Fitch keeps Itabo on negative watch

Fitch Ratings said it maintained Empresa Generadora de Electricidad Itabo, SA's (Itabo) BB- senior unsecured notes on rating watch negative.

Additionally, Fitch affirmed the long-term foreign and local currency issuer default ratings of Itabo at BB- with a stable outlook.

“Itabo's ratings reflect the electricity sector's high dependency on transfers from the central government to service its financial obligations, a condition that links the credit quality of the electric distribution companies (EDEs) and generation companies to that of the sovereign,” the agency said in a news release.

“Low collections from end-users, high electricity losses and subsidies have undermined distribution companies' cash generation capacity, exacerbating generation companies' dependence on public funds to cover the gap produced by insufficient payments received from distribution companies.”

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