Moody's gives Transenergia Renovavel notes Ba2

Moody's Investors Service said it assigned Ba2 global scale and Aa2.br on the Brazilian national scale senior secured ratings to the proposed first issuance of debentures by Transenergia Renovavel SA of R$123 million due in 12 years.

“The Ba2/Aa2.br ratings assigned to the proposed issuance reflect the revenue profile composed of 30% of revenues linked to the basic electricity transmission network (rede basica) until 2039 –– with counterparty risk highly diversified –– and 70% of transmission charges linked to transmission facilities for exclusive interest of generation plants for shared connection (ICGs) and transmission facilities for exclusive interest of generation plants for individual,” the agency said in a press release.

The proceeds will be used to prepay all debt at the project level and upstream resources to shareholders through dividends and a capital reduction. The structure also has an incurrence covenant test for dividend distributions, constraining cash upstream if the debt service coverage rates drops below 1.2x

The outlook is stable, reflecting the expectation of availability above 98% and that the project will continue to generate DSCRs above 1.2x, even in scenarios where some of the ICG/IEG, or individual connection, counterparties default on their obligations, Moody’s said.

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