According to the rating agency, this change in outlook responds to the solid implementation of the state-owned company's strategic plan for 2023-2027.
The international risk rating agency Standard & Poor's (S&P) announced the improvement of Empresa Nacional del Petróleo's (Enap) risk rating from 'BB+' to 'BBB-', placing it in what is known as investment grade. This update reflects the “improvement in the company's operating results and credit metrics.” The outlook for this rating remains in the “Stable” category.
S&P said that this decision is based on the solid results presented by the company in recent years and the expectation that ENAP will maintain its operations and credit metrics in the coming years. This improvement is attributed to the "implementation of the state-owned company’s strategic plan for 2023-2027, which includes a more disciplined focus on operations and indebtedness," according to the rating agency.
Likewise, Enap's Stand-Alone Credit Profile (SACP) also increased from “b” to “b+” reflecting the strengthening of the company's financial risk profile. In addition, S&P maintained its assessment of "a very high probability of support" in the event of financial difficulties from the Chilean government, Enap's sole shareholder.
The entity noted that the improvement in Enap's credit metrics is due to more effective and disciplined management, including the gradual reduction of indebtedness. Among the highlights are its self-sufficiency mandate, management aligned with OECD standards, cost containment policies, and a focus on specific investments to maintain asset integrity. In addition, the diversification of oil suppliers and proactive management of refinancing have been key factors in this improvement.
ENAP’s CEO, Julio Friedmann, stressed that "this improvement recognizes the serious work done in these two years and the focus we have placed on taking charge of our financial backpack, aligned at all times with the Board of Directors and our shareholder. The challenge is to advance the operational excellence and efficiency of our management to maintain these indicators in the future and ensure the sustainability of the company."
S&P's stable outlook reflects the expectation that the state-owned company will maintain a debt/EBITDA ratio of around, or below, 4x over the next two years, with equity initiatives aligned with this objective, and that ENAP will continue its strong relationship with the Chilean government, playing a crucial role in the country's energy sector.