S&P cuts Itabo outlook to stable

Standard & Poor's said it revised its outlook on Empresa Generadora de Electricidad Itabo SA's long-term B corporate credit rating to stable from positive.

At the same time, the agency said it affirmed the B long-term rating on Itabo and on Itabo Finance SA's $125 million bonds.

The outlook revision reflects the uncertainties that the operational strengthening of the country's distribution electric system and the sector's medium-term development plan will be achieved on time, the agency said, noting that the Government of the Dominican Republic's recent proposal to renegotiate the existing long-term energy sales contracts with the power generators anticipates that the distribution companies will continue generating inadequate cash flows to meet their contractual obligations and that the government's sizable subsidy for the sector is unsustainable in the long run.

S&P added that it believes that Itabo's business profile should not be affected by the government's plans to reform the electric sector.

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