Fitch might downgrade EPM

Fitch Ratings said it placed Empresas Publicas de Medellin ESP's (EPM) BBB+ foreign-currency and local-currency issuer default ratings on rating watch negative.

The previous outlook was stable.

Similarly, the AAA(col) national long-term rating was placed on negative watch.

The action affects about $1.5 billion of outstanding debt with a long-term rating of BBB+.

Fitch said the negative watches on EPM's ratings reflect the increased likelihood of delays in the construction of the Ituango hydroelectric plant, which will likely lead to sustained pressure on the company's capital structure.

“Additionally, logistical and environmental issues have increased uncertainty surrounding the possibility of material cost overruns and related liabilities,” the agency said in a news release.

“The rating actions follow the sudden collapse of a mountain section at the Ituango dam site, blocking the tunnel that diverts water from the Cauca River downstream from the project.”

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