Research Update: Galp Gas Natural Distribuicao Affirmed At 'BBB-' On Planned Acquisition By Allianz Capital Partners; Outlook Stable

Galp Energia S.A. on Oct. 26 announced its agreement to sell 75% of Galp Gas Natural Distribuicao (GGND) to infrastructure fund Allianz Capital Partners, which we expect to close in the first quarter of 2021 without significant hurdles in the approval process. We expect GGND will continue to meet its financial obligations under its new ownership and will continue to generate stable regulated cash flows in line with our threshold for the current rating level. We are therefore affirming our 'BBB-' issuer credit rating on GGND and our 'BBB-' issue rating on GGND's senior unsecured debt. Our stable outlook on GGND reflects our expectation that GGND will maintain adjusted funds from operations (FFO) to debt at about 10%, despite potential

...- Galp Energia S.A. on Oct. 26 announced its agreement to sell 75% of Galp Gas Natural Distribuicao (GGND) to infrastructure fund Allianz Capital Partners, which we expect to close in the first quarter of 2021 without significant hurdles in the approval process. - We expect GGND will continue to meet its financial obligations under its new ownership and will continue to generate stable regulated cash flows in line with our threshold for the current rating level. - We are therefore affirming our '###-' issuer credit rating on GGND and our '###-' issue rating on GGND's senior unsecured debt. - Our stable outlook on GGND reflects our expectation that GGND will maintain adjusted funds from operations (FFO) to debt at about 10%, despite potential extraordinary effects from the pandemic, with any negative tariff deviation in 2020 being redeemed in 2022-2023....

Research Update