Fitch rates ISA Capital do Brasil BB, notes BB

Fitch Ratings said it assigned a preliminary rating of BB to ISA Capital do Brasil SA's proposed issuance of up to $554 million in senior secured notes to be issued in two tranches. Fitch said it also assigned a local- and foreign-currency issuer default rating of BB to ISA Capital do Brasil.

The outlook is stable.

The notes will have a short- and medium-term tenor with a bullet amortization and benefit from a six-month debt-service reserve account. Proceeds will be used to repay a $554 million bridge loan entered into by ISA Capital do Brasil for the acquisition of Companhia de Transmissao de Energia Eletrica Paulista in two phases during 2006 and early 2007.

The company's ratings are based on the strong credit quality of Companhia de Transmissao de Energia Eletrica Paulista, its sole source of revenue and only operating asset, Fitch said. Companhia de Transmissao de Energia Eletrica Paulista's strong credit quality stems from its monopoly position, stable and predictable operational cash flow generation, and financially sound credit profile.

The ratings also reflect the note holders' structural subordination to Companhia de Transmissao de Energia Eletrica Paulista's obligations, the concession renewal risk and refinancing risk, the agency said.

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