Research Update: Engie Energia Chile S.A. 'BBB' Ratings Placed On CreditWatch Negative On Persistent Liquidity Pressures

Engie Energia Chile S.A.'s (Engie Chile) liquidity position has worsened due to increased working capital requirements in 2022, and we believe this situation will persist until the company is able to refinance or repay part of its short-term debt, which reached $360 million as of December 2022. In addition, the higher fuel and energy spot prices in Chile along with the company's short position on its power purchase agreements (PPAs), have eroded its credit metrics. We expect it to recover to historical figures once it increases its renewable generation capacity, but not before 2025. As a result of these factors, on March 31, 2023, S&P Global Ratings placed its 'BBB' ratings on Engie Chile on CreditWatch with negative implications, indicating

...- Engie Energia Chile S.A.'s (Engie Chile) liquidity position has worsened due to increased working capital requirements in 2022, and we believe this situation will persist until the company is able to refinance or repay part of its short-term debt, which reached $360 million as of December 2022. - In addition, the higher fuel and energy spot prices in Chile along with the company's short position on its power purchase agreements (PPAs), have eroded its credit metrics. We expect it to recover to historical figures once it increases its renewable generation capacity, but not before 2025. - As a result of these factors, on March 31, 2023, S&P Global Ratings placed its '###' ratings on Engie Chile on CreditWatch with negative implications, indicating a 50% chance of a downgrade if the company is unable to remediate the current liquidity pressures through a successful refinancing strategy in the next three months. Engie Chile's debt maturity profile could improve from either the monetization...

Research Update