S&P Affirms Proyectos de Energia 'BB+' FC Rating.

Business Editors

NEW YORK--(BUSINESS WIRE)--Standard & Poor's

April 11, 2001-- Standard & Poor's today affirmed its double-'B'-plus foreign currency rating on Proyectos de Energia S.A. de C.V.'s US$100 million senior-secured notes. The outlook is positive.

The rating and outlook reflect that of Comision Federal de Electricidad (CFE; double-'B'-plus/Positive foreign currency issuer credit rating). CFE has provisionally accepted all 13 of the electrical substations that make up the project, and has assumed the project's debt service payments to noteholders. CFE is expected to make its first debt service payment on the recently completed thirteenth substation on April 15. CFE's creditworthiness constrains the rating on the project debt, and the notes' debt service ranks on par with CFE's outstanding unsecured external debt. CFE's ratings reflect its:

      --  Legal status as a decentralized government agency;

      --  Close ties to, and support from, the Mexican government; and

      --  Economic importance as the primary supplier of electricity
        within Mexico.

Although the government is not liable for CFE's obligations, national ownership and tight integration of CFE into the budgetary process closely aligns CFE's creditworthiness with Mexico's.

Proyectos de Energia (Proyectos) is a special-purpose, jointly owned subsidiary of Grupo Siemens S.A. de C.V. and Siemens S.A. de C.V. (SMEX), both of which are directly or indirectly wholly owned by Siemens AG (double-'A'/Negative/'A-1'-plus). Noteholders have no direct recourse either to Siemens, Proyectos, or CFE.

Proceeds funded construction of 13 electrical energy substations, with a total capacity of 1,975 megavolt amps. Siemens AG and SMEX constructed the substations through a US$154 million fixed-price turnkey engineering, procurement, and construction contract. Though Siemens has completed all the substations comprising the project, Siemens remains involved through a two-year guarantee on the substations.

With provisional acceptance of all 13 substations, CFE assumes operational control of the substations and is unconditionally obligated to make fixed quarterly payments in U.S. dollars to a collateral agent in the U.S. CFE was already making payments on substation 12, and on April 15 will initiate payments on substation 13. Certain events of default occurring after provisional acceptance may trigger an early redemption of debt. In all instances, these accelerated payments are the obligation of either CFE or Siemens AG. The notes are secured, among other pledges, by the rights of Proyectos to receive CFE payments. Until final repayment of all outstanding indebtedness, title to the assets remains with a Mexican trustee, although lenders do not benefit from a property mortgage. Thereafter, ownership passes to CFE free of all liens and charges. Interest on the notes is paid semiannually, and principal is due as a bullet payment in 2013.

OUTLOOK: POSITIVE

The positive rating outlook reflects that of CFE, which, in turn, reflects that of the United Mexican States. CFE's legal status, economic importance, and close ties to the government are expected to remain unaltered in the medium term. Although there are prospects for a gradual opening of the electricity sector to competition, CFE is expected to continue playing a central role in distribution, transmission, and overall electric sector planning, Standard & Poor's said. -- CreditWire