S&P puts Suez SA on positive watch

Standard & Poor's said it placed Suez SA's A-/A-2 corporate credit ratings on CreditWatch with positive implications following the announcement that Suez will merge with Gaz de France SA (AA-/A-1+) in an all-share transaction.

S&P said the positive CreditWatch action reflects the improvement in Suez's business and financial risk that would result from a merger with stronger, lower-risk Gaz de France.

From a business risk perspective, while Suez has substantial diversity and enjoys top-tier European market positions in energy, water and waste, S&P said it views Gaz de France's business risk as lower, given the large share of earnings it derives from its core regulated businesses in the benign regulatory environment of France.

From a financial risk perspective, while Suez's financial profile is adequate, S&P said the company nevertheless has weaker credit ratios than Gaz de France and, moreover, has announced an exceptional dividend of €1.25 billion to be paid out before the proposed merger.

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