S&P Global Ratings has revised to negative from stable the outlook of Croatian state-owned electricity company Hrvatska Elektroprivreda due to the impact of government intervention and high procurement costs amidst the energy crisis.
The energy crisis had negative consequences for HEP. Price caps from April 2022 to March 2023 and high procurement costs led to an expectation of operating losses of about 900 million euro in 2022, S&P said in an announcement.
It also affirmed its ‘BBB’ long-term issuer credit rating on HEP and revised downwards the company’s standalone credit profile (SACP) to ‘bb+’ from ‘bbb-‘.
In 2023, operating performance is expected to stabilize on the back of the announced special measures regarding electricity and heat energy and gas starting April 2023 and the up to 900 million euro package announced by the Croatian government to support the company, it added.
The negative outlook indicates that the credit rating agency could lower the rating if HEP’s funds from operations to debt don’t recover beyond 40% by 2024, which could stem from state support not being received promptly or operating performance not stabilizing in line with S&P’s expectations this year.
