Fitch affirms Itabo

Fitch Ratings said it affirmed Empresa Generadora de Electricidad Itabo, SA's international foreign- and local-currency issuer default ratings at B-, $125 million senior unsecured notes due 2013 at B-/RR4, national long-term issuer default rating at BBB(dom) and $25 local senior unsecured issuance program at BBB(dom).

The outlook is stable.

The agency said Itabo's ratings reflect the company's dependence upon government subsidies for its financial sustainability. Notwithstanding recent improvements in the timeliness of government payments, the risks of operating electric generation assets in the Dominican Republic remain high and reflect the distribution companies' low collections and high losses, Fitch said, adding that these risks translate into high cash flow volatility for all generation companies.

The company's financial profile is considered strong for the rating, the agency said, although EBITDA was negatively affected during the first quarter by lower sale prices and higher fuel cost due to tariff adjustment lag under the company's power purchase agreement and unfavorable coal contracts.

The leverage ratio is approximately 2.4 times for the last 12 months ended March 31.

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