Moody's cuts Enel's rating to Baa1 from A3. The prospects, the agency specifies in a note, are stable. “The weak conditions of Enel's core markets, Italy and Spain, continue to put pressure on earnings as revealed in the first quarter 2012 results announced last week,” Moody's said. The stock reacted poorly to the news. One hour after the opening of trading, Enel lost 0,7%.
The decision to cut Enel's rating is also based on the "difficult regulatory business environment both in Italy and in Spain, already evident with the 'Robin-Hood' in Italy and the removal of some tax benefits and other measures that have a impact on electricity companies in Spain”.
Moody's believes that the second package of measures for the electricity sector in Spain, which is expected to be announced in the coming weeks, will have a broader scope than that of March and could therefore weaken the financial profile of utilities. “Weakness in core European markets is unlikely to be offset by growth in international markets in the near term.
