(The following statement was released by the rating agency)
Apr 18 -
Summary analysis -- DUET Group ----------------------------- 18-Apr-2012
CREDIT RATING: BBB-/Stable/-- Country: Australia
Primary SIC: Trusts, nec
Credit Rating History:
Local currency Foreign currency
03-Jul-2003 BBB-/-- BBB-/--
Rating Rating Date
AUD267.7 mil var rate bank ln due 08/29/2013 BBB- 12-Mar-2009
The ‘BBB-’ rating on the DUET Group, a listed infrastructure fund on the Australian Securities Exchange, reflects our opinion of the underlying credit strength of the fund’s small portfolio of investment-grade regulated network assets in the utilities sector. DUET also benefits from completion of its capital restructuring in late 2011, which results in there being no debt at the parent entity. The intercompany loans to the asset companies have also been repaid. Somewhat offsetting these strengths are DUET’s structural subordination to the senior debt obligations of its narrow portfolio of aggressively leveraged underlying investments, and an exposure to any deterioration in the credit quality of these investments.
DUET’s strategy is to invest in established regulated or highly contracted energy utility assets that have underlying investment-grade risk profiles. The fund’s investments have been focused on electricity and gas networks. DUET’s asset portfolio consists of three investments in electricity and gas network businesses in Australia comprising:
-- A 66% share in United Energy Distribution Holdings Pty Ltd.(UED; BBB/Stable/--);
-- A 100% share in Multinet Gas Holdings Ltd. (Multinet: the rating is on the finance company, Energy Partnership (Gas) Pty Ltd. (EPG; BBB-/Stable/--), and
-- An 82.4% share in DBNGP Trust (DBP; BBB-/Stable/--).