Moody’s drops Cadent to Baa1

Moody's Investors Service said it downgraded the ratings of Cadent Gas Ltd. (formerly National Grid Gas Distribution Ltd.) and Cadent Finance plc (formerly National Grid Gas Finance plc) to Baa1 from A3.

The outlook is stable.

Moody’s said the downgrades, which follow National Grid's sale of a controlling stake in Cadent to a consortium of infrastructure investors in March 2017 and subsequent decisions on the group's financing structure, reflect the higher leverage of the group as a whole, which the agency regards as a constraint on the credit quality of the operating company.

This action concludes the reviews initiated when Moody's assigned ratings to Cadent and Cadent Finance in September 2016.

“The Baa1 ratings reflect the very low business risk of gas distribution networks, which in Great Britain operate under a well-established and transparent regulatory framework, cash flows which are expected to be stable and predictable, moderate gearing, and a cost of debt significantly below the regulatory allowance,” the agency said in a news release.

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