Fitch cuts Argentine utilities

Fitch Ratings said it downgraded the local currency issuer default ratings of four Argentine utilities to B from BB-, removed the ratings from rating watch negative and assigned a stable outlook.

The entities include AES Argentina Generacion SA, Capex SA, Genneia SA and Pampa Energia SA.

The agency also affirmed the four utilities' foreign currency issuer default ratings at B with stable outlooks.

Fitch said the downgrade reflects the increased reliance on the Argentine government (B/stable) subsidies to Compania Administradora del Mercado Mayorista Electrico (Cammesa), in order to fund the deficit caused by disparity between Argentine peso tariffs charged to end-users and U.S. dollar-linked fees paid to generation companies.

The agency said it believes the tariff adjustments announced on Aug. 1, although a positive step, do not adequately offset the increased need for government support.

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