Moody's rates Ashmore loans Ba3

Moody's Investors Service said it assigned B1 corporate family and probability-of-default ratings to Ashmore Energy International (formerly Prisma Energy International) and Ba3 ratings with loss-given-default assessments of LGD3 (35%) to its proposed $500 million senior secured revolving credit facility due 2012 and $1 billion senior secured term loan due 2014.

The outlook is stable.

Proceeds from the credit facilities will be used to refinance existing debt, to pay transaction fees and for general corporate purposes. Ashmore's capital structure also includes $560 million of subordinated PIK notes that are not rated.

The agency said the Ba3 rating on Ashmore's proposed credit facilities reflects the security afforded these facilities under the credit agreement and that the company's B1 corporate family rating reflects Ashmore's focus on equity investments in energy assets located primarily in speculative-grade emerging markets, including some countries where the risk of nationalization or adverse changes to contractual arrangements is particularly high; the structural subordination of the credit facilities to existing project level debt of about $900 million; concentration risk associated with its Brazilian power distribution company, which generates over 50% of the parent company's cash inflows; and risks associated with the company's current acquisitive growth strategy.

These credit challenges are mitigated by the stable and predictable cash flows provided by most of the company's operating companies; Ashmore's moderately leveraged financial profile, including the relatively low amount of debt at key subsidiaries; and the supportive regulatory frameworks and contractual arrangements governing most of the company's operating companies, Moody's said.

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