The third-quarter EBITDAR represents a 15.5% year-over-year increase from the $356 million USD reported in Q3 2024. Total operating revenues reached $1,509 million USD, marking a 12.8% increase compared to the $1,338 million USD recorded in the same period of the prior year. Total operating costs increased by 13.3% year-over-year, settling at $1,290 million USD. Net income for the quarter was $101 million USD, an improvement from $72 million USD in Q3 2024.

Operational and Capacity Metrics

Capacity, measured in Available Seat Kilometers (ASKs), reached 18,284 million, denoting a 6.8% increase compared to Q3 2024. This growth was attributed primarily to a 6.2% year-over-year increase in Stage Length. Passenger departures increased 1.0% year-over-year. The company transported 9.7 million passengers, consistent with the volume in the comparable period of 2024. The network encompassed 169 routes serving 83 destinations across 28 countries. Subsequent to the quarter’s close, Avianca introduced three new international routes, which included Belém (Brazil) and Monterrey (Mexico).

Cost performance for the quarter indicated a reduction in overall per-unit costs. Total Passenger CASK (Cost per Available Seat Kilometer) was 5.7 cents, a 1.9% decrease relative to Q3 2024. This decline was largely driven by Passenger Fuel CASK, which decreased 9.9% to 1.7 cents, resulting from lower fuel prices and increased fuel efficiency. Passenger CASK excluding fuel increased 2.1% year-over-year to 3.9 cents.

Balance Sheet and Credit Rating Actions

As of September 30, 2025, Avianca reported liquidity totaling $1,361 million USD, which represented 24.2% of last-twelve-month revenue. This total includes a cash balance of $1,161 million USD and $200 million USD available through an undrawn Revolving Credit Facility. The Net Debt to last-twelve-month EBITDAR ratio improved sequentially to 2.8x from 2.9x reported on June 30, 2025.

Rating agencies Moody’s and Fitch  upgraded Avianca’s credit ratings to B1 and B+ respectively. Both rating actions were assigned a stable outlook.

Business Unit Performance and Network Development

The cargo division, Avianca Cargo, recorded $157 million USD in revenue during Q3 2025, representing a 14.1% year-over-year increase. The operating freighter fleet currently consists of nine Airbus A330s, following the integration of two additional P2F aircraft during the quarter.

The loyalty program, LifeMiles, reported a 72% year-over-year increase in Q3 2025 Third-Party Cash EBITDA, reaching $77 million USD.

In network strategy, AGIL expanded its Business Class service to 54 additional routes from key operational centers including Bogotá (Colombia), Medellín (Colombia), San Salvador (El Salvador), Quito, and Guayaquil (Ecuador). The company’s passenger operating fleet totaled 161 aircraft as of September 2025, including 134 Airbus A320 family aircraft, 15 Boeing 787s, and 12 Airbus A330s.

Avianca is a member of Star Alliance  and is part of the Abra Group. The Abra Group also controls Gol Linhas Aéreas Inteligentes S.A.   and holds a strategic investment in Wamos Air .

Above photo: Avianca A330F cargo jet (photo courtesy Avianca)

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).

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.

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.

Continuing growth and fiscal challenges remain important factors in Fitch’s sovereign ratings assessments. Most Latin American economies will grow in 2024, with only Argentina’s forecast to contract. But muted economic performance means Fitch forecasts regional growth will slow to 1.4%, from 2.2% in 2023 – the weakest forecast among all emerging market regions.

LatAm sovereigns’ projected median 2024 current account deficit is modest at 1.5% of GDP in 2024 (in 2023 it was 1.4%). External buffers and financing options are mostly sound, although Bolivia’s downgrade to ‘CCC’ in February means that four sovereigns are rated in this category or lower, indicating more acute financing constraints and international liquidity challenges.

Fiscal risks are rising as broadly weak 1H24 deficits imply that fiscal forecasts may deteriorate for 2024 and beyond. Overall, deficits will remain above debt-stabilizing levels in most countries. The fading post-pandemic fiscal recovery has exposed underlying fiscal weaknesses, notably the difficulty in reducing primary expenditure due to social spending pressures and indexation. Exceptions are mostly in Central America and the Caribbean, where fiscal positions are tighter.

Economic deceleration, a period of high inflation, and increased income inequality and poverty rates following the pandemic underpin risks to social and political stability. Periodic protests have been common in recent years and may remain so. Governability challenges from fragmented congresses and difficult executive-legislative relationships can delay reforms and fiscal consolidation.

“Latin America Sees Mixed Sovereign Actions as Growth, Fiscal Challenges Persist” is available at www.fitchratings.com,

Credit Metrics and Business Position

The affirmation of GEB’s ratings reflects the company’s steady cash flow generation, robust business position, and sufficient liquidity. Fitch anticipates GEB’s credit metrics to remain consistent with its current rating over the medium term. The ratings also consider GEB’s reliance on dividends from its financially solid subsidiaries to manage its debt obligations and the company’s ongoing growth strategy, including its aggressive dividend policy.

Fitch’s analysis indicates short-term pressure on EBITDA, with an expected gross leverage of approximately 4.1x in 2024, followed by a gradual reduction to an average of 3.5x, consistent with the ‘BBB’ rating category.

Leverage and Revenue Considerations

The appreciation of the Colombian peso against the U.S. dollar in 2024 has negatively affected GEB’s subsidiary, Gas Natural de Lima y Callao S.A. (Cálidda), due to foreign exchange exposure. Additionally, a reduction in dividends from Enel Colombia, estimated at USD 202 million, is expected to impact EBITDA in 2024. However, this will be partially offset by increased revenue from the transmission business and significant dividend payments from Enel Colombia in 2025, alongside retained earnings from the Argo subsidiary in Brazil in 2024 and 2025.

In 2025, contracted demand at Transportadora de Gas Internacional S.A. ESP (TGI) is projected to decline, leading to reduced revenue from the gas transportation business. No major acquisitions are expected in the near term. Consequently, Fitch forecasts GEB’s gross leverage to rise to 4.1x in 2024, with a decrease to 3.9x in 2025 and 3.5x in 2026.

Diversified Operations and Cash Flow Stability

GEB’s ratings are supported by its diversified portfolio of regulated businesses, primarily consisting of entities with strong market positions and solid credit profiles. The company operates in Colombia’s electricity transmission sector and participates in electricity generation and distribution through its associate, Enel Colombia. GEB also holds controlling stakes in energy assets functioning as regulated monopolies in their service areas. TGI, Colombia’s largest natural gas transportation company, is fully owned by GEB, which also has a 60% stake in Cálidda, the largest natural gas distribution company in Peru.

GEB’s operations benefit from business diversification, with subsidiaries that generally operate as regulated monopolies, contributing to stable and predictable cash flow. TGI is GEB’s most significant asset, expected to generate 47% of EBITDA from controlled companies in 2024. The electricity transmission business is anticipated to increase its EBITDA contribution in the medium term, supported by planned investments of approximately USD 637 million from 2024 to 2027.

Credit Quality and Regulatory Considerations

As an operating holding company, GEB derives its cash flow mainly from dividends from subsidiaries and non-controlling stakes in primarily investment-grade entities. This predictable income stream helps mitigate the structural subordination of dividends to GEB’s debt service obligations. Enel Colombia is expected to provide 53% of GEB’s dividends from non-controlling interests in 2024.

Fitch considers GEB’s exposure to regulatory risk as low to moderate, despite its concentration in regulated businesses within Colombia. Recent regulatory developments, including attempts by President Petro to influence public service regulations, present potential risks. However, tariff structures in Colombia have maintained a balance between company and end-client interests, and GEB’s geographic diversification and strong subsidiary business positions partially offset this risk.

Parent-Subsidiary Dynamics and Credit Comparisons

GEB’s credit profile aligns with its ‘BBB’ rating and is not constrained by its controlling owner, Bogotá, Capital District. Regulatory mechanisms, significant minority shareholders, and strong governance practices limit the parent’s influence on GEB, enabling Fitch to rate GEB two notches above Bogotá’s consolidated profile.

GEB’s ratings reflect a low business-risk profile consistent with an investment-grade rating. Compared to peers like Enel Americas S.A. (BBB+/Stable) and Promigas (BBB-/Stable), GEB’s ratings are lower due to its higher leverage, projected to average 3.5x, compared to Enel Americas’ leverage below 2.0x. GEB’s ratings are above those of Empresas Públicas de Medellín E.S.P. (BB+/Rating Watch Negative), which faces higher risk due to its dependence on the competitive electricity generation business and its connection to the City of Medellín’s credit profile.

Outlook and Potential Rating Actions

A positive rating action for GEB is unlikely in the near to medium term due to anticipated EBITDA pressures and potential capex increases. However, a sustained reduction in leverage below 2.5x after the completion of regulatory tariff resets and the investment program could positively impact the ratings.

Conversely, negative rating actions could result from sustained gross leverage above 4.0x, negative influence from shareholders leading to a weakened financial strategy, large acquisitions funded primarily by debt, or significant delays and cost overruns in major projects.

Liquidity and Debt Management

GEB’s liquidity remains adequate, supported by high cash reserves, predictable operational cash flow, and reliable access to bank and capital markets. As of June 2024, GEB held approximately USD 539 million in cash and equivalents, with an estimated cash flow from operations of around USD 730 million for the year. The company faces near-term debt maturities of USD 430 million in 2024 and USD 175 million in 2025, which Fitch expects GEB to refinance successfully through a mix of bank loans and capital market resources.

The acquisition allowed OCENSA to invest its excess cash in an asset that Fitch expects to generate stable, permanent dividend cash flows for the company. RDC holds a 7.14% equity stake in Oleoducto de Colombia S.A. (ODC), a privately owned pipeline that has been operating for 35 years. The pipeline transports crude oil between the Vasconia Station in the municipality of Puerto Boyacá and the Coveñas maritime terminal in the municipalities of Coveñas (Sucre) and San Antero (Córdoba).

Fitch views ODC as financially stable. It generates low-risk dividends due to its strategic location for crude oil evacuation in Colombia. Fitch also expects the investment in ODC to generate significantly more revenue for OCENSA than it would from interest on its unused cash. The acquisition improves OCENSA’s business profile and enhances its existing revenue-based model. The fee-based structure, combined with fixed-price arrangements in ship-and-pay contracts, protects the company from direct exposure to commodity prices.

OCENSA has a strong liquidity and debt profile over the rating horizon. As of March 31, 2024, its only debt was USD400 million, with EBITDA leverage of 0.3x. Available cash at the end of Q12024 was USD330 million. The company has no major capex plans other than maintenance.

OCENSA’s ratings primarily reflect its linkage with Ecopetrol S.A. (BB+/Stable), which indirectly owns 72.65% of OCENSA. Ecopetrol is the largest crude oil producer in Columbia, and OCENSA’s operations are an integral part of its core business as its main off-taker. Fitch considers OCENSA strategically important for Ecopetrol, as the company heavily relies on OCENSA’s infrastructure to transport crude oil from production fields to its refineries and export terminal. Approximately 84% of the total crude oil transported in 2023 was for Ecopetrol.

Ratings of several GREs with key roles in their respective economies and sectors have faced pressure in recent years. Downgrades to PEMEX (B+/Stable, Mexico) and Petroperu (CCC+, Peru) were driven by weakening standalone credit profiles (SCPs). Ecopetrol (BB+/Stable, Colombia) and ENAP (A-/Stable, Chile) were downgraded after negative sovereign actions. Both factors have contributed to downgrades of CODELCO (BBB+/Stable, Chile).

Related Content: GREs Under Pressure Could Affect Fiscal Outlook in Some LatAm Countries

The GREs’ strategic importance incentivizes governments to support them, and they are contingent liabilities to the sovereigns. Fitch says it does not think these would drive negative sovereign actions on their own if they materialized, because the level of support would be manageable, or because these liabilities are already incorporated into our sovereign analysis.

Fitch did not include LatAm GRE debt in its sovereign debt figures, as per our principal approach that focuses on consolidated general government debt. But the ratings firm says it considers it in qualitative analysis. Mexico’s ‘BBB-’/Stable rating is adjusted down by one notch from the Sovereign Rating Model output via Fitch’s Qualitative Overlay, as support for PEMEX has become material and sustained.

Neither did Fitch adjust the ratings of Chile (A-/Stable) or Peru (BBB/Negative), as support for CODELCO and Petroperu has not become recurrent and remains limited. Nevertheless, the recent deterioration in their SCPs underscores the possibility that they may require more direct financial support. ENAP will likely receive sustained, but not material, support from the Chilean authorities. Ecopetrol has not received support from Colombia (BB+/Stable) in the past decade.

The report “GREs Under Pressure Could Affect Fiscal Outlook in Some LatAm Countries” is available at www.fitchratings.com or via the link above.

• Issuance of Ordinary Bonds for COP $640,000 million
• Program for the Issuance of Ordinary Bonds and Commercial Papers for up to COP $3.0 trillion
• Program for the Issuance of Ordinary Bonds and Commercial Papers for up to COP $2.0 trillion

The Long-Term Rating Outlook is Stable. The short-term national rating for the Ordinary Bond and Commercial Paper Issuance Programs was affirmed at ‘F1+(col)’.

The upgrade reflects the anticipated strengthening of Cementos Argos’ capital structure and enhanced financial flexibility due to the use of USD1.2 billion from a transaction with Summit Materials for debt repayment. Fitch projects the company’s gross and net leverage to approach 2x by 2024. Despite reduced geographic diversification from deconsolidating its U.S. operations, Cementos Argos’ profitability, reduced financial expenses, and reallocation of capital to more profitable operations are expected to support operating cash flow generation. The company’s non-controlling investment in Summit Materials provides exposure to the U.S. market, contributing to its financial flexibility.

Key Rating Factors:

Strengthened Capital Structure: Cementos Argos received approximately USD$1.2 billion from its transaction with Summit Materials (NYSE: SUM), earmarked for debt repayment. By 2024, debt payments are expected to total COP4.7 trillion, reducing the company’s debt from COP6.9 trillion at the end of 2023. The reduction in debt is expected to lower short-term debt maturities, spread out long-term amortizations, and maintain leverage near 2x.

Lower Leverage: Cementos Argos’ net leverage was 2.4x at the end of 2023, supported by favorable operating results. The transaction with Summit Materials allowed for U.S. asset monetization and debt repayment. Fitch forecasts that leverage will remain close to 2x through 2024, supported by stable EBITDA and moderate debt requirements.

Geographic Concentration: The deconsolidation of U.S. operations has reduced the company’s geographic diversification, concentrating operations in Colombia and Central America and the Caribbean (CAC). These regions are expected to account for approximately 58% and 42% of EBITDA, respectively. While this increases exposure to regional economic cycles, the expected improvement in profitability, stable EBITDA, and stronger capital structure should offset the risks.

Financial Flexibility: The non-controlling 31% stake in Summit Materials provides exposure to the U.S. market and supports financial flexibility. Cementos Argos has implemented cost and productivity efficiency programs, which are expected to improve its cost structure and profitability.

Negative Free Cash Flow: Fitch projects that operating cash flow (FCO) will remain stable, averaging COP730,000 million annually from 2025. However, due to demanding dividend payments and share buybacks, free cash flow (FFL) is expected to remain negative, with a margin of approximately -4%.

Competitive Position: Cementos Argos remains a leading producer of cement and concrete in Colombia and Central America. The company holds significant market shares in Colombia, the Dominican Republic, Panama, and Honduras.

Rating Derivation:

Cementos Argos has a more robust business and credit profile compared to Ultracem, S.A.S. (rated A(col) with a Negative Outlook) due to its broader geographic presence and lower leverage. However, compared to Colombina S.A. (rated AA+(col) with a Positive Outlook), Cementos Argos’ business profile is more vulnerable to economic cycles, although this is partially offset by its stronger capital structure.

Key Assumptions:

• Deconsolidation of the U.S. operation in 2024 and investment registration via the equity method.
• Debt repayment totaling USD1.2 trillion, with USD700 million for U.S. debt and USD500 million for Colombia.
• Annual cement sales volume growth in the low single digits between 2024 and 2027.
• EBITDA margin near 22%.
• Average exchange rate of COP4,152 per USD1 for the projection period.
• Capex and dividend distribution aligned with management projections.
• Share buybacks between 2024 and 2026 totaling approximately COP450,000 million.

Rating Sensitivity:

Negative/Downgrade Factors:

• Net debt-to-EBITDA leverage exceeding 2.5x on a sustained basis.
• Liquidity levels below 1x.
• Equity investments or debt-financed acquisitions that weaken the credit profile.
• Dividend distributions or value extraction mechanisms that increase leverage and pressure FFL.

Positive/Upgrade Factors:

• Greater geographic diversification of EBITDA generation.
• Sustained net debt-to-EBITDA leverage below 2x.
• Liquidity consistently above 1.5x.
• Interest coverage above 6.5x.
• Positive FFL generation throughout the cycle.

Liquidity:

The transaction with Summit Materials has improved Cementos Argos’ liquidity by reducing short-term debt concentrations. The remaining debt is primarily in long-term bonds with amortizations spread over time. The company’s stake in Summit Materials, a New York Stock Exchange-listed company, also supports financial flexibility. Cementos Argos maintains uncommitted credit quotas of COP2.5 trillion.

Issuer Profile:

Cementos Argos is a nearly 90-year-old company specializing in cement, concrete, and aggregates production in Colombia and CAC. Following the integration with Summit Materials in 2024, the company deconsolidated its U.S. operations, which accounted for 55% of EBITDA in 2023.

Criteria Applied:

• Corporate Finance Rating Methodology (December 22, 2023)
• National Scale Grading Methodology (December 22, 2020)
• Parent-Subsidiary Rating Link Methodology (July 13, 2023)