S&P: Edenor on positive watch

Standard & Poor's said it placed its B- ratings on Empresa Distribuidora y Comercializadora Norte SA (Edenor), on CreditWatch with positive implications following the promulgation of national decree 1957/2006 on Jan. 8.

The agency said that this decree ratified the "Acta Acuerdo" agreement between Edenor and Unidad de Renegociación y Análisis de Contratos de Servicios Públicos, the entity created by the Argentine government to renegotiate the concessions for public service companies, which defined terms and conditions for a transition period until the global renegotiation of Edenor's concession contract.

S&P noted that the CreditWatch listing reflects potential improvement of Edenor's credit quality mainly due to the Acta Acuerdo's incorporation of: a significant tariff increase for the company's customer base and certain language mitigating Edenor's exposure to the unavailability of transmission or power generation capacity, which could result in power supply shortages.

The agency added that the ratings on Edenor reflect the company's weak business and financial risk profiles, which derive from high political and regulatory risks, increasing concerns regarding power supply in Argentina, the company's high foreign exchange risk and limited financial flexibility.

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