Asian power firms' outlook stable despite high fuel prices: Moody's
Asian power firms' outlook stable despite high fuel prices: Moody's
Agence France-Presse, Singapore
The outlook for Asian power ulities will remain stable in the
next 12 months despite recent fuel price increases, Moody's
Investors Service said on Monday.
Sustainable growth in consumption, supportive regulatory
environments and utilities' steady financial profiles were
offsetting concerns over fuel prices, large capital requirements
and risks linked to overseas expansion, it said.
"Furthermore, most utilities' financial profiles remain sound
and compare favorably to their global investment grade peers,"
the credit rating agency said in a special commentary on the
power sector.
Moody's said it did not expect any significant developments in
deregulation and liberalization in the near term, with
governments wary of opening up their markets and regulators
focused on ensuring stable power supply.
"The exception will be the Philippines which will likely push
for the privatization of its generation and transmission assets
to raise the funding needed to cover the huge deficit of its
loss-making state-owned utility, National Power Corp.," it said.
The Moody's commentary covered utilities in Hong Kong, India,
South Korea, Malaysia, the Philippines, Singapore and Thailand.
The Philippine utility got the lowest rating at Ba2 with a
negative outlook for both foreign and local currency debt. The
rest were rated higher and were either stable or positive in
outlook.
The Electricity Generating Authority of Thailand (EGAT)
received an A1 rating and stable outlook for foreign currency
debt, CLP Holdings Ltd. in Hong Kong got A1/stable, and Tenaga
Nasional in Malaysia Baa2/stable.
While the sector's prospects remained generally stable,
Moody's said tariff-setting mechanisms remained opaque in certain
countries, making them highly dependent on electricity demand for
revenue and cash-flow growth.
Financial profiles would come under pressure if fuel prices
continued to rise and remained high for a prolonged period
without tariff adjustments "to allow for cost pass through" to
consumers, Moody's said.
Utilities were also exposed to adverse currency movements,
while revenues were largely generated in local currency.
"The risk is partially mitigated by the sector's efforts to
reduce foreign currency debt. We draw additional comfort from
their ability to access domestic and international bank and
capital markets," it said.
Moody's cautioned that "an aggressive expansion strategy into
more competitive and uncertain regulatory environments could
raise overall business risk profiles and pressure ratings over
the medium term."