Edenor Rallies on Bets Subsidies Will Rise: Buenos Aires MoverCamila Russo
Empresa Distribuidora y Comercializadora Norte SA, Argentina’s largest power company, surged to its highest level in almost two years on speculation it will receive higher subsidies from the national government.
Shares climbed for a seventh day, rallying 5.4 percent to 1.75 pesos at 3:12 p.m. in Buenos Aires, the highest on a closing basis since November 2011. The stock has more than doubled this year, the best performance on the Merval index.
Edenor climbed after regulators allowed it to report higher costs, supporting the case for more subsidies, according to Lautaro Marra, an analyst at Buenos Aires-based brokerage Bull Market Brokers. The U.S. Federal Reserve’s surprise decision last week to maintain the pace of its bond purchases to stimulate the economy has helped push most Argentine stocks higher, Marra said in a phone interview.
“The whole stock market is rising, and this news in Edenor’s balance sheet gave it an extra boost in the past week,” Marra said.
Edenor has posted yearly losses since 2009 as a decade-long cap on utility rates with estimated 20 percent annual inflation undermined the company’s profit.
The government’s decision to allow Edenor to publish its expenses came after President Cristina Fernandez de Kirchner’s party suffered election setbacks in August.
“People see a shift from the government after elections, and the expectation is there will be a change,” Alejandro Bianchi, the head of investment at Buenos Aires brokerage Invertironline.com, said in a telephone interview. “You’re buying at a low price a power company that supplies half of Buenos Aires. There’s more room for it to go even higher.”
Standard & Poor’s rates Edenor at CCC-, nine levels below investment grade.