S&P rates Neoenergia debt brA+

S&P said it affirmed the BB global scale and brAA- national scale long-term corporate credit ratings on Neonergia SA and its core subsidiaries, Companhia de Eletricidade do Estado da Bahia (Coelba), Companhia Energetica de Pernambuco – Celpe, and Companhia Energetica do Rio Grande do Norte (Cosern).

The outlook remains negative.

The agency also said it affirmed the brA-1 short-term national scale rating on Neoenergia and lowered its stand-alone credit profile to BB from BB+.

S&P also said it affirmed the brA+ issue-level ratings on Neoenergia's subsidiaries, NC Energia SA, Termopernambuco SA and Itapebi Geracao de Energia SA, based on the parent company's unconditional and irrevocable guarantee of these entities' notes.

The agency also said it assigned a brA+ rating to Neoenergia's proposed R$250 million three-year unsecured debentures.

The one-notch difference between the long-term corporate credit rating and the issue-level ratings are based on the guarantee of Neoenergia, reflecting structural subordination, S&P said.

The ratings reflect an expectation that the company's credit metrics will worsen as a result of higher debt to fund the group's sizable capital expenditure plan amid Brazil's still weak economy, the agency said.

S&P said it believes Brazilian electricity distributors are vulnerable to the weakening of economic activity because it depresses electricity consumption and may lead to power surpluses and higher delinquencies from end-users.

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