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UTILITIES: Ausgrid (AUSGF Baa1/BBB/NR): Credit Overview

UTILITIES
BulletCredit BulletsAPACAustralia
  • Ausgrid is a monopoly distribution business in NSW with 92% of revenue from regulated activities. Smart metering and telecoms infrastructure are smaller contributors. Moody’s views the Australian regulatory framework as mature and transparent.
  • 85% of revenue is insulated from volume, with variance recovery under the regulatory cap. The other regulated 7% includes metering, data, connections and public lighting management.
  • It bills directly to retailers who pass on to end customers. It has protection from retailer default risk via regulated recovery mechanisms.
  • The NSW government owns 49.6% of the equity, with an arm’s length model. The balance is held by infrastructure investors. It gets a one-notch uplift from Moody’s due to shareholder base.
  • Capex is expected to average A$725mn over the 2025-29 regulatory period. FY24 OCF was A$850mn. 85% of surplus cash is required to be distributed to shareholders unless the current baseline credit rating is impacted. It highlights suspension of distributions from 2019-23 to support ratings.
  • At June 2024 Debt / RAB was 65% and is expected to increase to the mid-70s. CFCR was 1.7x.
  • Moody’s has a 7% threshold for FFO/net debt for the rating, with 7.3% at FY2024.
  • It could become a more frequent issuer, saying it could to increase future EMTN issuance.
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  • Ausgrid is a monopoly distribution business in NSW with 92% of revenue from regulated activities. Smart metering and telecoms infrastructure are smaller contributors. Moody’s views the Australian regulatory framework as mature and transparent.
  • 85% of revenue is insulated from volume, with variance recovery under the regulatory cap. The other regulated 7% includes metering, data, connections and public lighting management.
  • It bills directly to retailers who pass on to end customers. It has protection from retailer default risk via regulated recovery mechanisms.
  • The NSW government owns 49.6% of the equity, with an arm’s length model. The balance is held by infrastructure investors. It gets a one-notch uplift from Moody’s due to shareholder base.
  • Capex is expected to average A$725mn over the 2025-29 regulatory period. FY24 OCF was A$850mn. 85% of surplus cash is required to be distributed to shareholders unless the current baseline credit rating is impacted. It highlights suspension of distributions from 2019-23 to support ratings.
  • At June 2024 Debt / RAB was 65% and is expected to increase to the mid-70s. CFCR was 1.7x.
  • Moody’s has a 7% threshold for FFO/net debt for the rating, with 7.3% at FY2024.
  • It could become a more frequent issuer, saying it could to increase future EMTN issuance.