Moody's cuts ILAP rating

Moody's Investors Service said it downgraded to Ca from Caa3 the rating assigned to the $404 million of senior secured notes issued by Inversiones Latin America Power Ltda. (ILAP) maturing in 2033.

“The downgrade of ILAP's secured notes to Ca is based on Moody's estimates of lower recovery prospects for bondholders due to the higher likelihood that ILAP's power purchase agreements (PPAs) with distribution companies, that have prices above $100 per megawatt hour, will be canceled given that the project company has failed to comply with the contractual provisions that required it to maintain minimum credit quality standards, Moody’s said in a statement.

The agency noted ILAP entered a standstill period with its bondholders in July and has been working with an investment bank on a restructuring plan, which was posted on the company’s website late last month. Under the plan, for each dollar of current senior secured notes, bondholders would receive 62 cents of take-back senior secured notes and 38 cents of unsecured convertible notes. The plan still has to be approved and signed by the bondholders

The outlook remains negative.

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