Moody’s cuts three Brazilian electric utilities

Moody’s Investors Service said it took the following rating actions on its portfolio of electric utilities:

• Centrais Eletricas Brasileiras SA: Corporate family rating downgraded to Ba3 from Ba2, R$1.75 billion in senior unsecured global bonds maturing in 2021 downgraded to Ba3 from Ba2 and outlook changed to negative;

• Itaipu Binacional: Issuer ratings downgraded to Ba2 from Baa3 and outlook changed to negative; and

• Companhia Energetica de Sao Paulo (CESP): $1.4 billion senior unsecured medium-term note program downgraded to provisional Ba2 from provisional Baa3 and outlook changed to negative.

Moody’s said the downgrades are a result of the downgrade of Brazil's issuer and bond ratings to Ba2 from Baa3 and the change of outlook to negative as well as the downgrade of the ratings of the States of Sao Paulo to Ba2 from Baa3 with a negative outlook, Minas Gerais to Ba3 from Ba1 with a negative outlook and Parana to Ba3/A2.br from Ba1/Aa2.br with a stable outlook on the global scale and on the National Scale Rating (NSR), respectively.

The action concludes the review for downgrade announced on Dec. 10.

These actions reflect the agency’s view that the recent sovereign and sub-sovereign rating actions, as a result of deteriorating economic and fiscal perspectives together with worsening governability and policy paralysis, will negatively affect the credit quality of the companies.

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