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 -- August 9, 2013

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 'N1 +/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.

KEY RATING DRIVERS

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 57% 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 Endesa (Spain, 'BBB+' on Rating Watch Negative by Fitch) to
promote any extraordinary dividends, possible environmental and/or political
issues that 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.

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 43% and 57% of
consolidated EBITDA as of June 2013, 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 (23%), Colombia (35%) and Brazil
(31%).

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 June 2013, Enersis maintained strong credit metrics with an
EBITDA-to-interest of 4.9 times (x) and net debt-to-EBITDA of 1.1x. EBITDA for
the latest 12 months (LTM) was USD4.4 billion and free cash flow was positive
after capital expenditures of approximately USD 1.2 billion and consolidated
dividends payments of USD 1.0 billion. 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 2013-2014, 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 to increase to approximately USD2 billion, during
the next few years and are expected to be funded with the company's own cash
flow generation. Should this level of capex materialize, free cash flow is
expected to remain break even.

Good Liquidity, Enhanced by Recent Capitalization

Enersis' credit profile is supported by ample consolidated liquidity with USD
2.3 billion of cash as of June 2013 and access to a USD769 million of
committed credit lines. Consolidated long-term debt maturities are manageable
of USD943 million due in 2H'13, USD1.4 billion due in 2014 and USD617 million
due in 2015. Fitch expects the company will refinance a portion of its debt
maturities, while interest coverage, as measured by EBITDA-to-interest is near
5.0x and leverage as measured by net debt-to-EBITDA to remains around 2.0x,
between 2013 - 2016.

On March 2013, Enersis concluded a capitalization process by which it raised
over USD 6 billion, of which USD 3.6 billion were contributed in kind by
Endesa (Spain), its controlling shareholder, and approximately USD 2.27
billion were contributed in cash by minority shareholders. Through this
capitalization Endesa (Spain) has concentrated its assets in Latin America
under Enersis, simplifying its group structure. Following the capitalization,
Enersis consolidated pro forma debt and cash generation are not expected to
change significantly as approximately 99% of the assets in which Enersis
increased its stake were 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' management has announced a USD9 billion capex plan for 2013-2017, of
which USD3.3 billion are expected to be invested in Chile and USD5.7 billion
are expected to be invested throughout the region. Fitch will monitor the
impact of these investments in Enersis credit profile, as the details are
announced.

RATING SENSITIVITIES

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 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'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 'N1+/AA(cl)';

--Commercial paper USD45 million at 'N1+/AA(cl)';

--Commercial paper USD75 million at 'N1+/AA(cl)';

--Commercial paper USD45 million at 'N1+/AA(cl)';

--Senior unsecured CLF5 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'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology: Including Short-Term Ratings and Parent and
Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=799083

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Contact:

Fitch Ratings
Primary Analyst
Ana Paula Ares
Senior Director
+54-11-5235 8121
Fitch Argentina Calificadora de Riesgo S.A.
Sarmiento 663, 7th floor
Buenos Aires, Argentina
or
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Paula Garcia Uriburu
Director
+56-2-499 3300
or
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Rina Jarufe
Senior Director
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or
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