Fitch rates Transportadora de Gas del Sur notes B-

Fitch Ratings said it assigned a B- local and foreign currency rating to the new notes to be issued by Transportadora de Gas del Sur's (TGS) under its recently expired exchange offer. Fitch has also assigned an Argentine national scale rating of BBB+(arg) to the new notes.

The international ratings apply to approximately $910 million of debt that will be outstanding after the exchange is consummated and cash payments are made.

Under terms of the exchange, TGS will make a cash payment of 11% of the principal amount of outstanding debt at 100% of face value, as well as for past due interest. The remaining 89% of principal will be exchanged for two new tranches of debt, tranche A and tranche B. Tranche A will amortize over six years, with tranche B then beginning its amortization for three years (to be fully repaid by the end of the ninth year).

Interest on tranche A will begin at 5.3% in year one and increase to 7.5% by year six. Tranche B will begin at 7.0% in year one and increase to 10% for years eight and nine. Principal and interest will be paid quarterly. A cash sweep is also included to provide opportunities for debt prepayment of tranche A, initially, after meeting certain pre-established conditions.

Fitch said the exchange will result in a more manageable debt service profile and allow the company to refocus on its operating business, improving the company's credit profile over the medium to long term.

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