Moody's rates Escelsa debentures Ba3

Moody's America Latina said it assigned a Ba3 global local-currency rating and an A2.br national scale rating to the R$250 million unsecured subordinated debentures due 2014 to be issued by Espirito Santo Centrais Eletricas SA (Escelsa).

The outlook is stable.

Net proceeds from the debentures will be used to refinance short-term debt, thereby lengthening the company's debt maturity profile and improving its liquidity position.

The agency said the Ba3 rating reflects the Ba2 global local-currency issuer rating of Escelsa, which in turn balances the company's exclusively regulated power distribution activity under a long-term concession contract against uncertainties related to the Brazilian regulatory environment for power utilities, particularly with regard to potential interference from the federal government.

The stable outlook reflects Moody's expectation that the company will continue to benefit from its monopolistic position in its concession area and will maintain strong debt protection metrics and a healthy liquidity position in the near term while executing mandatory investments.

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