Milan, May 21st 2008 – After its annual review, rating agency Standard&Poor’s today affirmed Edison long term rating at BBB+.
Outlook was revised to “stable”. The ratings reflect Edison strong position on the Italian energy market, growth perspectives and shareholders’ support. Rating affirmation, in fact, takes into consideration Edison 2008-2013 Industrial Plan, which envisages strong investments and calls for a consolidation of the Group’s presence on the Italian market, a fast growth in the renewable energy sources sector and a major expansion of its international operations, both in the hydrocarbons – where Edison is already bidding in a number of major international tenders in the E&P field - and electric power areas.
Full Standard&Poor’s press release is attached.
S&P Revises Edison's Outlook To Stable.
PARIS (Standard & Poor's) May 21, 2008-Standard & Poor's Ratings Services said today that it revised its outlook on major Italian power and gas utility Edison SpA to stable from positive. At the same time, Standard & Poor's affirmed all ratings, including the 'BBB+/A-2' long- and short-term corporate credit ratings, on the company. "The outlook revision primarily reflects the likelihood that Edison's financial profile will weaken to a degree from 2008, as a result of substantial debt-funded investments," said Standard & Poor's credit analyst Hugues de la Presle. Moreover, Edison will allocate a significant share of these investments to exploration & production (E&P) activities, which are generally considered to be riskier than the company's core power business. The ratings on Edison reflect its well-established position as Italy's second-largest electric and gas utility; its efficient and recent generation fleet; the Italian market's favorable growth prospects notwithstanding some risk of slight overcapacity over the next years; the stable cash flows derived from regulated CIP6 power sales, whose share of total sales is, however, declining; and a one-notch uplift for shareholder support from joint owner Electricite de France Sa (EDF; AA-/Stable/A-1+). Constraining factors include Edison's primary focus on power generation and limited downstream integration; Edison's limited ability to sell its output forward given market conditions in Italy; and the limited fuel diversity of its primarily gas-fired generation fleet. "We expect Edison to maintain its leading positions in Italy in electricity and gas, as well as a financial profile in line with the ratings," said Mr. de la Presle. We particularly look for coverage of adjusted net debt, excluding the debt of holding company TdE, by FFO in excess of 20%. Given the scale of Edison's investments, the ratings offer limited upside. Conversely, ratings could come under pressure if the group's financial profile weakens markedly as a result of further investments, or if its business mix shifts significantly more toward riskier E&P activities.
Edison Press Office: Tel. +39 02 62227331
ufficiostampa@edison.it
Edison Investor Relations: Tel. +39 02 62228415
investor.relations@edison.it
www.edison.it
Public disclosure required by Consob Resolution No. 11971 of May 14, 1999, as amended.
