Moody's rates Suez hybrids Baa2

Moody's Investors Service said it assigned a provisional Baa2 long-term rating to Suez Environnement Co.’s proposed issuance of euro-denominated undated deeply subordinated fixed-rate resettable notes. The outlook is stable.

Suez Environnement's A3/Prime-2 ratings are based on Moody's assessment that the company has a relatively low business risk profile overall. The agency said this factors in that it operates in the lower-risk water sector and in waste, both of which benefit from positive underlying structural growth due to increased urbanization and rising environmental concerns, and that its operating cash flows are underpinned by long-term contracts to deliver essential services, mainly to relatively low-risk counterparties in the public sector.

These positive underlying trends are partly offset by the negative effect of environmental concerns on water consumption and a flat outlook for waste volume growth in Western countries, Moody’s said.

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