Moody´s Investors Service

New York, April 16, 2003 -- Moody's Investors Service has assigned a Baa3 rating to the US$ 150,000,000 Senior Secured Loan Participation Certificates to be issued by Empresa Electrica Guacolda S.A. ("Guacolda"). The rating outlook is stable. The rating and outlook reflect Guacolda's competitive market position, the stability provided by long-term contracts that cover almost 90% of its revenues, and structural protections to benefit the certificate holders. Guacolda is one of the lowest cost fossil fuel generators in Chile, and sells its output under nine contracts with industrial and regulated power purchasers. These power purchase agreements are denominated in U.S. dollars, indexed to U.S. inflation, and paid in Chilean pesos, providing a significant hedge against Guacolda's foreign currency debt exposure. Structural protections include benefits derived from a collateral agency and security agreement, a 12 month debt service reserve, tighter than average limitations on distributions to equity holders, limitations on additional debt, and prohibitions on changes to material agreements.

The rating on the certificates also reflects single asset operating risk, the staggered expiry of Guacolda's power sales agreements beginning in 2004, the low cost of hydro generation that dominates the Chilean market, and dependence upon the level of economic activity in Chile (Baa1 sovereign foreign currency rating) and on the copper mining industry (for which Chile is a low cost producer). In Moody's opinion the structural enhancements compensate for the variability in the PPA contract terms which could under certain economic conditions result in lower coverage ratios.

The debt service reserve fund can be either cash funded or funded with an acceptable letter of credit. An acceptable letter of credit would be issued by a financial institution rated A2 or better, with a P-1 short term rating. The letter of credit must be for an initial term of at least one year and drawings would be reimbursed over eight equal quarterly installments. Under a full L/C drawdown scenario, this would have the effect of repaying one half of the amount drawn in the first year, presumably in a time of stress. However, under a scenario in which the reserve fund is fully drawn, there would still be six months debt service reserve one year after the drawing. Given the nature of Guacolda's contracts and the most likely events that would lead to cash flow shortfalls, this level of liquidity support is considered to be significant.

A portion of the proceeds of this issue will be used to repay maturing notes rated Ba1, and that rating will be withdrawn.