Fitch Ratings has affirmed the Long-Term Foreign Currency and Local Currency Issuer Default Ratings (IDRs) of
The Rating Outlook is Stable.
Fenix's ratings and Outlook reflect its strong EBITDA margins and stable leverage underpinned by long-term contracts, manageable costs and an amortizing debt burden. The cash support agreement (CSA) extended by parent
Key Rating Drivers
Strong Leverage: Fenix ended fiscal 2023 with Fitch-calculated leverage (total debt/EBITDA) at 2.8x, in line with fiscal 2022. EBITDA, which includes certain lease adjustments, exceeded
EBITDA assumptions for Fenix include a mix of 80% contracted and 20% spot sales, negotiated average purchase agreement (PPA) prices of
Solid Contractual Position: Fenix benefits from stable and predictable cash flows driven by generation capacity contracted under
Solid Market Position, Expansion Planned: Fenix operates an efficient single-asset 573MW gas-fired combined cycle plant and accounts for an average 7% of
Parent-Subsidiary Assessment: Fitch views
Derivation Summary
Fenix's business profile compares favorably with other generation companies in the region, namely
Kallpa benefits from a stronger capital structure, asset diversification across thermal and hydroelectric facilities, a stronger contractual structure and a leading market position with nearly three times the installed capacity of its Fitch-rated Peruvian peers. Kallpa's leverage is trending toward 3.5x and below within the rating horizon. Orazul operates two hydroelectric generation facilities and has medium-term leverage approximating 5.0x.
Additionally, Fenix compares well to German utility RWE. Though RWE operates a diversified generation mix with a materially higher 34GW of installed capacity (nearly 60x that of Fenix), its output comes primarily from its gas-fired thermal capacity. Similar to Fenix, this proves strategic for RWE during high price environments as the company can hedge its contracted position through increased spot market sales. Fenix's leverage is comparatively higher than RWE's; however the latter expects a near-term leverage uptick with new debt.
Key Assumptions
Energy production of approximately 4,000 gigawatt hours (GWh) on average per year during 2024-2027
Electricity spot price of
Monomic regulated PPA prices averaging
Cost of goods sold assumed at 65% of revenue each forecast year;
Average demand growth of 1% yoy;
Heat rate at 6.75Btu/kWh;
Capex averaging
Neither dividend payments to shareholders nor financial support from shareholders is assumed.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to Positive Rating Action
Gross leverage, measured by total debt/EBITDA, falling to below 3.5x on a sustained basis;
An increased weighted average contract life while maintaining similar contractual positions;
Maintaining robust liquidity indicators such as a one-year liquidity ratio above 1.25x.
Developments That May, Individually or Collectively, Lead to Negative Rating Action
A multiple-notch downgrade of
Increase of Fitch-adjusted total debt/EBITDA to 4.0x on a sustained basis;
A change in Fenix's commercial policy that results in an imbalanced long-term contracted position;
Material disruptions to operations that weaken cash flows.
Liquidity and Debt Structure
Strong Liquidity: Fenix ended fiscal 2023 with an estimated
The 10-year term notes due in 2027 started a step-up amortization of principal in
Issuer Profile
Fenix owns and operates one combined cycle gas plant with a total installed capacity of 573 MW located in Salinas,
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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