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UPDATE 1-Moody's cuts Verbund outlook to negative
(Adds comments from Moody's)
VIENNA, March 6 (Reuters) - Moody's cut its outlook for Austrian energy group Verbund's A2-rated senior unsecured debt to negative from stable on Tuesday, citing expected pressure on earnings.
"The change of outlook ... reflects increased pressure on the company's earnings and cash flows from a combination of low power prices, poor spreads on gas-fired capacity and the negative performance of its international holdings," it said.
Verbund's credit metrics for 2011 remained below the guidance for the current rating, it said.
"This weak positioning is due to the company's historically high leverage as a result of past acquisitions and ongoing investments, in conjunction with poor operating performance, persistently weak power prices and exceptionally low hydro availability," Moody's said.
Hydro power conditions have improved of late and locked-in prices for Verbund's electricity generation in 2012 have risen, Moody's said, but "conditions in the electricity markets remain challenging".
Verbund's 2.4 billion euro ($3.2 billion) investment programme for 2012-16 and projected dividend payments will continue to weigh on the company's financial profile, it said.
The fact Austria has a 51 percent stake in Verbund provided a two-notch uplift from its stand-alone credit quality given the potential for government support. ($1 = 0.7557 euro) (Reporting by Michael Shields; Editing by Dan Lalor)
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