Ratings agency Fitch assigned to Romanian electricity producer Nuclearelectrica, the company which operates the country’s sole nuclear power plant Cernavoda, a BBB- rating (lowest in the investment-grade area), with negative outlook. This is the first time that Nuclearelectrica has received an investment grade rating.
The BBB- Long-Term Foreign-Currency Issuer Default Rating (IDR) reflects Nuclearelectrica’s strong market position as the sole producer of electricity from nuclear power plants in Romania, covering around 20 % of the country’s electricity demand, a solid operational record and a strong financial profile.
Nuclearelectrica’s negative outlook mirrors that of the sovereign as its rating would be constrained by the sovereign rating of Romania (BBB-/ Negative), if the latter is downgraded.
The business profile of Nuclearelectrica is supported by its strong market position as the sole producer of electricity based on nuclear technology, covering around 20 % of the country’s total demand for electricity and 35 % of electricity produced without greenhouse gas emissions. The company operates two nuclear reactors with a total installed capacity of about 1.4 GW, has a strong operational record, high operating margins and a solid position in the Romanian merit order, ahead of thermal generation.
Nuclearelectrica operates two units under licenses, which are valid till 2023 for unit 1 and till 2030 for unit 2. The licenses are renewed every 10 years on the basis of nuclear safety assessments. Fitch assumes that the license for unit 1 to be renewed in 2023.
The Romanian Government has recently introduced a windfall tax of 80 % on electricity producers, with the exception for power plants that run on fossil fuels, on revenues from prices higher than 91 euros/MWh. This measure will apply till end-March 2022. Fitch expects this to have limited impact on Nuclearelectrica’s financial profile at present as our current electricity price assumptions are below this level.
