Moody's reviews Metrogas

Moody's Investors Service said it placed under review for downgrade the Caa1 and Ba1.ar ratings on Metrogas' dollar-denominated bonds.

The action was prompted by an increased concern over Metrogas' ability to meet principal amortization of its dollar debt that is scheduled to begin in the second quarter of 2010 if the previously approved tariff increase is not implemented and a further devaluation of the peso occurs, according to the agency.

"The rating action has not been driven by GASA's recent filing for court protection but by the need to evaluatate Metrogas' ability to begin making required principal payments on its debt in 2010 in light of the current uncertainty with implementing the previously approved tariff increase," Daniela Cuan, a senior analyst at Moody's, said in a statement.

The Caa1 rating reflects Metrogas' tight liquidity and expected weak cash generation as well as the current regulatory risk profile for the gas distribution sector, the agency said.

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