Standard & Poor's lowers credit rating of Eesti Energia from BBB to BBB +

Wednesday, 01 July 2015

The rating agency Standard & Poor's (S&P) lowered the credit rating of Estonia's state-owned energy company Eesti Energia from BBB to BBB + while the outlook remained stable, Eesti Energia announced.

The cause for the rating downgrade was mainly lower sales prices at liquid fuels and electricity markets.

"At the end of 2014, oil prices fell by nearly 50%, the price of electricity at the Nord Pool Spot wholesale market has this year reached a historically low level also," said Eesti Energia financial director Andri Avila. He added that the low prices are beneficial for consumers, but make the situation of energy companies more difficult, which can also be manifested in the reduced credit rating. "In the currently relatively complicated conditions, flexibility is very important which Eesti Energia's oil and electricity cogeneration strategy gives us," said Avila.

The rating agency notes that Eesti Energia's debt burden has increased due to the construction of the Auvere power station that is to be completed this year and construction of Enefit280 oil factory. S&P evaluates the company's financial risk higher in a situation where the profitability of the group can fall due to low energy prices, but debt level does not change significantly.

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