Fitch revises Scotland Gas, Southern Gas views downward

Fitch Ratings said it revised the outlooks for Southern Gas Networks plc and Scotland Gas Networks plc to negative from stable, while affirming the companies' long-term issuer default ratings at BBB.

The revisions reflect expectations of weaker post-maintenance interest cover ratios below the agency’s negative rating sensitivities, as a result of the upcoming price control, RIIO-GD2; from April 2021 to March 2026, that could lead to a significant decline in cash flow generation. It also reflects high uncertainty over the financial profile of the companies in RIIO-GD2, due to the sector-specific methodology decision published by the regulator Ofgem in late May 2019, Fitch said.

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