The ratings on 100% state-owned Gaz de France (GDF) reflect the company's robust regulated gas transmission and distribution activities in France, a benign regulatory environment, and a strong financial profile. GDF's higher-risk gas supply operations--involving sizeable long-term gas import commitments--benefit from a high share of residential clients, a diversified gas supply portfolio, and access to liquefied natural gas (LNG) transport and gas storage facilities in France. These strengths are offset by the strategic challenges posed by expansion in Europe and diversification into upstream gas, energy services, and electricity activities, in part through debt-financed acquisitions. The ratings are based on the group's stand-alone credit quality, including a limited negative impact expected from the upcoming pension reform. GDF supplied 60 billion cubic
