The ratings on Gas Natural SDG, S.A., Spain's principal gas utility, are based on its low-risk regulated domestic gas distribution activities, complemented by a strong competitive position in gas supply in Spain, substantial financial flexibility, and a moderate financial policy. These strengths are offset by the group's increasing share of nonregulated revenues, together with a growth-oriented strategy, involving diversification into Latin-America and likely acquisitions in Europe. After the disposal and deconsolidation of gas transmission operator, Enagas S.A. (A+/Stable/A-1), at the end of June 2002, stable Spanish gas distribution and supply contributed to approximately 60% of group EBITDA over the 12 months to June 30, 2003. The contribution of distribution and supply is forecast to fall to approximately 40% by 2007,
