Enemalta rating confirmed, propped up by state support

Ratings agency Standard & Poor's yesterday affirmed Enemalta's BBB+ long-term corporate credit rating following a review of the company.

The outlook is stable.

The rating is based on a top-down methodology and reflects Enemalta's 100 per cent ownership by and support from the state (A/Stable/A-1), the agency said.

"The rating approach is based on the electricity sector's critical importance for the country; Enemalta's key public policy role, the low likelihood of privatisation in the short-to-medium term and the strong direct and indirect support provided by the Maltese government, which guarantees more than 70 per cent of Enemalta's debt," said credit analyst Monica Mariani.

These strengths, it added, were offset by Enemalta's very weak underlying credit quality, which, on a stand-alone basis, would be of deeply speculative grade, reflecting the company's extremely poor financial performance and very aggressive financial profile.

"The stable outlook is based on our expectation that the company will continue to be supported by the Maltese government, and also reflects the stable outlook on the Republic of Malta.

"Any actual or perceived weakening of the government's support for Enemalta would likely result in a downgrade, particularly if tariffs were not to become fully cost reflective and Enemalta were not to improve its operating efficiency," Ms Mariani said.