Transportadora de Gas del Sur S.A. (TGS)

The stable outlook reflects TGS' affordable debt maturities in the next 12 months. It also mirrors the outlook on the sovereign. In the next 12 months, we could lower our ratings on TGS or revise the outlook to negative upon a similar action on the sovereign, because the rating on the latter caps those on the company. Additionally, we could lower the ratings if transfer and convertibility (T&C) restrictions are extended or tightened, which could limit companies' ability to service debt and/or interest payments. Additionally, we could revise the company's stand-alone credit profile (SACP) downward if funds from operations (FFO) to debt is consistently below 12%. In the next 12 months, we could raise our ratings on TGS if we

...Argentina's economic and regulatory volatility continues to limit the company's credit quality. Our '###+' rating on TGS mainly reflects that its operations are located in Argentina (###+/Stable/C), exposing the company to worsening business conditions and exchange rates, spiking interest rates, and some restrictions on accessing and/or transferring funds from abroad. These factors could compromise the company's ability to service its foreign currency financial obligations. On Sept. 15, 2020, Argentina's central bank tightened regulations on accessing foreign exchange (FX) to protect the country's international reserves. This regulation is outstanding through December 2021. Although the new regulation doesn't currently apply to TGS, the company is exposed to currency fluctuations, and we think it's uncertain whether or not the government could extend FX restrictions, which we think could erode business conditions in the next 12 months. TGS's comfortable debt maturity profile sustains its...

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