Empresa Distribuidora & Comercializadora Norte SA (EDN) is heading for its biggest weekly gain since May 2009 on speculation the company will increase rates.
Edenor, as Argentina’s largest electricity distributor is known, gained 1.8 percent to 0.884 peso in Buenos Aires at 2:20 p.m., a 22.9 percent increase during the week, the most since the first week of May 2009.
The rally started after the Argentine government announced on Jan. 7 new rules for oil and gas producers paving the way for rate increases in the electricity distribution industry.
“Edenor is the tip of the iceberg as its current market value is worth nothing,” Carlos Aszpis, an equity strategist at Schweber & Cia., said in phone interview from Buenos Aires. “The rate increase will arrive next week, in six months or a year, and the company will have to recover its 10 times higher value granted by investors in its initial public offering.”
Argentine deputy Economy Minister Axel Kicillof was not immediately available to take calls, his spokeswoman Jessica Rey said in a phone interview from Buenos Aires. She declined to comment.
Edenor, owned by Pampa Energia SA (PAMP), has posted seven straight quarterly losses that forced it to sell assets for capital spending to avoid a debt default. The company has negative cash flow and is not paying in full for the electricity it distributes to the government controlled wholesale seller know as Cammesa.
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