Naturgy Energy Group S.A. · Financial Risk Liquidity Environmental, Social, And Governance Issue Ratings--Subordination Risk Analysis ... Naturgy Energy Group S.A.'s (Naturgy's)

Naturgy Energy Group S.A.

Primary Credit Analyst:

Massimo Schiavo, Paris + 33 14 420 6718; [email protected]

Secondary Contacts:

Claire Mauduit-Le Clercq, Paris + 33 14 420 7201; [email protected]

Gonzalo Cantabrana Fernandez, Madrid (34) 91 389 6955; [email protected]

Pierre Georges, Paris (33) 1-4420-6735; [email protected]

Table Of Contents

Credit Highlights

Outlook

Our Base-Case Scenario

Company Description

Business Risk

Financial Risk

Liquidity

Environmental, Social, And Governance

Issue Ratings--Subordination Risk Analysis

Reconciliation

Ratings Score Snapshot

Related Criteria

www.spglobal.com/ratingsdirect April 23, 2019 1


Business Risk: STRONG

Vulnerable Excellent

Financial Risk: SIGNIFICANT

Highly leveraged Minimal

bbb bbb bbb

Anchor Modifiers Group/Gov't

Issuer Credit Rating

BBB/Stable/A-2

Credit Highlights

Overview

Key Strengths Key Risks

High share of low-risk regulated gas and power distribution activities in

Spain and Latin America, generating stable and predictable cash flows.

Aggressive shareholding structure, with 40% of share capital owned by

infrastructure and private equity funds.

Good geographic and group diversification, mainly linked to operations

growth in the international liquefied natural gas (LNG) midstream

sector and in Latin America.

Reduced capital expenditures (capex) in the 2018-2022 strategic plan,

with cost-cutting potentially compromising longer-term cash flow

generation.

Industrial and commercial integration of electricity and gas business in

Spain.

One of the most aggressive dividend policies among Europe's largest

integrated utilities.

Strong liquidity, supported by a conservative 24-month prefunding

policy.

Gas, power, and service sales and international LNG (about 33% of 2018

EBITDA), could suffer as a result of a weak operational performance

and increasing competition.

Naturgy Energy Group S.A.'s (Naturgy's) cashflows are stable and predictable thanks to its fully regulated electricity

and gas distribution activities (67% of 2018 EBITDA). The company's credit profile benefits from a higher contribution

from fully regulated activities in Spain, Latin, and Central America than for other European integrated utility players.

Naturgy's gas, power, service sales, and international LNG (about 33% of 2018 EBITDA) continue to suffer as a result

of a weak operating performance and increasing competition. Despite strong results in 2018 thanks to lower

procurement costs and better pricing environment in LNG, we see some potential long-term risks of underperformance

in the business division. Naturgy is a relatively small player in LNG, thus not fully benefiting from economies of scale

and vertical integration in the gas value chain, and is exposed to gas price fluctuations in the service sales business.

Naturgy stands out among European integrated utilities due to the relatively low contribution of renewable assets to its

current generation portfolio.Although the company plans to double its exposure to renewables over 2018-2022 by

adding an additional 1 gigawatt (GW) of installed capacity, Naturgy is more focused on providing the base load with

combined cycle gas turbines (CCGTs).

The company's aggressive dividend policy, reduced capex in the 2018-2022 strategic plan, and cost-cutting could

compromise longer-term cash flow generation.Naturgy's dividend policy stands out as one of the most aggressive

amongst the European integrated utilities, based on dividends per share (DPS), with Naturgy targeting €2 billion of

shares buyback over 2018-2022, absent meaningful investment opportunities.


40% of Naturgy's share capital is owned by infrastructure and private equity funds.Two of Naturgy's main

shareholders are Rioja Bidco Shareholdings (20.1%), which is 75% and 25% owned by CVC and Corporación

Financiera Alba respectively, and Global Infrastructure partners (20%).

Outlook: Stable

S&P Global Ratings' stable outlook on Spain-based vertically integrated gas and electricity utility Naturgy

incorporates our expectation that, over 2019-2020, the company will maintain funds from operations (FFO) to debt

of over 18%. We also consider the group's commitment to cost-cutting, which should compensate for the

aggressive and inflexible shareholder remuneration policy established as part of the 2018-2022 strategic plan.

Downside scenario

We could downgrade Naturgy if its adjusted FFO to debt does not remain above 18% over 2019-2020, or if its

operating performance deteriorates. The fixed and aggressive dividend policy over 2018-2022 leaves Naturgy

limited headroom for underperformance. We will closely monitor, in particular, Naturgy's performance in gas,

power, service sales, and the LNG businesses, given the company's weak results in the past.

In our base case, we don't anticipate sizable debt-financed acquisitions. We will closely monitor the evolution of

the company's strategy and the potential impact of the company's plan on capital structure optimization.

Upside scenario

We could consider a positive rating action if the group's adjusted FFO to debt improved sustainably to more than

20% over 2019-2020, combined with a good operating performance. Any positive action will ultimately depend on

Naturgy's successful execution of operating efficiencies outlined in the 2018-2022 strategic plan.

Our Base-Case Scenario



Assumptions Key Metrics

• Improving macroeconomic conditions in countries

where Naturgy operates. In particular, we expect

continued real GDP growth in Spain, Chile, and

Mexico at a rate above or close to 2% over

2019-2021. In Brazil, while growth should remain

subdued in 2018, we expect real GDP will increase

by more than 2% over 2019-2021.

• Power prices will improve in Spain, but remain

below €55 per megawatt hour (MWh) for 2019-2020.

Cash flow generation will remain supported by

Naturgy's high share of regulated activities.

• Revenues remaining about stable over 2019-2021.

• Average EBITDA margins of about 19% over

2019-2021.

• Proceeds of about €350 million from disposals in

2019.

• Capex averaging €1.6 billion over 2019-2021.

• Dividends, including to minority shareholders,

averaging €1.8 billion over 2019-2021.

• Average interest rate on debt of about 3.1% in 2018,

versus 3.4% in 2017, and averaging 3.2% over

2019-2021.

• No operational underperformance compared with

targets outlined in the 2018-2022 business plan.

• Negative free cash flow after capex and dividends

over 2019-2021.

2018a 2019e 2020e 2021e

EBITDA (bil. €) 4.1 4.5-4.6 4.6-4.8 4.6-4.8

Debt (bil. €) 17.3 17.3-17.5 17.6-17.8 17.8-18.0

Dividends (bil. €) 2.0 1.7-1.8 1.7-1.8 1.8-1.9

Capex (bil. €) 1.8 1.7-1.8 1.4-1.5 1.3-1.4

FFO to debt (%) 18.2 18.0-19.0 18.5-19.5 18.0-19.0

Debt to EBITDA (x) 4.2 3.7-4.0 3.7-4.0 3.7-4.0

* All figures are S&P Global Ratings adjusted.

a--Actual. e—Estimate

Base-Case Projections

Naturgy's adjusted EBITDA in 2018 was at €4.1 billion versus our expectation of €4.3 billion due to

higher-than-expected capture costs (€180 million) resulting from implementation of the efficiency plan.In 2018, DPS

increased by 30% to €1.30 per share and Naturgy also invested €121 million in buying back shares as part of its €400

million annual buy-back to be completed by the end of June 2019. S&P Global Ratings-adjusted debt decreased to

about €17.3 billion from €18.3 billion in 2017 thanks to about €1.5 billion of disposals. As a result, adjusted FFO to

debt was 18.2%, compared with 14.8% in 2017. In 2019, Naturgy expects reported EBITDA of about €4.6 billion.

Company Description

Spain-based Naturgy is a vertically integrated utility with leading positions in the gas and power value chain in Spain

and Latin America. Naturgy supplies gas and electricity to almost 22 million customers in over 30 countries.



In Spain, Naturgy is the incumbent gas utility. It is the largest gas distribution operator, with more than 5.4 million gas

distribution points in 2018. It is also the third-largest electricity distributor, after Endesa and Iberdrola, with more than

3.7 million electricity distribution points in 2018.

Naturgy is the largest wholesale and retail supplier of natural gas, with more than 197,000 gigawatt hours (GWh) of gas

supplied in 2018 (versus more than 195,000 GWh in 2017). It is also one of the largest power generators in Spain, with

28,307GWh of electricity generated in 2018 (versus 27,953 GWh in 2017) and more than 80% of the generation

portfolio coming CCGT plants and coal. In Latin America, Naturgy is the largest electricity distribution and

transmission company and one of the leading gas distributors in Chile. It also enjoys a top-tier position in Brazil in gas

distribution and supply.

Naturgy is also active in the LNG business; its fleet of LNG carriers had a capacity of 1.2 billion cubic meters (bcm) in

2018, which increased from 1.0 bcm in 2017.

In 2018, Naturgy reported revenues of €24.3 billion and EBITDA of €4.0 billion.

Chart 1



Chart 2



Chart 3

Business Risk: Strong

Naturgy's strong business risk profile hinges on the group's sizable share of low-risk regulated gas and electricity

activities, its resilient business model, international diversification, and flexible international gas midstream operations.

Naturgy continues to suffer from weak, albeit improving gas supply margins, as highlighted by the 2018 results.

The high share of predictable regulated network earnings supports stability

More than 60% of Naturgy's earnings come from regulated activities, about half of which are in Spain and the rest in

South America, mainly Chile. Although we view the regulatory frameworks in South America as somewhat weaker

than in Spain, we view Naturgy's diversification and operating efficiency favorably, in particular since Naturgy took

over Compania General de Electricidad (CGE) in Chile, a country we regard as having a stable and transparent

regulatory framework.

In Chile, gas distribution operations enjoy a real return cap of 9% after tax. Electricity transmission and distribution

activities have four-year regulatory periods, regulated real remuneration on investments of 10% before tax, and the

pass-through of energy costs.



In Brazil, Colombia, and Mexico, distribution-operation tariffs are not exposed to commodity-price, transport, or

local-inflation risk. Regulatory periods span five years, providing good earnings visibility. In Argentina, the integral

tariff review was implemented in April 2018. We view the Argentinian regulatory framework weaker than that of the

rest of Naturgy's regulated activities in the region.

Generation activities in Spain remain challenging

Naturgy's business risk profile is somewhat hampered by its material exposure to the Spanish gas and electricity

markets. About 10% of estimated 2019 earnings come from Spanish power generation activities, which are exposed to

weak and declining power prices. Power prices will likely remain below 55€/MWh, according to S&P Global Platts.

Naturgy stands out among European integrated utilities due to the relatively low contribution of renewable assets to its

generation portfolio. The company was awarded 926 MW of renewable capacity to be built before January 2020 in the

2016-2017 renewables auctions in Spain. However, as highlighted in the report "The End To Subsidies: The Beginning

Of A New Era For Spanish Renewables?", published Feb. 7, 2018, on RatingsDirect, the remuneration scheme for the

recently awarded renewables is much weaker than what we have seen so far in Europe.

Naturgy's generation portfolio is more carbon dioxide (CO2)-intensive than some other integrated peers, and we

therefore might see the company increasingly involved in renewable projects at a global level over the next three

years.

Chart 4



Peer comparisonTable 1

Naturgy Energy Group S.A.--Peer Comparison

Industry Sector: Energy

Naturgy Energy Group

S.A.

EDP - Energias de Portugal

S.A. Enel SpA Iberdrola S.A.

Rating as of April 23, 2019 BBB/Stable/A-2 BBB-/Stable/A-3 BBB+/Stable/A-2 BBB+/Stable/A-2

--Fiscal year ended Dec. 31, 2018-- --Fiscal year ended Dec. 31, 2017--

(Mil. €)

Revenues 24,339.0 15,278.1 74,437.0 31,263.3

EBITDA 4,127.5 3,207.0 14,993.0 7,482.2

FFO 3,150.3 2,455.1 8,724.5 5,898.3

Interest Expense 673.2 708.6 2,469.5 1,279.1

Cash Interest Paid 714.2 686.9 4,689.5 1,041.7

Cash flow from operations 2,949.3 2,398.2 10,366.5 5,030.1

Capital expenditures 1,800.0 1,674.9 8,499.0 6,259.4

Free operating cash flow 1,149.3 723.3 1,867.5 (1,229.3)

Discretionary cash flow (1,107.7) (156.1) (1,616.0) (2,526.2)

Cash and short-term

investments

1,696.0 1,720.3 6,781.7 3,205.1

Debt 17,293.1 18,147.4 45,244.4 37,439.9

Equity 13,734.0 13,275.3 54,314.5 42,185.9

Adjusted ratios

EBITDA margin (%) 17.0 21.0 20.1 23.9

Return on capital (%) 4.8 5.5 10.5 5.4

EBITDA interest coverage (x) 6.1 4.5 6.1 5.8

FFO cash interest coverage (x) 5.4 4.6 2.9 6.7

Debt/EBITDA (x) 4.2 5.7 3.0 5.0

FFO/debt (%) 18.2 13.5 19.3 15.8

Cash flow from

operations/debt (%)

17.1 13.2 22.9 13.4

Free operating cash flow/debt

(%)

6.6 4.0 4.1 (3.3)

Discretionary cash flow/debt

(%)

(6.4) (0.9) (3.6) (6.7)

Compared with peers Enel, EDP, and Iberdrola, Naturgy enjoys a higher portion of EBITDA from fully regulated power

and gas networks activities, which represented more than 65% of 2018 EBITDA. In the case of Enel and Iberdrola they

represented more than 50%, and for EDP, about 30%.

Compared with the aforementioned peers, Naturgy has a more aggressive shareholders' remuneration, which is based

on increased DPS over 2018-2022, coupled with share-buyback in the amount of €2 billion in the same time period,

absent significant investment opportunities. In the case of Enel, EDP, and Iberdrola, it is based on payout ratio, which

is at 70% over 2019-2021 for Enel, 75%-85% for EDP, and 65%-75% for Iberdrola.



Financial Risk: Significant

We forecast that, over the next three years, Naturgy will maintain FFO to debt at 18% or higher. In its 2018-2022

strategic plan Naturgy has outlined the most aggressive dividend policy among Europe's integrated utilities. In 2019,

we expect Naturgy will pay out a total of about €1.8 billion in dividends (including to minority shareholders),

compared with about €2.0 billion in 2018. More generally, the dividend per share will increase to €1.3 per share in

2018 from €1.0 per share in 2017 and then gradually increase to €1.59 per share in 2022. Over 2018-2022, we expect

the dividend-to-capex ratio will average 1.0x, which is below that of the other integrated utilities we rate in Europe.

Chart 5



Chart 6 Chart 7

Financial summaryTable 2

Naturgy Energy Group S.A.--Yearly Data


--Fiscal year ended Dec. 31--

2018 2017 2016 2015 2014

(Mil. €)

Revenues 24,339.0 23,306.0 23,184.0 26,015.0 27,828.0

EBITDA 4,127.5 3,920.5 4,771.5 5,075.0 5,120.5

FFO 3,150.3 2,712.9 3,367.4 3,506.1 3,427.9

Interest Expense 673.2 737.6 907.1 986.9 1,016.6

Cash Interest Paid 714.2 772.6 879.1 973.9 944.6

Cash flow from operations 2,949.3 2,816.9 3,389.4 3,392.1 2,746.6

Capital expenditures 1,800.0 1,766.0 2,135.0 1,767.0 1,453.3

Free operating cash flow 1,149.3 1,050.9 1,254.4 1,625.1 1,293.3

Discretionary cash flow (1,107.7) (203.1) (268.6) 578.6 46.7

Cash and short-term investments 1,696.0 3,215.9 2,067.0 2,390.0 3,572.0

Gross available cash 1,696.0 3,215.9 2,067.0 2,390.0 3,572.0

Debt 17,293.1 18,329.8 18,853.4 18,645.7 20,243.1

Equity 13,734.0 17,444.0 18,144.0 17,658.0 16,773.5

Adjusted ratios

EBITDA margin (%) 17.0 16.8 20.6 19.5 18.4

Return on capital (%) 4.8 5.6 7.7 9.0 10.2

EBITDA interest coverage (x) 6.1 5.3 5.3 5.1 5.0

FFO cash interest coverage (x) 5.4 4.5 4.8 4.6 4.6

Debt/EBITDA (x) 4.2 4.7 4.0 3.7 4.0



Table 2

Naturgy Energy Group S.A.--Yearly Data (cont.)


--Fiscal year ended Dec. 31--

2018 2017 2016 2015 2014

(Mil. €)

FFO/debt (%) 18.2 14.8 17.9 18.8 16.9

Cash flow from operations/debt (%) 17.1 15.4 18.0 18.2 13.6

Free operating cash flow/debt (%) 6.6 5.7 6.7 8.7 6.4

Discretionary cash flow/debt (%) (6.4) (1.1) (1.4) 3.1 0.2

FFO--Funds from operations.

Liquidity: Strong

We view Naturgy's liquidity as strong, given its proactive financing and healthy cash flow generation. We estimate that

the company's sources of liquidity will exceed projected uses by more than 1.5x over the next 12 months, and by more

than 1.0x over the next 24 months.

Our assessment of Naturgy's liquidity is further supported by the company's sound banking relationships, prudent

financial discipline, and proven access to the international debt capital markets.

Principal Liquidity Sources Principal Liquidity Uses

We anticipate the following principal liquidity sources

for the 12 months started in Dec. 31, 2018:

• Reported access to about €1.7 billion in unrestricted

cash, of which more than 85% is at the parent

company;

• Access to about €5.0 billion under available

committed credit facilities, maturing in more than

one year; and

• Forecast cash FFO of approximately €3.3 billion in

the next 12 months.

We anticipate the following principal liquidity uses

over the same time period:

• Capex of about €2.0 billion;

• Debt maturities of about €2 billion;

• Working capital outflows of about €150 million; and

• Dividends of about €1.8 billion.

Debt Maturities



Chart 7



Environmental, Social, And Governance

From an environmental standpoint, Naturgy's generation portfolio compares unfavorably with those of other

European integrated utilities due to the relatively low contribution of renewable assets and its relatively high CO2

intensity (more than 80% generated from CCGT plants and coal). The company was awarded 926 MW of

renewable capacity to be built before January 2020 in the 2016-2017 renewables auctions in Spain, but the

company still lags behind its European peers. We believe its long-term position is, however, linked to the future

relevance of gas.

Naturgy's ownership structure and governance has changed radically over the past two years, with investment

funds (Global Infrastructure Partners and CVC) now majority shareholders. We believe this has materially changed

the company's operating model and financial policy to be increasingly skewed toward shareholders. We believe

this could translate into accrued social risks over time. We note a reduction in capex in the new 2018-2022

strategic plan, and believe cost-cutting could compromise the quality of network services and overall longer-term

cash flow generation. In addition, Naturgy's 140 managers benefit from a new five-year (2018-2022) Long Term

Incentive Plan, which is based on total shareholders' return (share price appreciation plus dividends paid over the

period of the strategic plan), and replaces the previous annual scheme that was dependent on operational targets.

As a result, this new plan might lead the management to opt for shareholder's remuneration maximization, which

could impair the company's longer-term cash flow generation.

Furthermore, we see increasing scrutiny from network regulators regarding the balance of interest between

stakeholders, which Naturgy may be penalized for over time. In Spain, the regulator is proposing the introduction

of leverage limitations, while in Colombia Naturgy is in a legal dispute with the government, which decided to take

over the management of the power distribution company Eletricaribe at the end of 2016. In the summer of 2016,

Naturgy notified Colombian authorities of a likely controversy in light of an international agreement of mutual

investments between Spain and Colombia, due to the debt accumulated with subsidiary Electricaribe, of which the

Spanish company owned an 85% share.

Issue Ratings--Subordination Risk Analysis

Capital structure

Naturgy's policy is to issue all debt at the parent company via its financial subsidiaries, and lend the proceeds to its

operating companies. Our calculation of structural subordination is at about 20% (compared with 11% in 2017),

however, because of the amount of operating debt at the subsidiaries. As part of its 2018-2022 strategic plan, Naturgy

will probably increase (or "push down") the amount of debt at the subsidiaries' level, which we will continue to

monitor. We believe that Naturgy's size, diversity of cash flow generation, and direct ownership of a significant amount

of operating assets may be a strong mitigating factor to structural subordination issues.

Analytical conclusions

The issue rating on Naturgy's senior unsecured debt is 'BBB', in line with the issuer credit rating, since currently no

significant elements of subordination risk are present in the capital structure.



Reconciliation

Table 3

Reconciliation Of Naturgy Energy Group S.A. Reported Amounts With S&P Global Ratings' AdjustedAmounts (Mil. €)

--Fiscal year ended Dec. 31, 2018--

Naturgy Energy Group S.A. reported amounts

Debt

Shareholders'

equity EBITDA

Operating

income

Interest

expense

S&P

Adjusted

EBITDA

Cash flow

from

operations Dividends

Capital

Expenditures

15,431.0 10,948.0 3,840.0 (2,167) 557.0 4,127.5 2,881.0 1,976.0 1,808.0

S&P Global Ratings' adjustments

Cash taxes paid -- -- -- -- -- (263) -- -- --

Cash taxes paid -

Other

-- -- -- -- -- -- -- -- --

Cash Interest Paid -- -- -- -- -- (621) -- -- --

Operating leases 888.3 -- 161.5 55.2 55.2 (55.2) 106.3 -- --

Debt-like hybrids 110.0 (110) -- -- 2.0 (1) (1) (1) --

Intermediate hybrids

reported as equity

751.0 (751) -- -- 29.0 (29) (29) (29) --

Postretirement

benefit

obligations/deferred

compensation

221.0 -- -- -- 15.0 -- -- -- --

Accessible Cash &

Liquid Investments

(1,696.0) -- -- -- -- -- -- -- --

Capitalized interest -- -- -- -- 8.0 (8) (8) -- (8)

Share-based

compensation

expense

-- -- 5.0 -- -- -- -- -- --

Dividends received

from equity

investments

-- -- 184.0 -- -- -- -- -- --

Asset retirement

obligations

285.8 -- -- -- 7.0 -- -- -- --

Non-operating

income (expense)

-- -- -- (477) -- -- -- -- --

Non-controlling

Interest/Minority

interest

-- 3,647.0 -- -- -- -- -- -- --

Debt - Derivatives (85) -- -- -- -- -- -- -- --

Debt - Lease

Liabilities Not

Included in

Reported Debt

1,318.0 -- -- -- -- -- -- -- --

Debt - Put options

on minority stakes

69.0 -- -- -- -- -- -- -- --

EBITDA -

Gain/(Loss) on

disposals of PP&E

-- -- (21) (21) -- -- -- -- --

EBITDA - Other -- -- (42) (42) -- -- -- -- --



Table 3

Reconciliation Of Naturgy Energy Group S.A. Reported Amounts With S&P Global Ratings' AdjustedAmounts (Mil. €) (cont.)

D&A - Impairment

charges/(reversals)

-- -- -- 4,270.0 -- -- -- -- --

Total adjustments 1,862.1 2,786.0 287.5 3,785.2 116.2 (977.2) 68.3 (30.0) (8.0)

S&P Global Ratings' adjusted amounts

Debt Equity EBITDA EBIT

Interest

expense

Funds

from

operations

Cash flow

from

operations

Dividends

paid

Capital

expenditures

17,293.1 13,734.0 4,127.5 1,618.2 673.2 3,150.3 2,949.3 1,946.0 1,800.0

Ratings Score Snapshot


BBB/Stable/A-2

Business risk: Strong

• Country risk: Intermediate

• Industry risk: Low

• Competitive position: Strong

Financial risk: Significant

Anchor: bbb

Modifiers

• Diversification/Portfolio effect: Neutral (no impact)

• Capital structure: Neutral (no impact)

• Financial policy: Neutral (no impact)

• Liquidity: Strong (no impact)

• Management and governance: Satisfactory (no impact)

• Comparable rating analysis: Neutral (no impact)

Stand-alone credit profile : bbb

• Group credit profile: bbb

• Related government rating: A-

Related Criteria

• Criteria - Corporates - General: Reflecting Subordination Risk In Corporate Issue Ratings, March 28, 2018

• General Criteria: Methodology And Assumptions: Assigning Equity Content To Hybrid Capital Instruments Issued

By Corporate Entities And Other Issuers Not Subject To Prudential Regulation, Jan. 16, 2018



• General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017

• Criteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate

Issuers, Dec. 16, 2014

• Criteria - Corporates - Industrials: Key Credit Factors For The Unregulated Power And Gas Industry, March 28,

2014

• Criteria | Corporates | Industrials: Key Credit Factors For The Midstream Energy Industry, Dec. 19, 2013

• Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, Nov. 19, 2013

• General Criteria: Group Rating Methodology, Nov. 19, 2013

• General Criteria: Methodology: Industry Risk, Nov. 19, 2013

• Criteria - Corporates - Utilities: Key Credit Factors For The Regulated Utilities Industry, Nov. 19, 2013

• General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013

• Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013

• General Criteria: Methodology: Management And Governance Credit Factors For Corporate Entities And Insurers,

Nov. 13, 2012

• General Criteria: Criteria Clarification On Hybrid Capital Step-Ups, Call Options, And Replacement Provisions, Oct.

22, 2012

• Criteria | Financial Institutions | General: Methodology: Hybrid Capital Issue Features: Update On Dividend

Stoppers, Look-Backs, And Pushers, Feb. 10, 2010

• General Criteria: Use Of CreditWatch And Outlooks, Sept. 14, 2009

• Criteria | Insurance | General: Hybrid Capital Handbook: September 2008 Edition, Sept. 15, 2008

Business And Financial Risk Matrix

Business Risk Profile

Financial Risk Profile

Minimal Modest Intermediate Significant Aggressive Highly leveraged

Excellent aaa/aa+ aa a+/a a- bbb bbb-/bb+

Strong aa/aa- a+/a a-/bbb+ bbb bb+ bb

Satisfactory a/a- bbb+ bbb/bbb- bbb-/bb+ bb b+

Fair bbb/bbb- bbb- bb+ bb bb- b

Weak bb+ bb+ bb bb- b+ b/b-

Vulnerable bb- bb- bb-/b+ b+ b b-

Ratings Detail (As Of April 23, 2019)*


Issuer Credit Rating BBB/Stable/A-2

Issuer Credit Ratings History

28-Nov-2013 BBB/Stable/A-2

15-Oct-2012 BBB/Negative/A-2



Ratings Detail (As Of April 23, 2019)*(cont.)

17-Dec-2010 BBB/Stable/A-2

Related Entities

Naturgy Mexico S.A. de C.V.


CaVal (Mexico) National Scale mxAA+/Stable/--

Senior UnsecuredCaVal (Mexico) National Scale mxAA+

*Unless otherwise noted, all ratings in this report are global scale ratings. S&P Global Ratings’ credit ratings on the global scale are comparable

across countries. S&P Global Ratings’ credit ratings on a national scale are relative to obligors or obligations within that specific country. Issue and

debt ratings could include debt guaranteed by another entity, and rated debt that an entity guarantees.





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