REG - Soc EnergElectricaSA - Fitch improves the Outlook of Electrica's rating

Societatea Energetica Electrica SAAnnouncement

28/03/2025 13:15

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250328:nRSb7440Ca&default-theme=true

RNS Number : 7440C  Societatea Energetica Electrica SA  28 March 2025

ANNOUNCEMENT - 28 March 2025

Fitch Ratings improves the Outlook of Electrica's Rating to 'BBB-' Stable from
'BBB-' Negative

 

Electrica informs investors that the international agency Fitch Ratings has
upgraded on 27 March 2025 the company's rating outlook from "negative" to
"stable" and has confirmed the long-term rating at the "BBB-" level. This
positive development comes after a complex period marked by global economic
and energy challenges.

Thus, Electrica's rating is similar to Romania's sovereign rating, but the
company's outlook is better than the one attached to the sovereign rating,
which remains "negative". In addition, there is potential for Electrica's
rating to be up two notches above the sovereign rating.

From the first rating from Fitch, on 23 September 2019, and until 16 March
2022, Electrica had a rating higher than the sovereign rating, respectively
"BBB", initially with a "stable" outlook and later "negative", compared to the
"BBB-" sovereign rating. From 16 March 2022, when Electrica was downgraded to
BBB-, with a "negative" outlook, the rating and rating outlook were similar to
the sovereign ones until 23 March 2023, when the outlook for the sovereign
rating was upgraded to "stable". From 17 December 2024, the outlook for the
sovereign rating returned to Negative, Electrica's rating and rating outlook
were again aligned with the sovereign one.

"The return to a 'stable' outlook comes after a complex journey, amid the
uncertainties generated by the pandemic and the energy crisis. The fact that
today we have a higher outlook than the sovereign rating confirms the
company's resilience and ability to adapt. Fitch Ratings' decision validates
our sustained efforts to strengthen the financial position of the Electrica
Group and supports us in the implementation of strategic plans, including the
issuance of green bonds, approved at the end of 2024 and scheduled for this
year. I thank all my colleagues for their effort and involvement in achieving
these results.", stated Mr. Alexandru Chirita, Electrica's CEO.

According to Fitch's analysis, the improvement in Electrica's outlook is
underpinned mainly by:

·    Improved financing structure - Electrica has optimized its financing
structure, reducing its short-term debt ratio from 80% to around 60% of total
debt by the end of 2024. In this context, the company has recently contracted
a EUR 200 million long-term loan worth from the European Investment Bank
(EIB), intended to support investments in the distribution segment. In
addition, Electrica intends to sign in April a syndicated credit facility
worth RON 3.1 billion, which will be used both for the partial refinancing of
existing short-term debt and for financing investments in the production and
distribution segments;

·    Solid financial performance - sustainable performance in the
distribution segment (approximately 80% of EBITDA being derived from regulated
and predictable electricity distribution);

·    The company's net indebtedness (net leverage effect) is expected to
remain within the range set by the rating agency, between 3x and 4x in the
period 2025-2029, as a result of constant EBITDA and solid capital generation
from operations (FFO);

·    Projected EBITDA growth from 2025 - a slight improvement in EBITDA is
forecast for 2025 to approximately RON 1.5 billion, with additional benefits
expected from the generation segment from 2027 onwards;

·    The new regulatory period in the distribution segment provides for an
increase in the return on the regulated asset base (RAB) to 6.94%, a level
that compensates for the decrease in incentives for certain categories of
investments and ensures the separate recognition of losses in the network,
thus contributing to the maintenance of the company's financial stability.

·    Electrica is running an ambitious investment program in renewable
energy, with an estimated budget of approximately RON 1.6 billion by 2029.
These investments aim to boost its own electricity production capacity, thus
serving as a hedge against energy price volatility and contributing to the
achievement of national energy sustainability objectives. It is estimated that
the generation segment will contribute about 10% to the company's EBITDA
starting in 2027, once the planned projects are commissioned.

The full release from Fitch Ratings is available HERE
(https://www.fitchratings.com/site/pr/10304234) .

 

Chief Executive Officer

Alexandru Chirita

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCPPUGUWUPAGWR