Fitch: Proposed ENAP Capital Injection Signals Continued Linkage to Sovereign

NEW YORK--()--Fitch Ratings believes the Chilean government's announcement that it will be injecting US$400 million of capital into Empresa Nacional de Petroleo (ENAP) represents another signal of the strong linkage between the republic of Chile and the company, which is consistent with the rating's rationale. Although the amount of the capital increase represents only about 10% of the company's outstanding debt, Fitch believes the government's announcement reinforces the to continue to provide financial support to ENAP despite the fact the Republic of Chile does not explicitly guarantee any of ENAP's indebtedness.

Fitch rates ENAP's foreign currency Issuer Default Rating (FC IDR) at 'A' and the national scale rating for the company is 'AAA(cl)'. The Rating Outlook is Stable.

As part of Chile President Michelle Bachelet's long-expected energy agenda, the Chilean government announced yesterday (May 15, 2014) that it will make this US$400 million capital addition to increase the country's liquified natural gas (LNG) supply through the expansion of the Quintero LNG Terminal and the construction of a new terminal with the support of ENAP. The government's rationale is that it intends to strengthen ENAP's financial position and to reinforce its strategic importance as the national oil and energy company. The capital increase will be introduced as part of the energy bill that will be sent for approval to Congress by, at the latest, the first quarter of 2016.

ENAP's ratings reflect its ownership by the Chilean government, strong legal, operational and strategic ties with the state, and strategic importance to Chile given it ensures a significant portion of the country's energy supply. ENAP is the only refined products producer and the largest marketer in Chile, meeting approximately 63% of the internal demand, and representing 40% of the country's energy matrix. As a state-owned company, ENAP's FC IDR is strongly linked with the credit profile of the Chilean sovereign (FC IDR 'A+'; Outlook Stable by Fitch), although direct financial support provided by the government has been limited. The Republic of Chile does not guarantee any of ENAP's indebtedness.

Additional information is available at 'www.fitchratings.com'.

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Contacts

Fitch Ratings
Media Relations
Elizabeth Fogerty, New York
Tel: +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com
or
Primary Analyst
Xavier Olave
Associate Director
+1-212-612-7895
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 1004
or
Secondary Analyst
Paula Garcia-Uriburu
Director
+562-2499-3316

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Contacts

Fitch Ratings
Media Relations
Elizabeth Fogerty, New York
Tel: +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com
or
Primary Analyst
Xavier Olave
Associate Director
+1-212-612-7895
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 1004
or
Secondary Analyst
Paula Garcia-Uriburu
Director
+562-2499-3316