Moody's rates TGS notes B1

Moody's Latin America said it assigned a B1 global foreign-currency rating to Transportadora de Gas del Sur SA's $500 million notes due 2017. An Aa2.ar national scale rating has already been assigned to the notes.

The outlook is stable.

Proceeds from the notes, along with cash balances, will be used to redeem most of TGS' outstanding debt, which totals roughly $630 million.

The agency said the ratings are based on TGS' very solid position and long-established operations in the gas transportation and gas processing business in Argentina; the company's credit and debt protection metrics, which Moody's believes are consistent with more highly rated diversified natural gas transportation companies; and a significant reduction in debt from more than $900 million at the end of 2004 to the $500 million total debt TGS will have after the planned notes issuance. Moody's attributed the debt reduction to strong internally generated cash in the context of very favorable international prices for natural gas liquids in the unregulated segment, despite frozen tariffs in the regulated segment.

However, the ratings are hindered by the company's continued exposure to dollar-denominated debt, regulatory uncertainty and volatility in international natural gas liquids prices, according to the agency.

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