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Financial News

May 2018 Financial News

The National Gas Company of Trinidad and Tobago Limited

May 02, 2018

The National Gas Company of Trinidad and Tobago Limited (NGC)'s Ba1 ratings and ba1 Baseline Credit Assessment (BCA), which measures a company's intrinsic risk regardless of government support considerations, reflect its long track record as a profitable and conservatively-managed company responsible for the aggregation, purchase, sale, transmission and distribution of natural gas from Trinidad and Tobago (T&T)'s offshore gas fields to the domestic petrochemical, electrical power generation, steel and light industrial and commercial sectors. In addition, the ratings incorporate our assumption that NGC and the government of Trinidad & Tobago (Ba1 stable) will remain committed to maintaining the company’s solid balance sheet, avoiding an increase in debt in order to transfer funds to the government.

Credit Strengths
» Strong balance sheet
» Solid operating margins and cash flow generation
» Domestic sector aggregator in Trinidad & Tobago
» Conservative financial management
» High level of government support

Credit Challenges
» Small scale
» Cyclical end markets
» Economic burden of serving as a conduit for the T&T national development
» Potential negative impact from interference by T&T’s government
» Supply risk

Rating Outlook
The stable outlook on NGC's rating reflects our view that the company’s creditworthiness will remain solid in the foreseeable future. In addition, its rating outlook is highly dependent on the credit quality of the government of Trinidad and Tobago.

Factors that Could Lead to an Upgrade
NGC's BCA could be raised if size and scale improves, in combination with sustainable low leverage and satisfactory returns. Although unlikely at this point, an upgrade of the ratings of the government of Trinidad & Tobago would provide an uplift to the company's rating.

Factors that Could Lead to a Downgrade
NGC's ratings could be downgraded because of materially weakened margin or cash flow performance, greater government interference via increased taxation or dividends that could jeopardize the company's liquidity profile, or a diversion of the company away from its core gas pipeline operations into public policy programs, including the extension of special credit terms to state entities.

In addition, NGC's Ba1 rating could be downgraded as a result of a decreased likelihood that the government of Trinidad & Tobago would provide extraordinary support to NGC, or as a result of a downgrade of the Government's Ba1 rating.


Source:
Moody's Investors Service
Friday 27th April, 2018