DBRS Assigns AA (low) (sf) Rating to Class A1 Notes issued by TAGUS – STC, S.A. (EnergyOn No. 1)

DBRS, Inc. (“DBRS”) has today assigned a rating of AA (low) (sf) to the €1,180,390,882.12 Class A1 Asset Backed Floating Rate Securitisation Notes due 2025 (the “Rated Securities”), issued by TAGUS – SOCIEDADE DE TITULARIZAÇÃO DE CRÉDITOS, S.A. (the “Issuer”). The Rated Securities were issued on 6 March 2009 with an initial amount of €1,253,450,000.00. The transaction is collateralised by Credit Rights (a specific component of an electricity tariff payable by all the consumers of electricity in mainland Portugal) that are owned by the Issuer.

The principle methodology is Portuguese Electricity Tariff, which includes the following analytical considerations:

• A satisfactory legal and regulatory support for the transaction which ensures the timely interest and full payment of principal of the Rated Securities including consideration of:

-- The Portuguese Electricity System legal and regulatory framework;
-- Ownership of the Credit Rights related to the collection of the specific tariff component;
-- True sale of the Credit Rights;
-- Validity and enforceability of the Credit Rights; and
-- Collection procedures related to the Credit Rights;

• The transaction parties’ capabilities and financial strength to perform their respective duties including:

-- Review of the utility performing the duties of the Distribution Grid Operator (“DGO”);
-- Possible liquidity constraints and structural mitigants including the swap agreement and the available cash reserve;
-- Timing considerations related to reinstatement of payments following failure by the current DGO and the structural mitigants provided by the swap agreement;
-- Absence of commingling and set-off risks; and
-- Absence of by-pass risks related to the electricity customers that are required to pay amounts related to the Credit Rights;

• Assessment of Portugal’s sovereign risk and respective mitigants including:

-- Sovereign risk and the potential impact on enforcement of the Credit Rights and related cash flows supporting the Rated Securities; and
-- The importance of the electricity system to Portugal and its citizens; and

• Review of the transaction’s legal structure including consideration of the following:

-- Consolidation risk and bankruptcy remoteness of the special purpose vehicle holding the Credit Rights;
-- The presence of satisfactory legal opinions supporting the legal and regulatory framework supporting the Rated Securities; and
-- Consistency with the DBRS Legal Criteria for European Structured Finance Transactions.

Based upon the aforementioned analytical considerations, DBRS concluded that the Rated Securities be limited to a three notch increase above the sovereign rating of Portugal.

The principal methodology is Portuguese Electricity Tariff as outlined above.

The sources of information used for this rating include parties involved in the rating, including but not limited to the Arrangers. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

This is the first DBRS rating on this financial instrument.

For additional information on DBRS European Portuguese Electricity Tariff, please see linking document, located at http://www.dbrs.com/research/239025.

Lead Analyst: Chuck Weilamann
Rating Committee Chair: Claire Mezzanotte
Initial Rating Date: 8 April 2011

Note:
All figures are in Euro unless otherwise noted.