Fitch Ratings Affirms AEI at 'BB'; Outlook to Positive
Business Wire, July 26, 2010
CHICAGO — Fitch Ratings has affirmed the ratings of AEI as follows:
— Issuer Default Rating (IDR) at ‘BB’;
— US$1 billion Sr. Secured term loan at ‘BB’;
— US$500 million Sr. Secured revolving credit facility at ‘BB’.
The Rating Outlook for AEI has been revised to Positive from Stable. The
Positive Outlook reflects the company’s moderation in growth and
improvements in the macroeconomic conditions where its operating
companies are located. Going forward, the AEI’s growth strategy is
expected to be focused on investing in existing assets and large
acquisitions are less likely. Over the past four years, cash flow
(subsidiary distributions) from investment grade countries and
investment grade assets has increased to approximately 60% from almost
none four years ago. This is the result of sovereign improvement
(especially Brazil and Peru) and to a lesser extent to the company’s
expansion in investment grade markets. The Positive Outlook also
reflects the company’s increased cash flow diversification.
AEI’s ratings reflect the company’s solid portfolio of energy companies,
which are focused in four primary lines of business electric
distribution, power generation, natural gas distribution and natural gas
transportation and generate a relatively predictable cash flow stream to
AEI. The company’s key operating assets have a relatively stable base of
revenues and cash flows as the majority of their revenues are either
from contracted power purchase agreements (PPAs) or from regulated
energy businesses; stable operating cash flow translates into more
predictable dividend flows to AEI. AEI’s ratings also reflect the
holding company’s structural subordination to its subsidiaries’ debt as
well as its adequate credit metrics.
GEOGRAPHIC DIVERSIFICATION:
AEI’s cash flow and geographic diversification moderately reduce the
company’s exposure to a downturn in any particular market, regulatory
changes and/or a key operating asset. The company’s operating assets are
concentrated in Latin America as approximately 70% of total subsidiary
distributions to the parent company in 2009 came from this region.
Presently, the company’s most important Latin American markets are
Brazil (‘BBB-’, Positive Outlook), Colombia (‘BB ‘, Stable Outlook),
Peru (‘BBB-’, Positive Outlook) and Chile (‘A’, Stable Outlook)
cash loans
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