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After Recent Recovery, Brazilian Electric Sector's Liquidity Should Withstand Challenges In 2008 Apr 08
Standard & Poors, April 2008
Abstract
Brazilian electric power companies remain on track in strengthening their financial profiles following the post-2001 rationing. While the risks in the past strongly reflected volatility emanating from regulation and other country-related risks, the current credit crunch, consolidation or capacity expansion ventures (expansions and acquisitions; E&A), and higher average electricity prices during 2008 and likely in 2009 present new challenges to the sector's liquidity. However, after two years of active liability management programs, most of the Brazilian electric utilities have manageable debt amortization profiles (most short-term debt is comprised of the amortization of long-term debts), carry more cash holdings, and benefit from access to domestic long-term credit both from the banks and public debt markets. As of December 2007, 30 companies...
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.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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