S&P downgrades Cemig

S&P Global Ratings said it lowered its global scale corporate credit on Companhia Energetica de Minas Gerais (Cemig) and on its operating subsidiaries, Cemig Distribuicao SA (Cemig D) and Cemig Geracao e Transmissao SA (Cemig GT), to B+ from BB-.

At the same time, S&P lowered its Brazilian national scale corporate credit rating on the company to brBBB+ from brA. The outlook is stable.

S&P also lowered the company's stand-alone credit profile (SACP) to b+.

S&P said the downgrade reflects the deterioration of the company's credit metrics and liquidity. Amid tightening credit conditions, Cemig was unable to refinance its short-term debt maturities in advance, because it was waiting for market conditions to improve. This resulted in a significant debt concentration of maturities at the end of 2016.

“Also, the sluggish electricity demand, given Brazil's recession, and weakness in Cemig GT's operating performance following the termination of some concessions raised the consolidated leverage to more than 5.0x in the past few quarters,” the agency said in a news release.

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