S&P downgrades Centrica

Standard & Poor’s said it lowered the long-term corporate issuer credit and issue ratings on Centrica plc to BBB+ from A-.

The agency also said it lowered the rating on Centrica’s junior subordinated notes to BBB- from BBB and affirmed its A-2 short-term credit rating.

The outlook is stable.

The downgrades reflect that despite the constructive outcome of its strategic review, Centrica’s credit ratios will fall short of guidelines for a modest financial risk profile, S&P said.

The operating environment also is expected to remain tough because of subdued power and gas prices in the United Kingdom, the agency said, and low commodity prices in the upstream business.

Forecasted credit ratios in 2015 are expected to remain broadly flat as Centrica uses cost efficiencies and positive free operating cash flows to reduce its debt, S&P said.

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