Fitch to assign B+/RR4 to Itabo debt

Fitch Ratings said it expects to assign a B+/RR4 long-term rating to Empresa Generadora de Electricidad Itabo SA's (Itabo) proposed issuance maturing in 2026.

The notes would be attached to AES Andres BV's notes but would carry no cross guarantees.

Fitch said the ratings reflect the electricity sector's high dependency on transfers from the central government of the Dominican Republic to service its financial obligations, a condition that links the credit quality of the distribution companies (EDEs) and generation companies to that of the sovereign. Low collections from end-users, high electricity losses and subsidies have undermined distribution companies' cash generation capacity, exacerbating generation companies' dependence on public funds to cover the gap produced by insufficient payments received from distribution companies.

Itabo's ratings also consider its low cost generation portfolio, strong balance sheet and well-structured Power Purchase Agreements, which contribute to strong cash flow generation and bolster liquidity, the agency said.

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