Moody's rates DTEK notes B3

Moody's Investors Service said it assigned a definitive B3 rating with a negative outlook to the 7 7/8% $600 million notes due 2018 issued by DTEK Finance plc, a wholly owned finance subsidiary of DTEK Holdings BV. The outlook is negative.

The proceeds will be used to refinance the purchase of up to $300 million of the existing $500 million of 9½% notes due 2015 issued by DTEK Finance BV under a tender offer and consent solicitation and to finance DTEK's investment program, working capital, new acquisitions and some financial commitments.

The agency said DTEK's B3 corporate financial rating remains constrained by the high-risk operating environment in Ukraine, where DTEK's integrated electric utility business operates, and by DTEK's active involvement in the ongoing privatization of Ukraine's electricity sector, which requires significant financing and may potentially weaken the company's currently strong financial profile and constrain its liquidity position.

Aside from the constraints of Ukraine's B3 foreign-currency bond country ceiling, the agency regards DTEK as strongly positioned in the B3 rating category given its solid business fundamentals, reasonable performance and moderate leverage.

Moody's said the negative outlook reflects the negative outlook on Ukraine's sovereign rating and the consequent risk of a further downgrade of the bond ceiling.

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