S&P Upgrades Bulgaria's NEK to 'B+'

SOFIA (Bulgaria), August 9 (SeeNews) - S&P Global Ratings said on Thursday that it has raised its long-term issuer credit rating on Bulgaria's National Electricity Company, NEK, to 'B+' from 'B' with stable outlook. "In our view, thanks to improved credit metrics reported in 2017 and improved liquidity, Bulgarian Energy Holding (BEH) has increased its ability to support its subsidiaries," S&P said in a statement. In June and July 2018, BEH issued a total of €550 million in Eurobonds to refinance the €500 million bonds maturing in November 2018. The stable outlook reflects S&P's view that, despite the company's high leverage, ongoing regulatory reforms and continuing payments from the electricity fund will enable NEK to demonstrate sustainable positive EBITDA, and BEH will remain able and willing to support NEK's liquidity, the ratings agency said. S&P also said: "BEH's operating performance has stabilized on the back of regulatory and legislative reforms started in 2015, and we expected it will strengthen further in 2018-2019. NEK continues to receive compensation from the Security of the Electricity System Fund (SESF) established by the regulator, which we understand is to predominantly cover NEK's annual tariff deficit. This compensation supports NEK's and BEH's credit metrics and cash flows, and strengthens BEH's ability to support NEK. BEH's consolidated S&P Global Ratings-adjusted EBITDA for 2017 amounted to Bulgarian lev (BGN) 848 million (about €440 million), and we forecast it will exceed BGN1 billion in 2019. We now assess BEH's group credit profile (GCP) at 'bb-'. We believe recent regulatory developments were positive for NEK and the group, and could support sustainable credit metrics for several years. Still, we continue to think...