Moody’s warns that ISA could become Ecopetrol's cash cow and is evaluating a downgrade in its rating
The agency Moody's Ratings announced that it is reviewing the rating of Interconexión Eléctrica S.A. (ISA) with the possibility of lowering it. This includes its long-term issuer rating, its basic credit profile, and the rating of its senior debt, which is currently maintained at Baa2.
TL;DR
- Moody's is reviewing ISA's credit rating for a potential downgrade, moving from a stable to a negative outlook.
- The review is triggered by the financial and governance deterioration of ISA's majority shareholder, Ecopetrol.
- Concerns exist that Ecopetrol could exert influence over ISA for resource transfers or increased dividends.
- ISA has an ambitious investment plan for 2025-2030, which could pressure its financial metrics.
- Moody's will evaluate Ecopetrol's impact on ISA's cash management, capital structure, and dividend policy.
- Factors like Ecopetrol's board influence, Colombia's sovereign rating, and ESG considerations are part of the review.
- Quantitative metrics for a downgrade include FFO/net debt below 15% or interest coverage below 3.0x.