On 6th of February 2023 Moody's improved Bulgarian Energy Holding EAD's (BEH) outlook from stable to positive and affirmed long-term corporate family rating (CFR) of Ba1 and the Ba2 ratings of the senior unsecured eurobonds.
The outlook’s upgrade from stable to positive was driven by the improved financial metrics and progress in the liberalization of the Bulgarian electricity and gas markets, given BEH Group's profile including electricity generation and public gas supply.
The rating agency pointed out that despite material capital expenditure, especially for gas infrastructure, BEH Group's leverage metrics improved over time and are likely to stay strong on the back of high-power prices.
The rating affirmation is further supported by the ongoing financial support that has been provided by the company's sole owner, the Government of Bulgaria (Baa1 stable).
Moody’s stated that BEH's rating is supported by the group's low-carbon power generation mix with around 75% of output stemming from nuclear and hydropower plants and its ownership of strategic infrastructure for gas and electricity transmission, whose operators contribute around 25% of annual EBITDA on consolidated base.
For the six months ended 30 June 2022, Bulgarian Energy Holding reported consolidated total revenues of BGN 9,845 million and EBITDA of BGN 2,837 million. The progress in the liberalization of the electricity and gas markets is expected to put BEH into a beneficial position.
Тhe rating is constrained by BEH's extraordinary contributions to the Security of the Electricity System Fund (SESF) in 2022 and a lack of visibility as to what such amounts may be in the future.
BEH’s rating could be upgraded if the market liberalization process is fully completed and proves to ensure improved earnings of the group's generation subsidiaries, maintaining the indicator above Funds from Operation/ Net Debt of 25%, as well as preserve the support of company's sole owner – the Government of Bulgaria.
For more information, please visit:Moody’s Press Release