Argentina-based Transportadora de Gas del Sur S.A. (TGS; foreign currency rating SD/--/--; local currency rating CC/Negative/--) announced today that it expects to have a large US$515.6 million net loss for first-quarter 2002. The loss is primarily due to the effect the peso devaluation--since January 2002--has had on the company's dollar-denominated debt of US$1.1 billion as of December 2001. However, new accounting rules allow companies to partially offset devaluation effects by capitalizing losses caused by foreign currency indebtedness used to finance investments in certain fixed assets. As a result, TGS capitalized US$1.5 billion. These negative foreign exchange effects are noncash items and therefore do not have a direct effect on the company's cash flow generation. Because Standard&Poor's analysis already
