Research Update: Portuguese Gas Distributor Floene Energias Affirmed At 'BBB-' On Refinancing And Regulatory Decisions; Outlook Stable

The published remuneration and regulatory framework for Floene Energias S.A.'s gas distribution activities from Jan. 1, 2024, indicates broad continuity with the current framework. We also anticipate that the company will refinance its €420 million bond, due in September 2023, in good time, and that it will benefit from the likely withdrawal of Portugal's special energy tax. That said, capex is likely to be lower than expected and prospects for gas remain uncertain, suggesting that the group will find it difficult to achieve growth. We therefore expect Floene to reduce its leverage before the regulatory reset in 2028, largely by cutting dividends. Floene has demonstrated its commitment to preserving an investment-grade rating and will have time to adjust its financial

...- The published remuneration and regulatory framework for Floene Energias S.A.'s gas distribution activities from Jan. 1, 2024, indicates broad continuity with the current framework. We also anticipate that the company will refinance its 420 million bond, due in September 2023, in good time, and that it will benefit from the likely withdrawal of Portugal's special energy tax. - That said, capex is likely to be lower than expected and prospects for gas remain uncertain, suggesting that the group will find it difficult to achieve growth. We therefore expect Floene to reduce its leverage before the regulatory reset in 2028, largely by cutting dividends. - Floene has demonstrated its commitment to preserving an investment-grade rating and will have time to adjust its financial policy before the 2028-2031 regulatory period begins. We therefore affirmed our '###-' issuer credit rating on Floene and our '###-' issue ratings on its debt. - The stable outlook indicates that we expect the group to...

Research Update