Fitch Affirms TPL’s Ratings at ‘BB+’

Fitch Ratings – New York – 08 May 2020: Fitch has affirmed TermoCandelaria Power Ltd.’s (TPL) Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘BB+’. The Outlook is Stable. Fitch has also affirmed the USD596 million senior unsecured note due 2029 at ‘BB+’.

TPL’s ratings reflect the combined operations of its operating subsidiaries TEBSA and TECAN, its current competitive position in the electricity generation market in Colombia, and its limited geographical diversification and asset operations. Also factored in the ratings are the expectations for an increasing consolidated EBITDA performance in the short to medium term, driven by the strong load factor at TEBSA, as well as the collection of reliability charge and regulated revenues not exposed to market dynamics. The ratings also consider TPL’s USD596 million international bond issuance that removed the structural subordination of the TPL’s debt to that of its subsidiaries. Included in the bond is a USD186 million reopening executed in January 2020. The reopening will fund TECAN’s combined cycle conversion, which will increase its efficiency by approximately 40% when completed in mid-2022 and also raise the company’s leverage in 2020 and 2021 during construction. The ratings also incorporate long-term threatens to TPL’s consolidated competitive position that could limit EBITDA generation capacity.