The rating on Portuguese utility REN-Redes Energeticas Nacionais, SGPS, S.A. (REN) reflects Standard&Poor's Ratings Services' assessment of the group's strong business risk profile and significant financial risk profile. Supporting our assessment is the group's national strategic importance to Portugal's energy system, its monopolistic market position, and its supportive regulatory regime with regulated-asset-based revenues that are immune to volume and commodity risk. Further ratings support comes from REN's strong operating performance and the independence of its regulator. These strengths are partly offset by REN's high leverage with a still-large capital investment program and an aggressive dividend policy, and the deterioration of Portugal's sovereign credit quality. Other constraining factors include REN's exposure to regulation reset risk and tariff deficits and
