MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services said the
Australian utilities sector could face rising risks over near-to-medium term, as
changing competitive landscape due to mergers and acquisitions activity, climate
volatility and new regulations will drive their credit-quality.
S&P, in a special report on Australian utilities, said over the past six
months, the Australian utilities sector experienced an extraordinarily high 20
rating actions due to operational issues and the completion of some M&A
activity, comprising the break-up of Alinta Ltd.
S&P said that for next 12 months M&A will remain the key determinant of
credit quality including the proposed takeover of Origin Energy Ltd. by
U.K.-based BG Energy Holdings Ltd.
Apart from M&A activity, ongoing adverse climate conditions due to
persistent drought in south-east Australia and heightened regulatory risk
arising from the prospective introduction of the federal government's carbon
emissions trading scheme will potentially affect the credit quality of rated
Australian utilities, the rating agency said.
The report also highlights that rated Australian utilities experienced
minimal impact from the global credit squeeze as companies have successfully
refinanced maturing debt to date.
Nevertheless, the credit squeeze has resulted in some contraction of typical
long-dated maturity profiles of rated Australian utility companies, S&P noted.
TFN.newsdesk@thomson.com
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