A further credit rating upgrade for power utility PPC, whose grade was lifted from CCC+ to B- by Standard & Poor’s yesterday, will depend on the progress of the corporation’s new business plan and, possibly, the Greek economy’s overall performance.
PPC’s upgrade essentially signals a slight improvement in the market’s confidence for the utility’s ability to meet financial obligations amid tough economic conditions. Long-term challenges concerning PPC’s sustainability remain, S&P noted in its report.
The power utility’s ability to restructure for reduced lignite dependence and greater RES participation, as well as its net debt progress, are pivotal factors in the new PPC business plan, S&P underlined.
The financial services company anticipates an EBITDA rebound from 315 million euros in 2018 to 495 million euros in 2019 for the power utility. Its net debt is expected to remain at 4.4 billion euros, while the debt to EBITDA ratio should fall to 9 from 13.5 in 2018, S&P projected.
PPC’s debt figures can be expected to improve as a result of pricing policy revisions implemented early September, which will boost the utility’s earnings per customer, S&P noted.
The introduction of a clause to electricity supply agreements that triggers tariff increases if CO2 emission right costs exceed certain limits will also help the company’s debt reduction, the report pointed out.
The termination of NOME auctions, whose EBITDA cost for PPC reached 224 million euros in 2018 and 72 million euros in 2017, is another favorable development, according to the S&P report.
Yesterday’s credit rating upgrade takes PPC one notch below the B grade it was at in the spring of 2014, when the utility had successfully headed to international markets for two bond issues, a 3-year bond worth 200 million euros and a 5-year bond worth 500 million euros.