IBI-Rating has affirmed the credit ratings of "Odessaoblenergo" PJSC and Series A Bonds

IBI-Rating informs on affirming the long-term credit ratings of "Odessaoblenergo" PJSC and interest-bearing series A bonds at uaBBB- grade, with a "stable" outlook. "Odessaoblenergo" PJSC operates the transmission and supply of electricity through the local grids to consumers of Odessa oblast’. The Issuer has the necessary licenses of an unlimited period of duration for conducting these activities. The Issuer is a natural monopoly in the Odessa oblast’, which ensures the stability of sales.

According to the results 6 months of 2015, the electricity transmission and supply by the grids of "Odessaoblenergo" PJSC grew due to the increased volume of electricity transit, while the supply to its own consumers decreased. As at 30.06.2015, "VS Energy International Ukraine" LLC, the State Property Fund of Ukraine and VS Energy International NV remained among the main shareholders of the company. Accordingly, the Rating agency «IBI-Rating» believes that the support of the Issuer by its major shareholders in the event such a need arises is likely.

Due to the increased selling tariffs the net income of "Odessaoblenergo" PJSC for 6 months of 2015 increased by 22.8% and amounted to UAH 2 077.3 million. Despite the substantial growth of financial expenses caused by the revaluation of liabilities on the foreign currency loans, the result of the Issuer's activities for 6 months of 2015 became the net profit in the amount of UAH 81.6 million, whereas in the same period of the previous year its activities were unprofitable. The prevailing amount of the company’s debt liabilities, in particular, on the bank loans denominated in foreign currency, in the absence of foreign exchange earnings in the conditions of devaluation of the hryvnia, predetermine the company’s vulnerability to the currency risk. The Issuer retains the need for significant amounts of capital investments, given the need for continuous upgrading of fixed assets in accordance with the legislation of Ukraine

A positive impact on the credit rating may have, as follows: improved financial results with an increase of performance indicators and reduced dependence on external sources of finance, liberalization of the energy market of Ukraine. A negative impact on the credit rating may have, as follows: default on debt liabilities, substantial growth of the debt burden, significant deterioration of financial results and reduced effectiveness of operations, a significant decline in consumer payments with an increase in electricity rates, a deterioration of the political and economic situation in the country.

In order to perform the analytical research the materials provided by "Odessaoblenergo" PJSC were used, including the annual financial statements for 2012-2014 and 6 months of 2015, the background information on its activity and parameters of the series A bond issue, other necessary internal information, expectations of the Rating agency «IBI Rating», as well as the information from public sources, which the rating agency considers reliable.