S&P cuts Eletrans

S&P said it lowered Eletrans SA’s senior secured notes to BBB+ from A-.

Citing regulatory events and delays, Eletrans cash flow has been more volatile than the expected for an A- rating., S&P said.

A regulatory decision forced it to pay power generators with cash and cut working capital by $10 million in 2020. This decision resulted in Eletrans’ debt service coverage ratio dropping under 1x and forced it to use money in its debt service reserve account, the agency noted.

“Although we view this situation as a one-off event that's unlikely to occur again, performance volatility is significantly higher than that we expect for an A- rated transaction. We also view the use of the DSRA as not commensurate with an A- rated project,” S&P said in a press release.

The outlook is stable.

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