Research Update: Engie Energia Chile S.A. 'BBB' Ratings Affirmed Despite Higher-Than-Expected Leverage; Outlook Still Stable

Even assuming an increase in leverage to finance Chilean power generator Engie Energia Chile S.A.'s (Engie Chile) capital expenditure plan and increased working capital needs, we expect its adjusted debt to EBITDA to peak at about 4.2x in 2022, and then drop to below 3.0x in 2023 and 2024, which is consistent with our current financial risk profile. In addition, we consider that Engie Chile's investment plan in renewables and its recently signed back-up power purchase agreements (PPAs) with other generation companies should help mitigate its exposure to the volatile energy spot prices in the Chilean market. On June 23, 2022, S&P Global Ratings affirmed its 'BBB' ratings on Engie Chile and on its senior unsecured notes. The stable outlook

...- Even assuming an increase in leverage to finance Chilean power generator Engie Energia Chile S.A.'s (Engie Chile) capital expenditure plan and increased working capital needs, we expect its adjusted debt to EBITDA to peak at about 4.2x in 2022, and then drop to below 3.0x in 2023 and 2024, which is consistent with our current financial risk profile. - In addition, we consider that Engie Chile's investment plan in renewables and its recently signed back-up power purchase agreements (PPAs) with other generation companies should help mitigate its exposure to the volatile energy spot prices in the Chilean market. - On June 23, 2022, S&P Global Ratings affirmed its '###' ratings on Engie Chile and on its senior unsecured notes. - The stable outlook incorporates our view that Engie Chile is strategically important for its parent company, which will likely provide support in most foreseeable circumstances. It also reflects our expectation that the company will generate EBITDA of $300 million-$320...

Research Update