Saneamento Ambiental Águas do Brasil e Concessionária Águas de Juturnaíba S.A.

FitchRatings

AAA(bra)

Stable

05/14/2024

i) Lower Warranty Vulnerability
ii) Robust cash generation
iii) Gradual decrease in leverage
iv) High Demand Predictability
v) Robust dividents for the Parent Company
vi) Consolidated approach

Saab's rating incorporates the reduced volatility of demand in the basic sanitation sector and its robust operational cash generation. The group benefits from a diversified and mature portfolio of concessions as a way of diluting operational and regulatory risks, as well as presenting a solid financial profile. The ratings of Águas de Juturnaíba and Águas do Paraíba are equal to that of the parent company due to the medium to strong incentives that Saab has to provide support to them if necessary.

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Saneamento Ambiental Águas do Brasil e Concessionária Águas de Juturnaíba S.A.

FitchRatings

AA(bra)

Stable

06/28/2023

i) Uncertanties on the evolution of Rio Mais
ii) Guarantees pressure Financial Leverage
iii) High demand predictability
iv) Robust cash generation
v) Robust dividents for the Parent Company
vi) Consolidated approach

The downgrade of the Long-Term National Rating of Saneamento Ambiental Águas do Brasil S.A. (Saab) and its subsidiary, Concessionária Águas de Juturnaíba S.A. (Águas de Juturnaíba) to 'AA+(bra)', from 'AAA(bra)', reflects the increase in SAAB's credit risk, due to the guarantees provided to the concessionaire Rio Mais Saneamento S.A. (Rio Mais). Fitch considers that Rio Mais has the challenge of improving its operational cash generation and that it should remain with high financial leverage for an extended period, bringing uncertainty regarding the need for additional support from shareholders. Saab must maintain its net financial leverage, adjusted by the agency's methodology, with the addition of guarantees provided to the debt, close to 5.0 times until 2026.                       The ratings of Saab and its subsidiary Águas de Juturnaíba are assessed based on the group's consolidated credit profile and reflect operations in the Brazilian basic sanitation sector, considered low risk due to reduced demand volatility. Águas de Juturnaíba's ratings are equal to those of the parent company due to the strong incentives that Saab has to provide support if necessary. The analysis also incorporates the group's solid business profile, which benefits from a diversified portfolio of mature operations as a way of diluting risk, as well as robust financial indicators when Rio Mais' guarantee is excluded from the calculations.

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Saneamento Ambiental Águas do Brasil e Concessionária Águas de Juturnaíba S.A.

FitchRatings

AAA(bra)

Stable

01/10/2023

i) High demand predictability
ii) Robust cash generation
iii) Moderated financial leverage
iv) Inorganic gowth opportunities
v) Robust dividends for the Parent Company
vi) Consolidated approach

The ratings of Saab and its subsidiary Águas de Juturnaíba are evaluated based on the group's consolidated credit profile and reflect operations in the Brazilian basic sanitation sector, considered low risk due to reduced demand volatility. Águas de Juturnaíba's ratings are equal to those of the parent company due to the strong incentives that Saab has to provide support if necessary. The evaluation also incorporates the group's solid business profile, which benefits from a diversified portfolio of mature operations as a way of diluting risk, as well as robust financial indicators when Rio Mais' guarantee is excluded from the calculations.

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Saneamento Ambiental Águas do Brasil e Concessionária Águas de Juturnaíba S.A.

FitchRatings

AAA(bra)

Stable 

12/23/2022

i) High demand predictability
ii) Strong liquidity profile
iii) Robust cash generation
iv) Moderated financial leverage
v) Inorgani growth opportunities
vi) Robust dividends for the Parent Company
vii) Consolidated approach

Fitch Ratings maintained on Negative Watch the 'AAA(bra)' Long-Term National Ratings of Saneamento Ambiental Águas do Brasil S.A. (Saab), its subsidiary Concessionária Águas de Juturnaíba S.A. (Águas deJuturnaíba) and the company's first issue of unsecured debentures, guaranteed by Saab.

The Negative Watch reflects the potential impact of the acquisition of the sanitation concession block from Companhia Estadual de Águas e Esgotos do Rio de Janeiro (Cedae), which occurred in December 2021, on Saab's financial leverage and liquidity.

Fitch understands that there are still uncertainties regarding the future performance of the concessionaire (named Rio Mais Saneamento S.A. (Rio Mais)), whose operations recently began. Important debt raisings are also pending at Rio Mais to resolve investments and the grant debt. Saab guarantees around BRL 1.2 billion in debt from this subsidiary.

The ratings of Saab and Águas de Juturnaíba are evaluated based on the group's consolidated credit profile and reflect its operations in the Brazilian basic sanitation sector.

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Saneamento Ambiental Águas do Brasil e Concessionária Águas de Juturnaíba S.A.

FitchRatings

AAA(bra)

Stable

10/07/2021

i) Low business risk
ii) Robust cash generation
iii) Conservative leverage
iv) Robust dividends for the Parent Company

The rating is based on the consolidated credit profile of the group to which they belong and reflects the performance of both in the Brazilian basic sanitation sector, considered low risk due to the reduced volatility of demand. The rating also incorporates the group's solid business profile, which benefits from a diversified portfolio of mature operations to dilute risks. The ratings also incorporate the expectation that Saab will preserve a robust consolidated financial profile, with comfortable liquidity and adjusted net leverage below 2.0x, benefiting from positive free cash flows (FCFs). The holding company's debt service should also remain comfortable. Fitch expects gradual growth in the group's consolidated operating margins.

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Rio Mais Saneamento

FitchRatings

AAA (EXP)(bra)
1st series of the 2nd debenture issue

Stable

10/30/2023

(i)Monopolistic Position and Low Demand Volatility
(ii) Tariffs adjusted annually with cost repass
(iii) Well defined and not complex investment plan
(iv) Adequated debt structure

Fitch Ratings assigned, on this date, the Long-Term National Rating 'AAA(EXP)(bra)' to the proposal for the first series of the second issuance of debentures of Rio+ Saneamento Bl 3 S.A. (Rio+ Saneamento), in the amount of BRL1.35 billion.

The rating reflects Rio+ Saneamento's monopolistic position and the essential nature of services provided, which comprises 18 municipalities in Rio de Janeiro, including part of the capital. The rating also considers the stable demand and economic characteristics of Rio+ Saneamento's coverage area. The operation will be carried out by an internal team and is considered of low complexity. The capex plan is well defined to meet the universalization goals set out in the concession contract. Tariffs are regulated, adjusted annually by a factor that passes on the main costs and are subject to deductions limited to up to 10%.

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Rio Mais Saneamento

FitchRatings

AAA (EXP)(bra)
2nd series of the 2nd debentures issue

Stable

11/01/2023

(i)Monopolistic Position and Low Demand Volatility
(ii) Tariffs adjusted annually with cost repass
(iii) Well defined and not complex investment plan
(iv) Adequated debt structure

Fitch Ratings assigned the Long-Term National Rating 'AAA(EXP)(bra)' to the proposed second series of the second issuance of debentures by Rio+ Saneamento Bl 3 S.A. (Rio+ Saneamento), in the total amount of BRL 1.150 billion .
Rio+ Saneamento's concession area covers more than 2.5 million inhabitants within the state of Rio de Janeiro, which includes part of the capital. The service provided by Rio+ Saneamento is an essential monopoly and, therefore, the customer base tends to be resilient, as does the volume of water demanded. Residential customers represent around 95% of the total, reflecting the demographic characteristics of the coverage area.

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