Standard & Poor's revised its outlook on HEP to stable from negative

Standard & Poor's revised its outlook on HEP to stable from negative

In its report of 21 December 2016, Standard & Poor's (S&P) affirmed its long-term rating on Hrvatska elektroprivreda (BB) and revised its outlook on HEP to stable from negative.

In light of the methodology and criteria used by S&P on rating HEP, the revision reflects the outlook upgrade on the sovereign rating, which is the first positive outlook trend on sovereign rating in the last nine years as a result of a faster growth of economy and the consolidation of public finances than expected.

'We are extremely pleased with the revised outlook on HEP by Standard & Poor's, which is another confirmation of active corporate governance of HEP Group's financial position and its overall business operations following the credit rating upgrade two months ago. This concludes an exceptionally successful business year during which, among others, we have retained a high 85% share of home-based electricity sale, and acquired 12.5% share of Slovenia's commercial segment.', said Tomislav Rosandić, a member of the Management Board of Hrvatska elektroprivreda d.d.

In late October, Standard & Poor's upgraded its stand-alone corporate rating on Hrvatska elektroprivreda to BB from BB-. The report stated that the main reason for said rating upgrade was strengthened liquidity as well as HEP's very strong credit parametres due to which the liquidity assessment was upgraded, in Standard & Poor's terms, from less than adequate to adequate.  Standard & Poor's sees HEP's conduct of regulated electricity transmission and distribution as well as its ownership of significant hydro and nuclear electricity sources as positive.  In its assessment, the Agency also stated that HEP had a leading share on the electricity market and that no switching of HEP's customers to its competitors is expected. HEP has the advantage of supplying legacy universal customers, which represent the bulk of the retail market, as well as guaranteed customers with its own supply.