Fitch rates Itabo notes B-

Fitch Ratings said it assigned a B- international foreign- and local-currency issuer default rating to Empresa Generadora de Electricidad Itabo, SA, which is based in the Dominican Republic, and a B- rating with a recovery rating of RR4 to the proposed $125 million notes to be issued by Itabo Finance SA. The outlook is positive.

The proceeds from the proposed issuance are expected to be used to refinance existing debt, for general corporate purposes and to pay dividends. Fitch predicted total debt to EBITDA will be between 2.5x and 3x and net debt to EBITDA will be between 1 times and 2 times following the issuance.

The agency said Itabo's ratings incorporate the risks of operating electric generation assets in the Dominican Republic, offset by the company's solid financial profile, experienced management team and strong competitive position as the lowest-cost thermoelectric generator in the country.

The positive outlook reflects the favorable operating conditions of the company within the local market, the Dominican government's continued support of the sector, the different steps taken by the government and sector participants in an effort to bolster the sector and the country's recent economic recovery, the agency said.

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