Investment ratings for Paraguay improved and Itaipu dam is no exception
After a Baa2 rating from Moody's, Standard & Poor's (S&P) issued on June 30, 2014 for Itaipu, a statement that confirms the competitiveness of the company and gives it a rating of BBB which reaches investment grade.
S&P stated that it had rated the business risk of the entity as strong as it faces no risks and conveys stability and predictability.
The stable outlook for Itaipu reflects the image of continuing its essential role played in the electricity sector, and it will keep receiving support from the governments of Paraguay and Brazil, if necessary.
This is not the first time that Itaipu is internationally analyzed, that is why this new rate is positive and could be considered as the beginning of a process that will increasingly positioning the entity. It will also serve for future actions aimed to improve efficiency, investment and institutional management. One of these measures is precisely the bond issue. Authorities are exploring the possibility of issuing bonds to honor the debt with the Brazilian Treasury and Eletrobras in order to get more resources for investment.
In order to reduce the cost of the debt as an immediate consequence, authorities began to measure whether the markets would care to purchase bonds from Itaipu. The resources obtained with the operations used to pay the debt of the entity. If the financial transaction is made, it could be a saving between 2.5% and 3%, but all depends on the amount to be issued.
In 2013, Paraguay issued sovereign bonds worth USD 500 million, for which the country paid a rate of 4.6%.
Financial sector analysts believe that this is an ideal time to raise an operation in the world market, given the good position the binational has after qualifying investment grade. According to records from Itaipu, the current balance of the debt is USD 12869 millions.
Sources: El Jurista and Ultima Hora newspapers