S&P affirms Companhia de Saneamento

Standard & Poor's said it affirmed the BB- foreign and local global-scale ratings on Companhia de Saneamento Básico do Estado de Sao Paulo SA. S&P also affirmed its corporate credit rating at BB- and national-scale ratings at brA+.

The outlook also was revised to positive from stable.

The outlook revision reflects the positive trend in credit metrics in light of the company's improved liability management, its efforts to manage operating costs, increasing service demand and positive track record of tariff adjustment.

The ratings are supported by the company's solid free operating cash flow, which has been used to gradually reduce its high debt volume in the last few years.

The ratings also reflect the company's strategic importance as a regional provider of water and wastewater services given its track record as an efficient operator.

For fiscal 2007, S&P said it expects a total debt-to-EBITDA ratio of 2.2 times.

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