S&P lifts Enersis senior debt from junk

Standard & Poor's said it affirmed its BBB- corporate credit rating on Enersis SA based on its good business and financial performance. The outlook is positive.

At the same time, S&P raised Enersis' senior unsecured debt to BBB- from BB+, eliminating the one-notch difference between Enersis' corporate credit rating and the rating of its senior secured debt.

Up to now, the rating on Enersis' senior debt was rated one notch lower than the company's corporate credit rating because, according to S&P's criteria, when liabilities at the subsidiary level are sizable regarding consolidated assets, the senior unsecured debt rating on the parent is notched down from the corporate credit rating. The decision to eliminate the notching reflects S&P's current expectations that Chilectra SA, Enersis' main cash contributor, is not expected to have outstanding debt with third parties and the fact that Enersis is Chilectra's only financial creditor and would rank pari passu with other creditors in case of liquidation.

These factors, added to Chilectra's strong cash flow, mitigate the weaker position of debtholders at Enersis individual level regarding debt recovery perspective under a liquidation scenario.

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