Sao Paulo, April 10, 2018 -- Moody's America Latina ("Moody's") has taken rating actions on several
infrastructure issuers operating in Brazil. The rating actions
follow the change in the outlook on the Government of Brazil's ratings
to stable from negative, and the affirmation of Brazil's issuer
and senior unsecured ratings at Ba2 on April 9, 2018.
Moody's rating action on Brazil's government issuer rating reflects
the strengths of Brazil's credit profile despite relatively weak
fiscal metrics. The sovereign's weak fiscal metrics are balanced
against moderately strong economic and institutional factors that are
in line with regional and Ba-rated global peers, with much
lower external vulnerability. For further information on Brazil's
sovereign credit profile, refer to the rating action press release:
https://www.moodys.com/research/Moodys-changes-outlook-on-Brazils-ratings-to-stable-from-negative--PR_380048
Please click on this http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_199000
for the list of affected credit ratings. This list is an integral
part of this press release and identifies each affected issuer.
RATINGS RATIONALE
The stable outlook for all these companies reflects Moody's stable outlook
for Brazil's government bond rating and Moody's view that the creditworthiness
of these companies continues to be dependent on the credit quality of
the sovereign.
Regulated utilities and concessions of public services have strong linkages
to the sovereign credit quality to the extent that those companies are
exposed to the same economic revenue base and subject to government policies.
Unregulated power companies and power projects are also exposed to the
sovereign credit quality due to the highly regulated nature of the energy
sector and its domestic end-customer base. Nevertheless,
the extent to which each company is immediately affected by an eventual
reversal of the economic growth and its ability withstand a prolonged
downturn varies according to its intrinsic credit quality and business
profile.
Despite the regulated nature, companies in the Brazilian transmission
sector rely on fixed revenues that are not volume dependent, which
mitigate their exposure to a declining economy. As a result,
the upgrades on EATE - Empresa Amazonense de Transmissão
de Energia S.A., ECTE - Emp. Catarinense
Trans. Energ. S.A., ENTE - Emp.
Norte de Trans. de Energ. S.A, ETEP -
Emp. Paraense Trans. Energ. S.A. and
Transmissora Aliança de Energia Elétrica ("TAESA")'s
ratings to Ba1/Aaa.br, reflect the highly predictable nature
of cash-flows of those companies coupled with their adequate liquidity
positions and low leverage for the rating category.
In the case of Rio Paranapanema Energia S.A., the
ratings' upgrade to Ba1/Aaa.br reflects Moody's perception
that this entity's strong credit metrics steaming from the unregulated
power generation business will remain robust, supported by Brazil's
higher-than-expected short- and medium-term
growth prospects. The ratings also consider Moody's expectation
of timely and reliable support from a foreign parent to mitigate eventual
cash flow volatilities. Rio Paranapanema Energia S.A.
is ultimately controlled by China Three Gorges Corporation (CTG Corp,
A1 stable).
The upgrade of EDP Sao Paulo Distribuicao de Energia S.A.'s
corporate family and senior unsecured ratings to Aa1.br on the
Brazilian national scale reflect the outlook change, as well as
the positioning of its credit profile relative to other domestic peers
in the regulated electric utility sector.
The upgrade of Energisa S.A's senior unsecured national scale
rating to A1.br reflect the outlook change, as well as the
positioning of its credit profile relative to other domestic peers in
the regulated electric utility sector.
WHAT COULD CHANGE THE RATINGS UP/DOWN
A rating or outlook change of the sovereign could result in subsequent
rating actions for these companies. A rating or outlook change
could also be triggered if Moody's perceives a material change in the
regulatory frameworks under which these companies operate, or disruptive
political interference in the normal course of their businesses.
Sustained deterioration or improvement in the relevant credit metrics
or the liquidity profile is also a trigger for a rating change for those
issuers.
PRINCIPAL METHODOLOGIES
The principal methodology used in rating Concessionária de Rod
Int do Oeste SA (SPVias) and Linha Amarela S.A. was Privately
Managed Toll Roads published in October 2017. The principal methodology
used in rating COMPANHIA PTA DE FORCA E LUZ - CPFL PAULISTA,
CPFL Energia S.A., EDP - Energias do Brasil
S.A., EDP Espirito Santo Distribuicao de Energia S.A.,
EDP Sao Paulo Distribuicao de Energia S.A., and Energisa
S.A. was Regulated Electric and Gas Utilities published
in June 2017. The principal methodology used in rating AES Tiete
Energia S.A., Energest S.A., Lajeado
Energia S.A., Rio Paranapanema Energia S.A
and Rio Parana Energia S.A was Unregulated Utilities and Unregulated
Power Companies published in May 2017. The methodologies used in
rating Companhia de Saneamento Basico do Estado de São Paulo -
SABESP and Companhia de Saneamento do Parana - SANEPAR were Regulated
Water Utilities published in December 2015, and Government-Related
Issuers published in August 2017. The principal methodology used
in rating Cea I - Centrais Eolicas Assurua I Spe S/A, Omega
Energia e Implantacao 2 S.A. and CEA II - Centrais
Eolicas Assurua II SPE S/A was Power Generation Projects published in
May 2017. The principal methodology used in rating Concessao Metroviaria
do Rio de Janeiro S/A was Global Passenger Railway Companies published
in June 2017. The principal methodology used in rating EATE -
Emp. Amazonense Trans. Energ. S.A.,
ECTE - Emp. Catarinense Trans. Energ. S.A.,
ENTE - Emp. Norte de Trans. de Energ. S.A,
ETEP - Emp. Paraense Trans. Energ. S.A.,
Transmissora Alianca de Energia Eletrica was Regulated Electric and Gas
Networks published in March 2017. Please see the Rating Methodologies
page on www.moodys.com.br 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 ".za"
for South Africa. For further information on Moody's approach to
national scale credit ratings, please refer to Moody's Credit rating
Methodology published in May 2016 entitled "Mapping National Scale Ratings
from Global Scale Ratings". While NSRs have no inherent absolute
meaning in terms of default risk or expected loss, a historical
probability of default consistent with a given NSR can be inferred from
the GSR to which it maps back at that particular point in time.
For information on the historical default rates associated with different
global scale rating categories over different investment horizons,
please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1113601.
REGULATORY DISCLOSURES
Information sources used to prepare the rating are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's information.
Information types used to prepare the rating are the following:
financial data, economic and demographic data, operating data,
historical performance data, and Moody's information.
Sources of Public Information: Moody's considers public information
from many third party sources as part of the rating process. These
sources may include, but are not limited to, the list available
in the link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_193459.
Moody's considers the quality of information available on the rated entity,
obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not an auditor
and cannot in every instance independently verify or validate information
received in the rating process.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
Please see the ratings disclosure page on www.moodys.com.br
for general disclosure on potential conflicts of interests.
Moody's America Latina Ltda. may have provided Other Permissible
Service(s) to the rated entity or its related third parties within the
12 months preceding the credit rating action. Please go to the
report "Ancillary or Other Permissible Services Provided to Entities Rated
by Moody's America Latina Ltda." in the link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_198873
for detailed information.
Entities rated by Moody's America Latina Ltda. and the rated entities'
related parties may also receive products/services provided by parties
related to Moody's America Latina Ltda. engaging in credit ratings
activities within the 12 months preceding the credit rating action.
Please go to the link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_198874
for a list of entities receiving products/services from these related
entities and the products/services received.
The date of the last Credit Rating Action for Concessionaria de Rod Int
do Oest SA (SPVias) was 31/5/2017
The date of the last Credit Rating Action for Linha Amarela S.A.
was 12/7/2017
The date of the last Credit Rating Action for COMPANHIA PTA DE FORCA E
LUZ - CPFL PAULISTA was 23/8/2017
The date of the last Credit Rating Action for CPFL Energia S.A.
was 23/8/2017
The date of the last Credit Rating Action for EDP - Energias do
Brasil S.A. was 31/5/2017
The date of the last Credit Rating Action for EDP Espirito Santo Distribuicao
de Energia SA was 31/5/2017
The date of the last Credit Rating Action for EDP Sao Paulo Distribuicao
de Energia S.A. was 31/5/2017
The date of the last Credit Rating Action for Energisa S.A.
was 15/7/2017
The date of the last Credit Rating Action for AES Tiete Energia S.A.
was 11/1/2018
The date of the last Credit Rating Action for Energest S.A.
was 31/5/2017
The date of the last Credit Rating Action for Lajeado Energia S.A.
was 31/5/2017
The date of the last Credit Rating Action for Rio Parana Energia S.A.
was 16/1/2018
The date of the last Credit Rating Action for Companhia de San Bas do
Estado de Sao Paulo was 16/8/2017
The date of the last Credit Rating Action for Companhia de Saneamento
do Parana - SANEPAR was 16/8/2017
The date of the last Credit Rating Action for Cea I - Centrais
Eolicas Assurua I Spe S/A was 31/5/2017
The date of the last Credit Rating Action for CEAII Centrais Eolicas Assurua
was 6/3/2018
The date of the last Credit Rating Action for Concessao Metroviaria do
Rio de Janeiro S/A was 12/7/2017
The date of the last Credit Rating Action for EATE - Emp.
Amazonense Trans. Energ. S.A. was 19/10/2017
The date of the last Credit Rating Action for ECTE - Emp.
Catarinense Trans. Energ. S.A. was 29/10/2017
The date of the last Credit Rating Action for ENTE - Emp.
Norte de Trans. de Energ. S.A was 17/3/2017
The date of the last Credit Rating Action for ETEP - Emp.
Paraense Trans. Energ. S.A. was 17/3/2017
The date of the last Credit Rating Action for Transmissora Alianca de
Energia Eletrica was 15/12/2017
The date of the last Credit Rating Action for Rio Paranapanema Energia
S.A was 8/2/2018
The date of the last Credit Rating Action for Omega Energia e Implantacao
2 S.A. was 23/8/2017
Moody's ratings are constantly monitored, unless designated as point-in-time
ratings in the initial press release. All Moody's ratings are reviewed
at least once during every 12-month period.
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 credit rating action on the support provider and in relation to
each particular credit 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.br.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit 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.
Please see ratings tab on the issuer/entity page on www.moodys.com.br
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is the most
reliable and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com.br
for further information.
Please see Moody's Rating Symbols and Definitions on the Ratings Definitions
page on www.moodys.com.br for further information
on the meaning of each rating category and the definition of default and
recovery.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com.br,
for each of the ratings covered, Moody's disclosures on the
lead rating analyst and the Moody's legal entity that has issued
the ratings.
Please see www.moodys.com.br 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.br
for additional regulatory disclosures for each credit rating.
Cristiane Spercel
Vice President - Senior Analyst
Project Finance Group
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800 891 2518
Client Service: 1 212 553 1653
Michael J. Mulvaney
MD - Project Finance
Project Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800 891 2518
Client Service: 1 212 553 1653
