S&P affirms ENAP

Standard & Poor's said it affirmed the BBB- ratings on Chile's 100% state-owned oil and gas company Empresa Nacional del Petroleo (ENAP) and assessed its standalone credit profile to be b+.

The outlook is positive.

Ratings reflect the likelihood that the Republic of Chile (foreign currency A+/positive/A-1; local currency AA/positive/A-1+) would provide timely and sufficient extraordinary support to ENAP in the event of financial distress, according to the agency.

"We also assess ENAP's standalone credit profile at b+, primarily as a result of its weak capital structure and low, or even negative, free cash flow generation," S&P analyst Luciano Gremone said in a statement.

Despite improvements in the last quarters, ENAP's high debt continues to result in weak cash flow protection measures, and the company's capital expenditures don't leave much room for reducing debt, the agency noted.

As a result, ENAP is expected to post a total debt-to-EBITDA ratio of more than 8x over the next two years, incorporating still-tight refining margins.

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