Scope rates Snam, one of Europe’s leading operators of natural gas infrastructure, on a subscription basis. To view Scope’s subscription rating and rating report, or to register, please click here.

In Scope’s November 2021 rating report, analyst Marlen Shokhitbayev noted that the company’s business risk profile benefits from its monopolistic position in Italian natural gas infrastructure, underpinning its strategic role for the economy. The company derives more than 90% of its revenues and more than 95% of its EBITDA from regulated activities such as transmission, storage and regasification.

“The company’s business model is strongly supported and well protected by the regulatory framework, which provides adequate and stable income by considering invested capital and operating expenses. There is a limited exposure to gas volumes transported by the company. Snam’s market position is further supported by its international activities, which aim to integrate European markets and strengthen the role of Italy as a gas hub,” Shokhitbayev noted.

Final demand for the bond’s EUR 850m long seven-year tranche was EUR 2.5bn, pricing at 60bp over mid-swaps, the tight end of guidance. Initial price thoughts were MS+85bp area. Final demand for the EUR 650m long 12-year tranche was EUR 1.6bn. It priced at MS+80bp, again the tight end of guidance; initial price thoughts were MS+105bp area, according to Bond Radar (www.bondradar.com).

The transaction followed two days of meetings to apprise bond investors of the company’s Sustainable Finance Framework, updated on 29 November. The deal will contribute to a target of achieving more than 80% of its funding through sustainable finance by 2025, the company noted (60% at the end of 2021).

Contributing to this target, the new issue came concurrently with an offer to purchase for cash a series of conventional bonds (due April, September and November 2023, January 2024, January 2025 and October 2027). Prior to its debut SLB, Snam’s labelled financing had come in the form of transition bonds; the company’s fourth offering coming in June 2021.

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