S&P gives Itabo notes B

Standard & Poor's said it assigned its B rating to Itabo Finance SAs $125 million senior notes due 2016.

The outlook is positive.

Itabo Finance will issue the bonds and on-lend the funds to Empresa Generadora de Electricidad Itabo SA to repay outstanding debt obligations and for corporate purposes.

S&P noted that the rating reflects the challenges that Itabo faces in operating in the Dominican Republic's electric industry, which is characterized by an inefficient and highly subsidized distribution sector whose long-term operational and financial sustainability remain uncertain.

The rating also incorporates Itabo's high off-taker risk, evidenced by the distribution companies' failure to fully meet their payment obligations with the generators during the country's latest economic crisis, as well as historically low, albeit improving, plant availability, which has exposed Itabo to spot market energy purchases in recent years, the agency added.

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