Fitch: Dominican Republic electric firms to stable

Fitch Ratings said it revised the outlooks on the ratings of the Dominican Republic's generation companies to stable from positive.

The agency also said it affirmed AES Andres Dominicana SPV's foreign-currency issuer default rating at B and $284 million notes due 2020 at B with a recovery rating of RR4; AES Andres BV's national long-term rating at A-(dom); Empresa Generadora de Electricidad Itabo, SA's foreign-currency issuer default rating at B, local-currency issuer default rating at B, national long-term rating at A-(dom) and senior unsecured notes due 2013 at A-(dom); Itabo Dominicana SPV's foreign-currency issuer default rating at B and $284 million notes due 2020 at B with a recovery rating of RR4; and Empresa Generadora de Electricidad Haina, SA's foreign-currency issuer default rating at B, local-currency issuer default rating at B, national long-term rating at A-(dom), $175 million notes due 2017 at B with a recovery rating of RR4 and senior unsecured notes due 2012 and 2016 at A-(dom).

The outlook revision was based on a similar revision on the sovereign's outlook, reflecting a deterioration in the sovereign's fiscal accounts, external vulnerabilities and the new government's challenges to reduce fiscal deficits and stabilize debt ratios in the context of budgetary rigidities, Fitch said.

The ratings of the Dominican Republic generation companies reflect the electricity sector's high dependency on transfers from the central government to service its financial obligations, the agency said.

The Dominican Republic's power sector is characterized by low collections from end-users and high electricity losses, Fitch added. Such conditions have kept distribution companies from effectively transferring cash to the country's generation companies, the agency said, and the government subsidies have covered this gap during recent years.

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