The rating mainly reflects its solid business profile as a concessionaire and operator of the gas transmission network in Romania.

Fitch Ratings affirmed Transgaz’ rating at BBB-, Stable Outlook. The rating mainly reflects its solid business profile as a concessionaire and operator of the gas transmission network in Romania as well as our expectation of a progressive contraction of its international gas transit business derived from traditional routes.

The rating is supported by the country’s regulation for gas transmission and rating agency’s expectation that a significant current investment related to the Bulgaria-Romania-Hungary-Austria corridor (BRUA) will be added to Transgaz’ regulated asset base (RAB), supporting future earnings.

Fitch continues to evaluate the Romanian transmission regulation as fairly transparent and stable and therefore supportive of Transgaz’s rating. In the initial months of the fourth regulatory period, all parameters have been applied consistently with the exception of the allowed real rate of return, which has been set at 6.39% versus an expected 6.9%.

Fitch adds that Transgaz’s financial profile is strong with a limited net debt position at end-2019. They expect funds from operations (FFO) net leverage to rapidly increase to around 4.5x at end-2021 from 0.5x at end-2019 due to increased capex and temporarily weaker transmission earnings before falling to around 3.8x over 2022-2024.