Bangkok--3 Aug--Moody's Investors
Moody's Investors Service has changed its outlook for the Asian (ex-Japan) power utilities sector to stable from negative for the next 12-18 months.
"Behind our change is firstly the consideration that debt-funded acquisitions, which pose a certain level of risk, are likely to decline in light of the economic downturn," says Jennifer Wong, a Moody's Assistant Vice President and Analyst. "This development provides rating support, as many acquisitions are highly capital intensive and some remain in their early stages with regard to overall cash flow generation."
"In addition, we expect fewer aggressive overseas acquisitions in the near to medium term, while declining capex requirements will keep debt levels manageable," adds Wong.
Wong was speaking on the release of Moody's latest outlook -- which she authored -- on the Asian power utilities sector. The report looks at key rating considerations and their rating implications, and includes themes such as liquidity and refinancing, financial profiles, and reform.
Moody's rates 17 utilities in the region with ratings ranging from Aa3 to Ba3, while rating outlooks are either stable or positive.
"Moreover, other reasons for the change in the industry outlook -- as distinct from the rating outlook -- to stable include the decline and stabilization in fuel costs against the backdrop of ad-hoc tariff adjustments, which will likely alleviate margin pressures on those utilities without automatic cost pass-through mechanisms," says Wong.
"And overall refinancing requirements in 2009 for the sector have declined significantly as compared to 2008," adds Wong. "Furthermore, close linkages with governments enable most state-owned power utilities to maintain strong access to their domestic capital and bank markets."
"At the same time, strong levels of government ownership continue to dominate the sector and remain one of the key rating drivers which provide support to government-owned Asian utilities," says Wong. "Reform of the industry -- that is privatization in many cases -- has also slowed, and so this is another support for the industry."
At the same time, the report also notes that in view of the economic slowdown, electricity demand growth is expected to slow.
The report is entitled, Asian (ex-Japan) Power Utilities Sector: Outlook 2009. It can be found at www.moodys.com.
Hong Kong
Jennifer W. Wong
Asst Vice President - Analyst
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077
Hong Kong
Gary Lau
Senior Vice President
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077