Fitch upgrades Endesa-Chile

Fitch Ratings said it upgraded Empresa Nacional de Electricidad SA's ("Endesa-Chile") local-and foreign-currency issuer default to BBB from BBB- and affirmed the A+(chl) Chilean national scale rating. The outlook is stable.

The agency said the upgrade reflects the company's improved credit protection measures, lower leverage and strong relationship with its parent company, Enersis SA. Enersis is currently 60.62%-owned by Endesa SA and there are two competing takeover bids for the company from E.ON AG and Gas Natural SDG. Any change in Enersis' ultimate shareholder should not immediately affect the ratings of Enersis or Endesa-Chile.

The ratings continue to be supported by the company's portfolio of efficient, low-cost hydroelectric-generation operations, its leading regional market positions and sound business strategy.

Nevertheless, the ratings continue to incorporate the exposure to weaker sovereign ratings of Argentina, Colombia, Peru and Brazil, which increases the risk of Endesa-Chile receiving cash flow from its investments in these countries, Fitch said.

Debt to EBITDA was 3.4x at the end of 2005.

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