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Concorde Capital Research: S&P affirms DTEK Renewables rating at B-, Stable outlook

April 21, 2020 | Cbonds

S&P Global Ratings affirmed the credit rating of DTEK Renewables at B- with a Stable outlook, the agency reported on Apr. 17. It acknowledges risks for a green energy rates revision in Ukraine, the recent announcement of debt restructuring talks by sister company DTEK Energy (DTEKUA), as well as worsened payment discipline on the Ukrainian energy market, still expecting that DTEK Renewables will maintain its sufficient liquidity and will go on with its new projects. S&P expects the company to demonstrate FFO-to-debt of above 12% and debt-to-EBITDA close to 4x from 2020. The agency also expects DTEK Renewables will “refrain from any large-scale dividends or loans to related parties.”

The agency will lower the DTEK Renewables rating in case green tariffs will be lowered more than the draft legislation assumes, in case the credit quality of parent DTEK B.V. worsens, or the company faces significant liquidity issues due to a delay in payments on the energy market or a need to support financially the parent group. The company’s rating could be upgraded in case its FFO-to-debt ratio improves above 20% and debt to EBITDA falls materially below 4.0x.

Alexander Paraschiy: Taking into account the increasing share of renewable energy in Ukraine’s electricity balance (3.7% of total power generated in January 2020, up from 1.3% a year before), the pressure of high renewable electricity prices is becoming significant for the market. For that reason, a downward revision of green power rates looks unavoidable, and the size of the revision is hard to estimate right now.

We see a risk that the revision will be deeper in the mid-term as compared to what the government is trying to implement now. So we see mid-term risks for companies like DTEK Renewables as high. In our view, S&P was too generous with DTEK Renewables to keep its rating outlook Stable.

Issue: DTEK RENEWABLES, 8.5% 12nov2024, EUR

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
outstandingUkraine11/12/2024325,000,000 EUR-/B-/B-


Full company nameDTEK RENEWABLES B.V.
Country of riskUkraine
Country of registrationNetherlands


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