Fitch Affirms Enersis' IDR at 'BBB+/AA(cl)'; Outlook Stable

  Fitch Affirms Enersis' IDR at 'BBB+/AA(cl)'; Outlook Stable

Business Wire

BUENOS AIRES, Argentina -- December 19, 2012

Fitch Ratings has affirmed the foreign and local currency Issuer Default
Ratings (IDRs) of Enersis S.A. at 'BBB+' and its long-term national scale
rating at 'AA(cl)'. In addition, Fitch has affirmed Enersis' short-term
national scale rating at 'F1+/AA(cl)'and its national Equity Rating at
'Primera Clase Nivel 1'. These rating actions affect approximately USD1.1
billion of outstanding Yankee bonds and USD67 million of domestic bonds.

The Rating Outlook is Stable.

Enersis' ratings reflect its solid business platform with a strong degree of
business and geographic diversification across the electricity chain, and good
financial metrics. The company's regulated business represents 49% of EBITDA
providing a degree of earning stability as it operates under supportive
regulatory environments. Geographic diversification through Latin America
provides a natural hedge to different regulations and weather conditions. The
Stable Outlook is driven by Enersis' adequate liquidity profile and credit
metrics and the expectation that a balanced mix between generation and
distributions businesses will be maintained.

Credit risks associated with the company include pressures from the
shareholder Enel S.p.a. ('A-' IDR by Fitch) to increase dividends, possible
environmental and/or political issues which could result in cost overruns or
modifications of projects under construction, although these risks appear
manageable. The ratings also consider the company's dependence on dividend
payments from its subsidiaries to repay its own debt and incorporate the
seasonal and regional cash flow volatility.

KEY RATING DRIVERS

A change in its power generation business' commercial policy that results in
an imbalanced long-term contractual position, and/or a material and sustained
deterioration of credit metrics (reflected in a Debt to EBITDA ratio greater
than 3x and EBITDA to interest coverage below 4x) could result in a negative
rating action. A material improvement in credit metrics that could be
sustained over time, reduction in debt levels and in pressure from
shareholders to distribute dividends could result in a positive rating action.
Enersis and Endesa Chile's ratings are not expected to be impacted by the
recently announced capitalization transaction, if approved.

BALANCED PROFILE

Enersis enjoys a strong business platform underpinned by a balanced portfolio
of regulated and non-regulated activities and a well-diversified geographic
presence. Enersis' cash generation is evenly split between its power
generation and power distribution businesses which represented 51% and 49% of
consolidated EBITDA as of September 2012, respectively. In the generation
business, operations are concentrated in its subsidiary Endesa Chile ('BBB+'
IDR by Fitch). Enersis generation business' conservative commercial policy is
a key strength to reduce the company's exposure to hydrology risk as
hydropower generation represents 58% of its generation matrix. Consolidated
EBITDA streams are well diversified amongst Chile (21.6%), Colombia (35.2%)
and Brazil (31.3%).

On the distribution side of the business, Enersis controls Chilectra S.A.
(Chile) which provides it with very predictable cash flows; Chilectra has no
debt outstanding. The cash flow stability and reliability of its other
regional distribution companies is also sound, yet distributions to the
holding company are more difficult to predict as they might be subject to
legal restrictions of each country and the willingness of the other
shareholders to distribute operating cash.

STRONG CREDIT METRICS

As of September 2012, Enersis maintained strong credit metrics with an
EBITDA-to-interest of 4.3 times (x) and net debt-to-EBITDA of 1.3x. EBITDA for
the latest 12 months (LTM) was USD4.4 billion and free cash flow was positive
after capital expenditures of approximately USD 1.1 billion and consolidated
dividends payments of USD 1.1billion. Enersis individual dividend payments are
in the range of USD 500 million per annum.

Fitch expects Enersis to moderately increase its EBITDA to a level of USD4.7
billion in 2012-2013, mainly due to the organic growth of its power
distribution segment. Cash flows from its generation business unit are
expected to remain stable in the range of USD2 billion per annum and increase
in 2015, after Quimbo power plant begins to operate. Consolidated capital
expenditures are estimated at approximately USD1.3 billion during the next few
years and are expected to be funded with the company's own cash flow
generation. Free cash flow is expected to remain positive.

GOOD LIQUIDITY

Enersis' credit profile is supported by ample consolidated liquidity with USD
1.7 billion of cash as of September 2012 and access to a USD897 million of
committed credit lines. Consolidated debt maturities are manageable of USD315
million due in 4Q'12, USD1 billion due in 2013 and USD1.3 billion due in 2014.
Fitch expects the company will refinance a portion of its debt maturities,
while interest coverage, as measured by EBITDA-to-interest is above 5.0x and
leverage as measures by net debt-to-EBITDA to remain below 2.0x, between 2011
- 2014.

CAPITALIZATION NEUTRAL TO RATINGS

Enersis and Endesa Chile's ratings are not expected to be impacted by the
recently announced capitalization transaction, if approved. On Dec. 7, 2012,
Endesa presented the terms and conditions of its proposal to increase Enersis
capital, initially announced on July 2012. Endesa expects to increase Enersis
capital by USD5963 million, of which USD3615 million would be contributed in
kind by Endesa, and up to USD2348 million will be contributed in cash by
minority shareholders, to maintain their current stake in Enersis. Through
this capitalization Endesa Spain is aiming to concentrate its assets in Latin
America by placing all of them under Enersis, and simplifying its group
structure.

Following the capitalization, Enersis consolidated pro-forma debt and cash
generation would not change significantly as approximately 99% of the assets
in which Enersis would increase its stake are already being consolidated by
the company. On an individual basis, Enersis' dividend stream from its
subsidiaries would marginally increase, proportionally to the increase of its
stake in such entities, assuming the current dividend policy.

Enersis and Endesa Chile's ratings could be pressured in the event of a
material change in Enersis current dividend policy or the existence of any
additional transfer of funds to its shareholders. Endesa is committed not
expect to use the expected cash contribution from minority shareholders to
increase Enersis dividend payments or to receive any intercompany loans from
Enersis. On a pro-forma basis, the potential contribution in cash from
minority shareholders' would enhance Enersis' cash position and growth
prospects.

Enersis is one of the largest private electricity utility groups in Latin
America. The company has varying ownership interests in electric generation,
distribution and transmission companies in Argentina, Brazil, Chile, Colombia
and Peru. Enersis is currently 60.62% owned by Endesa Spain ('A-' IDR by
Fitch), Spain's largest electrical utility. Beyond its direct investment in
Enersis, Endesa Spain holds stakes in many investments as a partner of Enersis
and Endesa Chile. Endesa Spain's ratings are linked to and capped by those of
its majority shareholder (92%), Enel SpA ('A-' IDR by Fitch), based on strong
legal, operational and strategic links.

Fitch has affirmed the following debt instruments of Enersis:

--Senior unsecured notes USD350 million due 2016 at 'BBB+';
--Senior unsecured notes USD350 million due 2014 at 'BBB+';
--Senior unsecured notes USD150 million due 2026 at 'BBB+';
--Commercial paper USD35 million at 'F1+/AA(cl)';
--Commercial paper USD45 million at 'F1+/AA(cl)';
--Commercial paper USD75 million at 'F1+/AA(cl)';
--Commercial paper USD45 million at 'F1+/AA(cl)';
--Senior unsecured CLF2.5 million notes due 2022 at 'AA(cl)';
--Medium-term notes program CLF12.5 million at 'AA(cl)'.

Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 8, 2012);
--'Parent and Subsidiary Rating Linkage' (Aug. 8, 2012).

Applicable Criteria and Related Research:
Corporate Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460
Parent and Subsidiary Rating Linkage
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

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Contact:

Fitch Ratings
Primary Analyst:
Ana Paula Ares, +54-11-5235 8121
Senior Director
Fitch Argentina Calificadora de Riesgo S.A.
Sarmiento 663, 7th floor
Buenos Aires, Argentina
or
Secondary Analyst:
Paula Garcia Uriburu, +56-2-499 3300
Director
or
Committee Chairperson:
Rina Jarufe, +56-2-499 3300
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com
 
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