Fitch, Moody's downgrade AES Tiete certificates

The Brazilian office of credit ratings agency Fitch Ratings has downgraded the AES Tiete Grantor Trust certificates to DDD from CC rating watch negative, Fitch said in a statement Wednesday. The move follows the downgrade to CC from B- announced on December 10. Meanwhile Moody's credit ratings agency also downgraded the AES Tiete Grantor Trust certificates rating, to Caa2 from Caa1, Moody's said in a separate statement. The rating outlook is negative. Fitch's latest downgrade reflects the missed principal and interest payment due December 15 of approximately US$22mn. The issuer (AES IHB Cayman) and certificate holders continue to negotiate a debt restructuring for the certificates, which is expected to be finalized in the near term, the statement said. Moody's rating action reflects the issuer's default on the same payment due December 15 and Moody's concern that future dividends paid by the operating company may not fully cover debt service payments. The Caa2 rating also incorporates the rating agency's view that future debt service payments may need to be restructured, which could result in a net present value loss for debt holders, the statement said. The rating outlook is negative due to uncertainties about the sufficiency of dividends from AES Tiete to cover future debt service of the issuer, and potential obstacles to the payment of these dividends, the statement added. AES Tiete is a Brazilian generation subsidiary of US power company AES. To read Fitch's full report on AES Tiete in English, paste the following link in your browser: http://www.bnamericas.com/rc_search_detail.xsql?id_documento=42881&Tx_idioma=I