Moody's rates Cemig notes B1

Moody's Investors Service said it assigned global scale B1 and Brazil national scale Baa2.br ratings to Cemig Distribuicao SA's sixth issuance of R$550 million senior secured debentures due June 2020.

The debentures are backed by a corporate guarantee from Cemig's parent company, Companhia Energetica de Minas Gerais, Moody's said, and secured by preferred shares of Companhia de Gás de Minas Gerais – Gasmig.

The proceeds will be used to replenish Cemig's cash position following high expenses with energy acquisition costs in 2018 and to pay debt due in 2019, the agency said.

The ratings reflect the ratings on the consolidated profile of its parent company due to corporate guarantees and cross-default clauses embedded in the various debt instruments across the corporate family, Moody's said.

The ratings reflect the difficulty in assessing the additional recovery benefits from the pledge of Gasmig preferred shares, the agency said.

The ratings also consider a perception of general improvement in the company's liquidity profile following indemnification payments, asset sales and short-term debt refinancing, Moody's said.

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