BRL2.0 billion in 2026, from BRL1.6 billion in the LTM ended September 2024, supported by business expansion and higher efficiency. Cash flow from operations (CFFO) should reach around BRL337 million in 2025 and BRL560 million in 2026, still negatively affected by high interest payments. Investments are estimated to be in the BRL500 million-BRL550 million range in the two-year period, resulting in negative FCF close to BRL226 million in 2025 and BRL62 million in 2026. High Gross Leverage to Decline: Ambipar strategy to reduce working capital and capital intensiveness, improve cash cycle, and focus on organic growth, should allow gradual deleveraging. Fitch expects gross leverage of 4.5x at YE 2025 and in the 3.5x-4.0x range 2026 onward, as Ambipar strengthens its EBITDA and pays down debt. Net financial leverage has been moderate, with Fitch's base case scenario of a reduction to around 2.5x in the rating horizon. The substantial debt volume and rising interest rates are expected to lead to a modest interest coverage by EBITDA of less than 2.5x through 2027. Derivation Summary Ambipar's credit profile is weaker than that of Aegea Saneamento e Participações S.A. (Aegea; BB/Stable). Both operate under long-term contracts, with relatively stable demand, although Aegea's business is more resilient. Aegea's EBITDA margins in the 50%-60% range are higher than those of Ambipar (around 30%), although the geographic diversification of Ambipar's operations is superior, which strengthens its business model. Ambipar's rating incorporates the expectation of a gradual increase in its operating cash generation, while Aegea's rating considers the significant challenge of investments and efficiency improvements in recently incorporated key assets. Aegea's moderate leverage reflects the company's strong investment cycle and is likely to remain moderately higher than that of Ambipar throughout the rating horizon. Aegea's further demonstrated access to the debt market favors its financial flexibility. The credit profile of Ambipar compares favorably with that of Waste Pro USA Inc (Waste Pro; B+/Stable), given its improved business model with a more diverse geographical footprint and service provision, whereas Waste Pro is geographically focused on municipal solid waste collection in U.S. Southeast. Fitch expects both companies to achieve similar leverage levels. Key Assumptions - Average EBITDA margins close to 30% in 2025-2027; - Average annual investments in the BRL500 million-BRL550 million range in 2025-2027; - Dividends of 25% of net income; - No acquisitions. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The Outlook will be revised to Stable if the sensitivities for an upgrade are not achieved. In addition, the following sensitivities would lead to a downgrade: - Net Debt/EBITDA above 4.0x and Gross Debt/EBITDA above 5.0x, both on a sustained basis; - EBITDA interest coverage ratio below 1.5x, on a sustained basis; - Weakening of liquidity profile with an increase refinancing risk; - Deterioration of profitability, with EBITDA margins below 22%. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Net Debt/EBITDA below 3.0x and Gross Debt/EBITDA below 4.0x, both on a sustained basis; - EBITDA margin above 30% on a sustained basis; - Sustained positive (CFFO-Capex)/Debt indicator. Liquidity and Debt Structure Fitch believes that Ambipar will maintain robust liquidity, with a consolidated cash balance above BRL2.5 billion, and diversified access to funding sources in the coming years. At the end of September 2024, the group had a strong cash balance and equivalents of BRL4 billion, compared with short-term debt of BRL712 million. Fitch assumes that Ambipar will use a part of its liquidity to reduce total debt and the proceeds of the proposed bond issuance to prepay short-term debt and lengthen the debt amortization schedule. Ambipar's consolidated total debt, adjusted for acquisition obligations, was BRL8.7 billion on September 2024, which mainly consisting of notes (41%), debentures (30%) and working capital (19%). The parent company's debt was around BRL1.2 billion (mainly debentures), guaranteed by its subsidiaries. Issuer Profile Ambipar provides environmental services in Latin America (primarily in Brazil), the U.S., Canada and the UK. It operates in two main segments: response (mitigating and preventing environmental damage from accidents) and environment (managing and recovering industrial waste from private clients). Date of Relevant Committee 25 September 2024 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 Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3. 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. Entity/Debt Rating ----------- ------ Ambipar Lux S.a.r.l. senior unsecured LT BB- New Rating BRAZIL: Bankruptcy Filings Hit Record High in 2024 -------------------------------------------------- globalinsolvency.com, citing data from Serasa Experian, reports that Brazil reached a record high for bankruptcy protection filings in 2024, with 2,273 companies seeking judicial relief. This figure marks a 61.8% increase from 2023 and is 22% higher than the previous peak in 2016, which saw 1,863 filings, Valor International reported, according to globalinsolvency.com. Experts predict this trend will worsen, with both 2025 and 2026 expected to surpass last year’s numbers due to a more challenging economic outlook, the report notes. 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 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: Supports Gol-Azul Merger to Strengthen Airline Sector ------------------------------------------------------------- globalinsolvency.com, citing Reuters, reports that a planned merger between Brazilian airlines Gol and Azul would strengthen the sector and prevent either company from failing, Brazil's ports and airports minister told Reuters, giving the potential move a key government nod. Azul and Abra, the majority investor of Gol and Colombia's Avianca, announced earlier this month they had signed a non-binding memorandum of understanding with the intent of combining their businesses in Brazil, according to globalinsolvency.com. 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 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. CIELO SA: Moody's Withdraws 'Ba2' Corporate Family Rating --------------------------------------------------------- Moody's Ratings has withdrawn the Ba2 corporate family rating of Cielo S.A. The outlook prior to the withdrawn was stable. RATINGS RATIONALE Moody's have decided to withdraw the rating(s) for Moody's own business reasons. The last rating action on Cielo was on August 2024 when Moody's affirmed the Ba2 Corporate Family Ratings. The affirmation followed the approval of a tender offer by controlling shareholders, Banco do Brasil S.A. (Banco do Brasil, Ba1 positive) and Banco Bradesco S.A. (Banco Bradesco, Ba1 positive), to acquire up to all outstanding common shares issued by Cielo. COMPANY PROFILE Headquartered in the city of Barueri, Brazil, Cielo is a leading company in the merchant acquiring and payment processing industry in Brazil, with a presence in almost all Brazilian municipalities. =========================== C A Y M A N I S L A N D S =========================== NATURAL CAPITAL: Chapter 15 Case Summary ---------------------------------------- Chapter 15 Debtor: Natural Capital Ltd. Harbour Centre 159 Mary Street, 2nd Floor George Town Grand Cayman, Cayman Islands Foreign Proceeding: Grand Court of the Cayman Islands Financial Services Division; No. 165 of 2024 Chapter 15 Petition Date: January 23, 2025 Court: United States Bankruptcy Court Southern District of Florida Case No.: 25-10662 Foreign Representatives: Michael Pearson and Nicola Cowan 10, Market Street, #769 Grand Cayman, KY1 9006 Cayman Islands Foreign Representatives' Counsel: Leyza B. Florin, Esq. SEQUOR LAW, P.A. 1111 Brickell Avenue, Suite 1250 Miami, FL 33131 Tel: (305) 372-8282 Email: lflorin@sequorlaw.com Estimated Assets: Unknown Estimated Debt: Unknown A full-text copy of the Chapter 15 petition is available for free on PacerMonitor at: https://www.pacermonitor.com/view/GXIFCZA/Natural_Capital_Ltd__flsbke-25-10662__0001.0.pdf?mcid=tGE4TAMA =============== C O L O M B I A =============== EMPRESA DE TELECOMUNICACIONES: Fitch Affirms BB+ IDRs, Outlook Neg. ------------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Foreign Currency (FC) and Long-Term Local Currency (LC) Issuer Default Ratings (IDRs) of Empresa de Telecomunicaciones de Bogota, S.A., E.S.P. (ETB) at 'BB+' and the Long-Term National Scale Rating at 'AA(col)'. The Rating Outlook on the IDRs is Negative and the Outlook on the National Scale Rating is Stable. The affirmation of the IDRs reflects ETB's strong infrastructure and competitive advantages in the fiber-to-the-home (FTTH) segment, which have resulted in roughly 2.2 million homes passed with FTTH. The ratings also consider ETB's limited scale and business concentration in the city of Bogotá. The Negative Outlook on the IDRs reflects uncertainty about the pace of recovery of profitability, ARPU, growth of its subscriber base in FTTH and continuing pressure on FCF over the rating horizon. Key Rating Drivers Negative FCF: Fitch expects ETB's FCF to remain negative over the rating horizon, despite lowering CAPEX investment, due to intense competition, high interest payments, and dividends. As a result, Fitch expects ETB's total gross and net leverage to remain above its rating sensitivities of 2x and 1.5x in 2024 and 2025, respectively. Fitch forecasts gross leverage will decrease toward 2x, subject to the company's ability to implement cost efficiency measures, reduce CAPEX, and recover ARPUs with the increase of its FTTH subscriber base. Lower Capex Intensity: Fitch expects that ETB will reduce CAPEX intensity to 18% over the rating horizon from a historical high of 30%, shifting its focus to maintenance CAPEX. ETB benefits from its strong infrastructure, allowing it to connect new users through alliances with third parties and rent its network to other operators. Pressured Operating Margin: Intense price competition, coupled with cost inflation, has eroded margins, affecting operating cash flow generation. Fitch projects steady EBITDA margin in 2025 and a gradual recovery of the EBITDA margin starting in 2026 to close to 26%-27% from about 22% in 2024F (excluding asset sales) based on the company's commercial initiatives, improved ARPU and cost efficiency measures. Fitch expects revenue and profitability growth to be derived from increased growth in subscriber for FTTH, higher penetration in medium size company's segment, digital solutions, and limited churn rate. Intense Competition: Fitch expects the company's competitive position to remain under pressure as integrated telecom operators (Claro, Movistar, Tigo) push their commercial strategies to retain and grow their subscriber base in Bogotá. ETB is the second leading fixed operator in Bogotá based on subscriber market share, after leader Comunicacion Celular S.A. Comcel S.A. (Claro). ETB's estimated market share in the city is 27% in broadband. Revenues are concentrated mainly in its business-to-business (B2B) and government segment (50% of revenues), home and small-and-medium-sized-business (SME) segment (44% of revenues), and Mobile and other services (6%). Standalone Rating: ETB is rated on a standalone basis, as any recurring support from the District of Bogotá, its controlling shareholder, is unlikely. Fitch views the district's 2017 and 2023 decisions to restructure ETB's dividend liability, extending debt term and including a grace period to capital, as extraordinary support of the company's cash position. No Country Ceiling and/or operating environment constraint were in effect for these ratings. Derivation Summary ETB is rated similar than Colombia Telecomunicaciones S.A. E.S.P. (ColTel; BB+/Stable, a more diversified telecom, with a growing fixed operation and a strong mobile footprint in Colombia. ColTel exhibits a more levered capital structure compared to ETB. ETB is rated higher than UNE EPM Telecomunicaciones S.A. (TIGOUNE) (BB/Stable). Despite TIGOUNE's larger scale and diversification, its weak liquidity position and governance issues weaken its credit profile compared to other peers. ETB is rated the same as Telefonica Celular del Paraguay S.A. (BB+/Stable), the leading mobile operator in Paraguay (BB+/Stable), which exhibits a strong competitive position, and similar gross leverage of around 2.4x. Key Assumptions - Total revenues grow in the low-to-mid-single-digits over the rating horizon, backed by increased FTTH network penetration; - Capex intensity with an average of 18.6% and COP320 billion over the next five years; - No cash tax payments in rating horizon due to Financial Stability Agreement effects until 2029; - Dividends paid throughout the rating horizon defined with shareholders; - Refinancing all maturing debt throughout the rating horizon; - Comcel (Claro) agreement solved the contingencies: ETB has to pay COL90 bi in three years after the approval process. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Muted revenue growth, due to slower than expected subscriber growth in non-traditional services, amid continued material revenue erosion in copper-based services; - EBITDA margin deterioration without a material improvement in market position; - Total debt/EBITDA above 2.0x and/or net debt/EBITDA above 1.5x on a sustained basis; - Negative (cash from operations-capex)/debt; - EBITDA/interest expense below 3.0x on a sustained basis. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Stabilization of the rating could be considered if the company shifts the (CFO-capex) /debt ratio to neutral/positive territory towards 2026; - A positive rating action requires a consistent improvement in business scale and diversification; - A positive rating action would require an upgrade of the rating of the District of Bogota, plus improvements in the company's operating performance. Liquidity and Debt Structure Liquidity is adequate due to a long-term capital structure. As of September 2024, ETB had cash on hand of COP95 billion, with short-term debt of COP37 billion. ETB reported lines of credit of COP227 billion available as of Dec. 30, 2024. The company expects to close 2024 with cash on hand of COP130 billion with short-term debt of COP49 billion. Issuer Profile ETB is an integrated Colombian telecommunication company owned 86.36% by the District of Bogota. The company's main services offered include fixed voice traditional services (local and long distance), broadband (BB) and subscription TV services on its copper and fibre networks. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The 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 ----------- ------ ----- Empresa de Telecomunicaciones de Bogota, S.A., E.S.P. LT IDR BB+ Affirmed BB+ LC LT IDR BB+ Affirmed BB+ Natl LT AA(col)Affirmed AA(col) ================= G U A T E M A L A ================= INGENIO MAGDALENA: Fitch Affirms BB- LongTerm IDRs, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Ingenio Magdalena, S.A.'s (IMSA) Long-Term Local Currency and Foreign Currency Issuer Default Rating (IDR) at 'BB-'. The Rating Outlook is Stable. The affirmations reflect Fitch's expectation that IMSA will have a stable cash flow profile over the rating horizon supported by their domestic sugar sales and highly contracted electricity revenues. The ratings also reflect the company's leading position in sugar and biomass power generation in Guatemala in a generally stable operating environment. The ratings are limited by the company's small scale, tight liquidity position and the relative cyclicality and volatility of its commodities offering. Key Rating Drivers Solid Market Position: IMSA is Guatemala's leading domestic producer and exporter of refined sugar, with an approximate domestic market share of 22% in sugarcane crushing. IMSA crushes on average 6.4 million metric tons (MT) of sugarcane per year, representing over 60% of EBITDA as of 3Q24. The remaining sugarcane bagasse, combined with coal, is used to generate approximately 6% of Guatemala's total electricity consumption. Fitch anticipates the sugar business will represent around over 60% of IMSA's consolidated EBITDA going forward, while energy will represent 25%. This is based on increased sugarcane production and a stable contracted position derived from energy power purchase agreements (PPAs) with a remaining average life of seven years. Limited Headroom: Fitch estimates IMSA's EBITDA net leverage will remain below 3.0x over the rating horizon, while keeping EBITDA interest coverage on average around 4.0x. IMSA refinanced its 80 million bank debt with an amortizing syndicated loan in 2Q24, now maturing in August 2025 and has total debt of USD506 million as of 3Q24. Fitch estimates EBITDA around 170 million and net leverage of 2.8x for YE 2024. The company is expected to be able to refinance short-term maturities into the future but has limited headroom for additional debt. Predictable Sugar Cash Flows: Fitch expects about 50% of IMSA's revenues, over the rating horizon, to come from its local sugar sales and power generation business. Based on the fixed quota established by the local regulator, IMSA currently supplies 22% of Guatemala's sugar demand. With current prices at 34¢/lb and a local production of around 250,000MT, domestic sales are expected to average 185 million through the rating horizon. The domestic sugar market is heavily regulated, with pricing set by the regulatory authority referencing regional Central American markets. Prices have historically been stable and higher than international prices. Highly Contracted Power Revenues: IMSA generates 25%-30% of its EBITDA form its electricity business and Fitch expects this trend to continue over the rating horizon. IMSA currently has 90% of their 246MW of available installed capacity contracted through long-term PPAs with cost pass-through provisions and an average life of seven years. Revenues from capacity availability represent on average a third of IMSA's electricity business and provide predictable cash flow. By 2027, a new 25MW solar project is expected to come online which will be contracted under a PPA for 15 years. Tight Liquidity Profile: IMSA has historically managed a tight liquidity profile. Given the current debt maturity profile, Fitch expects IMSA to be able to maintain its liquidity, with projected positive FCF over the rating horizon, while considering the new solar project in Guatemala with capex of USD25 million. The company manages price volatility through a hedging program that typically aims to fix its export prices for 80% or more of its production. IMSA also purchases coal and energy from the grid to generate power outside of the sugar harvest season, which can lead to cost volatility in its energy business. Production Site Concentration: IMSA derives essentially all its EBITDA from a single location where all sugar crushing and refining and power generation occurs. Any disruption to this site could impair IMSA's ability to process, generate or distribute its products, which could cause it to incur revenue losses and reduced cash flow. The ratings do not factor in a catastrophic event but acknowledge IMSA's production concentration in a single industrial complex. Derivation Summary IMSA's ratings reflect its leading domestic position in sugar and biomass generation, both of which have been stable cash flow generators. The company's large export base should allow it to boost its cash flow materially during periods of high international sugar prices. IMSA has a more stable cash flow profile compared with that of corn-based ethanol producer FS Industria de Biocombustiveis Ltda. (FS; BB-/Stable), which is more exposed to commodity price fluctuations in both raw materials and products. IMSA counts its electricity business as a cash generator, as well as domestic sugar sales, which have a lower price correlation with international sugar prices. The stability of IMSA's highly contracted electricity business and predictable domestic sugar sales facilitates the company to carry a similar expected net leverage, at 2.9x in 2025, compared with FS's fiscal 2025 leverage of 2.8x. IMSA's ratings are four notches lower than Raizen S.A. (BBB/Stable). This gap reflects IMSA's smaller scale, weaker liquidity and a more leveraged capital structure. Raizen is the leading sugar and ethanol player and the second largest fuel distributor in Brazil. Fitch projects average net leverage for Raizen at 1.9x over the next three years. IMSA is also rated a notch below Tereos SCA (BB/Positive). Tereos' rating reflects its resilient market position as the second-largest sugar producer globally as well as moderate product diversification. Key Assumptions - Productivity yields of 109 tons/hectare from 2024-2027; - Average total sugar production and purchase of 680,000 tons through the rating horizon; - Average energy sales of 1,200,000MWh through the rating horizon (63% bagasse and 37% coal); - Average domestic sugar prices in U.S. dollars at 33 cents/lbs through 2027; - Export sugar prices in U.S. dollars in 2024 and 2025 at hedged price and average price of 24 cents/lbs from 2026 through 2027; - Fitch price deck for coal costs with costs declining over rating horizon - Solar plant coming online in 2027 with 88,000 Mwh in sales - Dividends policy remains at 30% of net income in 2024-2027; - Maintenance capex of around USD25 million per year. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A significant increase in scale; - A combination of debt reduction or higher EBITDA generation throughout sugar industry cycles, with a record of positive FCF generation leading to continued organic debt reduction and improved liquidity, would be viewed as positive for credit quality; - Expectations of midcycle net debt/EBITDA below 2.0x. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Expectations of sustained weakness in local sugar prices or in the contractual position of the company's electricity business; - Expectations of midcycle net debt/EBITDA above 3.0x; - Weakening liquidity that could see cash declining below USD25 million. Liquidity and Debt Structure Improving Liquidity: IMSA's liquidity has historically been tight though is expected to maintain thanks to solid cash-flow generation from operations. The company was granted a new committed credit line of USD50 million and maintains their syndicated USD100 million committed credit line. As of 3Q24, the company's debt was USD506 million, and cash on hand was USD22 million. Net leverage is expected to average below 3.0x over the rating horizon. Issuer Profile Ingenio Magdalena, S.A. is a sugar mill company located in Guatemala with a market leading position in the production of sugar and byproducts. The company is also the largest biomass power generator from sugar cane bagasse in the country. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The 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 ----------- ------ ----- Ingenio Magdalena S.A. LT IDR BB- Affirmed BB- LC LT IDR BB- Affirmed BB- ============= J A M A I C A ============= JAMAICA: Remittance for Jan.-Oct. 2024 Declines 0.1% ---------------------------------------------------- RJR News reports that the Bank of Jamaica is reporting that total remittance inflows from January to October of last year dipped by 0.1% to US$2.793 billion, when compared with the corresponding period in 2023. The central bank has also reported that Guatemala, Mexico and El Salvador recorded increases in remittance inflows for the corresponding period, according to RJR News. The BoJ is also reporting that 67.7% of the country's remittance inflows came from the USA for the months January to October last year, down from the 69.5% recorded during the corresponding months in 2023, the report notes. The BoJ also says 11?me from the UK, 10.7% from Canada, while the Cayman Islands accounted for 6.2 of remittance inflows, 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: Urges to Lower Cost of Banking --------------------------------------- RJR News reports that with banks facing pressure to lower interest rates on loans, a leading banker is urging the Jamaican government to take additional steps to reduce the cost of banking in Jamaica. President and CEO of Scotia Group Jamaica, Audrey Tugwell Henry, reiterated these concerns during the recent Investments and Capital Markets Conference hosted by the Jamaica Stock Exchange, according to RJR News. She stressed that banks currently pay 33.3% on their business operations while other corporate entities pay 25 per cent. Additionally, banks pay an asset tax on total assets held, "which is a disincentive to growth, but banks are growing anyway," she declared, the report notes. She also recalled that the Jamaican government had implemented "a temporary measure" to institute an asset tax on banks but has not removed it, "and that creates a burden on the Jamican public because it is a burden that the banks are bearing," the report relays. Mrs. Tugwell Henry also raised concern about transactions which attract General Consumption Tax, noting that "every single banking service attracts GCT," the report says. Therefore, she said, "if the Government of Jamaica is interested in taking down the cost to the consumers, those are all things that are within their control, to make banking services and interest rates lower for consumers," 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. ======= P E R U ======= COMPANIA DE MINAS: Fitch Assigns BB- Rating on Sr. Unsecured Notes ------------------------------------------------------------------ Fitch Ratings has assigned a 'BB' rating to Compania de Minas Buenaventura S.A.A.'s benchmark proposed senior unsecured notes with intermediate maturity. Proceeds from the proposed notes will be used to refinance the existing senior unsecured bonds due in 2026 and for general corporate purposes. Fitch currently rates Buenaventura's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) 'BB'/Stable. Buenaventura's ratings reflect its improving production and operational diversification profile, low leverage, and good liquidity. The ratings are constrained by the company's small scale and high cost profile. Fitch estimates the company's gross and net leverage ratio to average 1.3x and 0.3x between 2024 and 2026. Fitch estimates that dividends received from Cerro Verde will comfortably cover debt services through the rating horizon by more than 2.0x on average. The current transaction is in line with Fitch's expectation that Buenaventura would remain proactive to refinance their 2026 bond to avoid market risks. Key Rating Drivers Increasing Operational Scale: Fitch expects a positive impact on the scale of production and EBITDA generation from the reintroduction of the Uchucchacua complex in 2024 and the start-up of the San Gabriel mine in 2H25. Fitch anticipates Buenaventura's gold equivalent ounces (GEO) production will increase to 613 thousand ounces (koz) in 2024, from 566koz in 2023. GEO production will fall to 576koz in 2025 due to the closure of legacy mines before further expanding to 685koz in 2026. Fitch projects the company's EBITDA will jump 44% in 2024 to $574 million before falling to below $470 million in 2025 and $450 million in 2026, affected by mid-cycle pricing. Cost and Mine Life Improvements: Buenaventura's focus on new major mines is expected to improve its overall cost profile and extend mine life. Management expects San Gabriel's lower production cost, relative to the aging Tambomayo and Orcopampa mines, will improve Buenaventura's consolidated cost position to below the 90th percentile of CRU's gold all-in sustaining costs (AISC) cost curve. Uchucchacua's ramp-up should reduce costs, with an expected 35% decrease due to sales over the next four years. The reserve life of major mines, contributing over 80% of EBITDA, will increase to 14 years from the previous level of below 10 years. Good Market Position Cerro Verde: Cerro Verde is Peru's second-largest copper mine and the sixth largest by capacity worldwide. It is an open-pit mine with over 30 years of life that produces more than 430,000 metric tons (MT) of copper annually at the third quartile of the AISC curve, with a cost of $5,234/MT in 2023, according to CRU Group. EBITDA margins are around 45%, and the asset is debt-free with low capex. Cerro Verde is a joint venture among Freeport-McMoRan Inc., (BBB/Stable), Buenaventura, and Sumitomo Metal Mining Company Ltd. Lower Reliance on Cerro Verde Dividend: Fitch expects the contribution from Cerro Verde dividends to EBITDA after associates to decrease from an average of 37% (2021-2023) to 32% (2024-2026). This is due to Buenaventura's consolidated EBITDA growth outpacing Cerro Verde's dividend growth, resulting in a stronger financial structure for Buenaventura. Excluding Cerro Verde dividends, gross and net leverage from 2024-2026, at 1.9x and 1.5x respectively, will keep Buenaventura well-positioned in the 'BB' category. FCF Shifting Positive: Fitch expects EBITDA after dividends (including those paid to non-controlling interests) to peak at $574 million in 2024, before declining to $464 million in 2025 and $442 million in 2026 under Fitch's conservative price assumptions. Capex is projected at $373 million in 2024 and $354 million in 2025 as the San Gabriel construction and ramp-up are completed. Dividends are expected to average $23 million annually. FCF after capex and dividends will remain low but slightly positive until 2026, when reduced capex leads to double-digit FCF margins. Derivation Summary Buenaventura's scale of operations from its direct mines is smaller than that of diversified peers Industrias Penoles, S.A.B de C.V. (Penoles; BBB/Stable), Nexa Resources S.A. (Nexa; BBB-/Stable), Minsur S.A. (BBB-/Stable) and gold-focused Endeavour Mining plc (BB/Stable). Buenaventura's operational scale is much closer to those of Volcan Compania Minera S.A.A. (Volcan; B-/Stable) and Hudbay Minerals Inc. (BB-/Stable). However, Buenaventura's EBITDA generation is larger due to dividends received from the large-scale Cerro Verde mine. Buenaventura conducts mining operations only in one country (Peru), like Volcan (Peru), Minsur (Peru), or Penoles (Mexico), but unlike Nexa (Peru, Brazil), Hudbay (Peru, Canada), or Endeavour (Western Africa). Buenaventura's mineral diversification is among the highest in its peer group, similar to Penoles. In comparison, Endeavour is the least diversified, with a sole focus on gold production. Buenaventura's major mines have a mine life of 14 years, aligning closely with Hudbay and Minsur, which have mine lives of 14 and 13 years, respectively. It also compares favorably against Volcan's four-year mine life and Endeavour's 10 years. Fitch expects Buenaventura's gross and net leverage to average 1.3x and 0.3x, respectively, over the next three years. This is similar to peers Endeavour (1.0x and 0.4x) and Minsur (1.2x and 0.8x), comparing favorably against other peers Volcan (3.4x and 3.2x) and Nexa (3.1x and 1.8x). Key Assumptions - Gold price at $2,400/oz, $2,100/oz, and $1,800/oz in 2024, 2025, and 2026, respectively; - Silver price at $30.00/oz, $26.25/oz, and $22.50/oz in 2024, 2025, and 2026, respectively; - Copper price at $9,100/tonne, $8,500/tonne, and $7,500/tonne in 2024, 2025, and 2026, respectively; - A 10% decrease in gold sales to 140,000 oz, a 63% increase in silver sales to 15.0 million oz, and unchanged copper sales at 58,000 MT during 2024; - A 37% fall in gold sales to 88,000 oz, considering Fitch's expectation of San Gabriel sales beginning in 2026, a 3% increase in silver sales to 15.5 million oz, and a 2% decrease in copper sales to 57,000 MT during 2025; - A 112% increase in gold sales to 186,000 oz, an 8% increase in silver sales to 16.8 million oz, and a 4% increase in copper sales to 59,000 MT during 2026; - Capex reaches $373 million in 2024, $354 million in 2025 and $118 million in 2026; - Dividends paid of $28 million in 2024, and $20 million in 2025 and 2026; - Dividends received from Cerro Verde of $183 million in 2024, $157 million in 2025, and $146 million in 2026. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Sustained gross debt/EBITDA levels of more than 2.5x with an unwillingness or inability to deleverage; - Inability to replenish reserves and resources leading to a significantly lower mine life at key operations; - Consistently negative FCF, driving down the company's comfortable liquidity position; - An adverse change in the overall framework toward mining projects in Peru. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Decrease in the AISC of the company's gold mines to the high end of the second quartile of the cost curve; - Significant increase in operational scale while maintaining a reserve life greater than 10 years; - Sustained gross debt/EBITDA levels of less than 1.0x; - A positive resolution of the tax liability paid under protest and currently under litigation, obtaining reparations of about $330 million. Liquidity and Debt Structure Buenaventura maintained an adequate liquidity position over the last few years and recently strengthened it significantly. Buenaventura ended 3Q24 with $458 million in cash and marketable securities, which represents a 108% increase from YE 2023. The company has $200 million of committed revolving credit facilities that remain undrawn. The company's $675 million of debt comprises a $545 million bond due in 2026, $55 million in loans for El Brocal, and a $75 million financing lease related to the Huanza hydro power plant. The proposed refinancing pushes the first major debt maturity out to 2027 when the final instalments of the Huanza lease comes due. Criteria Variation Since Fitch updated its "Corporate Rating Criteria" following the implementation of IFRS 16, lease-related debt for mining companies has been reclassified as "other liabilities" and excluded from leverage calculations. For Buenaventura, Fitch has treated the financing lease of Huanza, Buenaventura's hydroelectric subsidiary, as financial debt in its leverage calculations, as the company intends to refinance this debt with either a private placement, bank loan, or capital markets bond. Date of Relevant Committee 05-Dec-2024 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The 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 ----------- ------ Compania de Minas Buenaventura S.A.A. senior unsecured LT BB New Rating ===================== P U E R T O R I C O ===================== PUERTO RICO: Mediators Hire PJT Partners for Debt Talks ------------------------------------------------------- Michelle Kaske of Bloomberg News reports that the mediation team working to reduce nearly $9 billion in Puerto Rico Electric Power Authority debt has brought in PJT Partners Inc. as an adviser as negotiations with bondholders progress. In a court filing on Tuesday, January 28, 2025, the team asked U.S. District Court Judge Laura Taylor Swain to extend the litigation stay in the utility's bankruptcy case until March 17, 2025, providing more time to reach a potential settlement. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States. The chief of state is the President of the United States of America. The head of government is an elected Governor. There are two legislative chambers: the House of Representatives, 51 seats, and the Senate, 27 seats. In 2016, the U.S. Congress passed PROMESA, which, among other things, created the Financial Oversight and Management Board and imposed an automatic stay on creditor lawsuits against the government, which expired May 1, 2017. The members of the oversight board are: (i) Andrew G. Biggs, (ii) Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J. Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii) David A. Skeel Jr. On May 3, 2017, the Commonwealth of Puerto Rico filed a petition for relief under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). The case is pending in the United States District Court for the District of Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico's PROMESA petition is available at http://bankrupt.com/misc/17-01578-00001.pdf On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation (COFINA) commenced a case under Title III of PROMESA (D.P.R. Case No. 17-01599). Joint administration has been sought for the Title III cases. On May 21, 2017, two more agencies -- Employees Retirement System of the Government of the Commonwealth of Puerto Rico and Puerto Rico Highways and Transportation Authority (Case Nos. 17-01685 and 17-01686) -- commenced Title III cases. U.S. Chief Justice John Roberts named U.S. District Judge Laura Taylor Swain to preside over the Title III cases. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose LLP; and Hermann D. Bauer, Esq., at O'Neill & Borges LLC are onboard as attorneys. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains the case Website https://cases.primeclerk.com/puertorico Jones Day is serving as counsel to certain ERS bondholders. Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General Obligation Bondholders. ********* 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 2025. 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 re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, 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, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *