S&P: Espirito Santo Centrais Eletricas 'BB' And 'brAA-' Ratings And Bandeirante Energia 'brAA-' Ratings Affirmed
The affirmation reflects Bandeirante and Escelsa's ratings limitation to the sovereign credit rating on the Federative Republic of Brazil (global scale: BB/Negative/B; national scale: brAA-/Negative/--), where they operate. As regulated utilities, in our view, they could be subject to intervention from the government, such as rate freezes, which could jeopardize their ability to continue generating cash, as already happened in other countries.
We analyze Bandeirante and Escelsa based on EDP Energias do Brasil S. A.'s (EDP Brasil) consolidated figures, given our view that the group adopts an integrated financial strategy and actively manages its subsidiaries' operations. Therefore, we take into consideration the importance of the distribution companies to EDP Brasil and the Brazilian operations to the ultimate controlling shareholder, EDP - Energias de Portugal S. A. (EDP; BB+/Positive/B).