Colombia and Germany are currently discussing implementing a debt-for-nature swap, an innovative financial mechanism designed to support environmental conservation. This deal would represent a key part of Colombia’s $40 billion climate transition plan, which seeks to shift away from fossil fuels and promote sustainable development.

During COP16, Chancellor Luis Ernesto Murillo confirmed that Germany is interested in pursuing this debt swap with Colombia, stating: “The German government has agreed to make symbolic gestures through a debt-for-nature swap operation.”

Months of Dialogue on Environmental Debt Swap

In September, President Petro (above, right) and the German Chancellor, Olaf Scholz (above, left)met to discuss the climate-focused debt swap and other environmental topics related to Colombia.

The Colombian president stated: “We had a lengthy discussion about what is happening in the Amazon rainforest and the ways to make the debt-for-climate swap a reality.”

According to the Ministry of Foreign Affairs, The Colombian Chancellor also met in Hamburg with Vera Songwe and Moritz Kraemer, who lead the Independent Expert Group (IEG) on debt and climate change. Susana Muhammad, the Colombian Minister of Environment and Sustainable Development, stated that the country is seeking $40 billion from various sources, including private sector and bank investments.

Photo: Presidencia de la República (Colombia)

You’re all being spared a video this morning because, truth be told, Colombia is short on news. This should have been the week when Banco de la República—Colombia’s central bank—cut interest rates by 1% to 8.75%. Instead, while they sit down for coffee, cake, and cash their paychecks, no decisions will be made. They only meet eight times a year for this—surely, that nonsense needs to change.

What also needs to change is the politicalization of the committee, which has left overnight rates at an artificially high level. The economy, according to experts like the Banking and Financial Institutions Association of Colombia Asobancaria, is already expanding. Consumer durables imports are rising, per the National Administrative Department of Statistics DANE Colombia. Inflation has been tamed, but things could be better if the central bank had done its job. Waiting until their next meeting on December 20? Too late.

Meanwhile, Bancolombia reports this morning that the National Directorate of Taxes and Customs DIAN is behind on 2024 tax collections—possibly $2.5 billion short. The only saving grace might be the delayed government spending execution for 2024. Minister of Finance, Ricardo Bonilla, hints at possible 2025 budget cuts, which Fitch Ratings acknowledged last week while reaffirming Colombia’s BB+ (Stable) rating.

And let’s talk about the weather. Torrential rains are wreaking havoc across the country, with videos of cars swept away by floods dominating the news. Yet, hydroelectric reservoirs, per CREG, are above alert levels. In contrast, Bogotá is still grappling with water shortages—a paradox that sums up Colombia’s complexity as we brace for La Niña. Institute of Hydrology, Meteorology, and Environmental Studies IDEAM hasn’t announced it yet, but surely it’s just a matter of time.

The minimum wage debate is ongoing, with a deadline of December 15 for a proposal to emerge.

For now, there’s little else to report.

Regards,
Roops

Mineros SA (TSE: MSA) is a rather uncommon mine for Colombia. While most mines are surface or underground mines, Mineros focuses on river mining. Still, CFO Alan Wancier insists that the company goes above and beyond what is required with regards to environmental stewardship, and also the company’s social commitment to the largely impoverished community around Nechí, Antioquia, in Colombia’s Bajo Cauca (lower Cauca River) region. Once home to the fabled Zenú people, who created beautiful, intricate gold jewelry and artwork until decimated by the Spanish, the area of lowland plains and marshes still hold lots of gold. However, downstream of the volcanic highlands to the south, this gold is alluvial.

Finance Colombia’s Executive Editor Loren Moss spent a few minutes with Mineros SA CFO Alan Wancier to discuss the company’s social commitments and unusual (for Colombia) mining techniques.

Finance Colombia: I’m here with Alan Wancier of Mineros. Mineros has been a long-time sponsor of the Colombia Gold Summit. We’re here at CGS 2024. You just gave a really interesting presentation talking about Mineros. Mineros is a mining company. I think, if I’m not mistaken, you guys are based right here in Medellín, right?

Click on the above image to view the video.

Alan Wancier: Yes, our headquarters are in Medellín. Yeah.

Finance Colombia: Yeah, but you’re on the TSX.

Alan Wancier: Yes, also.

Finance Colombia: Great, great. And so, you guys have an interesting model because a lot of the mines, the precious metals mines that I’ve seen here in Colombia are your traditional kind of deep tunnel mines, but you guys have diverse operations. You guys have here in the north of Antioquia an interesting alluvial mining operation. If you could touch a little bit on that.

Alan Wancier: Yeah, so, we have an alluvial operation in El Bagre, Antioquia. It’s called the Nechí Mine. We have roughly five bucket dredges, nine suction dredges, and another couple of Brazilian dredges. We mine the bank of the river. Not the river, per se, in a closed pond. We create a closed pond, water doesn’t mix with the river water. And our deposit is between 15 meters and 30 meters deep. We dredge the deposit, we do the beneficiation within the bucket dredges, and inside the bucket dredges, all gold is separated just by water and gravity.

Finance Colombia: So that’s another thing I was going to ask you, because a lot of traditional mining operations need either cyanide or mercury, but you guys have a process that you use, I think a gravity-based process, that’s a lot more environmentally friendly.

Alan Wancier: Yes. We only use water and gravity, no chemicals, and the electricity for the dredges comes from our hydroelectric plants. So we have a very, let’s say, green gold. Our gold is very, very sustainable. And as we move upwards in the deposit or downstream in the river, we close the mine, we put a layer of soil, we plant again, and grass and forests grow again.

Finance Colombia: So, very environmentally responsible.

Alan Wancier: Yes, very environmentally responsible.

Finance Colombia: Now, that area of Colombia has also suffered from underinvestment and a lack of attention from the authorities. You also mentioned some of the things that, you know, you talked about the environmental responsibility that you guys have, but you also have some social programs and ways that you interact with the local economy up there, right?

Alan Wancier: Yes, we invest a lot in the local economy. We have a bee plantation, a bee…I’m not sure how you say it in English.

Finance Colombia: In Spanish.

Alan Wancier: An aviary…Beekeeping.

Finance Colombia: For a bird. Hatchery, a bird-

Alan Wancier: No, but for bees. Bees.

Finance Colombia: Oh, bees. Okay, apiculture.

Alan Wancier: Apiculture.

Finance Colombia: I forget the word for honey and bees. Yeah, there’s a word for it. I forget what it is in English [laughs].

Alan Wancier: We also have one of the biggest rubber plantations-

Finance Colombia: Oh, wow.

Alan Wancier: In the country. We also have some small projects, growing fish. And we also invest a lot in infrastructure.

Finance Colombia: Okay.

Alan Wancier: We invest a lot in the education; we have built bridges, we have built roads, and we invest a lot in the community, and we are very, very close to the community, and the community is very close to us for that reason.

Finance Colombia: I see, and that’s good. You know, I know that you guys have been good citizens. I’ve followed you all for some time, being here in Colombia. And I think one of the things also that you talked about, you know, our audience is made up of a lot of institutional investors, and it sounds like your shares are kind of trading at a bargain rate of discount, right now.

Alan Wancier: Yes, our shares, compared to our peers, are very cheap.

This is because, maybe several reasons. Probably the major reason is that we’ve been public in Colombia for 50 years.

Finance Colombia: Yeah.

Alan Wancier: Since the 1980s, give or take. But Colombia is a very illiquid market. We were the only gold mining company in the exchange. So, people and investors do not know how to value us in Colombia.

Finance Colombia: Right.

Alan Wancier: That’s why we did an IPO in Canada in 2021, with the idea that more people are going to know us and the idea for us to be better valued and to be able to do more business with other mining companies. In Canada, we started with a small float, only $25 million in the IPO.

But we’ve slowly been moving shares, or investors have been moving shares, from Colombia to Canada. And as more shares are moving in Canada, we get more liquidity in Canada and a better share price. As an example, last year in Canada, we were trading at 20,000 shares per day on average. Today, we’re trading 80,000 shares per average. So we have quadrupled the liquidity in Canada, and our strategy is to keep increasing that liquidity to maybe get a better rate or to get a re-rate in the future. Our stock has almost tripled since nine months ago, a year ago, for various reasons. Primarily because we have a new majority shareholder.

So those changes in shareholders have made a good positive impact in the Canadian and economic market. Also, of course, the price of gold has increased. That helps all gold mining companies. We have had very good results, and we hope to continue to have good results in the future. We also have had a bigger exposure to investors. We are going to every conference we can, and we are getting our name out.

Finance Colombia: I see that, and that’s important. You guys, I think that, one, when you bring in a majority shareholder, that’s a vote of confidence from the institutional capital markets. And it’s also, I think, important to point out that you guys are no startup. I think you guys are celebrating, like, your 50th anniversary.

Alan Wancier: We celebrated our 50th anniversary about a month ago, 3 weeks ago. Yes, we’re no startup, and we produce cash. We’re one of the few companies that actually makes cash and pays a dividend, and we pay a hefty dividend. Our current dividend yield is at 10%, and we have paid dividends for decades. We are probably an aristocrat dividend payer, probably compared to Agnico in terms of the number of years paying dividends consistently.

Finance Colombia: That’s unusual because a lot of the mining companies we see here in Colombia, not all of them, but a lot of them, are early-stage, still exploratory, juniors, things like that. But you guys are an established operation with a track record, and so I think that your move to TSX, your continued growth, and your responsibility as a company means that more investors are going to be inevitable, and I think that they are aware of you. So, thanks again for your time. Great presentation. And I think that mineros.com.co is how people can find out about it. And what’s the TSX symbol again?

Alan Wancier: MSA.

Finance Colombia: MSA.

Alan Wancier: MSA on the TSX.

Finance Colombia: Worth keeping a look-out.  I’m going to add that to my watch list, if not more, so thanks a lot.

650+ Senior Global Banking & Markets Attendees

350+ Pre-Arranged Business Meetings

89% Director Level or Above

110+ Industry Expert Speakers

Benefits of Attending

The Colombian government continues to enhance its commercial and industrial ties with China, as evidenced by the recent visit of Luis Carlos Reyes Hernández, Minister of Commerce, Industry, and Tourism, to Shanghai. The visit aimed to promote investment opportunities in areas such as energy transition, infrastructure, and technology, and was part of the broader strategy under President Petro’s administration to attract strategic investments and advance inclusive, sustainable development.

Reyes, accompanied by Acting Deputy Minister of Business Development Lorenzo Castillo Barvo, held meetings with Chinese investors and visited key industrial sites including the headquarters of technology giant Huawei, the automotive company SAIC, and the electric vehicle manufacturer BYD, which has a notable presence in Colombia’s electric bus sector. The trip also included a tour of Yangshan Port, the world’s largest port, renowned for its state-of-the-art automation and zero-emissions operations, which Colombia hopes to emulate to improve its own logistics infrastructure.

These meetings coincide with Colombia’s ongoing efforts to strengthen its participation in China’s Belt and Road Initiative (BRI), which has sparked both interest and concern across the region. China’s BRI is a multi-billion-dollar infrastructure and investment strategy aimed at enhancing global trade links. For Colombia, formal participation could mean increased investment in critical sectors such as energy and transportation. However, the initiative has also raised concerns about increasing Chinese influence in Latin America and the long-term geopolitical implications of deepening ties with the Asian power.

Colombia’s government is focusing on collaboration with Chinese entities in infrastructure, renewable energy, and technology, areas that align with global trends towards sustainable development. At Huawei’s Shanghai facility, Reyes explored advances in artificial intelligence, fiber optics, 3D modelling, and 5G technologies, while discussions with companies like Alibaba, ZTE, and Jinkosolar underscored Colombia’s push to boost its digital and green economy.

During his visit, Reyes also participated in the China International Import Expo (CIIE), a major trade event that draws global participants. Colombian companies including LOK Foods, Madremonte, and Minerva showcased their products to Chinese buyers, hoping to capitalize on the growing demand for Colombian goods in China. Reyes emphasized the importance of international trade for Colombia’s economy but stressed that the benefits should reach all sectors of society, particularly rural communities involved in agriculture.

While the Colombian government appears eager to capitalize on China’s economic potential, critics of the BRI are concerned about its broader geopolitical impact. The initiative, which has been expanding across Latin America and other developing regions, often involves Chinese loans for large-scale infrastructure projects. Critics argue that these loans can increase the indebtedness of participating countries, making them more susceptible to China’s economic and political influence.

In a parallel development, discussions about Colombia’s official participation in the BRI were revisited during a trade event between Colombia and China’s Guangdong-Hong Kong-Macao Greater Bay Area (GBA) in October. Luis Diego Monsalve, former Colombian ambassador to China, indicated that efforts were underway to formalize Colombia’s involvement in the BRI, highlighting the economic benefits but also noting potential risks of growing dependence on Chinese investments.

China’s BRI has sparked concerns about the environmental and financial risks posed by massive infrastructure projects in developing nations. However, Colombia’s government remains focused on harnessing the economic potential of Chinese investment to support its transition to a sustainable economy. This balancing act will be critical as Colombia continues to navigate its relations with China, while ensuring that the long-term benefits of these investments are not overshadowed by the geopolitical risks associated with the Belt and Road Initiative.

As Colombia and China strengthen their commercial relationship, the implications for regional geopolitics and the future of the Belt and Road Initiative will remain a central issue. The growing influence of China in Latin America and the Caribbean is set to redefine trade dynamics and the balance of power in the region in the years to come.

For more details on the BRI and its implications for Latin America, see Guangdong Provincial Development and Reform Commission and Huawei’s Technology Solutions.

Above photo: Luis Carlos Reyes Hernández, Minister of Commerce, Industry, and Tourism (courtesy MinCIT)

Fitch Ratings has placed HDI Seguros Colombia S.A. (HDI Seguros Colombia), previously known as Liberty Seguros S.A., on a Positive Rating Watch, maintaining the company’s national financial strength rating of ‘AA+(col)’. The outlook change reflects Fitch’s anticipation of improved business profile and financial performance following the ongoing merger with HDI Seguros S.A.

The rating watch is expected to resolve upon the completion of the merger and the release of consolidated financial statements, which Fitch will review to determine if HDI Seguros Colombia’s performance aligns with the current rating or merits an upgrade. Fitch indicates that the process may extend beyond the usual six-month timeline required for a Positive Rating Watch resolution.

Key Factors in Rating Decision

Ongoing Merger with HDI Seguros S.A.
Following its acquisition by Germany’s Talanx Group in February 2024, HDI Seguros Colombia initiated a merger with HDI Seguros S.A., changing its corporate name and submitting a legal merger approval request to Colombian regulators. Once approved, HDI Seguros Colombia will absorb HDI Seguros S.A.’s operations. Fitch views this consolidation as potentially enhancing HDI Seguros Colombia’s business profile and operational results.

Support from Talanx Group
HDI Seguros Colombia now benefits from financial and strategic backing from Talanx Group, which has been designated as the new parent company. Fitch considers Talanx’s support significant, as Colombia is an essential growth market for the group, providing brand, operational, and technical synergies, along with capital support if needed.

Medium-Sized Company with a Strong Market Position
At the close of 2023, HDI Seguros Colombia ranked as the tenth-largest general insurance provider in Colombia, holding a 4.4% market share. The company maintains a notable presence in the auto insurance sector, accounting for 8.7% of premiums in this segment. Fitch notes that the merger with HDI Seguros S.A. is likely to strengthen HDI Seguros Colombia’s market position and facilitate the adoption of best practices within its operations.

Performance Improvements and Risk Exposure
The company’s operating performance has seen improvements, with favorable loss ratios across its main business lines. This performance has been supported by reserve releases within compliance and liability lines, though Fitch expects this effect to be temporary as HDI Seguros Colombia phases out underwriting in these lines. The company reported a combined ratio of 96.7% at the end of 2023 and 95.5% by mid-2024, though these metrics remain influenced by recent reserve releases. Fitch will monitor future loss ratios for further clarity.

Reduced Leverage Levels
In 2023, HDI Seguros Colombia reversed a previous trend of declining equity, recording a 32.5% increase in equity that continued into 2024 with 24.6% growth by mid-year. Internal resource generation and modest retained premium growth contributed to improved leverage ratios. Between the end of 2022 and 2023, the company’s retained premium-to-equity ratio decreased from 1.62x to 1x, while net leverage dropped from 2.51x to 2.14x. As of mid-2024, these indicators stood at 1.25x and 2.17x, respectively. The company maintains a solvency margin of 237% and will assess its dividend policy following the merger’s completion.

Conservative Investment Portfolio
HDI Seguros Colombia’s investment portfolio remains conservative, with a focus on fixed income assets and limited exposure to riskier investments. As the merger progresses, Fitch expects adjustments to the investment guidelines to standardize the policies of both companies. The agency will monitor how these changes impact portfolio performance.

Rating Sensitivities

Potential for Rating Downgrade
Fitch may remove the Positive Rating Watch and affirm the current rating with a Stable Outlook if the combined entity’s profitability and leverage metrics show a decline relative to the 2023 and 2024 levels.

Potential for Rating Upgrade
The Positive Rating Watch could be resolved with an upgrade if consolidated financial results continue to demonstrate improved performance, with a combined ratio near 100%, comparable to peers in higher rating categories, and leverage levels in line with averages from the past three years.

Regulatory Information

HDI Seguros Colombia S.A. requested this rating assessment, which followed a periodic review by Fitch Ratings on November 6, 2024. The rating decision was made by a committee led by Carolina Triat, Carolina Ocaranza, and Miguel Martínez. Additional information about the committee members and their profiles can be found on Fitch Ratings’ Colombia page.

Fitch clarifies that its ratings reflect professional assessments and do not serve as buy, hold, or sell recommendations. The credit rating criteria applied in this assessment include the Insurance Rating Methodology (April 3, 2024) and the National Scale Rating Criteria (December 22, 2020).

Fitch Ratings has upgraded the Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) of Gran Tierra Energy Inc. (GTE) and Gran Tierra Energy International Holdings Ltd. to ‘B+’ from ‘B’ with a Stable Outlook. The upgrade, which removes the previous Rating Watch Positive (RWP) designation, also applies to Gran Tierra’s senior unsecured and secured notes.

The rating upgrade reflects Gran Tierra’s expanded scale and asset diversification following the company’s acquisition of i3 Energy North Sea and i3 Energy Canada Ltd., doubling Gran Tierra’s proven reserves (1P) on a pro forma basis. Fitch projects production could reach approximately 60,000 barrels of oil equivalent per day (boe/d) by 2026, aligning with a ‘B+’ rating level.

Key Rating Factors

Expanded Scale
With the acquisition, Gran Tierra’s proven developed producing (PDP) reserves have increased to 91 million barrels of oil equivalent (mmboe), while 1P reserves reached 183 mmboe, effectively doubling the company’s scale. Fitch projects daily production to approach 60,000 boe/d by 2025. Financial metrics are expected to strengthen, with estimated debt levels reaching around $8/boe for PDP reserves and $4/boe for 1P reserves, marking the lowest debt levels among comparable ‘B’ rated companies.

Enhanced Geographic Diversification
The acquisition adds 19,000 boe/d of production in Canada, offering Gran Tierra a foothold in a stable, investment-grade jurisdiction. The transaction also introduces natural gas to Gran Tierra’s portfolio, which will make up roughly 20% of its production, reducing its dependency on oil.

Low-Cost Production Structure
Gran Tierra’s production cost is competitive, with a half-cycle cost of $25/boe in 2023, which Fitch expects to maintain over the next few years. This cost structure is expected to improve the company’s resilience to price fluctuations. Fitch’s projections anticipate an average sales discount of $12/bbl to Brent over the rating period.

Stable Capital Structure
Fitch anticipates that Gran Tierra’s gross leverage will remain around 1.5x in 2024 and below 2.0x through the rating horizon. The acquisition is expected to be funded without additional debt, with capital expenditures estimated at $900 million from 2024-2027, covered by internal cash flows. Annual free cash flow (FCF) is forecast to average $40 million over 2024 and 2025.

Comparative Analysis with Peers

Gran Tierra’s credit profile is broadly in line with other independent Colombian oil producers, including SierraCol Energy Limited and GeoPark Limited. Both SierraCol and GeoPark are rated ‘B+’, constrained by the operational risks inherent to smaller oil and gas producers in Colombia. In comparison, 3R Petroleum Óleo e Gás S.A., rated ‘BB-‘, benefits from a larger reserve base and natural gas focus, which distinguishes it within the sector.

Forecast Assumptions and Sensitivity Analysis

Fitch’s rating case assumes a Brent crude price of $80/bbl in 2024, falling to $65/bbl by 2026. Key assumptions include:

• Production targets of 39,000 boe/d in 2024, 61,000 boe/d in 2025, and 68,000 boe/d by 2026.
• Operating costs averaging $11/boe between 2025-2027.
• Capital expenditures of approximately $260 million in 2024.

Factors Supporting Further Upgrades
A consistent rise in production to 75,000 boe/d and maintenance of 1P reserve life at 10 years could lead to an upgrade. Fitch would also consider a further upgrade if Gran Tierra diversifies its operations and enhances oil and gas sales prices.

Factors for Potential Downgrade
Production declines below 45,000 boe/d or a decrease in 1P reserve life below seven years could pressure the rating. Additionally, higher debt levels, reaching a total debt-to-EBITDA ratio of 3.0x, or a significant downturn in oil prices could negatively impact the rating.

Liquidity and Debt Structure

Gran Tierra reported $278 million in cash as of the third quarter of 2024, with $25 million in short-term debt. Fitch’s projections assume positive free cash flow through 2027. In the third quarter, Gran Tierra issued $150 million in new senior notes due 2029 at a 9.5% interest rate, using $100 million for the i3 Energy acquisition.

This rating update reflects Fitch’s assessment of Gran Tierra’s evolving asset base and financial structure, positioning it with greater operational resilience and flexibility.

In October 2024, Colombia’s wholesale prices for various fresh fruits and vegetables saw notable declines, according to the Unit of Agricultural Rural Planning (UPRA). Items like cucumber, onions, and beets dropped over 20%, reflecting an increase in supply due to favorable harvests in key regions such as Cundinamarca, Boyacá, and Cauca.

Root vegetables, particularly potatoes and yams, also experienced price reductions exceeding 10% due to higher yields from areas like the Cundiboyacense plateau and Norte de Santander. In contrast, the prices of certain grains and cereals, including corn and beans, rose by up to 5%, largely due to adverse weather conditions and limited market availability.

Despite logistical challenges posed by protests, including mining and farming strikes that disrupted supply chains, wholesale food prices generally stabilized. This trend was attributed to price declines in previous weeks that helped offset October’s fluctuations.

While fresh fruits like papaya, mango, and pineapple saw price reductions, products such as lime and avocado experienced increases. Additionally, there were slight drops in the costs of beef, pork, and chicken cuts, although reductions were minimal—under 3%.

For more information on food price changes in Colombia, visit the official UPRA report.

Headline photo: Colombian criolla potatoes (photo: Loren Moss)

Fitch Ratings has reaffirmed Medellín’s credit ratings, reflecting stability in its fiscal performance and reliance on revenues from city owned multinational utility Empresas Públicas de Medellín (EPM).

Fitch maintained Medellín’s Long-Term Local and Foreign Currency Issuer Default Ratings (IDR) at ‘BB+’ with a Stable outlook, while the National Long-Term Rating (NLTR) is affirmed at ‘AAA(col)’. Additionally, the National Short-Term Rating (NSTR) remains at ‘F1+(col)’ and senior unsecured notes issued in 2014 continue at ‘AAA(col)’.

Fiscal Overview and Risk Profile

Medellín reported a robust 2023 fiscal performance, with tax revenue growth and an operating margin around 21.5%. EPM dividends remain essential to funding the city’s capital expenditures, yielding a positive fiscal surplus before net financing. Fitch assessed the city’s risk profile as ‘Low Midrange,’ indicating a moderate capacity to manage potential fiscal challenges.

Revenue growth from Medellín’s diversified economy—especially the service and tourism sectors—underpins a stable outlook. Property tax contributions, however, are limited by geographic constraints.

Key Rating Factors

Revenue Robustness and Adjustability: Fitch rated Medellín’s revenue as ‘Midrange,’ supported by its moderately diverse tax base. Despite political reluctance for tax hikes, property tax adjustments may aid in covering potential revenue gaps.

Expenditure Sustainability and Adjustability: Health and education spending, primarily financed by EPM dividends and national transfers, are countercyclical. Fitch anticipates Medellín’s operating margins to align with historical levels, although inflationary pressures could impact healthcare and education costs.

Liabilities and Liquidity: Medellín has access to diversified funding, but 72% of debt is linked to floating rates, increasing exposure to interest rate risks. Liabilities linked to Medellín’s metro infrastructure add to its obligations, with most short-term liquidity stemming from EPM dividends.

Debt and Financial Structure

Medellín’s debt plan includes long-term borrowing projected at COP1.97 trillion by 2027. Fitch’s forecast incorporates Medellín’s adjusted debt, which includes COP1.9 trillion in long-term debt and approximately COP2.5 trillion for the metro system infrastructure. Medellín’s debt management includes measures to alleviate cash flow pressures.

Potential Rating Actions

A downgrade could result if Medellín’s enhanced payback ratio nears 9.0x or if Colombia’s sovereign rating declines. Conversely, an upgrade would be contingent on improvements in Colombia’s sovereign rating.

For more information, visit Fitch Ratings and Medellín’s financial updates.

Tecnoglass, Inc. (NYSE: TGLS), a key player in high-end aluminum and vinyl window and architectural glass manufacturing, reported record-breaking Q3 results on November 7, 2024, achieving $238.3 million in revenue—a 13.1% increase from last year. The growth was fueled by a 25% jump in single-family residential revenue, as well as a 4.6% increase in multi-family/commercial revenues.

Gross margin reached 45.8%, up from 43% a year prior, a reflection of Tecnoglass’ efficiency and its vertically integrated model, which minimizes costs and adjusts quickly to market shifts. CEO José Manuel Daes remarked, “Our ability to control costs and adapt swiftly… drove strong gross profit and Adjusted EBITDA growth this quarter.” He cited automation and manufacturing upgrades as central to Tecnoglass’ capacity to meet increasing demand.

Demand was strong across multiple segments. Chief Operating Officer Christian Daes highlighted, “Our vertically integrated platform ensures a high level of quality, leverages operating efficiencies, and enables quick adaptation…” He underscored the company’s $1.04 billion backlog, marking the 30th consecutive quarter of backlog growth, as a foundation for its confidence in long-term demand.

The company’s Adjusted EBITDA increased to $81.4 million, representing 34.2% of revenue, bolstered by a $2.1 million contribution from its joint venture with Saint-Gobain. Net income stood at $49.5 million, or $1.05 per share.

Capital Strategy and Shareholder Returns

Following a strategic alternatives review, Tecnoglass’ Board affirmed its commitment to a long-term growth strategy. This plan includes organic market expansion and cash flow-focused operations. Additionally, Tecnoglass increased its quarterly dividend by 36% to $0.15 per share and expanded its share repurchase program to $100 million, reinforcing its dedication to shareholder returns. The board cited the company’s vertically integrated model, advantageous geographic location, and robust cash flow as drivers of continued success.

Tecnoglass reported strong cash flows of $41.5 million for the quarter, enabling a $17.5 million loan prepayment and maintaining liquidity of approximately $290 million. The company’s balance sheet remains solid, with a record low net leverage ratio of 0.01x.

Full-Year Outlook

Tecnoglass revised its 2024 guidance, projecting annual revenues between $880 million and $900 million and Adjusted EBITDA of $270 million to $280 million. Chief Financial Officer Santiago Giraldo emphasized the company’s confidence in sustained growth, driven by geographic expansion, increased vinyl window production, and its resilient operations.

Looking Forward

Tecnoglass aims to build on its recent growth through new showroom openings and increased focus on residential and commercial markets. Its strategies reflect confidence in demographic trends favoring its core segments, which, alongside a fortified balance sheet and extensive backlog, position Tecnoglass to maintain above-market growth and robust margins.

Above photo: Christian Daes & Jose Manuel Daes (R) of Tecnoglass Photo credit – https://imgur.com/user/josemanueldaes