S&P turns Orazul Energy view to negative

S&P said it revised Orazul Energy Peru SA’s outlook to negative from stable but affirmed its BB ratings.

The outlook revision follows Orazul's announcement its plan to dispose of its thermal power generation and hydrocarbon businesses in Peru.

Last year, Orazul sold its transmission assets in 2020, limiting its business to hydro power generation. “As a result, we consider that the company's business risk profile, which we currently view as satisfactory, would weaken. This is because compared with the regional peers, Orazul would no longer benefit from a large scale of operations, and will lack a more balanced generation portfolio of assets or business diversification,” S&P said in a press release.

Orazul’s hydro capacity includes the Canon del Pato and Carhuaquero plants that represent about 66% of Orazul's current total capacity. Historically, the plans reported stable generation levels with capacity factors of 60%-65%, which are higher than among other hydro plants in the region, the agency noted.

S&P warned there a chance of a downgrade in the next 12 months if the sale goes through.

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