Fitch Downgrades AES Puerto Rico, L.P. to 'BBB-'.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 downgraded AES Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , L.P. (AES-PR) as follows: --$161.9 million tax-exempt bonds due 2026 to 'BBB-' from 'BBB'; --$33.1 million taxable bonds due 2022 to 'BBB-' from 'BBB'. The bonds were issued by the Puerto Rico Industrial, Tourist, Educational, Medical, and Environmental Control Facilities Financing Authority. The rating action is due to revised projected cash flows and ongoing operating issues that are inconsistent with the previous rating category. Annual debt service coverage ratios are lower in the long-term than original forecasts. AES-PR has experienced persistently intermittent operating difficulties and forced outages since commencement of commercial operations, which were delayed by approximately five months. The AES-PR project is a 454.3 megawatt coal-fired circulating fluidized bed combustion Fluidized bed combustion (FBC) is a combustion technology used in power plants. FBC plants are more flexible than conventional plants in that they can be fired on coal, biomass, among other fuels. power plant in Guayama, Puerto Rico Guayama (gwah-YAH-mah) is a municipality of Puerto Rico located on the Southern Coastal Valley region, bordering the Caribbean Sea, south of Cayey; east of . The plant delivers electric energy and capacity to Puerto Rico Electric Power Authority (PREPA PREPA Puerto Rico Electric Power Authority ), a public power utility, and steam to Phillips Puerto Rico Core, Inc. under long-term contracts. The downgrade reflects projected annual debt service coverage ratios that exhibit a declining trend and are generally lower than original projections. Intermittent equipment reliability issues have reduced average availability below contractual requirements in 17 of 35 months of commercial operation. Turbine blade failures in both steam turbines caused forced outages in 2003 and 2005, requiring replacement with coated blades designed to reduce the likelihood of further failures. Additional uncertainties exist regarding methods and costs of ash disposal, which are not directly reimbursed by the power purchase agreement (PPA PPA 1. Palpation, Percussion & Ausculation 2. Pittsburgh pneumonia agent 3. Postpartum amenorrhea 4. Price per accession 5. Pure pulmonary atresia ). The investment grade rating is supported by fuel costs that are a pass-through to PREPA, subject to a PPA guaranteed heat rate and minimizing fuel price risk. AES-PR is a low cost source of power and a good fit with PREPA's fuel diversification strategy. PREPA serves an island system without electric competition. Prior concerns regarding Puerto Rican income tax liability appear to have been resolved as no income tax payments are projected for the term of the rated debt. 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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