The recurring power outages in the city of São Paulo have called into question the possibility of renewing the distribution contract with Enel Brasil. Although the debate is not new, the discussion has taken on new dimensions in the financial market, with a sharp devaluation of the company's debentures.
Reflecting this loss of value, the spreads on Enel Brasil bonds maturing in 2031 and 2032 jumped last week by 1.22 percentage points (pp) and 0.84 pp, respectively, to 1.87% and 1.98%.
During the same period, the median credit spread for tax-exempt debentures fell 10 percentage points to -0.34%, according to Credit Guide data, well below the levels of Enel's bonds.
The trigger for the devaluation of Enel Brasil's bonds was a report from Fitch Ratings that maintained the company's AAA(bra) rating – the best credit rating – but placed the credit rating on negative watch, amid uncertainties related to its operations in São Paulo.
"The recurring long interruptions in the energy supply increase the pressure for the contract to expire or not be renewed," says the risk rating agency.
Energy distribution in São Paulo is Enel Brasil's main operation, and the loss of this contract, according to Fitch, "could have a material impact on the group's credit profile and result in downgrades of multiple notches."
According to Fitch's assessment, the risk of the contract not being renewed in São Paulo has increased due to the special regulatory oversight processes by Aneel , scheduled until March of this year, and the "worsening of political tensions."
"Failure to renew by June 2027 may trigger the early maturity of debts with third parties if no guarantee from Enel Brasil or bank guarantee is provided," the agency points out.
According to sources consulted by NeoFeed , some credit managers had some exposure to the company's securities, given its high rating, but the impact was limited in the fund industry.
"For some time now, the demand for this type of paper has been more concentrated among individual investors, due to the historically low spreads on issuance," said an analyst from a large credit management firm. "But we are monitoring the situation."
