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Aegea Downgraded to B by S&P
April 21, 2026
Brazilian sanitation company Aegea Saneamento e Particiacoes SA (Aegea), was downgraded by a notch to B from B+ by S&P. The rating action follows repeated delays by company in releasing its 2025 financial statements and subsequent material accounting restatements in the delayed results, that have significantly weakened its EBITDA and credit metrics. The accounting revisions which covered revenue recognition, PPP construction contracts, expected credit losses, and interest capitalization, have materially worsened S&P’s projections. The rating agency now forecasts net debt-to-EBITDA of around 6.0x in 2026–27 and interest coverage below 2.0x. Aegea’s net debt-to-EBITDA was 3.78x at end-2025, against a covenant of 4.0x. A potential breach of covenant threshold could trigger debt acceleration for most debt lines. Aegea’s rapid growth has been financed almost entirely by debt, with financial liabilities ballooning from BRL 16.4bn ($3.3bn) to BRL 55.6bn ($11.2bn) between 2021-25 period. S&P forecasts a free operating cash flow deficit exceeding BRL 5bn ($1bn) annually over the next two to three years, requiring continued debt issuance at higher funding costs. The independent auditor identified internal control deficiencies, highlighting governance concerns.
Aegea’s dollar bonds traded with a negative bias. Its 9% 2031s were down 1.3 points to 86.7, yielding 12.8%
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