Moody's Upgrades Ratings of Five Argentine Companies: Who Are the Beneficiaries

The improvement in Argentina's credit rating has extended to the corporate sector. After raising the country's long-term sovereign rating from Caa1 to B3 with a positive outlook, Moody's Ratings upgraded the ratings of five infrastructure companies, considering that the new macroeconomic scenario has strengthened their operational and financial conditions.

The companies that benefited were Transportadora de Gas del Sur (TGS), Aeropuertos Argentina, Empresa Distribuidora de Electricidad de Mendoza (EDEMSA), Genneia, and YPF Luz, whose corporate and debt ratings moved from B2 to B1, all with a stable outlook. In contrast, MSU Green Energy maintained its rating at B2, also with a stable outlook.

According to Moody's, the upgrade reflects a more favorable economic and financial environment for infrastructure companies, which present solid operational fundamentals, adequate liquidity levels, and credit metrics consistent with the new rating.

However, the agency emphasized that the credit quality of these companies remains closely linked to that of the Argentine sovereign, so any deterioration in the country's credit profile or significant regulatory changes could impact their ratings.

In the case of TGS, Moody's highlighted the strategic nature of its assets for the gas transportation system and for the development of Vaca Muerta. It also noted the diversification between regulated and unregulated businesses, its low leverage level, and a strong liquidity position. For Aeropuertos Argentina, the rating agency emphasized the strength of the country's main airport network, backed by a concession valid until 2038, dollarized revenues through its fees, and sustained growth in air traffic.

In EDEMSA, the upgrade was due to the stability of its regulated electricity distribution business, its monopolistic position in Mendoza, a tariff scheme that includes periodic updates, and predictable cash generation.

Regarding Genneia, Moody's valued its leadership in renewable energies, the predictability of its revenues thanks to long-term contracts, its operational performance, and the expansion plan it maintains to continue increasing its installed capacity. As for YPF Luz, the agency highlighted the diversification of its generation park, the combination of long-term contracts with CAMMESA and private clients, the strategic backing of YPF, and the expected growth in renewable energies.

Unlike the other companies, MSU Green Energy retained its rating at B2. Moody's explained that the company has predominantly dollarized revenues through long-term contracts and strategic assets such as the El Chocón-Arroyito hydroelectric complex, in addition to new solar and energy storage projects.

However, it considered that these positive factors are still balanced by risks related to project execution, variability of renewable resources, greater future exposure to market prices, and a relatively high level of leverage.

The rating agency noted that future increases in corporate ratings will depend, first and foremost, on further improvements in Argentina's sovereign rating. At the corporate level, maintaining a solid liquidity position, low levels of indebtedness, and consistent operational performance will also be decisive. Conversely, a deterioration in the country's credit profile, a worsening macroeconomic scenario, or adverse regulatory changes could exert pressure on the ratings. Moody's also warned that an increase in leverage or changes in CAMMESA's payment conditions could particularly affect some companies in the energy sector.

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