IBI-Rating has affirmed credit ratings of «ODESAOBLENERGO» PrJSC and its series А bonds

IBI-Rating informs on affirming of the long-term credit ratings of «ODESAOBLENERGO» PrJSC and its interest-bearing series А bonds at uaBBB- grade, with a «stable» outlook.

«ODESAOBLENERGO» PrJSC is engaged in the electricity transmission and supply by local grids to consumers of Odesa region. The Issuer has the necessary licenses with an unlimited validity period to carry out the above-mentioned activities. The Issuer is a natural monopoly in Odessa region in the transmission and supply of electricity at regulated tariffs, which ensures stable sales.

By results of 2016, the volume of productive electricity supplies to own consumers of «ODESAOBLENERGO» PrJSC decreased by 0.4% (mainly due to the decrease in consumption by the population, the largest group of consumers). As a result of the increase in electricity selling tariffs and the consequent decline in the level of payments, indebtedness of the main consumer groups grew.

Net revenue of «ODESAOBLENERGO» PrJSC in 2016 increased by 36.8%, as compared with the similar period of the previous year, amounting to UAH 6 102.8 m. There was an increase in all major components of net revenue, the largest one remaining the electricity supplies to legal entities (accounting for about 70% of the total structure).

By results of 2016, the Issuer's activity was unprofitable, the main reasons being the revaluation of fixed assets and negative exchange rate differences on foreign currency denominated liabilities in the conditions of the hryvnia devaluation. As a result of attracting of new loans, as well as the revaluation of obligations under foreign currency denominated loans, the debt of «ODESAOBLENERGO» PrJSC increased, as at the end of 2016. The Issuer’s level of debt burden increased, based on results of the year, but was assessed as acceptable.

The Issuer remains susceptible to foreign currency risk caused by the existing foreign currency denominated loans under conditions of the hryvnia devaluation. The Issuer’s need in considerable amounts of capital investments in renewal of fixed assets remains, given the need for constant upgrading of fixed assets according to the legislation of Ukraine. In 2016, the amount of financing under the investment program of «ODESAOBLENERGO» PrJSC amounted to UAH 296.7m. The main directions (accounting for 75% of the total amount of financing) were the construction, modernization and reconstruction of the electrical grids and equipment.

In order to conduct the analytical research the materials provided by «ODESAOBLENERGO» PrJSC have been used, including: annual financial statements for 2014-2016 , background information on the enterprise activities, parameters of the series A bonds issue, other necessary internal information, expectations of the Rating agency IBI Rating, as well as the information from the public sources, which the Rating agency considers credible.

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