S&P cuts Eletropaulo, debt

S&P said it lowered its global scale corporate credit rating on Eletropaulo Metropolitana Eletricidade de Sao Paulo SA (Eletropaulo) to BB- from BB and its Brazil national scale rating to brA- from brA+.

The outlook remains negative.

At the same time, the agency lowered the issue-level rating on Eletropaulo's 11th debentures issuance due 2018 to brA- from brA+. It also withdrew the 3 recovery rating on Eletropaulo's senior unsecured debt.

S&P said the downgrade reflects its expectation that the company will have a tighter cushion for its debt covenants over the next few quarters due to the potentially lower reported EBITDA, used in the ratio calculation, amid losses from selling its electricity surplus in the spot market.

This risk increased due to lower demand in Eletropaulo's concession area, because according to regulation, electricity sales in the spot market that surpass 105% of a company's electricity demand can't be passed through rates, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.