Moody’s affirms Gas Natural

Moody's Investors Service said it affirmed the Baa2/P-2 senior unsecured issuer ratings of Gas Natural SDG, SA and the ratings of its guaranteed subsidiaries.

The agency also affirmed the provisional Baa2/Baa2/Prime-2 ratings of Gas Natural Fenosa Finance BV, as well as the Baa2 and provisional Baa2 ratings of Gas Natural Capital Markets, SA. The Ba1 junior subordinated (hybrid) rating of Gas Natural Fenosa Finance was also affirmed.

The outlook remains stable.

The affirmations follow the company’s announcement on Aug. 3 that it will sell a 20% stake in its Spanish gas distribution subsidiary, GNDB, to Alliance Capital Partners, and Canada Pension Plan Investment Board for €1.5 billion.

The agency said the actions reflect the expectation that the transaction will not materially change the risk profile of Gas Natural Fenosa, which will continue to generate around 60% of its EBITDA from network activities and around 50% of EBITDA from Spain, although these contributions could weaken modestly on a pro-rata basis (by around 2%) taking into account minority interests.

“The outlook is stable reflecting our expectation of financial ratios consistent with guidance for the Baa2 rating of funds from operations/net debt of high teens to low twenties in percentage terms, and retained cash flow/net debt which, while it is expected to dip in 2017, should recover towards the low teens by 2020,” Moody’s said in a news release.

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