Fitch Issues 'AA-(dom)' Rating on Enadom; Stable Outlook

The following is a machine translation of a Fitch Ratings release

Fitch Ratings - Santo Domingo - 27 Sep 2024: Fitch Ratings published the long-term national rating of 'AA-(dom)' of Energía Natural Dominicana Enadom, SRL (Enadom). The Outlook is Stable. It also published the 'AA-(dom)' rating of the new issue of ordinary bonds of 2024 for up to USD300,000 million. The resources from the issue will be used to refinance the existing debt and to extend the maturity term to 10 years. The rest of the resources from the issue will be used to pay working capital.

The ratings reflect Enadom's strong business profile given the strategic importance of its gas storage and transportation infrastructure for the Dominican Republic's electricity system. The ratings also take into account the high predictability of its revenues, based on current infrastructure and gas transportation tariff contracts with average durations of seven years, and which incorporate contractual minimums equivalent to 50% of the reserved capacity in the natural gas infrastructure. The ratings are limited by geographic concentration by operating the natural gas infrastructure in a single geographic location.

The ratings consider the leverage level of 2.8 times (x) as of December 2024 and 3.1x as of December 2025 with the issuance; the agency expects it to gradually reduce in the following years, supported by the projected increase in EBITDA due to a higher volume of gas transported. The ratings also incorporate the issuance for USD235 million, of which USD180 million will be used to pay the current debt and the rest for working capital.

Enadom's bond issuance was approved by the Superintendency of the Dominican Republic on July 12, 2024. The first issuance, for an amount of USD15 million, has already been made and the company expects to issue approximately an additional USD90 million by the end of this year. The remaining amount is planned to be issued in 2025. The total bond issuance is expected to be distributed in several tranches, subject to the approval of the Central Bank of the Dominican Republic and liquidity in the USD market.

Enadom is a jointly owned company   50% venture between AES España BV (AES España) [BB- Positive Outlook], a subsidiary of The AES Corporation (AES) [BBB- Stable Outlook] and Compañía de Electricidad San Pedro de Macorís (CESPM) – Energas (not rated by Fitch). Fitch does not consider a benefit of support to Enadom from its parent company because the legal, strategic and operational incentives between each company are low.

The full report is available here .