JSC IDGC Holding received from Moody’s Investors Service an international credit rating of Ba1 with a stable outlook. Additionally, Moody’s Interfax Rating Agency assigned IDGC Holding a national scale rating of Aa1.ru, reflecting the company’s credit worthiness compared with its competitors in the Russian Federation.
This is the first time that IDGC Holding has received a credit rating.
The Ba1/Aa1.ru rating assigned to IDGC Holding reflects the following key factors:
- the average risk level taking account of the company’s status as a regulated monopoly that operates in Russia’s developing electric power market;
- the conservative borrowing policy pursued by the company;
- potential support from the company’s majority shareholder, the Russian government.
A stable outlook means that it is highly probable that the evaluation corresponds to the assigned rating.
The rating is based on a consolidated evaluation of operational and financial indicators of IDGC Holding subsidiaries and dependent companies. The factors listed below had a positive influence on the evaluation:
1) IDGC Holding’s strategic position in the Russian electricity industry;
2) advantages stemming from geographically diversified operations;
3) support provided by the government for the implementation of a new tariff regulation method (RAB).
The negative factors affecting the evaluation were as follows:
1) an unstable regulator environment, including the shortcomings of laws on tariff setting;
2) a short period of IDGC Holding’s operation as a standalone electricity business, which prevents an evaluation of its current management efficiency. IDGC Holding has been in operation since July 1, 2008;
3) a potential risk that large-scale investment programs may fail and their influence on the company’s financial policy.
As the government is IDGC Holding’s majority shareholder and is interested in developing the Russian electricity distribution grid sector, Moody’s considers the company to be a government-related issuer (GRI). The assigned credit rating takes account of advantages resulting from actual and potential government support.
At present, RusHydro, MegaFon, Novolipetsk Steel, and some other Russian companies have the same credit rating (Ba1).
JSC IDGC Holding is an open joint-stock company established on July 1, 2008, as a result of the reorganization of RAO UES of Russia. JSC IDGC Holding has shareholdings in 11 Interregional Distribution Grid Companies (IDGC).
Moody’s Interfax Rating Agency (MIRA) specializes in credit risk analysis in Russia. Moody’s Interfax Rating Agency (MIRA) is controlled by Moody’s Investors Service, one of the three largest players providing credit ratings, research and analysis on issuers in the global capital markets. Moody’s Investors Service is a subsidiary of Moody’s Corporation.
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