Friday, January 21

Enagás’ good health leads its bondholders to losses

Enagas He received approval for his accounts in the form of an improvement in his credit rating outlook. But the good financial health of the Spanish company is less positive news for investors in the debt market, who see the yields on some of the company’s bonds fall below their original coupons.

The Spanish energy company announced communicated to National Securities Market Commission (CNMV) the publication of a report by the credit rating agency, Fitch Ratings, in which the company’s outlook is improved, placing it at stable, at the same time that Enagas’ rating is reaffirmed at BBB +.

Enagás points out that when reaffirming the BBB + rating granted, the credit rating agency highlights both the company’s strong liquidity position, as well as its compliance with financial metrics, as well as robust cash generation.

Enagás has a liability on its balance sheet that, as of September 30, 2021, stood at around 6,300 million euros, of which around 3,500 million correspond to obligations and other negotiable securities.

Bonds that, in recent months, with one exception, have maintained a premium price that reduces their yield to the lowest exponent.

A Year of Bond Price Drops That Don’t Boost Yield

Enagás has six listed debt bondss on the Luxembourg Stock Exchange, whose coupons vary between 0.375 per cent and 2.5 per cent.

The bono XS2251626896 which expires in November 2032 and pays a coupon of 0.375 percent, is the only Enagás debt asset that is currently trading at a discount to its nominal value.

The 97.37 euros with which the session of December 29 closed, however, leaves a yield that does not exceed 0.38 percent.

The poor benefit offered by securities that have received the approval of Fitch is also observed in the case of the bond XS1508831051, which offers a coupon of 0.75 percent and expires in October 2026. With its current listing price at 102 , 86 euros, its yield is 0.72 percent.

The drop is steepest in voucher XS1177459531 maturing in February 2025 and a coupon of 1.25 percent, which after months of correction in its price improved a slight 0.053 percent on Wednesday. Put your current yield at 1.2 percent.

One of the few Enagás bonds that has slightly improved its performance throughout 2021, in fact, is the XS1052843908 bond with an expiration date of April 2022.

Your coupon goes up to 2.5 percent. By lowering its price throughout the year from € 103.52 to € 100.8, it will reward its buyers with a performance that is practically similar to that offered in its issue.

Fitch expects no surprises at Enagás

In a year of poor performance for bondholders, Enagás undoubtedly offers a safe haven in which profit margins are not wide, but where investors can take shelter if they want to have a trustworthy asset.

At least, Fitch has considered it that way, by improving the company’s perspective on the latest company report.

“The stable outlook reflects our expectations that the net leverage of the Enagás operations funds will be broadly in line with our negative guidelines for the ‘BBB +’ rating in the 2021-2024 period, based on the planned divestments and the resumption of Prairie ECI Acquiror dividends, beginning in 2021, “the report explains.

The BBB + rating assigned to Enagás also takes into account “a very predictable, albeit decreasing, regulated income trajectory in Spain, and an onerous and fully committed dividend policy, both until 2026.”

The agency warns, however, that “the expected increase in investments in decarbonization of the gas and hydrogen network as of 2025”, which it considers key to the sustainability of Enagás’ business model in the long term, “will exert pressure Considerable on Credit Metrics for 2025-2026 “.

Leave a Reply

Your email address will not be published. Required fields are marked *