Fitch rates EDP – Energias notes BB

Fitch Ratings said it assigned an expected rating of BB to EDP - Energias de Portugal, SA’s proposed deeply subordinated hybrid securities.

The ratings reflect the highly subordinated nature of the notes, which Fitch said it considers having low recovery prospects in a liquidation or bankruptcy scenario.

The company has a long-term issuer default rating of BBB-, short-term issuer default rating of F3 and senior unsecured rating of BBB-.

EDP Finance BV has a long-term issuer default rating of BBB-, short-term issuer default rating of F3 and senior unsecured rating of BBB-.

Hidroelectrica del Cantabrico, SA has a long-term issuer default rating of BBB-, short-term issuer default rating of F3.

The equity credit on the notes reflects the equity-like characteristics of the instruments, including subordination, maturity in excess of five years and deferrable interest coupon payments, the agency said.

The proposed notes are rated two notches below EDP’s long-term issuer default rating given their deep subordination and lower recovery prospects and deferral option, Fitch said.

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