Brazil's integrated electric utility,
Companhia Energetica de Minas Gerais
), also known as Cemig's distribution arm, Cemig Distribuicao
S.A., or Cemig D, recently concluded the offering of roughly
R$2.16 billion worth of unsecured debentures.
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The issue was approved by the company's board of directors on Jan
17, 2013. The whole issue was completed on three series. The
first one comprised R$0.41 million debentures, the second, R$1.1
million debentures and the third, R$0.65 million debentures. The
debentures issued had a nominal face value of R$1000 and cannot
be converted into shares.
Cemig D covers approximately 97% of the Brazilian State of Minas
Gerais and has four electricity distribution concessions in Minas
We find the long-term growth prospects for Brazilian electricity
utilities very bright. Cemig ranks fifth among the electricity
generators in Brazil and derives roughly 97% of electricity from
hydroelectric sources. The company is in a constant pursuit to
attain the position to benefit from the expected growth in
electricity demand in Brazil which is gearing up to host two
major sporting events in the coming years.
The Brazilian government, in a bid to improvise the electricity
industry through its Second Accelerated Growth Program (PAC 2),
has allocated approximately R$1.1 trillion. In Cemig's area of
operation, according to the national Energy Research Institute,
EPE, the average consumption growth is expected to be 4.5% from
2011 to 2021.
Cemig currently bears a Zacks Rank #3 (Hold). Other companies to
watch out for in the industry are
Brookfield Infrastructure Partners L.P.
Otter Tail Corporation
Pike Electric Corporation
), each with a Zacks Rank #1 (Strong Buy).