Energy, Estonia, Investments, Rating

International Internet Magazine. Baltic States news & analytics Thursday, 28.03.2024, 16:37

S&P affirms Eesti Energia at BBB, raises outlook

BC, Tallinn, 23.03.2018.Print version
The international ratings agency Standard and Poor's (S&P) has improved the outlook on the credit rating of the Estonian power utility Eesti Energia to stable on reduced debt, while affirming the rating at BBB, informs LETA/BNS.

Commenting on the decision, Eesti Energia CFO Andri Avila said that as prices on the energy market have improved somewhat, Eesti Energia as well has more certainty about the future than a year ago.


"The financial standing of Eesti Energia has improved, and therefore the ratings agency's decision to switch its outlook from negative to stable is altogether justified. The stronger financial standing is demonstrated also by the plan of Eesti Energia to redeem bonds due in October this year in the amount of 152 million euros with existing funds. As at the end of 2017, the net debt of Eesti Energia totaled 582 million euros, having decreased by 134 million euros during the year. The last time Eesti Energia's net debt was at that level was in 2012," Avila said.


At the sames time, the CFO highlighted the need for investments to support Eesti Energia's ambitious goal to produce 40 percent of electricity from renewable and alternative sources by 2021.


Standard and Poor's said in its rating update that the stable outlook reflects its expectation that, over 2018-2019, Eesti Energia will maintain funds from operations to debt sustainably above 25 percent and continue receiving government support.


The agency observed that while Esti Energia's oil-shale-based generation portfolio exposes it to increasing carbon-emission costs and competition from more efficient power production from Nordic countries, its vertically integrated oil-shale operations reduce fuel price volatility. Over the past few years, the company has worked to enhance the value added from its oil-shale resources by increasing its shale oil production.


"We believe that, over the next 2-3 years, risks from volatile power and commodities prices and relatively high costs of oil-shale power generation will remain partly mitigated by the company's strategy to address electricity demand at peak

hours, and by relatively stable earnings from its regulated electricity distribution network." it said.


Eesti Energia has been rated by Standard and Poor's and Moody's since 2002. Moody's has issued a Baa3 on the state owned Estonian power group with a stable outlook. The ratings by both Moody's and Standard and Poor's are investment grade.






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