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Gas industry

Duff & Phelps Upgrades Seven Chilean Companies Following Sovereign Rating Upgrade

Strategic Insights

— 1 min read

Duff & Phelps Credit Rating Co. (DCR) upgraded seven Chilean companies after upgrading the sovereign rating of the Republic of Chile to "A-" from "BBB+." The upgrades reflect the positive impact of the sovereign upgrade on companies rated at the sovereign ceiling, with local currency ratings remaining unaffected. The upgrades have significant implications for the companies' credit profiles, with strong capital structures, cash flows, and growth prospects contributing to their improved ratings.

Key Takeaways:

  • Andina, the largest Coca Cola bottler in Chile and second largest in Brazil, has a strong credit profile due to its capital structure and cash flow, enabling it to pursue international expansion, including a recent acquisition in Argentina.
  • Chilgener's operating income is expected to benefit from an expanding economy in most of its service territory over the near term, despite potential delays in credit protection measures due to the need for new capital to realize expansion opportunities.
  • Copec's diversified business portfolio provides a balance between cyclical and stable growth activities, benefiting from the attractive growth prospects of the Chilean economy and high pulp prices.
  • CTC has a strong financial position despite long-distance competition, with its telecommunications operations diversification mitigating the impact of competition.
  • Pehuenche's sound business and financial fundamentals will enable it to benefit from continued growth in central Chile's energy needs and higher contract capacity sales.
  • Enersis has solid operating and credit fundamentals, with a strategy to pursue investments in privatization opportunities in emerging economies to diversify its business mix while minimizing cross-border risks.
  • DCR will continue to monitor Chilean corporate ratings and take rating actions when warranted.

Statistics:

  • 7 Chilean companies were upgraded by Duff & Phelps.
  • The sovereign rating of the Republic of Chile was upgraded to "A-" from "BBB+."
  • Andina's foreign currency rating was upgraded.
  • Chilgener, Copec, CTC, Pehuenche, and Enersis were also upgraded.

Sources:

  • Duff & Phelps Credit Rating Co. (DCR)
  • PR Newswire (September 14, 1995)
  • Duff & Phelps Credit Rating Co. press release

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