Fitch lowers AES El Salvador Trust

Fitch Ratings said it downgraded the long-term foreign- and local-currency issuer default ratings on AES El Salvador Trust II to CCC from B.

The actions affect $310 million notes due 2023, which also have a CCC rating.

The long-term national scale ratings of related entities Empresa Electrica de Oriente SA (EEO) and Compania de Alumbrado Electrico de San Salvador SA (Caess) also were downgraded to BBB-(slv) from A+(slv).

The outlook was revised to negative from stable.

The downgrades follow the downgrade of El Salvador's long-term foreign-currency issuer default rating to CCC and long-term local-currency issuer default rating to RD (restricted default).

The sovereign rating actions come on the heels of missed interest payments on debt to the local private pension funds issued under domestic law, Fitch explained.

Political polarization and gamesmanship have severely constrained the government's ability effectively manage its financial obligations, the agency said.

The trust's ratings are linked to the sovereign rating of El Salvador due to operational exposure to regulatory instability and a reliance on subsidies, Fitch said.

The ratings also reflect the company's fundamental sensitivity to additional cost absorption on the part of end-users in the event subsidies are suspended or remain unpaid, the agency said.

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