The Latin American electricity sector is one of the most resilient sectors regarding the coronavirus pandemic and the resulting economic fallout, according to Fitch Ratings. Fitch expects the pandemic to affect overall revenues and leverage, but electric corporates generally have sufficient leverage and liquidity to absorb shocks.
Fitch estimates gross leverage, defined as total debt/EBITDA, to be 3.5x at YE 2020, a 10% increase from the pre-pandemic forecast of 3.2x. Leverage is expected to be 13% higher than prior forecasts, at 3.3x in 2020, and 19% higher in 2022 at 3.2x. Aggregated gross revenues and EBITDA forecasts were adjusted down 10% on average compared with pre-pandemic forecasts, with EBITDA margins staying the same. Fitch estimates 2021 and 2022 revenues and EBITDA to be approximately 9% less than prior estimates, given lower overall demand due to the economic downturn. Post-pandemic capex is expected to follow similar trends in 2020, but increase by 9% in 2021 and 15% in 2022.
Refinancing risk is moderate with Eletrobras, Comision Federal de Electricidad (CFE) and Elektra Noreste, S.A. have international notes maturing in 2021, which Fitch does not expect these issuers to face difficultly refinancing upcoming maturities.