Fitch downgrades Engie Energia Chile

Fitch Ratings said it downgraded Engie Energia Chile SA's long-term foreign- and local-currency issuer default ratings to BBB from BBB+, and long-term national scale rating to AA-(cl) from AA(cl). The agency also trimmed the rating on the company's $850 million outstanding of senior unsecured notes to BBB from BBB+.

“The downgrade reflects Engie Chile's higher leverage, which is expected to reach 6.2x by the end of 2022 and remain above 3x on average through 2024, deteriorated liquidity position weakened by expected negative free cash flow due to its renewable expansion. Further, the company is highly exposed to the spot market with high marginal costs, where approximately 30% of its contracted position has been covered with spot energy purchases,” Fitch said in a press release.

The rating outlook is stable.

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