Moody's upgrades Energisa

Moody's Investors Service said it upgraded Energisa SA's corporate family rating to Ba2 from Ba3 on the global scale and to A1.br from A2.br on the national scale. The agency also upgraded the $250 million of note due 2013 issued by Energisa Sergipe - Distribuidora de Energia SA and Energisa Paraiba - Distribuidora de Energia SA to Ba2 from Ba3.

The outlook is stable.

The upgrade reflects Moody's expectation that Energisa will continue to post solid credit metrics with lower profit and cash flow volatility going forward with the implementation of a more conservative hedging policy, which the company's board of directors approved last year.

The agency said the Ba2 corporate family rating reflects Energisa's solid credit metrics for the rating category, sound liquidity position, experienced management and the inherently stable and predictable cash flow nature of the electricity distribution business.

The rating is constrained by a fairly sizeable capital expenditures program that will increase Energisa's participation in the unregulated electricity generation business, the evolving Brazilian regulatory framework and Energisa's recent profit volatility that is a result of a previous somewhat aggressive hedging policy, Moody's said.

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