Now we are going to explain which risk are associated if we consider to invest

in a stock such as Edenor.

As we could see in the Risk Matrix we are going to focus in the most relevant
risk issues that have the higher occurrence probability with the higher impact
on the stock price.
As we see before Argentinas country Risk is inversely correlated with EDN
stock price, If Argentina Country risk begin to increase this will led to less
investments in Argentina in overall which may affect EDN possibilities to
develop in the future as the general macroeconomic conditions will begin to
decline. On the other hand , the team estimates a decrease of the Country Risk
that will benefit company devolpment and increasethe stock price.
Secondly a key issue is the inhability of Edenor to rise tarrif accordingly with
our model , as we could see in this chart this will highlt affect the revenue
following the Base Model the company currently have , having a huge impact in
profitability.
Thirsly, the FX rate represent one of the most important macroeconomic issue
that may affect Edenor. Is important the FX rate if we consider that Edenor has
twi bond issue that mature on 2017 and 2022 this two particular years are the
most importants as Edenor has to pay the Capital o f the Bond so the exchange
rate will be critical as Edenor earns in ARS but the debt is issue in USD. In
addition, Edenor value will decrease upon a devaluation as the revenue EDN
has are totally in ARS. On the other hand , we consider the devaluation effect
neutralized as Country Risk will decrease and More investment will come to
Argentina.
Lastly , Pampas interest not aligned with Edenor will have bad effects on the
stock price as Pampa may decide to sacrifice Edenor profitability in response of
the entire Electrical Chain generation and transportation.
As we had said before and stated in the entire presentation we recommend
Edenor due to :
-

Highly defensive business

We are expecting a downside in Argentina Risk and an improvement in
macroecnomic indicators
We expect a normalized electrical market with logical electrical tarrifs

On the other hand we consider extremely important to warn that this is not an
asset for everyone as you may experience high volatility as it is shown in this
Capital Markets Line (CML).
Another interesting option in investing at Edenor may be buying Edenor Bond
that mature in 2022 and has a IR of 11,20% which represent an interesenting

rate if we consider international rates. With this you may expect less volatility
than buying Edenor Stock.