Correction: Fitch Upgrades Transener's National Scale to 'BBB+(arg)'; Rates US$250MM Proposed Note Offering 'B/RR4'.BUENOS AIRES Buenos Aires (bwā`nəs ī`rēz, âr`ēz, Span. bwā`nōs ī`rās), city and federal district (1991 pop. -- (This is an amended draft of a press release issued earlier today. It corrects the original national scale rating in the first paragraph) Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has upgraded Transener S.A.'s national scale rating to 'BBB+ (arg)' from 'BBB-(arg)'. In addition, Fitch assigns the following ratings to Transener: --Long-term foreign currency Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'B'; --Long-term local currency Issuer Default Rating (IDR) 'B'; --US$250 million proposed senior unsecured note offering 'B/RR4'. All ratings have a Stable Outlook. Transener's ratings reflect its improving financial profile and operating performance. Over the last year, credit fundamentals have strengthened following the company's debt restructuring Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Notes: and the recently implemented tariff increase. Credit protection measures are expected to improve slightly from currently levels and stabilize following completion of the proposed refinancing. Transener's electric transmission business has low operating and business risks and generates stable cash flows. The company should benefits from an increasingly diversified business mix, with a growing share of the non-regulated business; non regulated business is essentially income from the operation, supervision and maintenance of third party transmission expansion projects. The ratings also incorporate significant expose to regulatory risk and the currency mismatch between its dollar denominated debt and its peso denominated cash flow. Transener's financial profile remains leveraged and is consistent with the 'B' rating category. At Sept. 30 2006, net debt/EBITDA was a moderate 3.6 times (x) and EBITDA/interest expense of 2.2x. Existing covenants restrict dividend distributions and have permitted cash to build and pay down debt; excess cash flow allowed for a repurchase of debt for approximately US$20 million through September 2006. Going forward, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become is expected to be in the mid US$60 million range with capital expenditures of about US$15 million, against current debt service of approximately US$25 million. Fitch expects the new issuance will extend debt maturities and lower annual debt service requirements through 2012 and provide more financial flexibility by introducing a less restrictive covenant restrictive covenant In property law, an agreement acknowledged in a deed or lease that restricts the free use or occupancy of property, such as by forbidding commercial use or certain types of structures. package. Transener is exposed to high levels of regulatory and country risks, which are incorporated into the ratings. Late last year, Transener reached a transitional agreement with the government that increased regulated tariffs until the full review of its concession contract. The tariff increase has helped restore profitability to its regulated business segment. Although positive, the agreement also stipulated tariff adjustments to reflect cost increases that have not yet been approved and the full tariff review of the contract remains pending, which adds to uncertainty. The future development of the non-regulated sector is partially subject to the effective expansion of the national grid national grid Noun Brit & NZ 1. a network of high-voltage power lines linking major electric power stations 2. the arrangement of vertical and horizontal lines on an ordnance survey map . Future investment is expected to be promoted and supported by the Argentine government through quasi [Latin, Almost as it were; as if; analogous to.] In the legal sense, the term denotes that one subject has certain characteristics in common with another subject but that intrinsic and material differences exist between them. Public Private Partnerships given the lack of private sector investment in the sector. Completion of currently planned projects should positively impact Transener's cash flow. Transener S.A. has an exclusive concession to operate high voltage The term high voltage characterizes electrical circuits, in which the voltage used is the cause of particular safety concerns and insulation requirements. High voltage is used in electrical power distribution, in cathode ray tubes, to generate X-rays and particle beams, to transmission assets in Argentina's major interconnected electric grid and owns a 90% share of the regional transmission system serving the Province of Buenos Aires (Transba S.A). In addition, the company generates revenues from services provided to third parties through Transener Internacional. Transener's ownership splits between Citelec S.A. (52.65%), the public (39.25%) and employees (8.1%). Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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