The APA Group (ASX: APA) share price is in focus today after S&P Global Ratings reaffirmed its BBB credit rating and improved APA's debt threshold, enabling over $1 billion in extra growth funding.
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What did APA Group report?
- S&P affirmed APA's BBB (stable) long-term credit rating
- S&P lowered APA's downside FFO to Debt threshold from 9.5% to 8.5%
- The modification increases debt capacity by more than $1 billion
- APA maintains stable and predictable cash flows
- The change strengthens APA's ability to fund future growth projects
What else do investors need to know?
The adjustment from S&P recognises APA's consistent cash generation and solid financial management. By lowering the downside threshold, APA can now take on additional debt to pursue expansion across its $27 billion portfolio of infrastructure assets.
APA supplies about half of Australia's domestic gas through its 15,000 kilometres of pipelines and operates a mix of gas, electricity, wind, and solar assets nationally. This strengthened balance sheet supports the company's strategy of securing Australia's energy future.
What did APA Group management say?
CEO and Managing Director Adam Watson said:
It is pleasing to see S&P acknowledge the high-quality of our ongoing cashflows. S&P's modification of our FFO to debt downside threshold is significant, providing more than $1 billion in additional funding capacity from our existing balance sheet.
We have strong momentum in the delivery of our growth strategy and remain focussed on efficient and prudent capital allocation to capture value from the most attractive long-term opportunities for APA securityholders. This ratings modification will provide further funding support for our attractive growth projects.
What's next for APA Group?
APA is expected to use this enhanced debt capacity to fund new projects across its key energy infrastructure networks. The company remains focused on efficient investment and pursuing growth opportunities that can deliver value for securityholders.
As the transition to renewable energy accelerates and demand for reliable energy infrastructure grows, APA aims to maintain its strong financial position to support the nation's evolving energy needs.
APA Group share price snapshot
APA Group shares have risen 27% over the past 12 months, outperforming the S&P/ASX 200 Index (ASX: XJO) which has increased 2% over the same period.
