Euler Hermes Rating has assigned a BB+ first-time issuer rating to Hungarian gas distributor TIGÁZ Földgázelosztó Zrt. At the same time the proposed 2019/2029 bond issuance was rated BB+ based on preliminary terms.
The BB+ first-time issuer rating is mainly driven by low to moderate business risks due to an established market regulation, a territory-based gas distribution licence, predictable distribution volumes/tariffs and largely efficient operations leading to robust sector benchmark scores. Consistently high financial debt levels (also including a notable proportion of shareholder funding) and a currently limited financial flexibility slightly weight on the issuer rating of TIGÁZ. The rating is expected to remain stable over the next twelve months.
The preliminary BB+ issuance rating was assigned to the proposed 2019/29 bond issue maturing in 2029 with a total expected issuance volume of between HUF 34bn and 50bn. The rating was derived from TIGÁZ’ current issuer credit rating (BB+), the bond’s proposed senior ranking, assumed reasonable creditor protections based on preliminary bond terms and adequate recovery expectations in a hypothetical bond default scenario.
TIGÁZ is the largest natural gas distribution system operator (DSO) in Hungary and distributes over 2 billion cubic metres of natural gas annually (c. 32% of total domestic consumption) to 1.2 million customers (c. 36% of all connected households in Hungary) via a 33,800 km long pipeline network (c. 42% of the national grid). TIGÁZ operations are concentrated in the North-Eastern regions of Hungary serving customers in 1,092 municipalities. At the end of 2018, TIGÁZ employed a workforce of 1,174 and had generated revenues totalling HUF 31,223 million based on regulated gas distribution tariffs.
Euler Hermes Rating GmbH (Euler Hermes Rating) was founded in 2001 as an independent European rating agency of the Euler Hermes and Allianz Group focusing on issuer and issuance ratings. Euler Hermes Rating is registered as a credit rating agency (CRA) in accordance with Regulation (EC) No 1060/2009 of the European Parliament and Council (as amended) and is considered as an external credit assessment institution (ECAI) by the European Banking Authority (EBA). Euler Hermes Rating is a subsidiary of Euler Hermes (ELE:PA), the world leader in trade credit insurance. The Moody’s group owns a minority stake in Euler Hermes Rating.
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