Fitch Ratings has affirmed its BBB+ rating, with a stable outlook, for publicly controlled Colombian electricity company Interconexion Electrica S.A. E.S.P.’s (ISA). The affirmation applies to the firm’s long-term foreign-currency issuer default rating and long-term local-currency issuer default rating.
The New York-based big three credit rating agency also affirmed its AAA(col) rating for ISA’s senior unsecured local bond and its F1+(col) for ISA’s commercial paper program.
The announcement earlier this month came on the heels of Fitch affirming its BBB sovereign rating and stable outlook for Colombia.
“ISA’s ratings reflect the low business risk profile of the company, which is a characteristic of the power transmission business,” said Fitch in its ratings rationale statement. “The ratings incorporate the strong geographic and business diversification of its revenue source, which along with the high predictability of cash flows from operations translate into a strong financial profile. Also factored in ISA’s ratings are its adequate liquidity position and its aggressive growth strategy.”
ISA, which is 51.4% owned by the Colombian government, operates in the energy markets of Brazil, Chile, Peru, Bolivia, and Central America in addition to its dominance of 68% of the electricity transmission network in Colombia (including its subsidiaries), according to Fitch Ratings. This market diversity, in addition to strong ongoing demand expectations, leaves ISA with operating cash flow stability.
“ISA’s credit metrics reflect solid cash flow generation, moderate debt levels and adequate liquidity,” stated Fitch.
Given the nature of its business, the company does face regulatory risk across its portfolio, but Fitch considers this to be “low to moderate” in the countries where ISA operates. It also has some uncertainly when it comes to executing a long-term growth strategy with planned capital expenditures of 6.6 trillion Colombian pesos on projects that have already been granted, but its cash and credit profile should allow it to support growth along with further acquisitions, according to Fitch Ratings.