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Rating Action:

Moody's changes outlook to negative for Argentine Infrastructure Issuers; downgrades CTLLL

 The document has been translated in other languages

07 Aug 2014

Buenos Aires City, August 07, 2014 -- Moody's Latin America Agente de Calificación de Riesgo S.A. ("Moodys") has changed the rating outlooks to negative and affirmed the current ratings on various infrastructure companies operating in Argentina. The outlook change for the affected companies follows the revision of Argentine government's Caa1 issuer rating outlook to negative from stable on July 31, 2014 and reflects the relative exposure that these companies have to Argentina´s deteriorating operating environment.

Please see www.moodys.com for further details on the recent outlook change in Argentina's issuer rating.

At the same time, in light of the negative sovereign outlook and weakened liquidity position relative to scheduled principal payments Moody´s downgraded Central Termica Loma de La Lata S.A. ("CTLLL") rating to Caa2 from Caa1 on the global scale and to Ba3.ar from Baa3.ar on the national scale. In addition, the outlook was changed to negative.

Issuers and ratings included in this action are as follows:

a) Ratings affirmed with Stable Outlook

1) Aeropuertos Argentina 2000 S.A.

Corporate Family Rating, USD 300 million 2020 Senior Unsecured Notes and Class "A" , Class "B" and Class "C" Senior Unsecured Local Notes: Caa1/Baa1.ar ratings affirmed; stable outlook

2) Transportadora de Gas del Sur S.A. (TGS):

Senior Unsecured Notes: Caa1/Baa1.ar ratings affirmed; stable outlook

3) Camuzzi Gas Pampeana S.A.

Corporate Family rating: Caa1/Baa2.ar ratings affirmed; stable outlook

4) Gas Natural Ban S.A.

Corporate Family rating: Caa1/Baa2.ar ratings affirmed; stable outlook.

5) Distribuidora de Gas Cuyana S.A.

Corporate Family rating: Caa1/Baa1.ar ratings affirmed; stable outlook.

b) Ratings Affirmed, Outlook changed to negative

6) Hidroeléctrica El Chocon S.A.

Corporate Family rating: Caa1/Baa2.ar ratings affirmed; outlook changed to negative.

7) Genneia S.A.

USD Senior Secured Notes, USD Senior Unsecured Notes and Corporate Family Rating: Caa1/Baa3.ar ratings affirmed; outlook changed to negative.

8) Empresa Distribuidora de Electricidad de Salta S.A. (EDESA)

USD 63.00M Senior Unsecured Notes and ARS. 30 m senior unsecured term loan due in 2015: Caa1/Baa3.ar ratings affirmed; outlook changed to negative.

9) Generación Independencia S.A.

Senior Unsecured Notes and Corporate Family rating: Caa1/Baa3.ar ratings affirmed; outlook changed to negative.

10) Empresa Provincial de Energía de Córdoba (EPEC):

USD 565 Senior Secured Notes and Corporate Family rating: Caa1/Ba1.ar ratings affirmed; outlook changed to negative.

11) Metrogas S.A.

Debt program and corporate family rating: Caa1/Ba1.ar ratings affirmed; outlook changed to negative.

c) Ratings Downgraded, Outlook changed to negative

12) Central Térmica Loma de la Lata S.A. (CTLLL)

USD 178 million Senior Secured Notes: downgraded to Caa2/Ba3.ar from Caa1/Baa3.ar; Outlook changed to negative from stable.

RATINGS RATIONALE

The ratings affirmation and stable outlooks kept by regulated companies (a) reflect one or more of the following factors: (1) strong credit profiles, (2) low or very low leverage, (3) adequate liquidity combined with comfortable debt profiles. Although as regulated utilities or concessions these companies are highly dependent on local economic conditions and operating environment, they remain subject to government regulations as reflected by the Caa1 rating level. The stable outlooks, despite the recent sovereign outlook change to negative, considers that the factors mentioned above will not change substantially over the next 12 to 18 months.

The rating outlook revision to negative for the issuers listed above (b) is mainly triggered by the negative outlook change for the Argentine government's Caa1 issuer rating.

The negative outlook on Argentina's Caa1 issuer rating reflects Moody's view that the recent default could increase pressure on Argentina's official foreign exchange reserves amid continued economic stagnation. The recent default is likely to exacerbate the economic contraction, increase pressure on the exchange rate, and push inflation even higher. Please see www.moodys.com for further details on the recent change in the government's rating outlook.

The negative outlook for the affected issuers reflects Moody's view that the creditworthiness of these companies cannot be completely de-linked from the credit quality of the Argentine government, and thus their ratings need to closely reflect the risk that they share with the sovereign. Particularly, the negative outlook considers that the affected companies (a) are either power generating companies that depend upon government direct payments or regulated concessions, subject to regulated tariffs and local economic conditions. The negative outlook for regulated utilities (b) also considers that those companies receive revenues in local currency while their debt is denominated in foreign currency which exposes them to both devaluation and transfer risks. Finally, the negative outlook assigned to these companies reflects the more direct linkages they have with the sovereign.

Please refer to Moody's Cross Sector Rating Methodology "How Sovereign Credit Quality May Affect Other Ratings" published on 13 February 2012, and available on www.moodys.com.

Moody's notes that a rating downgrade of the sovereign would likely result in negative rating actions for all of the companies, even in the absence of any significant change in their underlying credit quality.

The downgrade on CTLLL's (c) ratings to Caa2/Ba3.ar from Caa1/Baa3.ar reflects the company's weakened liquidity as it approaches its upcoming debt maturities in the context of potentially less certain access to alternative sources of financing amid the recent default.

In particular, CTLLL's debt totaling USD 166 million is coming due in full in about a year (final maturity of USD 125 million in September 2015). Although the next principal payment of USD 21 million due next month is expected to be manageable for the company given its current liquidity and cash generation position, 2015 payments and/or refinancing (for an amount of USD 145 million) will remain challenging in relation to the company's cash generation capacity given local market conditions. Consequently, the outlook for CTLLL is also changed to negative.

The principal methdology used in rating Camuzzi Gas Pampeana S.A., Distribuidora De Gas Cuyana S.A., Metrogas S.A., Empresa Distribuidora de Electricidad Salta, Empresa Provincial de Energia de Cordoba, and Gas Natural BAN, S.A. was Regulated Electric and Gas Utilities published in December 2013. The principal methdology used in rating Hidroelectrica El Chocon S.A., Generacion Independencia S.A., Genneia S.A., and Central Termica Loma de la Lata S.A. (CTLLL) was Unregulated Utilities and Power Companies published in August 2009. The principal methdology used in rating Transportadora de Gas del Sur S.A. was Natural Gas Pipelines published in November 2012. The principal methdology used in rating Aeropuertos Argentina 2000 S.A. was Operational Airports outside of the United States published in May 2008. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in June 2014 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.ar

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

The regulatory report related to this rating action is available on www.moodys.com.ar.

Please see www.moodys.com.ar for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com.ar for additional regulatory disclosures for each credit rating.

Daniela Cuan
Vice President - Senior Analyst
Corporate Finance Group
Moody's Latin America Agente de Calificación de Riesgo
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 5129 2600

William L. Hess
MD - Utilities
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Latin America Agente de Calificación de Riesgo
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 5129 2600

Moody's changes outlook to negative for Argentine Infrastructure Issuers; downgrades CTLLL
No Related Data.
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