S&P rates ENAP bonds A

Standard & Poor's said it assigned its A rating to the $150 million 10-year bonds to be issued by Chilean government-owned oil and gas company Empresa Nacional del Petroleo (ENAP).

The company's A corporate credit rating is affirmed.

The outlook is stable.

S&P said proceeds from the issuance will be used primarily to refinance existing debt, while $33 million will go to finance a portion of this year's capital expenditures. Thus, this transaction is positive for the company's short-term refinancing risk.

"The ratings reflect the company's strong position in its core business, an adequate financial profile, and ownership by the Republic of Chile," said S&P credit analyst Pablo Lutereau. "These factors are partly offset by the volatility and cyclicality of international refining margins and a small upstream operation with reserves geographically concentrated in Argentina, Colombia, and Chile.

"ENAP's profitability and cash flow protection measures are expected to reflect the swings of the refining cycle and oil and gas price performance. Moreover, although the growing E&P division might strengthen ENAP's cash flow generation ability, it is not expected to become a major driver of profitability."

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