July 22, 2008 / 8:54 PM / 11 years ago

TEXT-S&P release on Uruguay's ANCAP

 (The following statement was released by the rating agency)
 July 22 - Standard & Poor's Ratings Services said today that it raised its
long-term corporate credit rating on Uruguay's 100% state-owned fuel company,
Administracion Nacional de Combustibles Alcohol y Portland (ANCAP), to 'BB-'
from 'B+'. The rating action follows the recent upgrade of the Oriental
Republic of Uruguay to 'BB-' from 'B+'. The outlook is revised to stable from
  Uruguay's diminishing economic vulnerabilities and solid commitment to
sound macroeconomic policies support the upgrade (form more information please
see "Oriental Republic of Uruguay Long-Term Rating Raised To 'BB' From 'B+';
Outlook Stable", published July 22, 2008, on RatingsDirect). The stronger
macroeconomic framework should continue positively affecting ANCAP,
particularly enhancing its financial flexibility.
  "The ratings on ANCAP reflect Uruguay's ownership, the risks inherent in
operating as a single-asset refiner, and the potential effects of deregulating
the Uruguayan fuel market. The ratings also incorporate our expectations that
ANCAP will maintain its dominant market position in Uruguay in the medium
term," said Standard & Poor's credit analyst Luciano Gremone. ANCAP's credit
quality remains linked to that of Uruguay because ANCAP is state owned. As of
Dec. 31, 2007, ANCAP had about $354 million in financial debt (unaudited
figures, including $335 million of long-term supplier financing with Petroleos
de Venezuela [PDVSA]).
  The Uruguayan government influences the company significantly,
particularly in the budget-approval process, indebtedness authorization, price
adjustments, and tax payments. Because ANCAP's operations are concentrated in
Uruguay, the country's financial system developments and growth prospects also
affect the company.
  The stable outlook indicates the link between ANCAP's credit quality and
the sovereign's financial health. We view the consolidation of a stronger
macroeconomic scenario in Uruguay as beneficial for the company's business
environment. Nevertheless, the ratings could come under pressure if the
company assumes a significantly more aggressive capital structure that could
affect its financial profile, combined with a change in our perception of
potential support from its owner.
  Complete ratings information is available to subscribers of RatingsDirect,
the real-time Web-based source for Standard & Poor's credit ratings, research,
and risk analysis, at www.ratingsdirect.com. All ratings affected by this
rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com; select your preferred country or region, then Ratings
in the left navigation bar, followed by Credit Ratings Search.
 (New York Ratings Team)

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