Moody’s rates Zhongyu Gas, notes Ba3

Moody’s Investors Service said it assigned Ba3 corporate family and senior unsecured ratings to Zhongyu Gas Holdings Ltd. and its planned dollar-denominated notes.

"Zhongyu Gas' Ba3 corporate family rating (CFR) reflects its (1) regional market position in China's city-gas distribution sector, especially in Henan and Hebei provinces, and (2) strong track record of gas sales growth supported by favorable industry policy," said Ralph Ng, a Moody's vice president and senior analyst, in a press release.

However, the company’s strengths are offset by the risks with China's evolving regulatory framework for gas distributors, its reliance on its less recurring gas connection business and the pressure on its credit metrics from heavy planned capital spending over the next two years, the agency noted.

The outlook is stable. Zhongyu Gas' outlook reflects the expectation its credit profile and regulatory environment will remain broadly stable over the next 12-18 months, Moody’s said.

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