26 June 2019
Rating agency Moody’s justified its decision by referring to the strong financial standing of PGNiG, which the company would be able to maintain while implementing a major investment programme and with falling gas prices.
“Developing gas production from own sources and ensuring security of gas deliveries through diversification of the supply directions and suppliers are the pillars of our strategy. The strategy is highly rated by independent financial institutions, as evidenced by the upgrade of our rating from Moody’s to Baa2,” said Piotr Woźniak, PGNIG S.A.’s CEO.
Moody’s points out that PGNiG has very strong financial flexibility, attributable to its low debt level in relation to the cash flows it generates. It will enable the company to finance investments in the Exploration and Production segment as well as development and modernisation of the gas distribution network. The rating agency anticipates that the financial performance of PGNiG may be under pressure from high costs of gas procurement under the Yamal contract, accompanied by low market prices of gas, potentially weighing on revenues in the Exploration and Production and Trade and Storage segments. Nevertheless, Moody’s believes that PGNiG’s financial condition is sufficiently good to merit the upgrade from Baa3 to Baa2.
“The upgrade confirms that the levels of our credit rating and financial capacity are appropriate to allow us to put in place an ambitious investment programme while maintaining financial stability. After securing the PLN 10bn syndicated credit facility, it is another proof that our approach to PGNiG management is well perceived by the financial market,” said Michał Pietrzyk, Vice President of the PGNiG Management Board for Finance.
Moody’s stressed that its decision was also based on non-financial factors: the PGNiG Group’s strong position on the domestic gas market, development of PGNiG’s own hydrocarbon reserves portfolio, and efforts to diversify gas supplies. As the agency noted, the diversification efforts enjoy support of the Polish government, which is the majority shareholder in PGNiG.