Fitch revises Eletrobras to negative

Fitch Ratings said it revised the outlooks on Centrais Eletricas Brasileiras SA’s (Eletrobras) and its wholly owned subsidiary, Furnas Centrais Eletricas SA’s (Furnas) long-term foreign- and local-currency issuer default ratings to negative from stable and affirmed the ratings at BB-.

The agency affirmed the companies' long-term national scale ratings at AA-(bra) and revised the outlooks to negative from stable.

Fitch said the outlook revision reflects its view that the expected increase of the Brazilian Federal Government's support to Eletrobras may not occur, considering its announced intention to privatize the power company through the dilution of its shareholding participation.

Based on this, the agency said it considers that a one-notch difference between the Brazilian sovereign issuer default rating (BB/negative) and Eletrobras is more appropriate. This means that changes to the sovereign issuer default rating or outlook should trigger the same action on Eletrobras to maintain the distance in the issuer default ratings.

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