Moody's rates EPM notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to Empresas Publicas de Medellin SA ESP's proposed senior notes and affirmed EPM's Baa3 local currency issuer rating and Baa3 foreign currency rating on its $500 million of senior notes due in 2019.

The outlook is stable.

The rating actions reflect the fact that EPM's baseline credit assessment of 11 and stand-alone credit risk profile captures the material increase in leverage to fund the group's sizeable capital expenditure program and the progressive deterioration in strong historical credit metrics, Moody's said.

The ratings reflect EPM's ownership structure and linkages with the City of Medellin (Baa3, stable), a medium-level probability of extraordinary support from the municipality and a high level of dependence, the agency said.

The outlook is based on the belief that EPM will be able to successfully manage its current increased leverage position, ongoing substantial capex program and liquidity in such a way that the reported credit metrics will continue to be well positioned for its current baseline credit assessment, Moody's said.

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