Bord Gáis Energy owner faces downgrade threat

Centrica is facing a ratings agency downgrade that could hit its plans to invest in Bord Gáis Energy, which it bought from the State this year for a net €150 million.

Moody’s has placed Centrica, which also owns British Gas, on a review for a downgrade that could come within 90 days, due to political pressure in Britain to reduce the cost of energy to customers.

The ratings agency said if Centrica was downgraded, it would "affect its cost of raising debt" for investment. Eddy Collier, Centrica's managing director for Ireland, has previously said it is considering investing in a gas storage facility in Ireland.

Helen Francis, a credit officer at Moody's, said a downgrade would raise Centrica's overall cost of doing business.

“Centrica, because it has trading as part of its activities, may also have to post collateral [in the event of a downgrade] on some of its contracts, which could mean it could raise the cost of its doing business more broadly,” she said.

Moody's rating
Centrica's long-term rating with Moody's has been A3 since about 2006, but the agency said it could drop its rating to Baa1.

It cited the establishment of a consultation by the energy regulator in Britain on a possible probe into energy companies’ pricing and profits, and also a threat from a senior British politician that British Gas could be broken up.

Meanwhile, UK Labour leader Ed Miliband has called for a price freeze on energy bills, which is also seen as a threat to Centrica.