GEISHA KOW­LESSAR-ALON­ZO

geisha.kow­lessar@guardian.co.tt

Moody’s In­vestors Ser­vice (Moody’s) has down­grad­ed the Na­tion­al Gas Com­pa­ny’s (NGC) rat­ing to Ba2 from Ba1.

Si­mul­ta­ne­ous­ly, Moody’s has low­ered the com­pa­ny’s base­line cred­it as­sess­ment (BCA) to ba2 from ba1.

The out­look on all rat­ings is now sta­ble.

The sta­ble out­look on NGC’s Ba2 rat­ings is based on Moody’s view that the com­pa­ny will sus­tain its cred­it

met­rics sta­ble in the next 12 to 18 months.

These rat­ing ac­tions fol­low Moody’s an­nounce­ment on No­vem­ber 19, 2021 that it had down­grad­ed the Gov­ern­ment’s rat­ing to Ba2 from Ba1 and changed the out­look to sta­ble from neg­a­tive, the rat­ing agency said in a state­ment.

“The changes in NGC’s rat­ing and out­look were trig­gered pri­mar­i­ly by the rat­ing ac­tions on T&T’s rat­ings and al­so con­sid­ered the de­te­ri­o­ra­tion on the com­pa­ny’s cred­it met­rics in the last years main­ly due to low­er sales vol­umes,” Moody’s ex­plained.

Ac­cord­ing to Moody’s NGC’s Ba2 rat­ing and ba2 BCA re­flect the com­pa­ny’s mo­nop­oly po­si­tion in the trans­mis­sion and dis­tri­b­u­tion of nat­ur­al gas from T&T’s off­shore gas fields to the do­mes­tic petro­chem­i­cal, elec­tri­cal pow­er gen­er­a­tion, steel and light in­dus­tri­al sec­tors.

“The BCA in­cor­po­rates the com­pa­ny’s eco­nom­ic bur­den of serv­ing as a con­duit for the Gov­ern­ment for na­tion­al de­vel­op­ment, in­clud­ing the need to ex­tend spe­cial cred­it terms to the gas con­sum­ing elec­tric util­i­ty com­pa­ny,” Moody’s fur­ther ex­plained.

It al­so not­ed that the BCA al­so con­sid­ers the high­ly cycli­cal na­ture of the petro­chem­i­cal sec­tor and longer-term nat­ur­al gas sup­ply risk.

In ad­di­tion, in its joint de­fault analy­sis, Moody’s said it as­sumes a high de­fault cor­re­la­tion be­tween NGC and the sov­er­eign, its sole share­hold­er, and a very high sup­port prob­a­bil­i­ty from the Gov­ern­ment to the com­pa­ny, in case of need.

“The high lev­el of de­pen­dence on cred­it fac­tors, such as the oil and gas in­dus­try dy­nam­ics, that could cause stress to both the Gov­ern­ment and the com­pa­ny si­mul­ta­ne­ous­ly, hin­ders the Gov­ern­ment’s abil­i­ty to pro­vide ex­tra­or­di­nary sup­port,” Moody’s added.

In ad­di­tion, Moody’s said it ex­pects that the NGC and the Gov­ern­ment will re­main com­mit­ted to avoid­ing the NGC in­crease debt to trans­fer funds to the Gov­ern­ment.

“NGC has strong liq­uid­i­ty, with a cash bal­ance and short-term in­vest­ments of $1 bil­lion in June 2021, which

com­pares with neg­li­gi­ble debt ma­tu­ri­ties in 2021-22 and an­nu­al main­te­nance cap­i­tal ex­pen­di­ture of around

$100 mil­lion.

“The com­pa­ny does not have com­mit­ted bank­ing cred­it fa­cil­i­ties but has had min­i­mal need for ex­ter­nal fund­ing over the last sev­er­al years,” Moody’s said.