S&P ups AES Dominicana notes to stable

Standard & Poor's said it revised its outlook on AES Dominicana Energia Finance SA's $160 million senior notes to stable and, at the same time, affirmed the B- long-term rating on the notes.

According to the agency, the outlook revision reflects the uncertainties that the operational strengthening of the country's distribution electric system and the sector's medium-term development plan will be achieved on time.

In S&P's opinion, the Government of the Dominican Republic's recent proposal to renegotiate the existing long-term energy sales contracts with the power generators anticipates that the distribution companies will continue to generate inadequate cash flows to meet their contractual obligations and that the government's sizable subsidy for the sector is unsustainable in the long run.

During 2006, the sector's deficit of $530 million was higher than the original $480 million budget, mainly attributable to the insufficient improvement in the performance of distributors' cash recovery index and to high generating costs resulting from fuel prices, the agency said.

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