Monopoly electricity and gas transmission operator in Portugal. Predictable earnings from regulated activities. Supportive regulatory regime, providing visibility over a three-year regulatory period. Mature business characterized by lack of dynamism in the regulated asset base. Continued fiscal pressure on energy companies in Portugal. Appetite for international expansion in potentially less-supportive jurisdictions. Credit metrics expected to improve due to stable earnings, cost discipline, stable dividends, and declining capital expenditure (capex). Cash flow volatility linked to a two-year time lag in the tariff mechanism. The positive outlook on Portuguese transmission grid REN-Redes Energéticas Nacionais (REN) reflects our expectations of continuous improvement in the company's credit ratios so that adjusted funds from operations (FFO) to debt sustainably exceeds 13% after hovering around 11%-12%
