Fitch downgrades Cemig, bonds

Fitch Ratings said it downgraded Companhia Energetica de Minas Gerais (Cemig)’s, Cemig Distribuicao SA’s (Cemig D) and Cemig Geracao e Transmissao SA's (Cemig GT) long-term foreign and local currency issuer default ratings to B- from B+, as well as Cemig GT's proposed $1 billion eurobonds due 2024 to B(EXP)/RR3 from BB-(EXP)/RR3.

Concurrently, the agency withdrew the rating of the proposed eurobonds as it has passed more than 90 days since this rating was assigned without conclusion of the issuance.

Fitch also downgraded the national scale rating to BB-(bra) from BBB(bra) for the three companies and their senior unsecured debentures.

The negative outlook was removed and the ratings were placed on watch negative.

Fitch said the downgrade reflects the deterioration of Cemig group's credit profile, as the agency believes that its financial flexibility has materially worsened and that net adjusted leverage will be in the range of 5 times to 5.5 times in the next two years, which is high for the previous rating.

Delays in completing its strategy for asset disposal along with high interest rates on its debt are having a negative impact on the group's ability to improve its financial metrics, including liquidity ratios, Fitch explained.

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