Moody’s Negative on Metrogas

Moody’s has assigned a Caa3 rating with negative outlook to Argentina natural gas distributor Metrogas’ MTN program of up to $600m. It says the company’s liquidity is extremely weak relative to its debt maturity profile as a provisional tariff increase announced in late 2008 has not taken place and as ARP devaluation exacerbates liquidity challenges by increasing interest and principal payments of USD-denominated debt. A day before, S&P had downgraded the issuer’s ratings to CC from CCC minus, saying Metrogas faces high refinancing risks in 2010 and 2011, when maturities will reach $21m and $42m, respectively. The outlook is negative. Metrogas says it has hired Barclays to evaluate debt refinancing alternatives.