Fitch Upgrades Dominican Republic GenCos' Ratings to 'B+'; Outlook Stable

Fitch Ratings has upgraded Dominican Republic's generation companies' (GenCos) long-term foreign and local currency Issuer Default Ratings (IDRs) to 'B+' from 'B'. Fitch has also upgraded national long-term ratings of most of the issuers. Please see below for a full list of rating actions.

These rating actions follow the upgrade of the Dominican Republic's long-term foreign and local currency IDRs to 'B+' from 'B'. The upgrade of the sovereign ratings reflects country resilience through adverse domestic and external conditions, improving current account dynamics due to the increasing diversity of the export structure, and the on-track fiscal consolidation of the Danilo Medina administration in its second year.

The ratings of the Dominican Republic GenCos reflect the electricity sector's high dependency on transfers from the central government to service its financial obligations. The Dominican Republic's power sector is characterized by low collections from end-users, high electricity losses, and consumption subsidies. This strong dependence on government transfers links the credit quality of the distribution and GenCos to that of the sovereign.

Fitch has affirmed Compania de Electricidad de Puerto Plata S.A.'s (CEPP) national long- and short-term issuer ratings at 'A-(dom)', Outlook Negative, and 'F2(dom)' respectively. Similarly, CEPP's bond rating has been affirmed at 'A-(dom)'. CEPP's ratings, in addition to the linkage to the sovereign, are constrained by the expiration of the company's purchase power agreement (PPA) in September 2014, which has left the company exposed to the spot market. Another constraint is its inability to start operating a new generation barge which was to increase its installed capacity by 37 MW but which was later prevented from doing so for environmental reasons. CEPP invested approximately USD17 million in the new barge and is now searching for alternatives to better employ this asset.

Rating Actions:

Fitch has upgraded the following ratings:

AES Andres Dominicana SPV (AES Dominicana)

-- Foreign Currency IDR to 'B+' from 'B', Outlook Stable;

-- USD167.5 million notes due in 2020 to 'B+/RR4' from 'B/RR4'.

AES Andres B.V.

-- National Long-term rating to 'A+(dom)' from 'A(dom)', Outlook Stable.

Empresa Generadora de Electricidad Itabo, S.A.

-- Foreign Currency IDR to 'B+' from 'B', Outlook Stable;

-- Local Currency IDR to 'B+' from 'B', Outlook Stable.

Itabo Dominicana SPV

- USD116 million notes due in 2020 to 'B+/RR4' from 'B/RR4'.

Empresa Generadora de Electricidad Haina, S.A.

-- National Long-term rating to 'A(dom)' from 'A-(dom)'; Outlook Stable

-- Sr. unsecured notes due in 2016 and 2020 to 'A(dom)' from 'A-(dom)'.

Fitch has affirmed the following:

Compania de Electricidad de Puerto Plata, S.A. (CEPP)

--National Long-Term rating at 'A-(dom)'; Outlook Negative;

--National Short-Term rating at 'F2(dom)';

--Senior Unsecured notes rating at ' A-(dom)'.

Fitch has withdrawn the following ratings:

Itabo Dominicana SPV

-- Foreign Currency IDR 'B'

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (May 28, 2014).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=934656

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.