Research Update: Transportadora de Gas del Sur S.A. Stand-Alone Credit Profile Revised Downwards To 'b'; 'CCC+' Ratings Affirmed

In our view, TGS' regulatory risk has increased, considering that the last two tariff increases were delayed (in October 2019 and April 2020) and the recent announcement of the extension of the period to revise the Integral Tariff Review (ITR). We've adjusted our 2020 base-case scenario to reflect higher uncertainty about TGS' cash flows. We don't apply any pass through of inflation costs to rate increases for 2020 and afterwards, because we view them as discretional. We also revised our expectations of natural gas and natural gas liquids (NGL) tariffs from 2020 on, considering lower-than-expected spot prices of the latter. On July 31, 2020, S&P Global Ratings affirmed its 'CCC+' foreign and local currency ratings on Argentina-based natural gas transportation

...- In our view, TGS' regulatory risk has increased, considering that the last two tariff increases were delayed (in October 2019 and April 2020) and the recent announcement of the extension of the period to revise the Integral Tariff Review (ITR). - We've adjusted our 2020 base-case scenario to reflect higher uncertainty about TGS' cash flows. We don't apply any pass through of inflation costs to rate increases for 2020 and afterwards, because we view them as discretional. We also revised our expectations of natural gas and natural gas liquids (NGL) tariffs from 2020 on, considering lower-than-expected spot prices of the latter. - On July 31, 2020, S&P Global Ratings affirmed its '###+' foreign and local currency ratings on Argentina-based natural gas transportation company Transportadora de Gas del Sur S.A. (TGS). At the same time, we affirmed our '###+' rating on the company's senior unsecured notes for $500 million due 2025. In addition, we revised downwards its stand-alone credit profile...

Research Update