Moody's boosts AGZ, notes

Moody's Investors Service said it upgraded the corporate family rating of AGZ Holding (Antargaz) to Ba2 from Ba3 as well as AGZ Finance's €165 million senior notes due 2011 to B1 from B2.

The agency said the rating on the notes is notched to reflect the fact that they are contractually subordinated to the existing more senior secured bank loans and potential other debt within the group.

The outlook is stable.

Moody's said that the upgrade reflected the recent track record of AGZ Holding's main subsidiary, Antargaz, as a stand-alone entity since its spin-off from Elf Aquitaine, as well as ongoing maintenance of a solid financial profile, which Moody's expects to be maintained going forward.

The upgrade is also assisted by the presence of UGI Corp. (not rated) as a shareholder and the relatively conservative financial policy the U.S. gas and electric utility has been implementing since it acquired the totality of Antargaz's capital in March 2004, the agency added.

At the same time, the Antargaz group's ratings remain constrained by its modest size, presence in the stagnating and mature French LPG market which offers little growth opportunity, as well as exposure to foreign exchange risk and temperature fluctuations, which create volatility in cash flow generation, Moody's said.

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