Research Update: Spain-Based Utility Gas Natural Affirmed At 'BBB/A-2' Despite Weak 2017 Results And Shareholding Change; Outlook Stable

Gas Natural's 2017 results were below our estimates and we note uncertainty stemming from the regulatory resets in Spain for electricity in December 2019 and for gas in December 2020, applicable to 2020 for electricity and 2021 for gas. Repsol's recent sell of its 20% stake in Gas Natural to private equity group CVC could create more uncertainty around the company's strategy and shareholder remuneration. Gas Natural remains well positioned thanks to the significant contribution from network activities in Spain and Latin America, as well as its large generation and supply activities. We are affirming our 'BBB/A-2' ratings on Gas Natural. The stable outlook on Gas Natural balances our expectation that the company will maintain funds from operations to debt

...+ Gas Natural's 2017 results were below our estimates and we note uncertainty stemming from the regulatory resets in Spain for electricity in December 2019 and for gas in December 2020, applicable to 2020 for electricity and 2021 for gas. + Repsol's recent sell of its 20% stake in Gas Natural to private equity group CVC could create more uncertainty around the company's strategy and shareholder remuneration. + Gas Natural remains well positioned thanks to the significant contribution from network activities in Spain and Latin America, as well as its large generation and supply activities. + We are affirming our '###/A-2' ratings on Gas Natural. + The stable outlook on Gas Natural balances our expectation that the company will maintain funds from operations to debt above 18% over 2018-2019 against our observation that rating headroom has reduced and the uncertainty on Gas Natural's future strategy since the shareholding change....

Research Update