The upgrade reflects S&P’s view that the regulatory conditions for regulated gas transmission activities in Romania have improved, which led the agency to revise upward its assessment of the company’s business risk profile to “fair” from “weak.”
“Over the past years, the regulator has introduced changes to the regulatory framework that we consider credit supportive. This includes increasing the share of capacity reservation tariffs to 50% as of August 2014, which reduces revenue volatility. Additional changes include the recognition of unrealized revenues in the previous regulatory period, allowing for efficiency gains to be obtained for five years and providing higher remuneration for new investments.”
The stable outlook reflects S&P’s assumption that Transgaz will be able to achieve solid operating and financial results over the next three years, while the regulatory framework will remain predictable, and Transgaz will remain shielded from negative political intervention.