The outlook on the ratings is negative. The decision was taken after a review for downgrade initiated on July 4, 2012, Moody’s said in a statement.
“The downgrade of Transelectrica’s ratings to Ba2 from Ba1 reflects the ongoing concerns over the liquidity position of Transelectrica, the associated refinancing risk, and the company’s continued reliance on short term bank facilities to meet ongoing funding needs,” said Nicholas Stevens, Moody’s lead analyst for Transelectrica.
The negative outlook captures the continued risk to support expectations from the Romanian government, Stevens added.
Transelectrica’s rating incorporates a two-notch uplift for potential government support, reads the statement.
The outlook on Transelectrica’s ratings could be stabilized following a stabilization of the outlook on the Romanian government rating, the establishment of an appropriate funding and liquidity program to give Transelectrica visibility as to funding sources, as well as the creation of a suitable hedging strategy to mitigate earnings volatility, Moody’s said.
Transelectrica registered net profit of 19.2 million lei (EUR4.3 million) in the first nine months of 2012, about eight times lower than the profit registered in the similar interval a year ago. In the second and third quarters of 2012, Transelectrica reported losses.
Its revenues amounted to RON2.18 billion in January-September, up 4.8% on the year, and overall expenses increased 13.5% to RON2.14 billion.