S&P rates Empresa de Energia notes BB

Standard & Poor's said it assigned a BB+ corporate credit rating to Empresa de Energia de Bogota SA ESP and a BB rating to its issue of up to $710 million in notes.

The outlook is stable. The BB rating assigned to the notes reflects the structural subordination between parent-subsidiary creditors.

The BB+ rating reflects the aggressive use of debt to finance the acquisition of the Ecogas business through its subsidiary Transportadora de Gas del Interior (BB/stable) that will result in a total debt-to-EBITDA ratio of about 5 times in 2007.

The rating also considers the partial currency mismatch between revenue, mostly in Colombian pesos, and debt service obligations, mostly in U.S. dollars, for the bond issue and the issuer's dependence on dividend payments from subsidiaries and related companies, S&P said.

These weaknesses are partially offset by the company's diversified portfolio, stable regulatory framework, economic growth prospects in Columbia and support from the city of Bogota (BB+/stable), with an 81.5% ownership stake, the agency said.

The issuer's debt-to-EBITDA ratio is about 4.9 times.

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