Moody's downgrades PGNiG

Moody's Investors Service said it downgraded the issuer rating of Polskie Gornictwo Naftowe i Gazownictwo SA and the senior debt rating of guaranteed subsidiary PGNiG Finance AB (publ) to Baa3 from Baa2. The outlook is stable.

The agency said the downgrade reflects PGNiG's evolving business risk profile in light of the increasing share of the exploration and production activities as well as challenges stemming from the evolution of the Polish gas market given the company's take-or-pay contracts and the price that it has to pay.

Overall, the agency said PGNiG's Baa3 rating is underpinned by the group's position as a large, vertically integrated utility provider; its dominant position in the Polish natural gas market; the sizable contribution of fairly stable, regulated cash flows stemming from distribution and storage activities; and its currently strong financial and liquidity profile.

However, the rating is constrained by the group's earnings volatility; high dependence on gas imports, mainly from Russia's Gazprom; its take-or-pay obligations under the long-term gas supply contracts; and rising risks to cash flows due to the company's increasing exposure to commodity price and output risk from gas and oil investments, Moody’s said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.