Telefonica de Espana SA’s plans to invest heavily in Peru will not be a problem, Standard & Poor’s Corp has decided, confirming the A-1+ short-term debt rating for the Barcelona company and its subsidiary Telefonica North America Inc. The confirmation followed an evaluation of the financial impact of Telefonica’s 85% stake in the consortium that is to buy 35% of those two Peruvian phone companies. The ratings agency says that it believes the expenditure involved and other costs can be met by the available cash flow, adding that Telefonica’s rating reflects its current monopoly in basic telecommunications services, its favourable outlook and strong public support. It also judges that despite the negative effect on earnings of the Spanish recession, the financial situation of the group had improved in 1993. This is due to the growing contribution of international operations, the advances made in restraining costs and a more conservative investment programme allowing a greater degree of self-financing and a modest reduction in debt, Standard & Poor’s concluded.