Moody’s downgrades EPM to Baa3

Moody's Investors Service said it downgraded Empresas Publicas de Medellin ESP’s (EPM) issuer and senior unsecured debt ratings to Baa3 from Baa2 and the baseline credit assessment to ba1 from baa3.

The ratings were placed under review for downgrade.

As a government-related issuer, said EPM's ratings reflect its ownership structure and linkages to the City of Medellin (Baa2 negative), on top of its intrinsic credit quality, measured by the baseline credit assessment.

While it downgraded the baseline credit assessment, Moody’s said its views concerning the Municipality of Medellin's support and dependence are unchanged at “strong” and “very high,” respectively.

As such, the downgrade to Baa3, reflects the downgrade of the baseline credit assessment, driven by Ituango related events, rather than a change in the agency’s views concerning support or dependence from the municipality, Moody’s explained.

The action reflects the agency’s expectation that EPM's credit metrics will remain pressured in the medium-term as a result of the material recent incidents on EPM's landmark hydro project Ituango (2,400 MW in installed capacity).

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