Fitch upgrades Energisa‘s ratings and outlooks remains stable

Fitch Ratings has affirmed the Long-Term IDRs (Issuer Default Ratings) of Energisa S.A. (Energisa) at ‘BB‘ and upgraded its Long-term National Scale Rating to ‘AA(bra)‘ (AA-(bra)), from ‘A+(bra)‘ (A+(bra)). The Rating Outlook remains Stable. Fitch has also affirmed Energisa‘s subsidiaries‘ Long-Term IDRs at ‘BB+‘ and upgraded its Long-Term National Scale Rating to ‘AA(bra)‘ from ‘AA-(bra)‘

The risk rating agency stated that the rating actions reflect Fitch‘s expectation that Energisa will succeed in continuously improving its consolidated credit profile after the initial impact of the acquisition of the Grupo Rede distribution companies in April 2014. The sale of its operational and under construction generation assets for BRL 2.7 billion - completed in March 2015 - combined with a capital increase of BRL 250 million, the issuance of BRL 1 billion debentures and BRL 661 million of Banco Nacional de Desenvolvimento Economico Social (BNDES) loans in 2015 benefited the group credit metrics. Fitch said this is because since it reduced pressure on the group‘s liquidity and leverage ratios on a more restricted credit scenario. The upgrade of the national scale ratings incorporates Fitch‘s view that the group is stronger in its IDR levels.

The agency said Energisa should continue to achieve efficiency gains in the operational performance of the subsidiaries acquired from Grupo Rede and benefit from the next tariff review cycle. Despite the relatively recent integration, positive results have already been noticed and reflected on the consolidated operational cash generation", reported the agency. Fitch also considered that the group is well positioned to compensate for potential negative pressures on energy consumption, delinquency and energy losses due to the challenging Brazilian macroeconomic environment. The asset diversification of Energisa through 13 power distribution companies is positive as it dilutes operational risks.

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