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SNAM New Strategic Plan; Credit Negative

UTILITIES

SNAM (SRG IM), the Italian infrastructure firm, published its strategic plan update earlier today.


  • Key part: “Energy Infrastructure for a Sustainable Future” which includes EUR11.5bn of capex plans to end-27, the vast majority in gas infrastructure, including a nascent hydrogen system. This is an upgrade from the previous EUR10bn plan (to end-26).
  • From a credit perspective, the slides also note an uplift in cost of debt to 2.9% by 2027 (from 2.0% in ‘23) and that FCF will mostly be consumed by capex… and then there’s a dividend plan. This will push net debt from around EUR15.5bn now to c.EUR19bn by 2027.
This appears quite an ambitious plan with a big equity payout attached (thought the equity price is still lower today), which would appear to imply credit supply and leverage deterioration, we feel. SNAM’s traded debt stack is trading relatively mixed today, its benchmark ’26 bond (SRGIM 0 7/8 10/25/26) is streaming 0.1bp tighter.
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