S&P lifts Transelectrica

Standard & Poor's said it raised its long-term corporate credit rating on C.N. Transelectrica SA to BB+ from BB.

The outlook is positive.

The agency said that the rating action reflects a decline in Transelectrica's business risk, expectations of a further reduction in regulatory and market risk following Romania's accession to the European Union, continued benign economic development, which should support growth in electricity transmission volumes and reduced operational risk following significant investments in the company's transmission network.

The rating action also reflects Transelectrica's improved liquidity following an IPO in June 2006, although the bulk of the proceeds is expected to be used for investments, the agency noted, adding that these strengths are likely to be offset by weakening credit metrics over the near term as a result of the company's debt-funded capital expenditure program, weak financial flexibility and below-average financial risk management practices.

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