Moody's drops rating on Colombia govt electric company

Investment rating agency Moody’s Investor Service on Tuesday lowered the rating of a major Colombia energy company.

Moody’s decision to drop the rating of one of Colombia’s most powerful electric power companies from positive to negative came after the government announced sell-off in late July.

“The change in ISAGEN’s rating outlook is largely driven by the Government of Colombia’s decision to sell its 57.66% majority ownership stake in the company”, Moody’s Vice President Natividad Martel said in a press statement.

At the time of the announcement, Colombia’s Finance Ministry told Bloomberg that the new operator of ISAGEN must “have a lot of financial muscle that allows it to contribute to the growth of the company, improve its operations and offer lower energy costs to Colombians.”

Why the government has decided to auction off its majority stake is, according to a column in Colombia magazine Semana, to raise cash. But the sell-off deal, which the last three governments have also tried to shake on, is controversial as it is one of the three strongest public energy holdings the Colombian government controls.

Oil and gas company Ecopetrol – of which the government controls more than 80%, and ISA, a transmission company, make up the other two, according to Semana.

Based in Medellin, ISAGEN is Colombia’s third largest electric power company and operates the country’s largest hydro power plant. In the sell-off, its current potential buyers include Duke Energy Corp., a UK-based company, and GDF Suez, a French company.