On August 17, 2023, the international rating agency Standard & Poor's upgraded the credit rating of National Electric Company (NEC) from BB to BB, with a stable outlook, due to an improvement in the company's credit performance. This was reported by NEC.

The rating upgrade is a result of the outstanding performance in 2022 of NEK and the sole owner of the company - Bulgarian Energy Holding (BEH).

The stable outlook reflects the rating agency's expectations that BEH will continue to provide liquidity support to NEK and the other subsidiaries of the Group, as well as will keep its indebtedness low for the period 2023-2025.

The postponement of the liberalization of the retail electricity market for 2025 limits the independent credit profile of NEK. The rating agency predicts that due to the performance of the function of a Public Provider, NEK may be faced with variable financial results.

Fitch confirms BDB's rating: 'BBB' with a positive outlook

The credit agency emphasizes that BEH Group retains its strategic importance for the security of electricity and natural gas supply in the country and points out that the likelihood of government support has increased, as evidenced by the state loans and guarantees provided to companies in the holding structure. Standard & Poor's considers NEK as a subsidiary of strategic importance to BEH Group, given its important role in Bulgaria's energy system as a producer of emission-free electricity from hydropower plants, a supplier of last resort and a public supplier of electricity, as well as the fact that the company managed to transform itself from a loss-making enterprise to a company contributing nearly 20 percent of EBITDA (operating profit before interest, taxes and depreciation) of BEH Group, the statement said.

The rating agency informed that it could upgrade the rating of NEK if the credit profile of BEH Group improves to "bbb-" as a result of greater stability of the group's profitability and more clarity regarding the implementation of national plans and policies aimed at energy transition.

BTA recalls that at the end of 2021, the international rating agency Standard & Poor's also upgraded NEK's credit rating to "BB-" level. The outlook for NEC was stable at the time.

Credit Rating

National Electricity Company

Bulgarian Energy Holding