Fitch Ratings has sharply cut the credit rating for CEEE-G, raising the alert on the probability of default for the power generator controlled by CSN.
Fitch Ratings has downgraded the credit rating of CEEE-G, a power generation company controlled by Companhia Siderúrgica Nacional (CSN), from BBB-(bra) to CCC+(bra).
The shift to speculative grade reflects not only the company’s financial scenario but also its heavy reliance on its parent company, which is also facing challenges regarding its own risk assessment. The agency has kept the company on Rating Watch Negative, signaling that further downgrades could occur soon.
Financial ties and operational risks
The downgrade was exacerbated by the nature of the links between the generator and the steelmaker. CEEE-G‘s debentures, valued at R$ 1.2 billion, include acceleration clauses tied to CSN credit events. In practice, this means that any negative fluctuation in the parent company’s balance sheet directly impacts the stability of the subsidiary’s obligations.
Beyond the debt, Fitch noted that capital movement between the two companies is facilitated by the lack of formal financial segregation guidelines. Reports indicate that, as of June 2026, CEEE-G held R$ 605 million in loans taken from CSN.
The concentration in the parent company is identified by Fitch as a weakness in CEEE-G‘s business profile, given the absence of formal policies for individualized financial management between the parties.
Cash flow and investment challenges
CEEE-G‘s internal situation also warrants caution. The company projects an accumulated negative free cash flow of R$ 350 million between 2026 and 2027. During this period, the generator has a robust investment plan totaling R$ 570 million aimed at modernizing and restoring assets—such as the Jacuí plant, which was severely impacted by the floods that devastated Rio Grande do Sul in 2024.
Although EBITDA growth is expected in the coming years, driven by project maturity, the amount still seems insufficient to reverse the cash burn scenario. With a total debt of around R$ 2.1 billion, the company is dealing with high leverage that is expected to take time to adjust.
The company holds a portfolio concentrated in hydroelectric assets in southern Brazil, totaling 1.1 GW of installed capacity. While this structure secures revenue, exposure to extreme weather events and reliance on contracts with CSN itself—which absorbs half of the produced energy—create a high-risk scenario for long-term investors.
