Fitch: Brazilian DisCos Positioned for Growth Despite Risks

RIO DE JANEIRO--(BUSINESS WIRE)-- Brazil's natural gas distribution companies (DisCos) should see near-term growth fueled by diversification, sector expansion drivers and a strong financial profile, according to a new Fitch ratings report.

"Low penetration within the commercial, residential and industrial segments should spur growth opportunities given natural gas' strong burning power, supply consistency and convenience when compared with alternate energy sources," said Gustavo Mueller, Associate Director.

Fitch expects Brazil's DisCos to sustain sound financial profiles with reduced leverage despite potential capex increases. DisCo net leverage has been below 1.0x with several operators holding no debt.

Cash flow from operations during the last three years has supported low-to-moderate capex, combined with manageable dividend distributions, resulting in reduced positive free cash flow.

The industry faces some risks, including mid-term supply concerns, industrial concentration, and regulatory and political structure.

The full special report titled 'Natural gas Distribution Sector in Brazil' is available at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Related Research

Natural Gas Distribution Sector in Brazil (Fueled to Grow)

https://www.fitchratings.com/site/re/885843

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160906006157/en/

Fitch Ratings
Gustavo Mueller
Associate Director
+55-21-4503-2632
[email protected]
Fitch Ratings Brasil Ltda.
Praca XV de Novembro, 20 - Room 401 B - Downtown
Rio de Janeiro - RJ - CEP: 20020-010
or
Mauro Storino
Senior Director
+55 21 4503-2625
[email protected]
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526
[email protected]

Source: Fitch Ratings

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