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Moody's upgrades Holding Slovenske Rating to Ba1

Power News - Published on Wed, 11 Sep 2019

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Moody's Investors Service has upgraded the long-term corporate family rating of Holding Slovenske Elektrarne doo to Ba1 from Ba2 and the probability of default rating to Ba1-PD from Ba2-PD. Concurrently, Moody's has changed the outlook on HSE's ratings to stable from positive. The rating upgrade reflects HSE's lower debt leverage, and Moody's expectation that the company will continue to benefit from robust electricity prices compared to the past few years, which together with a modest capital expenditure programme and an expected absence of dividends to shareholders, should enable further deleveraging over the next few years.

The higher electricity prices reflect the sharp rise in EU carbon prices in the second half of 2018 which were a key driver of higher profits in HSE's hydro generation division, and which is expected to continue. The price of EU Allowances has risen from below EUR8/tonne in January 2018 to above EUR24/tonne at the end of last year, supporting higher electricity prices.

The lower debt levels are evidenced by improved credit metrics for the financial year ending 2018 when HSE reported a lower leverage ratio of 5.5x Net debt/EBITDA compared to 5.7x in 2017. A combination of moderate capital expenditure focused mainly on maintenance, higher power prices and the absence of shareholder distributions enabled the company to reduce its reported financial debt by nearly 8% to EUR784 million per year end 2018.

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Posted By : Rabi Wangkhem on Wed, 11 Sep 2019
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