S&P puts Eletropaulo, bonds on positive watch

Standard & Poor's said it placed its B+ corporate credit rating on Eletropaulo Metropolitana Eletricidade de Sao Paulo and its B+ issue rating on Eletropaulo's $200 million bonds on CreditWatch with positive implications.

Underpinning this action are the recent extension of the amortization schedule on Eletropaulo's pension fund debts, equivalent to roughly 45% of the company's total debt, and the deleveraging that will take place on Eletropaulo's holding company Brasiliana Energia SA, which will use the proceeds from Eletropaulo's secondary share offer to prepay debts with Banco Nacional de Desenvolvimento Economico e Social, the agency added.

According to S&P, the CreditWatch listing indicates that the ratings on Eletropaulo may be raised to BB- within three months, depending on how much those two factors positively affect the company's cash generation prospects, coupled with its continuing efforts to extend debt amortizations and cost of debt.

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