The 'AA-/A-1+' corporate credit ratings on French gas utility Gaz de France S.A. (GDF) were placed on CreditWatch with negative implications on Feb. 27, 2006, following the announcement of a proposed all-share merger between GDF and Franco-Belgian multi-utility Suez S.A. (A-/Watch Pos/A-2). The negative CreditWatch action on GDF reflects the dilutive impact the merger would have from a credit standpoint--in terms of both business and financial risk--given Suez's weaker business mix and financial profile, despite the link-up addressing the strategic issues faced by GDF, especially with respect to its plans to expand further abroad and in electricity. From a business risk perspective, while Suez is larger and more diversified, Standard&Poor's Ratings Services views GDF's business risk as lower,
