S&P ups Espirito Santo view to positive

Standard & Poor's affirmed its B+ foreign and local currency corporate credit and senior unsecured debt ratings assigned to Espirito Santo Centrais Eletricas SA and revised the outlook to positive from stable.

The outlook revision is based on better financial prospects arising from the final execution of the divestiture plan, the redeployment of all Energias do Brasil assets and the creation of a clear and united group strategy.

S&P said the ratings affirmation is based on weaknesses including the presence of relevant short-term debt and a debt maturity of $114 million in July 2007, expectation of aggressive dividend distribution from now on and the company's exposure to currency mismatches.

These weaknesses are partially offset by improving financial performance, the quality of the company's receivable portfolio, revealed by the low level of past-due receivables, a monopoly franchise to distribute energy in the state of Espirito Santo and a fairly steady demand for electricity, the agency said.

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