Fitch Affirms IHB Certificates at 'B' and Tiete National Rating at 'BBB+(bra)'.CHICAGO -- 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 affirmed the 'B' international rating on US$300 million of 11.5% trust certificates issued by AES IHB IHB International Hydrographic Bureau IHB International Hospital of Bahrain IHB Indiana Historical Bureau IHB Indiana Harbor Belt Railroad IHB In Het Bijzonder (Dutch) IHB Indian Health Board IHB It's Happy Bunny Cayman, Ltd. (IHB). Fitch has also affirmed the national scale rating of AES Tiete S.A. (Tiete) at 'BBB+(bra)'. Both ratings have a Stable Outlook. The ratings reflect the continuing improvement of the credit-protection measures of the underlying operating company operating company A business that engages in transactions with outsiders. (Tiete, a publicly traded, Brazilian, hydroelectric generation company) and the upgrade in December 2005 of Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A. (Eletropaulo), Tiete's sole contractual offtaker beginning in 2006, to 'B+' from 'B' (to 'BBB(bra)' from 'BB+(bra)' on the Brazilian national scale). The certificates are guaranteed by AES Tiete Empreendimentos S.A. (TE), the controlling shareholder, AES Tiete Participacoes S.A. (TP), and AES Tiete Holdings, LTD., holding companies of Tiete, and the shares owned by these companies are pledged as collateral. The rating of the certificates is based on the underlying credit strength of Tiete and the quality and amount of dividends and distributions available to IHB to pay the debt on the certificates. Tiete's financial condition is strong, supported by a low and relatively stable operating cost structure and operating company debt that is easily manageable. Tiete reported net revenue of BRL BRL In currencies, this is the abbreviation for the Brazilian Real. 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. 1.2 billion in 2005, up 24.4% in comparison with 2004, primarily due to the replacement of the lower priced initial contracts with the Eletropaulo PPA PPA 1. Palpation, Percussion & Ausculation 2. Pittsburgh pneumonia agent 3. Postpartum amenorrhea 4. Price per accession 5. Pure pulmonary atresia . 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 increased 20.9% to BRL939 million for the comparable period. Operating company leverage is low with total debt at December 2005 of BRL1.5 billion and a net debt/EBITDA ratio of 0.7 times (x). The company also has a low amount of debt maturing in the short term (BRL146 million) compared with cash and short-term investments of BRL795 million as of Dec. 31, 2005. Increased net income has resulted in higher dividends, BRL539 million for 2005, a portion of which will be used to service the IHB certificates. During 2005, Tiete distributed dividends sufficient to pay US$61.5 million in deferred and accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. on the certificates and accumulate an additional US$13.8 million in the reserve account for a total of approximately US$29 million as of October 2005. All requirements under the certificates have been met, including a minimum US$15 million payment during 2005 and a cash reserve higher than the immediately succeeding scheduled semi-annual payment of interest and principal. Tiete may be exposed to certain financial risks associated with non-completion of capacity expansion as required by the concession contract. The company is obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to expand its generating capacity by approximately 400 megawatts (MW) by December 2007. This additional capacity must be in the State of Sao Paulo, where development of hydroelectric plants is difficult due to limited availability of hydro resources and there have been no environmental licenses issued for building thermoelectric plants. Tiete has been negotiating with the sector regulator and the government of the State of Sao Paulo for a solution to the matter. All affected parties are aware of the situation and working toward an agreement. Tiete is directly owned by AES Tiete Empreendimentos S.A. and AES Tiete Participacoes S.A., subsidiaries of Brasiliana. TE and TP own 71.3% of the voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. of Tiete, representing approximately 43.9% of the company's total capital stock. While TE and TP have effective control, they receive only 42.5% of dividends and distributions from Tiete, which provides the cash flow to service the certificates. TE and TP forward funds to IHB in form of intercompany loan debt payment in order for IHB to meet its debt-service obligations. 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. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion