RIYADH: Saudi Electricity Co. received an upgrade from Fitch Ratings, raising its long-term foreign and local currency issuer default rating to “A+” from “A,” citing government support.
In its latest report, the agency also upgraded the company’s national long-term rating to “AAA” from “AA,” with a stable outlook.
According to Fitch, SEC’s standalone credit profile remains at “bbb” due to its dominant position in Saudi Arabia’s electricity market.
“The upgrade follows our reassessment of SEC’s links with the Saudi Arabian government under Fitch’s recently updated Government-Related Entities Rating Criteria. SEC’s ratings are now equalized with those of Saudi Arabia (A+/Stable),” stated Fitch in the report.
According to the US-based agency, an “A+” rating denotes expectations of low default risk and a strong capacity to meet financial commitments.
On the other hand, a “bbb” rating indicates that while default risk expectations are currently low and the capacity to meet financial commitments is adequate, adverse business or economic conditions could impair this capacity.
Commenting on the upgrade, Khaled bin Hamad Al-Gnoon, CEO of SEC, said the rating action is a testament to the company’s efforts and investments to bolster the reliability and efficiency of Saudi Arabia’s electrical grid.
“This improved rating is reflective of our best-in-class governance, our close alignment with the Ministry of Energy and Saudi Arabia’s decarbonization strategy, and our solid financial profile,” said Al-Gnoon.
He added: “We are committed to maintaining our service excellence and fulfilling our pivotal role in powering Saudi Arabia’s future.”
In a statement, the company said the upgrade was driven by several key factors, including recognition of SEC’s robust decision-making and strong government support.
Additionally, the upgrade acknowledges SEC’s stable financial profile, bolstered by the conversion of SR168 billion ($44.80 billion) of liabilities into equity-like instruments, the company’s leverage headroom, and strong cash flow visibility.
Earlier this month, SEC reported a net profit of SR897 million for the first quarter of 2024, marking an 87 percent increase compared to the same period the previous year.
