Euler Hermes Rating assigns an A- issuer credit rating to Elia Group S.A./ N.V. The agency affirms the credit rating existing since 2015. The agency expects the rating to remain stable over the next twelve months.
Euler Hermes Rating assesses the business risk of Elia Group S.A./ N.V. as low. The agency views as strengths Elia Group’s regional monopolies in Belgium and Germany and its position as a transmission system operator (TSO) with its own transmission infrastructure and government licenses. Heavy investment in modernizing and upgrading the grid, integrating renewable energy into the grid, and expanding supranational transmission lines in northwestern and central Europe will improve grid stability and resilience and reduce the threat of blackouts over the long term. Regulatory grid development plans, incentive systems and the roll-out of smart grids appear likely to accelerate the achievement of build-out targets. The agency notes only low downside risks of industry disruptions resulting from the European economic recession, increasing regulatory and political risks and structural transition in supply chains. Euler Hermes Rating believes, Elia has the potential to provide new digital services for grid based demandside, peak-load and network management. In the agency’s view, its risks include grid instability, new technologies and greater EU deregulation arising from changes in energy policy and the regulatory framework.
Euler Hermes Rating rates the Elia Group’s financial risk as moderate. Its earning potential and financing structure are reasonable given its secured cash flow, fair regulated returns on equity and capital employed and its legally protected ability to recover its regulatory and non-regulatory costs. Thanks to its preferred access to funding from public and municipal shareholders and good access to capital markets, Euler Hermes Rating evaluates Elia’s Group financing structure as good. However, the agency expects that its ability to deleverage will be increasingly impacted by its need to finance large growth investments and its obligation to repurchase green certificates from Solar Chest S.A. Due to its reasonable cash reserve and freely available lines of credit Euler Hermes Rating views Elia Group’s financial flexibility as good. Its investments and business projections for the years ahead appear realistic to us overall.
Euler Hermes Rating believes the operational risks are consistent with the anchor rating. The agency considers the high economic priority of Elia’s public utility role for Belgium and Ger-many, its tight integration and the high (sub) sovereign credit ratings of Belgium, Germany, and the Belgium provinces and municipalities to be positive rating factors. Therefore Euler Hermes Rating assign two-notches of uplift to the stand-alone-rating of BBB, resulting in a rating of A-.
Elia Group S.A./N.V. operates electricity transmission grids (TSO) in Belgium and in Germa-ny. In 2019 the Elia Group generated revenues of € 2.2 billion with more than 2,500 employees.
Euler Hermes Rating GmbH (Euler Hermes Rating) was founded in 2001 as an independent European rating agency of the Euler Hermes and Allianz Group focusing on issuer and issue ratings. Euler Hermes Rating is registered as a credit agency (CRA) in accordance with Regulation (EC) of the European Parliament and Council (as amended) and is considered as an external credit assessment institution (ECAI) by the European Banking Authority (EBA). Euler Hermes Rating is a subsidiary of Euler Hermes (ELE:PA), the world leader in trade credit in-surance.
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