Fitch: Enel closer to resolving Rating Watch

Fitch Ratings said the measures announced by Enel SpA's management as part of its 2009-2013 business plan presentation, which are meant to improve the company's credit and financial profile, are a positive step forward for resolving the Rating Watch negatives assigned to the A- long-term issuer default ratings of Enel and Endesa SA on Feb. 23.

The rights issue for up to €8 billion and the reduction of dividend payouts to 60% of consolidated net ordinary income from 2009, together with a cut of €11 billion in investments announced in March 2008, are viewed positively by Fitch as they should accelerate Enel's deleveraging process. The rights issue is scheduled to take place in June.

The Rating Watch negative was prompted by Fitch's concerns about Enel's liquidity pressure stemming from refinancing needs in 2010. The agency said that the rights issue, together with cash already partially secured through the disposals of Enel's high-voltage grid and a majority stake of its gas distribution network, will contribute to a substantial reduction of Enel's refinancing risk.

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