Fitch Upgrades Transgaz Rating to BBB Above Romania Sovereign — NRG-IA

Fitch Upgrades Transgaz to ‘BBB’ Rating — What Happened Transgaz officially surpassed Romania’s sovereign credit rating on May 29, 2026, after Fitch Ratings upgraded the gas transmission operator’s Long-Term Issuer Default Rating (IDR) from “BBB-” to “BBB” with a stable outlook. This upward revision partially decouples the natural gas transport monopoly from the macroeconomic vulnerabilities of the Romanian state, whose sovereign rating remains stalled at “BBB-” with a negative outlook. The decision reshapes the financial stability hierarchy in the Romanian energy sector, granting the operator a credit profile superior to that of its own majority shareholder. According to official data published by Mediafax and Economica.net, Fitch also revised Transgaz's Standalone Credit Profile (SCP) upward, from “bbb-” to “bbb”. With this move, the national transmission system operator becomes the highest-Fitch-rated company among the issuers listed on the Bucharest Stock Exchange (BVB) subject to rating evaluations, surpassing major utility and production peers such as Romgaz, Transelectrica, Nuclearelectrica, or Electrica. The Romanian state, through the General Secretariat of the Government, holds a majority stake of 58.5% in Transgaz. However, Fitch’s methodology allowed for a rating above the sovereign due to the company's operational strength and the relative independence of its financial flows. This decision represents a solid validation of the transmission operator's structural maturity relative to country-specific risks. Completion of the Tuzla-Podisor Pipeline and Reduced Execution Risk The direct cause of this historic rating upgrade is the successful completion of the largest investment project in the company's recent history: the Black Sea-Podisor (Tuzla-Podisor) gas pipeline. This strategic pipeline, with a total cost of approximately RON 2.3 billion partially supported by non-refundable grants, has been physically completed, thereby eliminating the major execution risk that previously weighed on Transgaz’s credit profile. The rating agency highlights that the absence of any other single project of this scale in the current capital expenditure (capex) plan drastically reduces the likelihood of delays that could have undermined projected profitability. The company’s financial performance consolidated rapidly following the heavy capex cycle of 2024-2025. Fitch estimates that Transgaz's average FFO net leverage will stand at 3.1x over the 2026-2028 period, remaining comfortably below the critical 4x warning threshold established for the previous “BBB-” rating. Furthermore, the company's Regulated Asset Base (RAB) is projected to expand by nearly 40% in 2025. This robust growth is the result of the official regulatory recognition of the Podisor project in tariffs starting October 2025. Concurrently, Free Cash Flow (FCF) for the 2026-2028 period is projected to normalize to an annual average of approximately minus RON 210 million, a much less negative figure than in previous forecasts, reflecting the stabilization of the investment budget. Lower Financing Costs and Strengthening the Vertical Corridor The immediate consequence of achieving a credit rating superior to the sovereign will be reflected in Transgaz’s financing costs. Holding a “BBB” rating allows the company to access capital from international and local markets at lower interest rates than those paid by the Romanian state for public debt. This financial efficiency indirectly protects household and industrial consumers, as the cost of borrowed capital is a direct component in the regulated transmission tariffs approved by ANRE. Regionally, the Tuzla-Podisor pipeline ensures the physical connection between the gas reserves of the Neptun Deep perimeter and the BRUA corridor (Bulgaria-Romania-Hungary-Austria). This strategic interconnection turns Romania into an essential logistical hub within the Vertical Gas Corridor, offering a viable alternative route for supplying Central and Eastern Europe and reducing historical dependence on eastern imports. Critical Dependence on Neptun Deep Production in 2027 Although the execution risk of the transmission infrastructure has been eliminated, Transgaz's long-term commercial success remains dependent on the production timeline of its upstream partners. The actual commencement of gas extraction from the Neptun Deep offshore field by the consortium of OMV Petrom and Romgaz, scheduled for 2027, represents the critical factor for validating the projected transport volumes. Any delay in commercial production in the Black Sea could reduce transmission tariff revenues, impacting medium-term EBITDA projections. However, by including the Podisor pipeline in the Regulated Asset Base as of autumn 2025, Transgaz has secured the recovery of its capital costs through regulated tariffs, mitigating the direct impact of potential upstream delays on its financial stability.