SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of December, 2023
Commission File Number 1-34129
CENTRAIS ELÉTRICAS BRASILEIRAS S.A.
- ELETROBRÁS
(Exact name of registrant as specified in its
charter)
BRAZILIAN ELECTRIC POWER COMPANY
(Translation of Registrant's name into English)
Rua da Quitanda, 196 – 24th floor,
Centro, CEP 20091-005,
Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant
by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule
12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No___X____
Press Release
Eletrobras‘ brAAA/brA-1+’ ratings reaffirmed;
outlook remains stable
December 20, 2023
Rating Action Summary
–
On December 19, 2023, S&P Global Ratings raised Brazil's long-term issuer credit ratings from ‘BB-‘ to ’BB‘
on the global scale. In addition, it reaffirmed the short-term ‘B’ sovereign ratings on the same scale and ‘brAAA’
on the Brazilian National Scale. On the same date, we recalibrated the mapping table for the Brazilian National Scale, which allows greater
granularity of the relative credit quality of Brazilian companies.
–
In our view, Centrais Elétricas Brasileiras S.A. – Eletrobras plays a critical role in the Brazilian electricity
sector as the largest integrated utility, representing about 30% of the total generation capacity and 44% of the country's transmission
lines.
–
In this context, on December 20, 2023, S&P Global Ratings reaffirmed its long-term and short-term issuer credit ratings‘
brAAA/brA-1+’ on the Brazilian National Scale assigned to Eletrobras. The long-term rating outlook remains stable.
–
The stable outlook embodies our expectation that the company will continue to deleverage through high EBITDA and liability management
initiatives to reduce interest expense. Thus, we project adjusted debt over EBITDA of around 5.0x and internal cash generation (FFO -
funds from operations) over adjusted debt of around 10% in 2024.
Rating Action Basis
On December 19, 2023, we recalibrated
the mapping table of the Brazilian National Scale due to the increase in the sovereign rating, which is the anchor and a fundamental premise
in determining the mapping for the national scale. We also consider our expectation of distribution and differentiation of credit quality
on the Brazilian National Scale of entities rated on this scale.
We reaffirm Eletrobras‘ ‘brAAA’
rating by assigning a holistic adjustment to the indicative rating on the Brazilian National Scale. This adjustment embodies our view
of the company's essentiality to maintain the stability of the Brazilian electricity system, as it is the largest integrated concessionaire
in the sector, representing about 30% of the total generation capacity and 44% of the country's transmission lines. Given the size of
the company and the time it would take to replace and/or build new assets, we believe that another entity could not perform these services
in the coming years and that the government would provide support if necessary, still considering its smaller influence and participation
in Eletrobras after privatization.
|
LEAD ANALYST
Julyana Yokota
São Paulo
55 (11) 3039-9731
julyana.yokota
@spglobal.com
ADDITIONAL ANALYTICAL CONTACT
Marcelo Schwarz
São Paulo
55 (11) 3039-9782
marcelo.schwarz
@spglobal.com
RATING COMMITTEE LEADER
Candela Macchi
Buenos Aires
54 (11) 4891-2110
candela.macchi
@spglobal.com
|
| | |
S&P Global Ratings | December 20, 2023 | 1 |
Press Release: Eletrobras‘ brAAA/brA-1+’ ratings reaffirmed; outlook remains stable |
Outlook
The stable outlook for Eletrobras'
rating on the Brazilian National Scale reflects our expectation that the company will continue to deleverage through high EBITDA and liability
management initiatives to reduce interest expenses. In this context, we project adjusted debt over EBITDA of approximately 5.0x and FFO
over adjusted debt of approximately 10% in 2024.
Downgrade scenario
Although unlikely, in the absence
of any action on the sovereign rating, a downgrade could also result from a weaker liquidity of the company.
Elevation scenario
We could raise the company's ratings
on the global scale in the face of faster-than-expected deleveraging, with adjusted debt over EBITDA of 4.0x and FFO over adjusted debt
above 11% in 2024. We believe the pace of deleveraging may accelerate further due to asset sales and contingency-related management.
Company Description
Eletrobras is the largest integrated
electricity concessionaire in Brazil, focusing on generation (with approximately 43.8 GW of installed capacity) and transmission (73,437
kilometers [km] of lines). After privatization in June 2022, the government now holds 10% of the voting rights (compared to 72% previously)
and about 43% of the total shares (compared to 61% previously, directly and indirectly) of the company.
Ratings Classification Table
| | |
S&P Global Ratings | December 20, 2023 | 2 |
Press Release: Eletrobras‘ brAAA/brA-1+’ ratings reaffirmed; outlook remains stable |
Certain terms used in this report, particularly
certain adjectives used to express our view of the factors that are relevant to the ratings, have specific meanings assigned to them in
our Criteria and should therefore be read in conjunction with those Criteria. See the Rating Criteria www.spglobal.com/ratings
for more information. Detailed information is available to RatingsDirect subscribers at www.capitaliq.com.
All ratings affected by this rating action are made available on S&P Global Ratings' public website at www.spglobal.com/ratings.
Criteria and Related Articles
Criteria
| – | Environmental, social and governance principles in credit ratings,
October 10, 2021. |
| – | Reflecting subordination risk in corporate entity issue ratings,
March 28, 2018. |
| – | Methodology and assumptions: Liquidity Descriptors for Global Corporate
Issuers, December 16, 2014. |
| – | Key Credit Factors for the Unregulated Power and Gas Industry,
March 28, 2014. |
| – | Corporate Ratings Methodology,
November 19, 2013. |
| – | Key Credit Factors for the Regulated Utility Industry, November
19, 2013. |
| – | Methodology: Credit factors related to management and governance for
corporate entities, November 13, 2012. |
| – | Principles of credit ratings, February 16, 2011. |
| – | General Criteria: Group rating methodology, July 1, 2019. |
| – | Criteria | Corporations | General: Corporate methodology: Indexes and
adjustments, April 1, 2019. |
| – | Methodology: Industry Risk, November 19, 2013. |
| – | Credit ratings methodology at the national and regional scales, June 8, 2023. |
| – | General Criteria: Country Risk Assessment Methodology and Assumptions,
November 19, 2013. |
| – | Ratings of Government-Related Entities (GREs): Methodology and Assumptions,
March 25, 2015. |
Articles
| – | Brazil ratings raised from ‘BB-’ to ‘BB’ after
approval of tax reform; outlook stable, December 19, 2023 |
| – | Sector and Industry Variables Report | General Criteria: Credit ratings
methodology at national and regional scales, December 19, 2023 |
| – | S&P Global Ratings Definitions |
| | |
S&P Global Ratings | December 20, 2023 | 3 |
Press Release: Eletrobras‘ brAAA/brA-1+’ ratings reaffirmed; outlook remains stable |
Issuer |
Initial rating assignment date |
Date of previous rating action |
Centrais Elétricas Brasileiras S.A. – Eletrobras |
Issuer Credit Rating |
Brazilian National Scale – long term |
April 25, 2019 |
June 15, 2022 |
Brazilian National Scale – short term |
July 17, 2015 |
June 15, 2022 |
European Endorsement Status
The global scale credit rating(s) issued by S&P
Global Ratings affiliates based in the following jurisdictions [To read more, visit Endorsement of Credit
Ratings] have been endorsed in the European Union and/or the United Kingdom in accordance with the regulations applicable to Credit
Rating Agencies (CRAs). Note: Endorsements for credit ratings on the global scale assigned to United States Public Finance
are made when requested. To check the status of the credit rating endorsement, visit spglobal.com/ratings
and search for the rated entity.
ADDITIONAL REGULATORY INFORMATION
Other services provided to the issuer
There are no other services provided to this
issuer.
CREDIT RATING ATTRIBUTES AND LIMITATIONS
S&P Global Ratings uses information
in its credit analyses from sources considered reliable, including those provided by the issuer. S&P Global Ratings does not perform
audits or any due diligence processes or independent verification of information received from the issuer or third parties in connection
with its credit rating processes or monitoring of assigned ratings. S&P Global Ratings does not verify the completeness and accuracy
of the information it receives. The information provided to us may, in fact, contain inaccuracies or omissions that may be relevant to
the rating credit analysis.
In connection with the analysis
of these credit rating(s), S&P Global Ratings believes that there is sufficient information of satisfactory quality to enable it to
have a credit rating opinion. The assignment of a credit rating to an issuer or issuance by S&P Global Ratings should not be viewed
as a guarantee of the accuracy, completeness or timeliness of (i) the information on which S&P Global Ratings relied in connection
with the credit rating or
(ii)
from the results that may be obtained through the use of the credit rating or related information.
SOURCES OF INFORMATION
In assigning and monitoring its
ratings, S&P Global Ratings uses, depending on the type of issuer/issue, information received from issuers and/or their agents and
directors, including audited financial statements for the Fiscal Year, quarterly financial information, corporate information, prospectuses
and other materials offered, historical and projected information received during meetings with the issuers' management, as well as the
reports of analysis of the economic-financial aspects (MD&A) and similar of the rated entity and/or its parent company. In addition,
we use information in the public domain,
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S&P Global Ratings | December 20, 2023 | 4 |
Press Release: Eletrobras‘ brAAA/brA-1+’ ratings reaffirmed; outlook remains stable |
including information published
by securities regulators, the banking industry, insurance and other regulators, stock exchanges, and other public sources, as well as
national and international market information services.
ISSUER RATINGS NOTICE
S&P Global Ratings' notice to
issuers regarding the assigned rating is addressed in the “Notices to Issuer (including Appeals)”
policy.
RATING REVIEW FREQUENCY
S&P Global Ratings' monitoring of its credit
ratings is covered in:
| – | Overview of the Credit Ratings Process (in the Rules, Procedures and Internal
Controls section) |
POTENTIAL S&P GLOBAL RATINGS CONFLICTS OF INTEREST
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the list of actual or potential conflicts of interest in the “Potential Conflicts of Interest”
section, available at https://www.spglobal.com/ratings/pt.
LIMIT RANGE OF 5%
S&P Global Ratings Brasil publishes
in its Reference Form, available at https://www.spglobal.com/ratings/pt/regulatory/content/disclosures,
the names of the entities responsible for more than 5% of its annual revenues.
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Rating Action. S&P Global Ratings updates the regulatory information for a given Credit Rating to include any changes in such information
only when a subsequent Credit Rating Action is posted. Therefore, the regulatory information presented in this report may not reflect
changes that may occur during the period following the publication of such regulatory information, but which are not otherwise associated
with a Credit Rating Action. Please note that there may be instances where the PCR reflects an updated version of the Ratings Model in
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S&P Global Ratings evaluates the impact of material changes to the Ratings Models and, where appropriate, issues revised Credit Ratings
if so required by the updated Ratings Model.
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S&P Global Ratings | December 20, 2023 | 5 |
Press Release: Eletrobras‘ brAAA/brA-1+’ ratings reaffirmed; outlook remains stable |
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S&P Global Ratings | December 20, 2023 | 6 |
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: December 22, 2023
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRÁS |
|
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By: |
/S/ Eduardo Haiama
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|
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Eduardo Haiama
Vice-President of Finance and Investor Relations |
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FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements.
These statements are statements that are not historical facts, and are based on management's current view and estimates offuture
economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes",
"estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended
to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal
operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends
affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect
the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected
events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic
and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual
results to differ materially from current expectations.
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