Moody`s: Endesa`s future is bright

Moody`s Investors Service Ltd. has assigned an Aa3 rating to the (US)$750 million Euro-medium-term-note program from International Endesa B.V. of Spain and fully guaranteed by Empresa Nacional de Electricidad S.A. The rating reflects Moody`s expectation that the company will continue to strengthen operating cash flow and significantly reduce debt. The rating also factors the strong regulatory support from the stable legal framework, the recently approved electric utility law, the government`s 67 percent stake and a strong competitive position.

The electricity law, Ley de Ordenacion del Sector Electrico, was approved on Dec. 31, 1994, and is expected to have positive effects on the entire industry. Main points include: competition in the construction of new generating plants, separation of generation and distribution for accounting purposes, maintenance of the current integrated industry model with the addition of independent producers under special conditions, creation of a National Electricity Commission to monitor the industry, clearer definitions of the government`s commitment and the mechanism for the full recovery of investments.