Andean utilities: Shining a Light on Key themes and Top Trades

Research evidence excerpt

Andean utilities: Shining a Light on Key themes and Top Trades

J P M O R G A N Latin America Credit Research

17 July 2026

Andean utilities

Shining a Light on Key themes and Top Trades

We review the key themes shaping the credit outlook for Andean utilities—El EM Latin America Corporate

Niño, capital expenditure, and the regulatory/political backdrop—and our Research

overall assessment is constructive. For most issuers in our universe, we expect Alejandra Andrade AC

El Niño to be a neutral-to-small credit factor, as diversified portfolios, healthy (1-212) 834-3220

contracted positions and disciplined commercial strategies should limit volatility, alejandra.andrade@jpmorgan.com

particularly across Chile and Peru. The main sensitivity in our coverage is AES J.P. Morgan Securities LLC

Andes: while Chile should see a muted impact, its Colombian hydro exposure

introduces a clearer downside channel under drier conditions. That said, a step-

down in capex to maintenance levels should support healthy FCF and balance sheet

flexibility. In Colombia, El Niño-linked dryness is generally supportive for

thermal generators through higher dispatch and earnings, assuming reliable fuel

supply. On capex, management teams continue to emphasize a PPA-first,

discipline-over-growth stance, while on regulation we expect Chile to remain

broadly “more of the same,” including continued focus on regulated prices; Peru

to stay stable with scope for marginal investment unlocks (particularly in

transmission); and Colombia to offer the most potential for improvement if the

incoming administration reduces intervention and credibly addresses distribution

arrears.

Against this backdrop, our relative value preferences favor issuers where the capex

cycle is moderating and cash generation is improving.