Fitch Ratings has elevated the credit status of Saudi Electricity Co. by upgrading its issuer default ratings to ‘A+’ from ‘A’, highlighting the strong support from the Saudi government.
Simultaneously, the company’s national long-term rating has been advanced to ‘AAA’, up from ‘AA’, paired with a stable outlook. This upgrade is attributed to the organization’s robust standing within the electricity sector of Saudi Arabia.
Fitch acknowledges that while Saudi Electricity Co.’s independent credit profile is rated at ‘bbb’, signifying a satisfactory capacity to meet financial commitments, the company’s ratings have been aligned with those of Saudi Arabia due to strengthened connections with the state under revised criteria for government-related entities.
An ‘A+’ rating signifies a low probability of default and a robust capability to fulfill financial commitments, according to the criteria set by the American rating agency.
CEO Khaled bin Hamad Al-Gnoon responded to the upgrade by emphasizing the company’s dedication to strengthening the reliability and efficiency of the national electrical grid. Al-Gnoon also highlighted the alignment with the Ministry of Energy and Saudi Arabia’s decarbonization agenda, praising the firm’s financial health and governance excellence.
The company attributes this rating upgrade to its sound decision-making process, consistent financial profile, and unwavering governmental support. Acknowledgment of the conversion of substantial liabilities to equity-like instruments, leverage flexibility, and reliable cash flow also played a role.
Recently, Saudi Electricity Co. reported a substantial net profit increase for the first quarter of 2024, marking an 87 percent rise from the corresponding period in the previous year, reflecting its strong financial performance.