Moody's cuts HSE Netz bonds to Baa3

Moody's Investors Service said it downgraded the rating on the €320 million 6 1/8% senior secured bonds issued by HSE Netz AG to Baa3 from Baa2.

The outlook is stable.

"Today's rating action reflects Moody's updated view that the consolidated credit quality of the HSE AG group, to which HSE Netz belongs, continues to act as a constraint on HSE Netz's rating," Stefanie Voelz, Moody's vice president and lead analyst for HSE Netz, said in a news release.

"The current Baa3 rating reflects (a) Moody's view that the long-term consolidated credit quality of the HSE AG group would be in line with a low investment-grade rating over the medium-term once shorter term challenges are addressed through the strategic repositioning of the group and an ongoing cost savings program; (b) HSE Netz's stronger stand-alone financial profile; and (c) some level of protection provided to HSE Netz's creditors by the covenant package embedded in the terms and conditions of the bonds."

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