Moody’s rates Phoenix Natural Gas Baa2

Moody's Investors Service said it assigned a Baa2 corporate family rating to Phoenix Natural Gas Ltd. with a stable outlook.

Moody’s said the rating reflects: (a) Phoenix Natural Gas’ position as a monopoly distributor of natural gas in its license area; (b) the regulatory environment which follows that of Great Britain to a large extent, albeit with important differences; and (c) a modest capital expenditure program, even with the build out of the network in its recently expanded license area (to East Down).

However, the agency said the rating is constrained by the significant deferral of returns under the regulatory framework which, historically, resulted in poor cash flow generation – in 2016, the company’s funds from operations (FFO) interest coverage was 1.6 times while FFO/net debt was 3.4%

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