The ratings on Spanish utility Gas Natural SDG S.A. (Gas Natural) reflect Standard&Poor's Ratings Services' view of its "significant" financial risk profile and "strong" business risk profile. Gas Natural's strong business risk profile is supported by its position as Spain's incumbent gas utility, with competitive positions in the electricity sector following the acquisition of Union Fenosa S.A. (not rated) and its significant share of low-risk regulated gas and electricity activities in Spain and Latin America. However, the strength of Gas Natural's business risk profile is mitigated by the company's exposure to liberalized electricity and gas markets, particularly the Spanish market. An unfavorable economic outlook for the Spanish market adds to our expectation of higher regulatory risks that are
