Fitch ups Eletropaulo, rates debentures BBB(bra)

Fitch Ratings said it upgraded to B+ from B Eletropaulo Metropolitana Eletricidade de Sao Paulo SA's international local and foreign currency ratings and $200 million five-year bonds. The long-term national scale corporate rating and the rating of the eighth debenture issuance are also upgraded to BBB(bra) from BB+(bra).

Concurrently, Fitch assigned the long-term national scale rating of BBB(bra) to the ninth issuance of debentures, for a total value of R$250 million.

The outlook has been revised to stable from positive.

A minimum of 90% of the resources from the issuance will be used for prepayment of debts renegotiated in 2004. The balance will be used to adjust the swaps related to dollar-denominated debt that will be prepaid, the agency said.

The upgrade reflects the company's improving credit-protection measures, supported by projected growth in operating income and cash flow and the expected reduction in annual debt service, the agency said. Eletropaulo should also benefit from the improved outlook for the Brazilian regulatory environment.

Fitch said the company is expected maintain a debt-to-EBITDA ratio between 2.5x and 3.0x.

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