Brazil's Eletropaulo Metropolitana Eletricidade de Sao Paulo SA's debt was lowered by Moody's Investors Service for a second time this year on concern it may not be able to refinance its $740 million debt.
The rating company said in a statement that it has lowered Eletropaulo's local currency issuer rating by one level to B1 from Ba2. Moody's said it was keeping utility, a unit of AES, under review for a possible further downgrade on its local and foreign currency ratings.
“The rating action reflects Moody's concern about Eletropaulo's financial flexibility and its significant need to execute near term financing, during a period of significantly diminished market access in Brazil,” Moody's said.
Eletropaulo, Brazil's largest electricity distributor with $1.6 billion in debt, does not have enough cash to pay off the $740 million in debt in coming due through December, Moody's said. The utility, which is based in Sao Paulo, may have trouble rolling over debt as investors dump Brazilian securities on concern opposition candidate Luiz Inacio Lula da Silva may win the country's October presidential election.