Fitch: Sabesp Expected to Breach Covenant in 2016

RIO DE JANEIRO--(BUSINESS WIRE)-- Fitch Ratings has published a 2016 scenario analysis report for Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP) highlighting potential implications for the company's ratings from FX variation and tariff policy.

Among the structural aspects discussed in the report is the timing of the potential suspension of the water reduction tariff incentive program current in place. Fitch expects Sabesp will breach its gross leverage covenant of 3.65x during 2016 in the most likely scenario, although debt acceleration is unlikely as the company should successfully negotiate waiver.

"The combination of relevant FX debt amortization in 2016, slight volume billed growth and significant capex should pressure Sabesp's cash flow and maintain its leverage at moderate levels, despite ongoing recovery of the hydrology situation," said Gustavo Mueller, Associate Director. "The current restricted debt market access and challenging macroeconomic environment are also concerns."

The full report, 'Sabesp - 2016 Scenario Analysis', is available at www.fitchratings.com or by clicking on the link below.

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

Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP) - Scenario Analysis (FX, Tariff Policy and Covenant Breach Are Factors in 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878999

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160322006283/en/

Fitch Ratings
Gustavo Mueller
Associate Director
+55 21 4503-2632
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
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
[email protected]

Source: Fitch Ratings

You May Also Be Interested In

• Mazda Selects Panasonic Automotive Systems' Cockpit Domain Controller for All-New CX-5
• Webster First Launches 'Pay a Person': Send Money to Friends and Family Instantly, No Extra Apps Required
• MobiMatter Promo Code 50CASHBACK Cuts eSIM Costs for Travelers