Fitch Ratings said it has affirmed the Bulgarian Energy Holding's (BEH) long-term foreign currency issuer default rating (IDR) and long-term local currency IDR at 'BB+' with a stable outlook.
BEH's 500 million euro ($695 million) bond has been affirmed at foreign currency senior unsecured rating 'BB+', the agency said in a statement.
"The ratings reflect BEH's and its 100%-owned subsidiaries' (BEH group) dominant position in the country's electricity and gas markets, and its strong links with the Bulgarian state (BBB-/Stable), mainly evidenced by state guarantees for about 30% of the group's debt and strong operational and strategic ties," Fitch Ratings also said in its statement. "The ratings also incorporate the weakness of the Bulgarian regulatory framework despite some recent improvements in relation to BEH, corporate governance limitations and the group's large capex plan for 2013-2017 that will likely increase its financial leverage."
"The rating for the unsecured bonds of BEH reflects our view that the structural subordination of the holding company's creditors to the external creditors lending directly to its operating companies is mitigated by the increased share of the holding company's debt in total debt and the low ratio of prior-ranking debt (the debt of subsidiaries who do not guarantee BEH) to consolidated EBITDA," Fitch added.