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
“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.