business

Elektra earns BBB rating

David Mesa/LA PRENSA

Approved:Fitch Ratings expressed confidence in Elektra Noreste’s current business and prospects.1057081

Fitch Ratings has maintained its BBB rating for Elektra Noreste, S.A., the Panamanian electric company that provides energy to more than 300,000 customers in northeast Panama. Fitch also gave the company's $100 million bond issue, which matures in 2021, a BBB rating. The agency categorized Elektra's Rating Outlook as Stable.

The BBB rating indicates expectations of low credit risk and an adequate capacity for payment of financial commitments so long as economic conditions remain favorable. It's Fitch's lowest investment grade category, but the ceiling rating for the country. Panama's use of the U.S. dollar was a significant factor in determining the rating.

Fitch based its opinion on Elektra's strong financial position, stable cash flow and low business risk profile.

The company occupies a natural monopoly position, with an exclusive concession covering an area of around 29,000 square kilometers encompassing roughly 41 percent of Panama's total population.

In a report issued last July 3, Fitch noted that “Elektra's financial profile is strong, with solid investment-grade protection measures” and that the company's EBITDA (earnings before interest, taxes, depreciation and amortization) of between $43 million and $46 million during the last four years has been “very stable.”

The report also stated that “Elektra is an efficient electric distribution company with energy losses from both technical and non-technical factors that are reasonable for a non-urban electric distributor in Latin America of 11.1% during 2007.”

Additionally, Fitch reported that “the Panamanian regulatory framework is considered strong, independent from central government and supportive of sector participants.”