Argentina
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Fitch downgrades TGS

Bnamericas Published: Wednesday, April 30, 2003
Credit rating agency Fitch has downgraded to DD from C the senior unsecured foreign currency rating of Argentine gas transport company Transportadora de Gas del Sur (TGS), Fitch said in a statement. The move follows the company's default on its US$100mn Floating Rate Notes (FRNs). TGS has included the FRNs in its US$1bn global restructuring program. TGS is seeking to restructure the greater part of its debt in an effort to extend maturities and adjust payment terms to reflect the company's limited financial flexibility. The devaluation of the peso and the pesofication of gas rates in Argentina have negatively impacted the company's ability to pay its mostly US dollar-denominated debt. TGS has not paid capital on any of its debts since early 2002, and recently failed to obtain approval from its creditors to renegotiate its debt. TGS has defaulted on US$450mn debt to date in 2003. Fitch believes that parties involved in TGS' restructuring efforts are still "far apart," which could draw out the negotiations. Meanwhile, the company's management is focused on protecting the company's "operational integrity," Fitch said. TGS is the operator of the largest pipeline transmission system in Argentina and delivers an estimated 60% of the country's total natural gas consumption. Local energy company Pecom Energia and bankrupt US energy company Enron own 70% of TGS through the Ciesa consortium.

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