S&P drops AES Panama, notes to BB+

Standard & Poor's said it lowered its corporate credit and issue-level ratings on AES Panama SA and its outstanding $300 million notes due 2016 to BB+ from BBB-.

At the same time, the agency revised the company's SACP to bb+ from bbb-. It also removed the ratings from CreditWatch with negative implications, where they were placed on October Oct. 25.

The outlook is stable.

S&P said the rating on AES Panama reflects the assessment of its bb+ SACP. The SACP is based on the company's "fair" business risk profile and "significant" financial risk profile as criteria define these terms.

"The rating on AES Panama also reflects our view that there is a moderately high likelihood that the government of Panama would provide timely and sufficient extraordinary support to AES Panama in the event of financial distress. In accordance with our criteria for government-related entities, our view is based on our assessment of AES Panama's role as the largest low-cost power generator in Panama and its strong link to the government, which has a majority stake in the company," S&P credit analyst Maria del Sol Gonzalez said in a news release.

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