S&P ups Endesa Chile view to positive

Standard & Poor's said it affirmed its BBB- ratings on Empresa Nacional de Electricidad SA (Endesa Chile) and revised the outlook to positive from stable.

S&P said the outlook revision reflects S&P's expectation that the company's financial profile, especially its debt-service coverage ratios, will benefit from higher cash flow generation in Chile as a result of higher electricity prices after the passage of the Short Law II in May 2005.

The BBB- ratings on Endesa Chile reflect the relatively strong business profile of its Chilean power generation assets, partly offset by investments in power generation in weaker economies in Argentina, Brazil, Colombia and Perú, which provide some diversity but expose the company to greater economic and financial volatility, the agency said. In addition, the ratings also incorporate an improving financial profile, especially regarding the company's financial flexibility that is still partially constrained by relatively weak debt-service coverage ratios.

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