Standard & Poor's (S&P) analysts said that Enron did not disclose the debt-like nature of certain structured finance transactions and their effect on Enron's financial situation at today's hearing before the Senate Permanent Sub-committee on Investigations.
S&P managing director Ronald M. Barone said: "Enron did not, despite our repeated requests for complete, timely and reliable information, disclose any information revealing a link between the prepaid forward transactions and the swap transactions.
"Similarly, Enron provided no indication that these transactions were in any way related to any of (its)
Yosemite or Credit Linked Notes transactions despite an explicit inquiry by Standard & Poor's regarding the effect, if any, of these structured finance transactions on Enron's financial situation.
"If such links did, in fact, exist and Enron's use of prepaid forward transactions and swap transactions were, in reality, an alternate form of financing giving rise to debt-like obligations, such information would have likely had a material impact on our rating analysis.
"The revelation of the debt-like nature of these transactions would also have had a substantial effect on our qualitative analysis of Enron's credit," he said.
Barone emphasised that on no occasion did Standard & Poor's advise, consult or suggest to Enron that it should employ these prepaid forward transactions and/or swap transactions or any other means, to increase cash flow.
