Aegea Saneamento, one of Brazil’s biggest water company, was downgraded by S&P Global Ratings for a second time in three weeks after reporting higher-than-expected leverage in its delayed 2025 financial statements.
S&P cut the firm by one notch to B and gave the rating a negative outlook, the agency said Monday in a report.
Aegea reported having a debt-over-EBIDTA ratio of 3.78 at the end of December, slightly below the ratio limit of 4 in the company’s covenants. S&P said it expects leverage will remain high throughout 2026 and 2027, despite Aegea management forecasts that the metric will improve in the second half of this year.
“The company doesn’t expect to breach covenants but if it occurs, we believe the company would likely seek waivers or prepay debt should first and second-quarter 2026 measurements indicate a potential breach,” S&P said.
Aegea will need to tap the capital markets to cover expenditures and refinance debt despite facing high funding costs, the report added.
“The negative outlook reflects our view that a further downgrade is possible if the company faces restricted access to debt markets due to rising funding costs, which could hinder its growth strategy and projected EBITDA increase,” S&P said.
S&P and Fitch Ratings stripped Aegea of its investment-grade rating in multi-notch downgrades at the start of this month after the company repeatedly postponed the publication of its financial results. They were finally issued on April 11.