This is the first time that the company receives the BBB rating, putting it into investment grade.
Electrica Group published a document on the Bucharest Stock Exchange that they have obtained the issuer corporate rating of BBB, with a stable outlook, from the rating agency Fitch Ratings. The rating puts the company in the investment grade for the first time.
Fitch Ratings states that the rating reflects Electrica’s resilient business profile with 80%-85% of EBITDA coming from regulated and fairly predictable electricity distribution and a strong financial profile. Under our rating case leverage will increase but remain low, which is commensurate with Electrica’s Standalone Credit Profile (SCP) of ‘bbb’.
The rating is above the sovereign rating of Romania (BBB-/Stable), due to Electrica’s weak links with its main shareholder, the Romanian state, assessed under Fitch’s Government-Related Entities (GRE) and Parent and Subsidiary Linkage (PSL) Rating Criteria.
Fitch’s Key Assumptions Within their Rating Case for the Issuer
- Stable EBITDA at RON 0.6bn to RON 0.7 bn per year over 2019-2023
- Distribution accounting for 80% – 85% of EBITDA, supply for around 15% and electricity services for the remainder
- Capex totaling RON 3.2bn over 2019-2023, with around 95% in distribution
- Lower dividends at RON 0.1bn to RON 0.2bn per year over 2019 – 2023
- New debt interest of 3.5%
