The rating on Empresa Electrica del Norte Grande S.A. (Edelnor) reflects: Debt financing at the NorAndino gas pipeline project did not take place as forecasted (anticipated US$30 million cash flow to Edelnor); Uncertainty over Edelnor's ability to meet its financial obligations in 2001; The likelihood of default in the first quarter of 2002; Worse-than-anticipated operating performance resulting in coverage ratios below expectations; The anticipated loss of significant contract revenue at the end of 2001; Uncertainty about Edelnor's ability to keep and attain new sales contracts or sell into the spot market; and The entry of gas and gas-fired plants, which has created overcapacity in the in the northern interconnected system (SING) grid. Edelnor generates and transmits electricity in the SING,
