Moody's rates Hidroelectrica El Chocón notes B3

Moody's Investors Service said it assigned a B3 global-scale rating and Baa1.ar national scale rating to the $120 million bonds issued by Argentina-based Hidroelectrica El Chocón. The outlook is stable.

The bonds are the company's only debt outstanding. Moody's said the rating is based on the company's adequate operating performance and the strong debt reduction over the last four years, which will amount $80 million after a payment in May. The company has recovered profitability, has been generating positive cash flows and profits and cash flows are expected to continue to be positive in the near future.

The agency said the company continues to face risks arising from regulatory uncertainties, potential adverse hydrology and currency devaluation. Because of the current electricity market, where there is limited competition due to excess demand, and the prospect of no new capacity coming to the market at least during the next two years, the company's business risk is considered to be medium.

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