Moody's lowers PGNiG view to negative

Moody's Investors Service said it changed to negative from stable the outlook on the Baa1 issuer rating of Polskie Gornictwo Naftowe i Gazownictwo SA (PGNiG).

The outlook revision reflects the execution risk associated with the company's plans to expand in the exploration and production segment, the related funding requirement and the higher business risk profile of these activities compared with the group's core regulated activities in the context of its earnings volatility, Moody's said.

The agency noted the historical strength of the company's financial metrics, but also the volatility of the group's earnings.

This volatility results primarily from the delay in reflecting changed crude oil prices and exchange rates under long-term take-or-pay gas contracts in tariffs. This was not a major rating constraint in the past as PGNiG had a very strong financial profile and low indebtedness.

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