Research Update: Portuguese Electricity And Gas Network Operator REN Upgraded To 'BBB/A-2'; Outlook Stable

REN's acquisition of EDP Gas Distribuiçao and a 42.5% stake in Chilean gas pipeline Electrogas last year have improved its diversification and strengthened its competitive position. REN financed these acquisitions with a €250 million capital increase and €300 million bond issuance. We expect REN will continue to demonstrate a relatively conservative financial policy. We expect the overall less supportive framework for electricity transmission in Portugal in 2018-2020 will be mitigated by improving operating efficiency, active liability management, and synergies from acquisitions. We are therefore raising our issuer credit ratings on REN to 'BBB/A-2' from 'BBB-/A-3'. The stable outlook reflects our view that the company's credit ratios will improve moderately over 2018-2020, thanks to contributions from recently acquired assets and positive

...+ REN's acquisition of EDP Gas Distribuitao and a 42.5% stake in Chilean gas pipeline Electrogas last year have improved its diversification and strengthened its competitive position. + REN financed these acquisitions with a 250 million capital increase and 300 million bond issuance. We expect REN will continue to demonstrate a relatively conservative financial policy. + We expect the overall less supportive framework for electricity transmission in Portugal in 2018-2020 will be mitigated by improving operating efficiency, active liability management, and synergies from acquisitions. + We are therefore raising our issuer credit ratings on REN to '###/A-2' from '###-/A-3'. + The stable outlook reflects our view that the company's credit ratios will improve moderately over 2018-2020, thanks to contributions from recently acquired assets and positive cash flow generation translating in adjusted funds from operations (FFO) to debt of about 13% on average....

Research Update