Fitch Ratings Affirms Key Ratings for Colombian Utility ISA

New York-based ratings agency Fitch Ratings recently affirmed its key ratings of Colombian utility Interconexión Eléctrica S.A. E.S.P. (ISA) due to a low business risk profile, manageable regulatory risk, and indebtedness that matches expectations, among other factors.

Specifically, the big three ratings agency affirmed the following ratings for ISA:

• long-term national rating at AAA(col) with a stable outlook
• short-term national rating at F1+(col)
• bond program rating at AAA(col)
• commercial paper program rating F1+(col)
• issuer default rating (IDR) in both foreign and local currencies

Fitch noted in its accompanying statement that the IDR ratings, in particular, “reflect the company’s low business risk profile, which is characteristic of the power transmission business.” All the current ratings, the agency says, “take into account the strong geographic and business diversification of its revenue stream which, together with the high predictability of its operating cash flow.”

The company’s outlook is also aided by a strong credit profile, adequate liquidity and aggressive growth strategy, according to Fitch.

Fitch Ratings added that it “considers ISA’s business and financial profile to be strong enough to rate it two notches above its owner, Ecopetrol S.A.,” while noting that “ISA’s ratings to preserve the two-notch spread” would be impacted if Ecopetrol faces a negative ratings move.

“The ratings reflect ISA’s low business risk profile, derived from its stable and predictable cash flow generation, a characteristic of electric transmission companies, where approximately 80% of the company’s EBITDA generation comes from the electric transmission business over the rating horizon,” stated Fitch Ratings.

“The rest of the EBITDA generation is mainly concentrated in concession roads, with operations in Colombia and three in Chile, which include a compensation mechanism that extends the concession period or offers a minimum revenue guarantee in case the concessions register low traffic volumes. The agency estimates that the telecommunications business accounts for less than 3% of the company’s consolidated EBITDA.”