OREANDA-NEWS. S&P Global Ratings affirmed its 'BBB-' corporate credit rating on Empresa de Energia de Bogota S. A. E. S.P. (EEB). We also reviewed the senior unsecured issue-level rating on EEB, which we labeled as "under criteria observation" (UCO) after publishing our revised issue ratings criteria, "Reflecting Subordination Risk In Corporate Issue Ratings," on Sept. 21, 2017. With our criteria review complete, we're removing the UCO designation from this rating and are lowering it to 'BB+' from 'BBB-'.

EEB's financial performance for the past 12 months has been in line with our expectation. As we had expected, the group has focused on its internal expansion, which combined with a stable Colombian peso-to-dollar exchange rate and the steady dividend flow from EEB's unconsolidated investments, has allowed it to strengthen its balance sheet and liquidity. The aforementioned factors have allowed the group to regain its financial flexibility. We now expect it to pursue some investment opportunities, particularly outside Colombia. Based on our conversations with management, we expect that funding of these investments would occur through operating cash flow, debt, and third-party equity in order to maintain a pro forma debt to EBITDA below 4.5x.

The rating action on EEB's senior unsecured debt stems solely from the application of our revised issue rating criteria. Our rating action takes into consideration EEB's capital structure, which consists of COP1.042 trillion of secured debt and COP4.56 trillion of unsecured debt at the operating company level, and COP3.47 trillion of unsecured debt at the holding company level. We have therefore arrived at the following analytical conclusion:EEB's notes due 2021 are now at 'BB+', a notch below the corporate credit rating. This debt's class ranks behind a significant amount of secured debt and debt issued by subsidiaries in the capital structure.