(This is a correction of a release published Dec. 19, 2014. It clarifies that the Rating Outlook for CORPOELEC, which had previously been Negative, has been removed.)
Fitch Ratings has downgraded Corporacion Electrica Nacional S.A.'s (CORPOELEC) foreign and local currency Issuer Default Ratings (IDRs) to 'CCC' from 'B'. Fitch has also downgraded approximately USD650 million of senior unsecured debt outstanding to 'CCC/RR4' from 'B/RR4'. Concurrently, Fitch has downgraded CORPOELEC's national long-term rating to 'AA(ven)' from 'AAA(ven)' and has also affirmed its national short-term rating at 'F1+(ven)'.
Prior to this downgrade, the Rating Outlook for CORPOELEC was Negative. Fitch has removed the Negative Outlook, as the agency does not assign Outlooks to ratings of 'CCC' or below.
The rating downgrade follows Fitch's downgrade of the sovereign ratings of Venezuela to 'CCC' from 'B'. The downgrade of the sovereign ratings reflects the sharp decline of international oil prices, which increase balance of payments pressures in the context of reduced external financing flexibility and rising macroeconomic instability.
KEY RATING DRIVERS
CORPOELEC's ratings reflect the company's strong linkage to the government of Venezuela (rated 'CCC' by Fitch), given its tight integration into the public sector determined by its 100% public ownership and its dependence on public funding to carry on its day to day operations, honor its financial obligations and finance its capital expenditure needs.
RATING SENSITIVITIES
The key rating triggers that could lead to a negative rating action include:
--A downgrade of the sovereign;
--Lack of financial support coming from the central government and its agencies in order to allow CORPOELEC to service its financial obligations on a timely basis, particularly the EDC bonds maturing in October 2018 (USD 650 million).
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (May 2014).
Applicable Criteria and Related Research:
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=965635
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