S&P changes Viesgo Generacion view

S&P said it revised its outlook on Viesgo Generacion SLU to positive from stable. The B+ long-term issuer credit rating was affirmed.

At the same time, the agency affirmed the BB- issue rating on the group's senior secured debt, comprising a €125 million loan and a €49.5 million senior secured revolving credit facility due in 2021.

The recovery rating is unchanged at 2, indicating an expectation of substantial recovery (70%-90%; rounded estimate 85%) for lenders in the event of a payment default.

S&P said the outlook revision follows the announcement that Repsol SA (BBB/stable/A-2) has agreed to buy all of Viesgo Generacion's power generation assets – with the exception of coal – and its supply business for about €750 million.

“We understand that the cash proceeds will be used to repay all of Viesgo Generacion's debt, comprising a €125 million external loan, which contains a change of control clause, and a €600 million loan from the parent company Viesgo Infraestructuras Energeticas (VIE),” the agency said in a news release.

“While we believe the transaction will be beneficial to the group, thanks to Repsol's stronger credit quality, we have no clarity yet on Repsol's strategy for Viesgo Generacion.”

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