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TEXT-Fitch assigns Enagas' bond 'A- (exp)' rating
September 26, 2012 / 4:16 PM / 5 years ago

TEXT-Fitch assigns Enagas' bond 'A- (exp)' rating

Sept 26 - Fitch Ratings has assigned Enagas Financiaciones, S.A.U.'s EUR500m
five-year bond with a coupon of 4.25% a 'A-(EXP)' expected foreign currency
senior unsecured rating. The bond is issued under a new EUR2bn euro medium-term
note programme (EMTN). Notes under the programme will be guaranteed by Enagas,
S.A. ('A-'/Negative) and other material subsidiaries.

The final bond and programme ratings are contingent upon the receipt of final 
documentation conforming materially to information already received

Proceeds from the notes issue will be used for general corporate purposes, 
including the extension of the group's debt maturity profile. The bonds will 
constitute senior unsecured obligations of Enagas Financiaciones, S.A.U. The 
obligations of Enagas Financiaciones, S.A.U. under the EMTN programme will be 
guaranteed on a joint and several basis by Enagas, S.A. and Enagas Transportes, 
S.A. and will have an equal priority ranking with all other unsecured 
obligations of them. 

Fitch does not differentiate between the rating of Enagas' existing and new 
notes, but acknowledges that holders of the latter appear to have a slight 
disadvantage as, under Spanish law, interest on the notes accrued but unpaid as 
at the commencement of any insolvency proceeding relating to the issuer will 
constitute subordinated obligations of the issuer ranking below its other 
unsecured and unsubordinated obligations. From a ratings perspective, this 
provision could adversely affect recovery prospects upon an insolvency scenario 
rather than the existing rating. 

Fitch downgraded Enagas' Long-term IDR to 'A-' from 'A+' with a Negative Outlook
in June 2012. This rating action followed the downgrade of Spain's sovereign IDR
to 'BBB'/Negative. Fitch had previously articulated its parameters for corporate
rating actions, should eurozone sovereign ratings fall further (see "The Future 
of the Eurozone - The Impact on Corporates - Reviewing Corporate Linkages and 
Fitch's Sovereign Rating Expectations" dated 16 May 2012 at 

Generally, both corporate IDRs and senior unsecured debt ratings within the 
eurozone may exceed the domestic sovereign rating, subject to (i) limited 
cushion for primarily domestic issuers and (ii) the Country Ceiling, currently 
'AAA' for all eurozone corporate issuers other than those in Greece. The number 
of notches by which a corporate's IDR can exceed that of its sovereign largely 
depends on the degree of international asset and cash flow diversification.

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