Moody's may upgrade four Mexican power projects

Moody's Investors Service said it placed the Baa2 foreign-currency debt ratings of four Mexican power projects - El Habal Funding Trust, Fideicomiso Petalcalco, Monterrey Power SA de CV and Proyectos de Energia SA de CV - under review for possible upgrade.

The debt of each of the four projects is supported by Comision de Federal Electricidad's (CFE) lease obligations to the particular project, and these lease obligations rank pari passu with CFE's senior unsecured debt. The ratings of the projects reflect the strength of CFE's ability to make payments under the lease and consider the structure of the agreements.

The agency said the possible upgrade reflects an improving trend in CFE's profitability and cash flow, along with stable operating performance and effective management of substantial capital expenditures that are needed to satisfy the growing electric infrastructure needs of Mexico.

The rating action also reflects Moody's current view that privatization appears to be quite unlikely in the foreseeable future, preserving the strong interlocking relationship between CFE and the Mexican government .

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