EEB Outlook Sours

Fitch has cut the outlook on EEB’s debt to negative from stable and affirmed the Colombian state-owned power company’s rating at BB. The move affects some $610m in 2014 senior unsecured notes. The company’s ability to reduce debt leverage in the medium term has weakened, says the shop, pointing to its aggressive growth strategy and unlikely possibility EEB will manage to IPO anytime soon. EEB’s $320m cash position as of September 30 will likely dwindle as it seeks to meet rising domestic demand for gas with new capital investments. “Depending on the size and timing of these potential capital investments, consolidated debt to Ebitda could increase by more than 1 time (x) to more than 4x, which may pressure credit quality,” says Fitch. In the 12 months ended September 30, consolidated debt to Ebitda ratio was 3.1x on $490m of Ebitda and $1.5bn in debt, it adds. In October 2007, EEB sold $610m in 7-year NC4 notes at par to yield 8.75% via ABN AMRO, now RBS. The notes were most recently quoted trading at 86.5-88.5.