Moody's rates Gas Natural hybrids Ba1

Moody's Investors Service said it assigned a provisional Ba1 long-term rating to the proposed nine-year non-callable securities (the "hybrid") to be issued by Gas Natural Fenosa Finance BV and guaranteed on a subordinated basis by Gas Natural SDG, SA (Baa2). The outlook is stable.

The agency said Gas Natural's Baa2 senior rating reflects the group's balanced asset portfolio, which mitigates earnings volatility, and takes into the group's recent acquisition of 96.72% of the share capital of the Chilean energy firm Compania General de Electricidad, SA, which Moody's regards as a good strategic fit for the group.

The rating also factors in the group's moderately increased leverage following the acquisition (pro forma net debt/EBITDA of 3.2x); the possibility that the group may consider pursuing future investment opportunities in Chile to augment its new growth platform, which could absorb free cash flow and delay further deleveraging; a still challenging domestic operating environment including a weak evolution of energy demand; and the risks and financial burdens arising from recent reforms aimed at eliminating tariff deficits in the Spanish electricity and gas systems.

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