The credit quality of Gas Natural SDG S.A. (Gas Natural) is underpinned by the company's: Dominant position in the Spanish natural-gas supply markets and competitive supply portfolio; Ownership of almost all gas distribution networks in Spain, a source of substantial stable, regulated cash flows; Strategic diversification into electricity; and Strong finance profile. Continued strong market growth prospects also provide support for the ratings, with annual gas demand in Spain expected to double over the next five years. The ratings are constrained by: A liberal regulatory environment and expected increasing competition from electric utilities; Standard&Poor's belief that a greater share of Gas Natural's revenues could be generated from higher-risk foreign energy markets by 2005 than the 29% share currently
