Moody's trims Aegea

Moody's Investors Service said it downgraded Aegea Saneamento e Participacoes SA's corporate family rating to Ba2 from Ba1 and Aegea Finance Sarl's senior unsecured rating to Ba3 from Ba2. The outlook was changed to stable from negative.

The agency noted its consolidated credit metrics weakened through December 2022, along with its perception that an improvement in the leverage profile will take longer.

“For fiscal year-end 2022, Moody's calculates the company's consolidated funds from operations (FFO)-to-net debt ratio has dropped to 10% in 2022, from an average of 14.3% in the previous three years (2019-2021). During the same period, the FFO interest coverage fell to 1.6x from 2x.

“Moody's revised baseline scenario for Aegea considers an improvement in credit metrics following recent acquisitions, potentially converging to the historical average. But additional financing needs to support new investments amid higher borrowing costs will constrain a material improvement of Aegea's credit profile over the three years,” the agency said in a press release.

Moody’s said it believes Aegea is well positioned in the Ba2 category for the next 12 to 18 months.

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