Moody's downgrades Coelba

Moody's Investors Services said it downgraded Companhia de Eletricidade do Estado da Bahia’s R$400 million bonds due 2016 to Baa3 from Baa2.

The downgrade results from the deterioration in the credit metrics not only of Coelba but also of its shareholder Neoenergia SA, whose support Moody's had previously factored into the rating. Because of Neoenergia's current weaker position, Moody's has decided that the previous one-notch uplift because of Neoenergia's implicit support is no longer appropriate.

The stable outlook reflects Moody's expectation that Coelba will post credit metrics commensurate with the low end of the Baa3 rating category and maintain its adequate liquidity standing over the short to medium term. The agency also expects that Coelba will balance the payment of dividends if its cash generation as measured by cash from operations falls short of its expectations so that credit metrics remain adequate for the rating category.

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