S&P turns ENN Natural view to positive

S&P said it revised its outlook for ENN Natural Gas Co. (ENN-NG) to positive from stable and affirmed its BBB- issuer rating.

“We expect the divestment of the coal business to benefit ENN-NG's credit profile, mostly its leverage position. The company's sale of its 100%-owned coal mining business will bring in a sizeable Chinese renminbi (RMB) 10 billion in net cash proceeds after tax. This is equivalent to 26% of the group's gross debt and 64% of stand-alone gross debt–excluding its gas distributor subsidiary ENN Energy Holdings Ltd. (ENN Energy)–as of mid-2023. Assuming the company uses a large portion of the proceeds to reduce debt, we believe ENN-NG's ratio of funds from operations (FFO) to debt could rise sustainably above 55% over 2023-2025, a threshold we would consider a rating upside.

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