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01.04.2008
Credit-Rating: Liberalization in electricity market may boost ratings of energy-distributing companies
Recent years have seen many Ukraine`s energy-supplying companies (oblenergos) to have improved their performance indicators, which help them get high ratings. In fact, Credit-Rating assigned mainly investment-grade ratings in 4Q08 to debt instruments issued by 4 oblenergos.
The principal factor to underpin the ratings is stable net incomes from sale and transit of electric energy, the fact contributed by natural monopoly of these companies, and increased payments from customers in the past few years. At the same time, the major factor to weigh on the ratings is high companies` dependency upon state regulatory policy, namely tariffs set by National Electricity Regulatory Commission of Ukraine (albeit, some oblenergos suffer from significant debts towards State-Owned Company Energorynok, which have been cumulated over the past few years).
In Credit-Rating`s view, the switch to direct agreements on electricity supply would allow for creating a competitive environment in this sector and would spur generating and distributing companies to cut costs and to enhance the payment discipline. We should note that the strategy of Ukraine`s energy sector scheduled through 2030 envisages a shift from present model of wholesale market to concluding bilateral direct contracts between energy-generating companies and energy-distributing companies, and final customers as well. Thus, the liberalization of the national energy market may contribute to rise in energy-supplying companies` ratings.
Credit-Rating`s note:
As of today, Credit-Rating has assigned ratings to seven issuances of registered interest-bearing bonds for the overall amount of UAH841m issued by the following companies: Zhytomyroblenergo EC OJSC, Kirovogradoblenergo OJSC, Sevastopolenergo EC OJSC, Odessaoblenergo OJSC. The bonds issued by the first 3 said companies carry investment-grade ratings of uaA- and uaBBB with stable outlook, with Odessaoblenergo OJSC`s UAH500m bond issue rated uaBB with stable outlook.
For more information, please contact:
Information and Communication Department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
