S&P affirms Israel Electric

Standard & Poor's said it affirmed the BBB long-term foreign-currency corporate credit rating on Israel Electric Corp. Ltd. and removed the rating from CreditWatch, where it had been placed with negative implications on Dec. 30, 2008.

The outlook is negative.

"The affirmation and removal from CreditWatch reflect our view of IEC's improved liquidity profile - albeit still weak overall - and our belief that IEC should be sufficiently funded until June 2010," S&P analyst Shaul Ben Shimol said in a statement.

"We expect IEC to benefit from a pending downward revision of its future pension liabilities, which would reduce the future calls on its cash flow."

The BBB rating is based on high likelihood of support from the State of Israel (foreign currency A/stable/A-1; local currency AA-/stable/A-1+).

The issuer's standalone credit profile is BB-.

The rating reflects the company's overall satisfactory business profile, which is based on its vertically integrated business model and resultant dominant market position, the agency said.

Constraints include uncertainty regarding both the future structure of the Israeli electricity sector and the tariff-setting regime, as well as the company's aggressive financial profile, weak liquidity, ongoing financial pressure from a large debt-financed investment program and tight capacity reserve margin, S&P said.

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