Transportadora de Gas del Sur

Overview Key strengths Key risks Low leverage with only a $500 million bullet bond due May 2025, and over $400 million in cash and liquid investments as of March 31, 2023 Limited access to foreign currency given policy controls in Argentina (CCC-/Negative/C). Some business diversification as most revenue is from the unregulated, dollar-denominated, natural gas liquids (NGL) segment Unsupportive and volatile regulatory framework, given 25% of revenue comes from the regulated natural gas transportation business, which has discretionary tariff adjustments amid high inflation TGS' operations are only located in Argentina, exposing the company to worsening business conditions and exchange rates, spiking interest rates, and certain restrictions on accessing or transferring funds from abroad, which could compromise its ability to service

...Argentina's economic and regulatory volatility continues to limit the credit quality of Transportadora de Gas del Sur (TGS). TGS' operations are only located in Argentina, exposing the company to worsening business conditions and exchange rates, spiking interest rates, and certain restrictions on accessing or transferring funds from abroad, which could compromise its ability to service its foreign-currency financial obligations. We cap the ratings on TGS at the level of our transfer and convertibility (T&C) assessment of Argentina, reflecting our perception of the risk of the sovereign interfering with the ability of domestic companies to access, convert, and transfer money abroad, which is essential for companies to service their financial obligations, particularly U.S. dollars (see "Argentina Long- Term Foreign Currency Rating Lowered To '###-' On Heightened Vulnerability; Outlook Negative," March 29, 2023.) We expect TGS' leverage to remain low. TGS has approximately $435 million in...

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