Moody’s downgrades ONE Gas

Moody’s Investors Service said it downgraded ONE Gas, Inc.’s ratings, including its senior unsecured rating to A3 from A2. Moody’s revised the outlook for ONE Gas’ rating to negative from stable.

The severe weather required ONE Gas to spend about $2.2 billion to acquire natural gas. This figure represents about 30 times what ONE Gas typically spends in February, Moody’s said.

“ONE Gas’ credit has historically been supported by its business profile as a fully regulated natural gas local distribution company (LDC) operating in jurisdictions with regulatory mechanisms that support predictable revenue and cash flow generation. However, we do not expect existing gas recovery mechanisms to function as usual given the magnitude of costs incurred. While we expect the utility to be allowed some form of regulatory recovery, we anticipate a long timeline of recovery for approved amounts to reduce the customer bill impact,” the agency said in a press release.

ONE Gas secured a $2.5 billion, two-year unsecured term loan, scheduled to fund during the week of 22 March 2021, to help cover the gas costs.

The outlook reflects the possibility of a sustained deterioration in its credit profile, given an expectation that the timeframe over which ONE Gas is allowed to recover its natural gas costs is likely to be several years, Moody’s said.

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