Energy, Estonia, Financial Services, Investments, Rating

The baseline credit assessment (BCA) on Elering is baa1 under Moody’s government-related issuers methodology.

As the factors underpinning Elering's credit profile, Moody’s listed low business risk profile of Elering's regulated transmission network operations, supportive regulatory framework and a conservative financial risk profile.

Elering's credit quality is constrained by the company's small scale, with total reported assets of 904 million euros as at the end of 2016, continued challenges of integrating Estonia into the wider European energy transmission system, and an expected moderate deterioration in cash flows reflecting a decreasing electricity regulated asset base as certain assets reach the end of their regulatory life, and lower returns due to the low interest rate environment, partially mitigated by lower future funding costs, according to Moody’s.

Elering's profile benefits from the potential support from the government of Estonia, its 100% owner having a rating of A1. The final rating incorporates two notches of uplift from Elering's baseline credit assessment (BCA) of baa1 under Moody’s government-related issuers methodology.

The outlook on Elering's ratings is stable, reflecting the rating agency's expectation that Elering will exhibit a financial profile commensurate with the guidelines for the current rating and that the company will continue to prudently manage its liquidity position.