S&P rates Guacolda notes BBB-

Standards & Poor's said it assigned its BBB- ratings to Empresa Electrica Guacolda SA and to its proposed 10-year bullet $500 million senior unsecured notes.

The outlook is stable.

The rating on Guacolda mainly reflects its "satisfactory" business risk profile, "significant" financial risk profile and "adequate" liquidity, the agency said.

Guacolda's "satisfactory" business risk profile reflects the company's low production cost at its 608MW coal fired plant, high level of contracted sales with solid off‐takers (which protect Guacolda from intense competition), sale pricing mechanism that allows the company to almost fully pass‐through changes in operating costs to its customers, strategic location in the north of Chile's largest power grid, Central Interconnected System (SIC), proximity to large industrial and mining operations, and good operating performance.

"These strengths are partly offset by the single asset nature of its plant, transmission bottlenecks between the northern and southern sections of the SIC, that expose Guacolda to the difference between the spot market of both regions, and highly competitive environment for power generators in Chile," S&P credit analyst Sergio Fuentes said in a news release.

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