Moody's boosts Sanepar's debt securities ratings

- Friday, February 24, 2012

Moody's boosts Sanepar's debt securities ratings

Ratings agency Moody's has upgraded its assigned ratings on the debt securities of southern Brazil's Paraná state water utility Sanepar to Ba2 from Ba3 global scale and to from on the Brazilian national scale, with a stable outlook.

The ratings action was prompted by the 16.5% increase in water and sewerage service tariffs the company said it will implement in March, a press release from the agency reads.

Sanepar has debt securities worth 55mn reais (US$32.2mn) due this year.

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The utility's ratings reflect its strong cash generation arising from its monopoly rights to operate regulated water and sewerage services through public concessions in southern Brazil, Moody's said.

"Sanepar's strong credit metrics have been historically characterized by relatively low leverage and predicable operating margins. Nevertheless, track records of political interference by the Paraná state government resulting from a tariff freeze initiated in 2005 have been constraining the ratings," the report reads.

For the full report, in English, go to this link; for Portuguese, this link