The Spark Infrastructure Group (ASX: SKI) share price will be one to watch when trading opens this morning. That’s because the company’s credit outlook has been downgraded by Moody’s.
At the close of trade yesterday, shares in the business were selling for $2.16. This was 0.93% higher than the previous day’s close. By comparison, the S&P/ASX 200 Index (ASX: XJO) finished 0.21% lower yesterday.
Let’s take a closer look at the news and how it could affect the Spark Infrastructure share price.
Company profile
Spark Infrastructure is an investment group that focuses on energy infrastructure. It has a stake in four projects, namely:
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49% of SA Power Networks, the sole operator of South Australia’s electricity distribution network, supplying around 880,000 residential and commercial customers across the state.
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49% of CitiPower and Powercor (together known as Victoria Power Networks), distributing electricity to over 1m customers in Melbourne and western Victoria.
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15% of TransGrid, the largest high-voltage electricity transmission network in the National Energy Market, connecting generators, distributors and major users in NSW and the ACT.
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100% of the Bomen Solar Farm north of Wagga Wagga in NSW, which is now fully operational and generating in line with expectations
Why is the Spark Infrastructure share price on watch?
In a statement to the ASX, Spark Infrastructure says Moody’s has lowered its credit outlook from Baa1 to Baa2.
According to the group, this is because of new regulatory decisions affecting SA Power Networks from 1 July 2020. As well, the company says the lower rating is also in anticipation of new regulations that will affect operations of Victoria Power Networks — coming into effect 1 July 2021.
Moody’s forecasted the decision back in March 2020, according to the statement. Spark Infrastructure says there will be “no material change” to the company’s cash flows and interest costs. It remains to be seen what effect it will have on the Spark Infrastructure share price.
Its dividend distribution guidance from 23 February 2021, of 12.5. cents per share, fully franked, is unaffected by today’s credit downgrade.
Spark Infrastructure share price snapshot
Over the past 12 months, the Spark Infrastructure share price has increased a modest 8%. Over the course of 2021, shares in the company have been relatively stable. It started the year at $2.14, peaked at $2.21 and troughed at $2.02 before reaching its current price.
Spark Infrastructure has a market capitalisation of $3.8 billion.
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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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