Thursday, January 31 14:25:46
Global ratings agency, Fitch Ratings today upgraded the ESB's credit rating from BBB+ with a Negative Outlook to BBB+ with a Stable Outlook citing the likelihood of better margins and cost control.
"The Stable Outlook reflects Fitch's revised expectations for ESB's credit metrics compared with previous estimates. This stems from likely better than expected outturn for 2012 on the back of continued cost control programme and revised capex, as well as an improvement in ESB's expected supply business margins in 2012. Whilst we did not expect recovery in supply margin in the foreseeable future, an increased customer base and lower System Marginal Prices (SMP) now appear to support the business line," Fitch said.
Northern Ireland Electricity's credit rating has also been revised from BBB+ (Negative Outlook) to BBB+ (Stable Outlook) in recognition of its ties to ESB.
The ratings applicable to bonds issued by NIE are maintained at A-, but remain on Ratings Watch Negative pending the outcome of NIE's RP5 determination review.
Donal Flynn, Finance Director at ESB, welcomed the revision by Fitch.
"The revised outlook for ESB demonstrates Fitch Ratings' confidence in our financial metrics and future outlook and recognises the progress that we have made in reducing our cost base, as well as our careful management of operating performance over the past year. This development will help to drive investor and financial market confidence and assist ESB in securing capital to fund future investments in electricity infrastructure," he said.
ESB is currently implementing a cost reduction programme which, it says, will deliver annual savings for the company of E280 million over a four year period to 2015. E140 million of the savings will be delivered through reductions in payroll costs.