Ratings agency Fitch downgraded Romanian electricity supplier and distributor Electrica’s long- term rating from BBB to BBB-, maintaining a negative outlook.
Electrica’s standalone credit profile (SCP) has also been downgraded from bbb to bbb-. The statement from the agency said that the rating reflects Electrica’s extremely poor performance in 2021 due to the abnormally high energy acquisition costs required to cover its risk-free supply position and significant grid losses.
The negative outlook reflects Fitch’s expectations of persistently weak (or negative) generation of funds in operations (FFOs) and poor liquidity.
The negative performance in the fourth quarter of 2021, the negative funds from operations in 2021 and a significant increase in net debt to 220 million euros from 80 million a year before, show the major impact of the current electricity market on Electrica. A significant increase in energy prices has massively increased the purchase costs of the uncovered portion of the supply business risks and the costs required to cover large grid losses, which account for approximately 9 – 10 % of distributed energy (approximately 2.1 TWh).
Fitch warned that the difficulties Electrica faced in 2021 will persist in 2022 as well.
