S&P Global Ratings said that it has upgraded long- term issuer credit and issue ratings of Croatian state-owned power utility HEP to BBB from BBB- and its senior unsecured debt to reflect a similar action on the Government’s ratings taken in view of the upcoming euro adoption in January 2023.
The agency said in the statement that it believes that the Government now has an increased capacity to support state-owned multi-utility HEP, if needed. The stable outlook mirrors that on the sovereign and reflects its expectation that the company’s credit quality will remain commensurate with the bbb- stand-alone credit profile (SACP), with adjusted funds from operations to debt expected to remain well above 45 % over the next two years.
HEP plays a very important role for the Croatian government because its regulated transmission and distribution operations are crucial for the security of the country’s energy supply. Its low- carbon generation fleet, which represents about 80 % of national electricity production, provides a significant competitive advantage considering increasing carbon costs and the EU’s low-carbon energy directives.
Earlier this month, the European Parliament approved Croatia’s entry into the eurozone as of the beginning of next year. The country will become the 20th member of the eurozone.
