Fitch ups two Dominican utilities

Fitch Ratings said it upgraded the ratings on the following Dominican Republic utilities following the upgrade of the country's long-term issuer default ratings to BB- from B+:

• AES Andres, BV: long-term foreign-currency issuer default rating to BB- from B+, outlook revised to stable from positive, senior unsecured notes due 2026 to BB- from B+/RR4; and

• Empresa Generadora de Electricidad Itabo, SA: Long-term foreign-currency and local-currency issuer default ratings to BB- from B+, outlook revised to stable from positive, senior unsecured notes due 2026 to BB- from B+/RR4.

The recovery ratings on the unsecured debt were removed following the issuers' transition into the BB category of ratings.

Fitch said the upgrades reflect the Dominican Republic's electricity sector's high dependence on transfers from the central government to service financial obligations; a condition that links the credit quality of the distribution companies and generation companies to that of the sovereign.

Low collections from end-users, high electricity losses and subsidies damaged the distribution companies' cash generation capacity, aggravating the generation companies' dependence on public funds to cover the gap produced by insufficient payments received from distribution companies, the agency added.

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