Sydney, March 08, 2010 -- Moody's Investors Service has today assigned a senior unsecured rating of A1 to SPI Electricity & Gas Australia Hldgs Pty Ltd's ("SPIEG") Hong Kong Dollar issue. The outlook on this rating is stable.

SPIEG is a wholly-owned subsidiary of SP AusNet (rated A1/Stable), and the issue will be guaranteed by a number of SP AusNet operating subsidiaries. As such, the credit profile of SPIEG reflects that of SP Ausnet.

Proceeds from the issue - which totals HK$700 million - will be used to refinance existing debt and fund capital growth.

"The A1 rating reflects SP AusNet's ownership and operation of low-risk regulated electricity and gas networks in Australia, under a supportive regulatory environment, that generate steady and predictable cash flows," says Clement Chong, a Moody's VP/Senior Analyst.

"The rating further incorporates an uplift due to the group's 51% ownership by the higher-rated parent (Singapore Power, rated Aa3), reflecting its strategic importance within the overall Singapore Power group," adds Chong.

That said, the group's credit strengths are countered by its relatively high leverage, and resultant weak financial metrics. However, its metrics are considered to be positioned appropriately against other peers in the same rating range.

The stable outlook reflects SP AusNet's low business risk, stable cash flow generation, and an expectation that the group's financial metrics will remain appropriate for the rating.

SP Ausnet Group's rating could face upward momentum if the group achieves better-than-expected financial performance. Financial indicators Moody's would look for include: FFO to Interest rising to above 4 times, FFO to Debt to higher than 20% and Debt to Regulated Asset Base (RAB) of below the 70 to 80% range. The ratings could also improve if Moody's perceives higher likelihood of support from Singapore Power.

The group's rating could be pressured downwards upon deterioration in its financial metrics, namely FFO/Interest falls to 2.5 times or below, FFO/Debt declines under 8%, and Debt/RAB rises above 100%. SP AusNet's rating could also come down upon a downgrade of Singapore Power's rating.

The last rating action on SP AusNet was on July 21, 2008 when the outlook on its rating was revised to stable from negative.

The principal methodology used in rating this issuer was Moody's Regulated Electric and Gas Networks methodology, published in August 2009, and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

SP AusNet is a listed infrastructure entity based in Melbourne. It owns [1] SPI Australia Group -- which owns one of Victoria's electricity and gas distribution networks -- and [2] SPI PowerNet Pty Ltd -- which owns almost all of Victoria's electricity transmission network through various operating subsidiaries.

Singapore Power is the owner of electricity assets in Singapore. It is wholly owned by Temasek Holdings (Private) Ltd, which in turn, is wholly-owned by the Singaporean government.