OREANDA-NEWS. S&P Global Ratings affirmed its 'CCC' issuer credit and issue-level ratings on Argentina-based electric distributor Empresa Distribuidora y Comercializadora Norte S. A. (Edenor) and revised its outlook to developing from positive.

The outlook revision follows a federal judge's recent ruling that rejected the tariff increases granted to the company in late January. The ruling reestablished the previously existing tariff scheme and ordered the company to refund customers for the excess billing. Edenor and the government already appealed the ruling, and now the Supreme Court should make a final ruling, which is expected within the next two months.

Our 'CCC' rating already reflects the company's vulnerability to nonpayment and its dependency on a new tariff setting mechanism to meet its financial obligations in the next 12 months. This is despite the fact that the company faces no material principal maturities in the short-term but, depending on the actual tariff scheme, it could face material operational cash-flow deficits.

The developing outlook on the company reflects the uncertainties regarding the new tariff implementation, in terms of timing and amounts. The outlook also reflects the possibility of a positive or negative outcome for the company, depending on the Supreme Court's final ruling.

We could revise the outlook to positive or upgrade the ratings, which is less likely, if the Supreme Court approves the tariff increases in the short term, and if, in our view, the new rate scheme improves the company's ability to fund maintenance costs and committed capital expenditures without jeopardizing its ability to service future debt. We could also consider upgrading the company one notch or revising the outlook to positive based on a successful renegotiation of the liabilities with Compania Administradora del Mercado Mayorista Electrico S. A. (CAMMESA).

We could revise the outlook to negative or downgrade the company if the tariff implementation gets delayed, or if the new rate-setting policy is below our expectations, weakening our liquidity prospects for the company. We could also revise the outlook downward if we don't see a positive impact from tariff increases in profitability and cash generation during the next few quarters, or if there is a negative outcome from the liability negotiation with CAMMESA.