Annual Report 2010 - Enel.com

Rating risk
The possibility of accessing the capital market and other
sources of financing, and the related costs, depend,
among other factors, on the rating assigned to the Group.
Enel’s current rating is equal to: (i) “A-” with a stable outlook
(Standard & Poor’s); (ii) “A-” with a stable outlook
(Fitch); and (iii) “A2” with a negative outlook (Moody’s).
In December 2010, Moody’s placed Enel SpA’s long-term
Exchange rate and interest rate risk
The Group is exposed to exchange rate risk associated
with cash flows in respect of the purchase or sale of fuel or
electricity on international markets, cash flows in respect
of investments or other items in foreign currency and, to
a marginal extent, debt denominated in currencies other
than the functional currency of the respective countries.
The main exchange rate exposure of the Enel Group is in
respect of the US dollar.
During the year, management of exchange rate risk was
pursued through compliance with internal risk management
policies, which call for hedging of significant exposures,
encountering no difficulties in accessing the derivatives
market.
The main source of exposure to interest rate risk for
Enel is floating-rate debt. In order to obtain a balanced
114 Enel Annual Report 2010 Report on operations
ratings under a credit watch with a view to assessing a
possible downgrade. Enel’s ratings are reported in detail
in the section “Enel and the financial markets”.
Any reduction in the rating could limit access to the capital
market and increase finance costs, with a negative impact
on the performance and financial situation of the Group.
structure for the debt, Enel manages the risk by reducing
the amount of debt exposed to interest rate fluctuations,
curbing borrowing costs over time and limiting the volatility
of results.
The management policies implemented by Enel SpA also
seek to optimize the Group’s overall financial position,
ensure the optimal allocation of financial resources and
control financial risks.
Under these policies, derivatives transactions for the management
of interest rate risk and exchange rate risk are
conducted, among other things, with careful selection of
financial counterparties and close monitoring of the related
exposures and ratings.
More detailed information is provided in note 5 to the
consolidated financial statements.