The ratings on France-based environmental services group Veolia Environnement S.A. (VE) are underpinned by its leading positions worldwide in water utility and waste management activities, and its strong European presence in energy services. VE benefits from diversified and recurring revenues under long-term municipal concessions and shorter term industrial outsourcing contracts. The ratings are also supported by VE's recent substantial shift toward a less capital-intensive and hence more credit-protective strategy. As a result of its focus on operating service contracts rather than on owning assets, VE is exposed to a degree of price competition at renewal time and renewal risk at contract maturity. VE is moreover not immune to the current economic downturn: Given the slowdown that has affected both its
