S&P rates Gas Natural hybrids BB+

Standard & Poor’s said it assigned a BB+ long-term issue rating to the proposed long-dated, optionally deferrable, subordinated hybrid capital notes to be issued by Gas Natural Fenosa Finance BV, a subsidiary of Gas Natural SDG SA, Spain’s gas and electricity utility.

Gas Natural SDG will guarantee the notes, S&P said.

The proposed notes are expected to have intermediate equity content until their first call date because they meet the hybrid capital criteria in terms of their subordination, permanence and optional deferability during this period, the agency said.

The proceeds will be used for general corporate purposes, including the redemption of existing securities.

Replacing securities viewed as debt with notes treated as 50% equity could strengthen Gas Natural’s balance sheet and support its credit profile, S&P said.

Gas Natural is committed to maintaining hybrid capital as a permanent feature in its capital structure, the agency said.

The proposed issuance has no impact on the rating of the €1 billion of securities that Gas Natural Fenosa issued in 2014, S&P added.

The issue rating of BB+ on the new notes was notched down from the BBB long-term corporate credit rating on the guarantor, Gas Natural SDG, the agency said.

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