August 22, 2017 / 7:38 PM / a year ago

Moody's says Eletrobras privatization negative for utility

SAO PAULO, Aug 22 (Reuters) - The Brazilian government’s decision to privatize Centrais Elétricas Brasileiras SA could have negative implications for the ratings of the country’s largest power utility because the process introduces uncertainty over state support, Moody’s Investors Service said on Tuesday.

In a statement, Moody’s senior analyst Cristiane Spercel said the plan “also creates distractions for management that may derail other initiatives, including the company’s turnaround strategy” that began in November.

Any impact on Eletrobras’s ratings would depend on further details about the model of privatization, bidders and a timeframe for the transaction, Spercel said. The government plans to exit control of Eletrobras by mid-2018, officials said earlier on Tuesday. (Reporting by Guillermo Parra-Bernal; Editing by Meredith Mazzilli)

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