The ratings on United Waterworks are based on the consolidated credit quality of its ultimate parent, Suez S.A. (A-/Stable/A-2), and are determined in conjunction with the company's above-average business and financial position. The ratings on Suez reflect its diversified business profile and resilient cash flows, as well as the top-tier European market positions of its European energy (through 50%-owned Electrabel), water (Ondeo), and waste (Sita) activities. A refocused investment strategy (limiting the share of higher-risk international activities) and commitment to continued credit-metric improvement, as well as positive discretionary cash flow by 2005, also support the ratings. These strengths are somewhat offset by a moderate (although significantly improved) financial structure, together with exposure to higher-risk international operations and lower-margin service and
