IBI-Rating has updated the credit ratings of «ODESAOBLENERGO» PrJSC and has determined the credit ratings of its bonds

Rating agency IBI-Rating informs on affirming of the long-term credit ratings of «ODESAOBLENERGO» PrJSC at uaBBB- grade, with a «stable» outlook. The credit rating of the interest-bearing secured B series bonds (nominal volume of the issue amount UAH 500 mln., with redemption in 2022) is determined at uaBBB grade, with a «stable» outlook. These bonds were issued for the purpose of converting A series bonds whose credit rating was withdrawn.

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

By the results of the first half of the 2017, the volume of productive electricity supplies to own consumers of «ODESAOBLENERGO» PrJSC increased by 1.2%. The periodic increase in tariffs for end users causes a further increase in the debt for consumed electricity. The largest debtors remained the population and enterprises of the housing and communal services sector.

Net revenue of «ODESAOBLENERGO» PrJSC by 6 months 2017 increased by 39%, as compared with the similar period of the previous year, amounting to UAH 3,822.9 mln. 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). The activity of «ODESAOBLENERGO» PrJSC by the results of 6 months of 2017 was profitable - net profit amounted to UAH 70.1 mln, against UAH 14.5 mln for the same period of the previous year. The revaluation of liabilities on foreign currency loans as a result of strengthening the hryvnia exchange rate (with an unchanged the volume of liabilities in the currency of loans) led to a reduction in the debt of «ODESAOBLENERGO» PrJSC at the end of June 2017, despite the re-placement of a part of previously repurchased interest-bearing bonds. Reduction of net debt, while improving financial results, led to a decrease in the debt burden of the Issuer, the level of which is assessed as acceptable. The sensitivity to foreign exchange risk remains, due to the availability of foreign currency loans in the conditions of the hryvnia devaluation.

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. For the first half of 2017, the amount of financing under the investment program of «ODESAOBLENERGO» PrJSC amounted to UAH 142.6 mln. The main directions (accounting for 64% 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 and 6 months of 2017, background information on the enterprise activities, parameters of the B series 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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