Fitch downgrades ICE

Fitch Ratings said it downgraded the long-term foreign-currency and local-currency issuer default ratings on Instituto Costarricense de Electricidad y Subsidiarias (ICE) to BB from BB+.

The agency also said it downgraded the ratings on its senior unsecured bonds due in 2021 and 2043 to BB from BB+.

The outlook also was revised to stable from negative.

These actions follow the downgrades of Costa Rica's long-term foreign- and local-currency issuer default ratings to BB from BB+ and the outlook revision to stable from negative.

The sovereign rating revisions reflect the country's deteriorating debt dynamics, driven by large fiscal deficits and continued institutional gridlock preventing progress on reforms to correct fiscal imbalances, Fitch explained.

Despite the estimated 0.6% of GDP improvement in 2016 due largely to administrative measures, the fiscal deficit is expected to rise over the next two years as a result of a higher interest burden and spending rigidities, the agency said.

The company’s ratings are linked to the sovereign rating of Costa Rica due to government ownership and the government's implicit and explicit support, Fitch said.

The company holds strategic importance for the government given the growing demand of electricity in the country and government's plans to increase renewable generation and to reduce exposure to fluctuations in fossil fuel prices, the agency said.

The ratings also consider the company's diversified portfolio of assets, adequate financial profile, aggressive capital expenditure program and strong market share position in the telecommunications business, Fitch 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.