IBI-Rating has upgraded the credit ratings of JSC «ODESAOBLENERGO» and its bonds

IBI-Rating informs on upgrading of the long-term credit ratings of JSC «ODESAOBLENERGO» and the credit rating of the interest-bearing secured B series bonds (nominal volume of the issue is UAH 500 mln, with redemption in 2022) to uaA grade. The credit rating outlook was changed from «evolving» to «stable».

In accordance with the Law of Ukraine «About the Electricity Market» from 01/01/2019, the JSC «ODESAOBLENERGO» has only the distribution function of electrical energy. The Company has the necessary licenses to carry out the above-mentioned activities. JSC «ODESAOBLENERGO» is a natural monopolist in the territory of the Odesa oblast, which ensures stable sales.

In the analyzed period, JSC «ODESAOBLENERGO» was included in the DTEK Group, which is the largest vertically integrated energy holding in Ukraine.

The cessation of activities related to the supply of electricity to consumers under the introduced legislative amendments led to a decrease in the net income of JSC «ODESAOBLENERGO» for 6 months by 2019 to UAH 1,761.7 million, which is 58.4% less than in the same period of the previous year. At the same time, operating profit increased by 63.6% to UAH 188.7 million, while net profit increased to UAH 164.1 million. (+ 87.9%), which had a positive impact on profitability.

According to the results of January-June 2019, the net debt of JSC «ODESAOBLENERGO» rapidly decreased due to repayment of bank loan obligations, despite the receipt of a loan and the growth of obligations on interest-bearing bonds. The reduction in net debt was also affected by a significant increase in highly liquid assets. A significant reduction in net debt based on the results of the analyzed period with a simultaneous increase in profitability led to a significant reduction in the debt burden, the level of which is estimated as low.

The Issuer retains the need for significant investment in the renewal of fixed assets, given the need for continuous modernization.

In order to conduct the analytical research the materials provided by JSC «ODESAOBLENERGO» have been used, including: annual financial statements for 2016-2018 and 6 months of 2019, background information on the enterprise activities, parameters of the B series bonds issue, other necessary internal information, expectations of the IBI-Rating Agency, as well as the information from the public sources, which the Rating agency considers credible.

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