S&P Lwrs Transportadora de Gas del Norte LC Rtg to SD

Business Wire, Jan 29, 2002

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 29, 2002

Standard & Poor's today lowered its local currency corporate credit rating on Argentina-based Transportadora de Gas del Norte S.A. (TGN) to (selective default) 'SD' from triple-'C'-minus.

Standard & Poor's 'SD' foreign currency and double-'C' senior unsecured ratings on the company remain unchanged.

The rating action follows the company's announcement that it missed debt service payments on certain financial obligations. The company did not make the debt service payments on the TGN IFC Trust I and II B loan and interest payments on the convertibility risk insured bond transactions. However, investors received the payments in a timely manner from the outstanding reserve funds of these deals. For more information, please refer to Standard & Poor's press release related to the rating actions on TGN's structured transactions issued today.

The missed payments reflect the negative impact the unsettled devaluation, which followed the end of convertibility, has had on the company's cash flow. As part of these changes, the government 'pesofied' the company's tariffs without allowing for any compensating adjustments, which, combined with the lack of liquidity in the financial system, worsened the company's operating cash flow.

TGN has a 35-year exclusive license to operate Argentina's natural gas north pipeline transmission system, which includes the center-west pipeline and the north pipeline. The company's pipeline network has approximately 3,329 miles of pipelines, with a transportation capacity of about 1,864 million cubic feet per day.

Copyright 2002, Standard & Poor's Ratings Services