Rating agency Fitch downgraded on Friday (24th) the national rating of Enel Brasil and its subsidiaries from AAA to AA+. The downgrade occurred due to the risk of the company losing its electricity distribution concession in São Paulo, after Aneel opened a process that could lead to contract forfeiture.
Brazil's National Electric Energy Agency (Aneel) opened a process in April to evaluate the termination of Enel SP's concession after identifying structural failures in service provision. Termination represents the most severe penalty applicable to an electric utility company and has never been applied in Brazil's energy distribution sector.
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Fitch downgraded the national rating of Enel Brasil and its subsidiaries from AAA to AA+ on Friday (24th)
The downgrade reflects the risk of non-renewal of Enel SP's concession after opening of regulatory process for possible forfeiture
Enel Américas made available a US$ 2 billion credit line to Enel Brasil
The ratings have negative outlook due to risk of deterioration in credit profile if SP concession is not renewed
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Aneel opened a process on April 7 to define possible forfeiture of Enel SP's concession after finding structural failures
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Aneel notified the company on April 13 to provide clarifications in the forfeiture process
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Enel Rio and Enel Ceará concessions have higher probability of renewal according to Fitch
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