Fitch rates new Enersis notes BBB-

Fitch Ratings has assigned a BBB- rating to the proposed issuance by Enersis SA of up to $500 million of senior unsecured notes.

The proposed 10-year notes will carry a fixed interest rate and semi-annual payments. The proceeds will be used to repay a portion of the $1 billion that remains outstanding on its syndicated bank loan (Jumbo II).

Fitch said the rating and stable outlook of Enersis reflect the company's diverse portfolio of assets, including companies that are financially strong with market leadership positions that benefit from constructive regulatory environments, growing demand and increasing client base.

The rating also reflects the weaker sovereign ratings of Argentina, Colombia, Peru and Brazil, increasing the risk of the cash flows received by Enersis and Endesa-Chile from their investments in these countries, the agency said.

Enersis' credit protection measures are currently low for the rating category, Fitch said, but should improve during the next year due to the largely successful execution of the company's financial strategy during 2003 and substantial completion of its financial strengthening plan as expected.

In May, Enersis completed the $1.587 billion Jumbo II syndicated bank refinancing, which included all international bank obligations maturing during 2003 and 2004. In June, Enersis also raised about $2 billion of capital, including the conversion of $1.4 billion of subordinated debt with Endesa-Spain to equity and subscription of an additional $663 million of equity by minority shareholders of Enersis.

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