Fitch Upgrades Bulgarian Energy Holding EAD`s Credit Rating to 'BB+' with Stable Outlook
Fitch Ratings (Fitch) has upgraded Bulgarian Energy Holding EAD's (BEH EAD) Issuer Default Ratings to 'BB+' and assigned a ‘Stable’ outlook. The upgrade follows improvement in BEH's standalone credit profile driven by strong financial results, substantially reduced leverage, improvements in the regulatory framework and strong links wits sole owner – the State.
Fitch has also upgraded BEH's foreign-currency senior unsecured rating, including the rating of BEH's EUR600 million bonds due 2025 and EUR600 million bonds due 2028, to 'BB+' from 'BB'.
The rating agency has revised up BEH's Standalone Credit Profile to 'bb' from 'b+' based on higher earnings, lower net debt and, as a result, substantially reduced financial leverage. This was driven by progressive liberalisation of the energy market and its full integration with neighbouring countries, allowing the group to benefit from a high power-price environment. The credit agency expects net leverage to remain solid for the rating in 2023-2025.
The agency points out that after the completion of the planned liberalization of the energy market in Bulgaria, BEH EAD will be able to sell its entire generated volumes on the competitive market, which should be beneficial for profitability.
The credit agency notes that the regulatory framework has already improved through establishing the Security of the Electricity System Fund (SESF), which successfully covered deficits arising from purchasing energy at regulated prices from producers and selling it to the end consumers at lower tariffs.
For more information please refer to Fitch`s publication: https://www.fitchratings.com/research/corporate-finance/fitch-upgrades-bulgarian-energy-holding-to-bb-outlook-stable-24-03-2023