Summary: C.A. La Electricidad De Caracas
Standard & Poors, April 2011
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
This product consists of a Summary Analysis: Bi-annual (at least). An abbreviated analysis containing Standard & Poor's issuer credit ratings as of the time the article was published. The analysis includes a rating rationale - the basis on which the rating was assigned - and an outlook section if the issuer is not on CreditWatch. Financial statistics are not included.
Abstract
The rating on C.A. La Electricidad De Caracas (EDC) reflects a deterioration of its stand-alone credit profile (SACP), which we recently revised to 'b-' from 'b'. The downgrade resulted from a sharp decline in EDC's profitability and cash flow generation as it adjusted to a new payroll base representing an approximately 86% increase in operating costs since 2009. Further, EDC's lack of a rate-setting policy that fully compensates it for all cost increases have constrained its top-line growth, and the current power outages and the energy savings policy that the government has implemented decreased the company's sales volumes in 2009 and 2010. Although EDC doesn't benefit from a formal guarantee from Petr-leos de Venezuela S.A. (PDVSA; B+/Stable/--) or the Venezuelan...
Companies mentioned in this report are: C.A. La Electricidad De Caracas ,Petroleos de Venezuela S.A.
Action: Review
C.A. La Electricidad De Caracas ,Petroleos de Venezuela S.A.
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