ESB and Gas Networks Ireland a safe bet for lenders

State-owned utilities have low-risk businesses, analysts say

Credit analysts rate State-owned energy businesses, ESB and Gas Networks Ireland, a safe bet for lenders, reports just published show.

Ratings agency, Moody’s, which assesses companies’ and other organisations’ ability to repay their debts, has just published its analysis of both ESB and Gas Networks Ireland.

Moody’s has given both State-owned utilities an A3 rating, meaning its analysts believe they represent a good credit risk and are unlikely to default on any liabilities.

Good credit ratings could help cut the interest both organisations may have to pay on future borrowings and make it easier for them to refinance existing debt at lower rates.


Gas Networks Ireland owns and operates the system for transporting natural gas around the country, North and South, as well as pipelines tying it to the wider European network through Scotland.

ESB generates electricity and sells both it and natural gas to homes and businesses. It also owns stakes in operations in Britain and has a multinational consultancy arm.

Moody's analysts Alastair Sullivan and Neil Griffiths Lambeth regard Gas Networks Ireland as Government-related as it is 100 per cent owned by the State.

Their rating is partly based on the fact that it is "adequately ringfenced" from Irish Water, which forms part of the same overall group, Ervia.

Low risks

Mr Sullivan and Mr Griffiths Lambeth say the low risks of Gas Networks Ireland’s business, which operates under transparent and predictable regulations, help to support its A3 rating.

They also highlight its solid business performance and the fact that its network needs only a modest level of investment.

The pair cite ESB’s low-risk electricity distribution business, low overall net debt and potential Government support, should it be needed, for the group’s high rating.

However, they say their rating is limited by the relatively higher business risks of ESB’s electricity generating and wholesale businesses, which accounted for 30 per cent of its 2017 earnings, and the uncertainty likely to follow last year’s change in the rules governing the electricity market here.

The analysts also point out that the ESB is facing “the challenges of a large capital investment programme”.

ESB published results last week showing that the group earned profits of €60 million in 2018 and had net debt of €4.9 billion.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas