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Gas Natural is the leading gas distribution and supply company in Spain and one of the leading gas distribution and supply companies in Latin America, with a presence in Argentina, Brazil, Colombia, Mexico and Chile (with CGE). In 2017 gas distribution operations accounted for ~40% of group EBITDA, with regulated and quasi-regulated activities accounting for 85% of EBITDA. The company changed its business profile and dramatically increased its electricity market presence when it acquired the third Spanish electric utility Union Fenosa in 2009. In 2008 (before the transaction) Gas Natural EBITDA was €2.56bn of which electricity operations accounted for ~20%. In 2017, group EBITDA was €4 bn with electricity operations accounting for around 26%. The merged company named Gas Natural Fenosa is the third largest utility in Iberia. On a global basis it has around 18 million connection points and 15,400 MW of installed capacity. Gas Natural is also active in the deregulated upstream and midstream gas businesses, as well as retail and wholesale gas activities. These activities have grown recently but have suffered from low prices. In 2017 they accounted for ~20% of group EBITDA. (12 Feb 2018)

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Oil & Gas: Slashing Oil Outlook, Downgrading E&Ps

Sector Analysis: 26 Nov 2018, 4:48 AM ET - We believe the recent 33% drop in oil prices is likely to be just the first leg of a deeper decline.  We are reducing our 2019 oil price view and recalibrating our IG and HY E&P investment recommendations to a more defensive position.

Naturgy: 9M18 Delivering To Plan

Worth Watching: 05 Nov 2018, 12:27 PM ET - Naturgy (Baa2/BBB+) reported 9M18 results broadly in line with market expectations, with reported EBITDA essentially flat year on year at €3 bn despite an unfavourable exchange rate evolution which meant the negative FX impact at the EBITDA lev ..

ESG and Utilities: CSights Sector View and Ratings

Sector Analysis: 30 Oct 2018, 3:25 PM ET - We are following up the formal launch of the CreditSights ESG investing framework with a in-depth look at ESG issues in the utility sector.

Euro IG Sector Snapshots: October 2018

Sector Analysis: 22 Oct 2018, 9:31 PM ET - Our updated one page snapshots of the Euro IG sectors.

Naturgy 1H18: Positive Management View Reinforced

Earnings Note: 26 Jul 2018, 10:02 PM ET - Naturgy 1H18 results were generally as expected, with nothing materially new since the 2018-22 plan. Naturgy needs to deliver on its new plan but management seems committed to improving market communication.

Gas Natural/Naturgy: New Name, New Strategy

Company Analysis: 05 Jul 2018, 10:41 AM ET - Gas Natural’s recent strategic plan saw not only a change of name to Naturgy but also, in our view, a shift in the thinking of the top management.

Euro HY Conference 2018: Hybrids - BB or Not BB

Transcript: 19 Jun 2018, 10:54 PM ET - At our Euro HY conference in London and Zurich last week we looked at whether BB investors should be looking at BB rated hybrids.

Euro HY Conference 2018: Insurers and Utilities

Transcript: 19 Jun 2018, 10:51 PM ET - Hybrid bonds issued by European Utilities and Insurers offer an interesting investment opportunity considering their relatively high yield levels while benefiting from strong ratings. We believe they offer an excellent risk/return.

EDP: Equity Up But Bonds Down On CTG Offer

Company Analysis: 14 May 2018, 9:53 PM ET - While equity was up on the CTG offer for EDP, bonds did not fare so well, with the hybrid being the worst hit. However fundamentally we view the potential offer as broadly credit neutral and believe the weakness unwarranted.

EDP: CTG Bids €12 bn For EDP

Company Analysis: 13 May 2018, 8:40 PM ET - We see the CTG bid on EDP, tabled over the weekend, as a low offer and one with regulatory hurdles, but it could bring other bidders out of the woodwork given previous speculation of interest in the company.

Euro Utilities: 2017 Results Roundup

Sector Analysis: 12 Apr 2018, 10:19 PM ET - We take a look at the trends and the highlights of the recent 2017 Euro utility results season 

EDP/Engie: Will They? Won't They?

Worth Watching: 09 Apr 2018, 5:58 AM ET - EDP/Engie : Speculation emerged this morning that Engie (A2/A-) is considering an offer for EDP (Baa3/BBB-). EDP equity is up 5% and CDS on EDP Finance is 5bp tighter as we write. There has been a lot of speculation around Engie making a big ..

Gas Nat: FY17 As Expected, Strategy Update In 1H18

Worth Watching: 08 Feb 2018, 12:01 PM ET - Gas Nat (Gas Natural, rated Baa2/BBB) reported FY17 numbers essentially in-line with market consensus with net income 1% higher at €1.36 bn. Results were impacted by the poor hydro year in Spain (Gas Natural hydro generation down 70%) and the 2 ..

2018 Outlook: Euro Utilities, Brave New World

Sector Outlook: 12 Dec 2017, 4:04 PM ET - In 2018 we see operating results and credit quality being relatively stable for the utility sector, but longer term increasing competition and declining profitability will likely lead to anew wave of M&A.

Gas Natural: Sells Italian Assets For €1 bn.

Worth Watching: 16 Oct 2017, 5:20 AM ET - Gas Natural (Baa2/BBB) announced on 13 October that it had reached agreement to sell its Italian gas assets for a combined EV of about €1 bn to 2i Rete Gas and Edison (owned by EDF). 2i will buy the gas distribution company (Negia) for a total ..

UK Utilities: Draft Leaves Hard Work To Ofgem

Sector Analysis: 12 Oct 2017, 10:20 PM ET - Draft legislation will enable the imposition of supply price caps in the UK but fell short of any clarity on the mechanics or level of the cap. The hard work in that regard falls to Ofgem.  

UK Utilities: Pummelled By Price Cap Uncertainty

Sector Analysis: 04 Oct 2017, 10:30 PM ET - UK utility share prices were pummelled on Wednesday after the government resurrected the prospect of price caps on the standard variable tariff. We cut Centrica and SSE to Underperform.

Gas Natural: Sells 20% Of Spain Gas Distribution

Worth Watching: 04 Aug 2017, 5:40 AM ET - Gas Natural (Baa2/BBB) : Announced on 3 August that it had reached agreement to sell a 20% interest in its Spanish gas distribution business for a total cash consideration of €1.5 bn. The implied EV for 100% of the Spanish gas  distribution bu ..

Gas Nat 1H17: Headwinds In Spain But FY Confirmed

Earnings Note: 26 Jul 2017, 6:57 PM ET - Despite headwinds in Spain, 1H17 results from Gas Natural were in line with consensus and full year guidance of net income in the €1.3-1.4 bn range was confirmed. Retain Market perform view.

UK Utilities: Tough Price Controls Ahead

Sector Analysis: 18 Jul 2017, 10:42 PM ET - Last week both Ofwat and Ofgem came out with consultation documents for their next regulatory periods. One thing is clear, the customer is the focus and the allowed cost of capital is going to be lower.

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