Moody's lowers Light; outlook negative

Moody's Investors Service said it downgraded the corporate family rating of Light SA (Light) and the issuer ratings and backed senior unsecured ratings of its operating subsidiaries Light Servicos de Eletricidade SA (Light SESA) and Light Energia SA (Light Energia) to Caa3 from B3.

The outlook on all ratings was changed to negative.

This action concludes the review for downgrade initiated on Feb. 3.

The downgrade of Light’s ratings to Caa3 follows the management announcement that they intend to seek negotiations with creditors to agree on a standstill period for its upcoming debt obligations with the purpose of retaining cash for the company’s operating needs, making the maintenance of the concession's quality and services a high priority.

This announcement was provided along with the release of 2022 fiscal year-end results, showing further deterioration in the company’s liquidity position amid high interest rates and challenging refinancing conditions, Moody’s said.

The Caa3 rating implies high likelihood of default with an average recovery rate for debtholders between 65% and 80%, Moody’s said.

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