Our Experts Comment the Times Series

See All the Comments

British Power

21 November 2019 by jbchevrel

Centrica (CNALN) is the U.K.’s biggest domestic energy supplier (incl. British Gas and Direct Energy). It is an integrated energy company offering home and business energy solutions. That credit belongs to the Main index since series s05. Rated Baa1n/BBB for currently 106bp on the 5y, it is the 7th widest name in Main index, 6th widest name in non-financial Main index. Along with other UK IG corporate CDS, CNALN has underperformed UK financial HoldCo CDS after the recent Brexit-related ‘UK rally’ (i.e. £ FX rally UKT/£ rates under-performance). Today CNALN said that the full cash flow and earnings outlook was unchanged. That trading statement was rather positive after a soft batch of numbers this summer. UK energy customer losses are slowing. That was reassuring, mostly for equity (+9%) than for credit (5y CDS is ~unchanged on the day, we close it -1). In this intermediary report, CNALN said trading in Jul-Oct was in line with expectations and they maintained their 2019 full-year guidance, even as they keep facing customers departures (they lost 107k retail customers in Jul-Oct). They guided on FY £1.8-2bn OCF, EOY net debt £3-3.5bn, FY capex £800m. The next big stop will be the 2019 preliminary results on February 13th, 2020.