Fitch affirms rating of Transgaz at BBB- and its stable outlook
International rating agency Fitch Ratings has affirmed its rating for the long-term debt (IDR) of Romanian natural gas transport company Transgaz (BVB: TGN) at BBB- with a stable outlook.
The affirmation is explained by the company's solid business profile as a concessionaire and operator of the gas transmission network in Romania and by the rating agency's expectation of regulatory continuity into the new regulatory period from October 2024.
This is in the short term offset by a transmission tariff freeze, increased dividend distribution, growing investment ambitions, and gradual contraction of its "north-to-south" gas transit business in the medium term, Fitch argues.
At the same time, Fitch views the regulatory framework in Romania as less mature than many western European regimes, with considerable earnings and operating cash flow volatility.
The stable outlook reflects the rating agency's expectations that funds from operations (FFO) net leverage will be structurally maintained below the negative rating sensitivity of 4.7x.
Fitch continues to assess Transgaz's standalone credit profile (SCP) at BBB-, which places the company's long-term IDR at the same level as the Romanian sovereign's (BBB-/negative).