Fitch Ratings has downgraded
The Rating Outlook has been revised to Stable from Negative. The company's
As a state-owned company, Petroperu's ratings are equalized with its sovereign's. Petroperu's ratings reflect its close linkage with
Fitch has also affirmed
Key Rating Drivers
The sovereign downgrade reflects the steady erosion of
The 'BBB' rating reflects still-moderate public indebtedness relative to peers, the product of a long-standing record of prudent fiscal policy with a fiscal rule and a debt anchor. Fitch believes that the macro-policy framework is in line with 'BBB' peers, given the steady deterioration of
The affirmation of
Petroperu has an ESG Relevance Score of '4' for Governance Structure, due to its nature as a majority government-owned entity and the inherent governance risk that arise with a dominant state shareholder. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.
The score reflects its ownership by the Peruvian government, the company's strong strategic ties with the state, and its strategic importance to maintaining the country's energy supply. As a state-owned company, Petroperu's ratings are strongly linked with the credit profile of the Peruvian sovereign, and reflects the sovereign's incentive to provide financial support to the company, given its strategic importance for the country. The company is 100% owned by the Peruvian government, through the
RATING SENSITIVITIES
Petroperu
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A positive rating action on the Peruvian sovereign could lead to a positive rating action on Petroperu.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of
Additional overrun costs or significant delays from Fitch's assumptions on PMRT's construction not met with Government support that would lower Petroperu's SCP to 'ccc' category from its current 'b-' level, will result in a negative rating action;
A sustained deterioration of Petroperu's financial flexibility, combined with government inaction to support the company's liquidity restricting the access to capital markets.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Although a positive rating action is not expected in the short to medium term given the company's exposure to countries with below-investment-grade ratings, a positive rating action might be considered if credit metrics improve on a sustained basis with a gross debt to EBITDA consistently below 1.5x;
An improvement in the mix of cash flow generation towards higher credit quality markets would be viewed positively.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A multi notch downgrade of
Hard-currency cash and committed credit lines does not cover consolidated hard-currency interest expense by 1.5x;
A material and sustained deterioration of credit metrics (reflected in a debt to EBITDA ratio greater than 2.5x and EBITDA to interest coverage below 5.0x;
A change in
Further acquisition by
Any divestments by
The deterioration of the macroeconomic conditions and respective sovereign ratings, in the company's key markets, including
Best/Worst Case Rating Scenario
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
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.
Public Ratings with Credit Linkage to other ratings
ESG Considerations
Petroperu has an ESG Relevance Score of '4' for Governance Structure, due to its nature as a majority government-owned entity and the inherent governance risk that arise with a dominant state shareholder. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This 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. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
RATING ACTIONSENTITY/DEBT RATING PRIOR
Enel Americas S.A. LT IDR A- Affirmed A-
LC LT IDR A- Affirmed A-
Natl LT AA+(cl) Affirmed AA+(cl)
Nat Equity Rating Primera Clase Nivel 1(cl) Affirmed Primera Clase Nivel 1(cl)
senior unsecured
LT A- Affirmed A-
senior unsecured
Natl LT AA+(cl) Affirmed AA+(cl)
Petroleos del Peru - Petroperu S.A. LT IDR BBB Downgrade BBB+
LC LT IDR BBB Downgrade BBB+
senior unsecured
LT BBB Downgrade BBB+
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
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