Fitch Ratings Affirms AES Puerto Rico's Bonds at '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 affirmed its 'BBB-' rating of 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.'s (AES-PR) $161.9 million tax-exempt bonds due 2026 and the $33.1 million taxable bonds due 2022. The bonds were issued by the Puerto Rico Industrial, Tourist, Educational, Medical, and Environmental Control Facilities Financing Authority. Financial performance has been consistent with cash flow forecasts revised in 2005, following successful resolution of intermittent equipment reliability issues. The annual debt service coverage ratio The debt service coverage ratio (DSCR), or debt service ratio, is the ratio of net operating income to debt payments on a piece of investment real estate. It is a popular benchmark used in the measurement of an income-producing property’s ability to produce was 1.82 times (x) in 2005 and 1.72x in 2006, with similar coverage levels expected for 2007. The rating reflects AES-PR's recent and expected financial performance over the term of the bonds. Fitch has evaluated AES-PR's credit quality on a stand-alone basis, independent of the credit quality of its owner, The AES Corporation (Long-term Issuer Default Rating of 'B+' by Fitch). AES-PR has earned 100% of its capacity payments since Fitch's last rating action in December 2005. Failed steam turbine blades were replaced with coated blades designed to reduce the likelihood of earlier forced outages, and the project has been able to consistently exceed the contractually required average availability. Scheduled maintenance has addressed boiler tube leak issues, reducing the frequency and duration of boiler outages. Some 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 ). A lawsuit for illegal dumping of boiler ash by a subcontractor in 2003 and 2004 was settled for $6 million in February 2007, eliminating the risk of a potentially larger liability. AES-PR is focusing on increased on-island utilization of boiler ash for liquid waste stabilization and other dry ash markets and has minimized on-site ash inventory. The investment grade rating is supported by pass-through fuel costs subject to a PPA guaranteed heat rate, minimizing fuel price risk. The project's heat rate has improved and now approximates original design criteria. 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. AES-PR is a low cost source of power and a good fit with PREPA's fuel diversification strategy. PREPA serves an island system with no electric competition. 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