Creditreform Rating has downgraded the solicited corporate issuer rating of Fluvius System Operator from A+ to A. Creditreform Rating has also downgraded the solicited corporate issue rating of the long-term local currency senior unsecured notes issued by Fluvius System Operator CV from A+ to A. These issues are included in the list of ECB-eligible marketable assets, which can be found on the ECB's website. The outlook for the ratings changed to stable from negative. For more details regarding the ratings, please refer to our rating report below.
Creditreform Rating has confirmed the solicited corporate issuer rating of Fluvius System Operator CV at A+. The outlook remains negative. The rating is based on its financial ratios, low business risk profile supported by a regulatory framework, and the strategic importance of the Group for the region of Flanders (Belgium). The proximity to the Belgian government as well as our assumption that Fluvius System Operator CV would receive financial support from the ultimate shareholders (Flemish municipalities) if necessary have a positive impact on the rating result according to our sub-methodology "government-related entities". The negative outlook primarily reflects the unfavourable effects of the new regulatory framework for the gas and electricity market, which will have a noticeable negative impact on the Group's earnings as well as its operational internal financial strength from the 2021 financial year onwards. The lower allowed income in combination with high investment pressure will lead to a significant deterioration of its financial profile. To prevent this from happening, the Group implemented a series of mitigating measures which will limit the deterioration of its financial profile. We nonetheless expect a slight deterioration of the Group´s relevant financial metrics over the course of the next years because we anticipate negative free cash flow generation (including dividends), which will lead to an increase in indebtedness.
Creditreform Rating has confirmed the solicited corporate issuer rating of Fluvius System Operator CV with A + and changed the outlook from stable to negative. The decisive factor for the rating level was the proximity to the Belgian government and our assumption that Fluvius System Operator CV would receive financial support from the ultimate shareholders (Flemish municipalities) if necessary. Based on the solid financial figures for the 2019 financial year and an overall stable development in the first half of 2020, the strategic importance of the company for Flanders (Belgium) and the low business risk profile continued to be important factors. The negative outlook is primarily based on the new regulatory framework for gas and electricity markets in Flanders for the period of 2021-2024 published by VREG on August 13, 2020, which will be applied from January 1, 2021. The new tariff methodology will cause a reduction in the company's allowed income in the coming regulatory period and will put a considerable strain on the operating profit and internal operating financing power. Moreover, we expect the indebtedness of the Group to increase in combination with the increased investment requirements.
Creditreform Rating has confirmed the solicited corporate issuer rating of Fluvius cvba at A+. The outlook is stable. The primary reasons behind this decision are the company´s strategic importance for the region Flanders (Belgium), which increased as a result of the merger with Infrax, and the low business risk with a transparent and supportive regulatory framework. During the business year 2018 the overall stable development continued. The Group´s earnings were negatively impacted by non-recurring effects that were incurred following the VREG´s decision of August 2018. We continue to assume that the ultimate shareholders of Fluvius System Operator cvba (Flemish municipalities) will offer the company financial support if necessary. For the current year we expect an overall stable operative development.
Creditreform Rating has confirmed the corporate rating of Eandis System Operator cvba at A+. The outlook is stable. Reasons behind the decision are the strategic importance of the company for the region Flanders (Belgium), its low business risk profile with a transparent and supportive regulatory framework (e.g. reduction of stock of unsold certificates, recovery of regulatory balance) and the high likelihood of extraordinary support of the regional authorities (ultimate shareholders) if necessary. The impacts of the current restructuring of the Flemish energy distribution sector, which foresees a merger with Infrax cvba and a possible partial integration of the "financing associations", remain to be seen.
Within the framework of the merger by absorption of Infrax CVBA, Eandis System Operator CVBA changed its name into Fluvius System Operator CVBA since 1 July 2018. The current rating of former Eandis System Operator CVBA will be pursued by Creditreform Rating AG under the name Fluvius System Operator CVBA.
Creditreform Rating has confirmed the unsolicited corporate rating of Eandis System Operator cvba at A+. The rating has been reviewed on the basis of the current rating methodology for government related corporates.