The ratings reflect Gaz de France's (GDF) strong domestic market position, vertically integrated structure (including supplies, transmission, distribution, and storage), and robust cash generation. The company recently announced its intention to triple its acquisitions over the next three years (to €860 million annually), which will significantly increase debt. Nevertheless, GDF's financial policies--set out in its recent multiyear operating agreement (2001-2003) with its 100% shareholder, the Republic of France (AAA/Stable/A-1+)--remain sound, with a ratio of net debt to capitalization under 44%. The ratings incorporate a very small degree of sovereign support, deriving from GDF's key role in France's energy policy and from the expectation that the state will retain at least a 51% stake in the company over the medium term.
