S&P: AES' El Salvadoran units' stable

Standard & Poor's said it changed the outlooks to stable from negative on AES Corp. electric distribution subsidiaries Compañia de Alumbrado Eléctrico de San Salvador SA, Empresa Eléctrica de Oriente SA, and Distribuidora Eléctrica de Usulután SA and affirmed its BB+ credit corporate ratings on the companies.

At the same time, S&P affirmed its AAA rating on the companies' $120 million wrapped fixed-rate notes due 2011. The rating reflects the unconditional and irrevocable guarantee of full payment on principal and interest as scheduled, provided by MBIA Insurance Corp. (AAA/stable/--), pursuant to MBIA Insurance Corp.'s financial guaranty insurance policy.

S&P said the BB+ ratings reflect the following risks: The tariff formula remains untested in a stress environment; because of the undeveloped capital markets in El Salvador, the companies have limited financial flexibility compared with distribution companies operating in countries with more developed financial markets.

Mitigating these weaknesses, the companies generate stable cash flow, the tariff structure and customer base profile are favorable, AES has strong management experience in successfully operating other distribution companies in Latin America, and there is a quasi-monopoly environment in which the companies provide electric distribution.

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