S&P upgrades Edelnor

Standard & Poor's said it raised its corporate credit and senior secured debt ratings on Empresa Electrica del Norte Grande SA (Edelnor) to B+ from B, mainly reflecting the improvement of its debt-service coverage ratios as a result of higher-than-expected cash generation combined with a prepayment of 12.1% of its $217.6 million outstanding debt certificates in May 2005.

The outlook is stable.

The ratings reflect the operation in a very competitive market environment and its still weak financial profile, which mainly derives from its volatile cash flow and weak financial flexibility, S&P said.

These weaknesses are partly offset by Edelnor's diversified generation base (mainly natural gas and coal), ownership of transmission assets and its 21% equity stake in the Gasoducto Norandino pipeline, which somewhat mitigate the company's high cash flow volatility, S&P said.

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