The ratings on French 100% state-owned Electricité de France (EDF) are based on the group's dominant position in its French home market, its low-cost nuclear generation portfolio--the world's largest--and its substantial share of low-risk regulated network activities. Further positive credit factors are management's reined-in and refocused strategy of consolidating its positions in Western Europe and the company's rapidly improving profitability and free cash flow generation, helped by strongly rising power prices in Europe. These strengths are offset by EDF's average financial profile, when taking into account its sizeable unfunded pension and nuclear liabilities. The recently announced acquisition of 50% of Edison will equally be credit-dilutive. A degree of state support is still factored in, but Standard&Poor's expects to
