S&P CE Casecnan outlook to positive

Standard & Poor's said it affirmed its B+ issue rating on CE Casecnan Water and Energy Co. Inc.'s $296.5 million senior secured notes and revised its outlook to positive from negative.

"The change in outlook reflects the positive impact of CE Casecnan's arbitration settlement with the Philippine National Irrigation Administration (NIA), which should significantly improve the company's liquidity over the short term, while reducing the uncertainty of protracted arbitration proceedings", said S&P credit analyst Raymond Woo.

As part of the settlement, S&P said CE Casecnan received $97 million in Philippine government 10-year notes, which the company can put back at par to the government between Jan. 15, 2004 and Feb. 15, 2004.

The proceeds will be sufficient to fund CE Casecnan's debt service reserve account to the required level of six months of principal and interest, which has remained unfunded since the commencement of commercial operations.

S&P said the settlement also removes near-term uncertainty about potential contract renegotiation of CE Casecnan's offtake contract with the NIA, as a result of a Philippine government review of the country's independent power producers.

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