Low-risk regulated gas distribution and transmission network operations in France, which are believed to account for the major share of Gaz de France's (GDF) cash flows; Favorable regulation, with liberalization of France's residential market (representing over a third of GDF's domestic sales volumes and a much higher share of cash flows) not foreseen before 2004-2005 at the earliest; and Strong financial profile and conservative expansion policy. Strategic and organizational challenges in the wake of the continued liberalization of Europe's energy markets; and Uncertainty related to GDF's potential future partial privatization--including its impact on the company's financial structure and strategy--and to the expected transfer to the state of a major part of GDF's large unfunded pension liabilities. The ratings reflect GDF's
