S&P, Fitch react positively to PPC foreseen acquisition of Enel’s Romanian activity, assets

Public Power Corp. (PPC) acquisition of Enel SpA’s participation in a Romanian utility and in-country projects received “thumbs up” from two international ratings firms on Thursday, in the wake of the binding agreement’s disclosure.

ATHEX-listed and state-run PPC announced the final agreement with Enel to purchase its integrated power utility in Romania (Enel Romania SrL) for a consideration of roughly 1.3 billion euros (proportional-equity value), via cash and committed bank borrowing.

S&P stated that it expects the agreement «to close by year-end 2023 … We expect the consolidated group’s credit metrics to remain commensurate with our ratings, with funds from operations (FFO) to debt at about 17% and debt to EBITDA below 4.5x (consolidating Enel Romania from Jan. 1, 2023), thanks to continued strong business performance and disciplined financial management. Also, diversification benefits and the integration of regulated activities of Enel Romania (about 50% of its total EBITDA) are slightly positive to PPC’s competitive position, fully mitigated by high near-term execution risk».

S&P also affirmed a ‘BB-‘ long-term issuer credit and ‘BB-‘ issue ratings for PPC.

On its part, Fitch was also positive, assessing that «…We believe that the sizable transaction has an overall neutral effect on PPC’s business risk profile assessment as it will accelerate renewables capacity and increase geographical diversification. The regulatory framework in Romania is relatively less transparent and predictable, given several recent regulatory tweaks. As a result, we do not expect a change in Fitch’s debt capacity for the current rating. Remedial measures that have been recently implemented in Romania could support a more benign assessment, once a positive track record of implementation is established».