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Fitch rates Energuate notes BB
Fitch Ratings said it assigned BB long-term foreign-currency and local-currency issuer default ratings to Energuate Trust.
Fitch also said it assigned an expected BB rating to Energuate's proposed senior unsecured notes to be jointly and severally guaranteed by the operating companies Distribuidora de Electricidad del Oriente SA (Deorsa) and Distribuidora de Electricidad del Occidente SA (Deocsa).
The outlook is stable.
Energuate's ratings consider the combined operations of Deorsa and Deocsa, Fitch said.
The ratings also factor in its dependence upon the Guatemalan government for the receipt of subsidy payments, the agency said.
While the company's credit profile is supported by its natural monopoly in its concession area, its exposure to socio-economically unstable regions within the country creates a challenging environment for maximizing profitability and operational efficiency, Fitch said.
Energuate's capital structure is considered adequate for the BB rating category, the agency said.
The proceeds will be used to refinance existing debt and replace acquisition debt at the IC Power level, Fitch said.
This capital structure is supported by Energuate's relatively stable and predictable cash flow generation, characteristic of distribution companies, the agency said.
The country's weak governance indicators highlight potential vulnerabilities to companies operating in sectors subject to significant regulatory interference, Fitch said.
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