Edenor Falls After JPMorgan Warns of Default: Buenos Aires Mover

Empresa Distribuidora & Comercializadora Norte SA (EDN) fell to its lowest price in almost three years after JPMorgan Chase & Co. said the Argentine power distributor may default on its bond payment next year as the government’s caps on utility rates constrain cash flows.

Shares in the company, also known as Edenor, fell 1.9 percent to 1.03 pesos at the close in Buenos Aires, the lowest price since June 2009.

Edenor won’t default this year and bonds would see “significant upside” if negotiations with the government over tariffs produce positive results, analyst Isabela Bacchi wrote in the report today. JPMorgan maintained its recommendation to buy Edenor bonds due in 2022.

Yields on Edenor bonds due in 2022 fell 16 basis points, or 0.16 percentage point, to 18.5 percent at 5:25 p.m. in Buenos Aires, according to prices compiled by Bloomberg. They have soared 405 basis points in the past month.

A telephone message and e-mail sent to Alberto Lippi, a spokesman at Edenor, weren’t immediately returned.

To contact the reporters on this story: Camila Russo in Buenos Aires at crusso15@bloomberg.net; Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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