BAKU, Azerbaijan, May 1
By Leman Zeynalova – Trend:
Italy’s Snam company may have some re-phasing of its capital expenditure (capex) plans, Fitch Ratings said as it has affirmed the company’s Long-Term Issuer Default Rating (IDR) at 'BBB+' with a Stable Outlook, Trend reports.
The rating is affirmed despite Fitch's recent downgrade of the sovereign rating of Italy (BBB-/Stable), reflecting Snam's nearly full insulation from the macro-economic shock stemming from the coronavirus pandemic.
“This is due to negligible volume and price risk, the good regulatory visibility (the current regulatory period covers 2020-2023 for gas transport and 2020-2025 for gas storage), and the long record of the regulator in Italy (since 1995). We expect Snam to meet its financial targets and remain within our rating sensitivities notwithstanding the coronavirus and economic crises,” Fitch said.
Stable Outlook also reflects Snam's importance for the sector's energy transition with the company's large capex plans and wider implications for the economy in Italy, according to the report.
“We expect Snam to confirm its strategic and financial targets, although some re-phasing of its capex plans may be possible,” said the rating agency.
Fitch predicts one-off 20 million euros cost related to provision of healthcare supplies due to the crisis, tax rate of around 26 percent and cumulative net capex of 6.5 billion euros over 2019-2023.
“Dividends will gradually increase to around 900 million euros in 2023; share buyback will stand at 150 million euros as announced by the company for 2020,” reads the report.
Moreover, Fitch expects additional investments in equity stakes (not included in the company's business plan) of 150 million euros per year in 2020-2023 with a cash dividend yield of 5 percent.
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