S&P lifts Eesti Energia view to stable

Standard & Poor's said it revised its outlook on Eesti Energia AS to stable from negative.

At the same time, the A- long-term corporate credit rating on Eesti Energia was affirmed.

S&P said the outlook revision reflects stabilized prospects for continued strong implied government support and the strengthening of the company's underlying medium-term financial prospects following a downward revision of its investment program.

The ratings on Eesti Energia reflect the company's strong business risk profile, its transmission and distribution monopolies and its dominant position in electricity generation and supply in Estonia, as well as prospects of increasing export revenues by 2007 when the Estlink subsea cable to Finland is planned for commissioning, S&P noted.

The rating is underpinned by the supportive regulation and implicit support from the company's 100% owner, the Republic of Estonia (A/positive/A-1), S&P said, adding these strengths are balanced by Eesti Energia's reliance on Estonia's small market, a significant modernization program and the, albeit decreasing, risk of political intrusion in tariff-setting and structural features.

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