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Fitch upgrades AES Tiete
Fitch Ratings said it upgraded Brazil-based AES Tiete SA's national scale rating to A(bra) from BBB+(bra) and the AES IHB Cayman, Ltd.'s $300 million 11½% trust certificates to B+ from B.
The outlook is stable.
The agency said the upgrade follows the upgrade of Eletropaulo Metropolitana Eletricidade de Sao Paulo SA's ("Eletropaulo") local- and foreign-currency issuer default rating to BB- from B+ and of its national scale rating to A(bra) from BBB+(bra). Eletropaulo is Tiete's sole contractual offtaker under a long-term power purchase agreement that expires in 2015.
Fitch said Tiete's financial profile remains strong for the rating category and is linked to Eletropaulo's ability to meet its contractual obligations. Tiete's strong credit profile is characterized by healthy EBITDA margins, low leverage, solid interest expenses coverage and predictable cash generation due to its contractual energy sales and low operating cost structure.
The rating is constrained by Eletropaulo's credit profile, its aggressive dividend policy and its potential capacity expansions, the agency noted.
Total debt to EBITDA was 1.4 times at June 30.
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