Moody’s might drop Eesti Energia

Moody's Investors Service said it placed the P-2 short-term issuer rating, Baa2 long-term issuer rating and senior unsecured ratings of Eesti Energia AS on review for downgrade.

Moody’s said the review reflects the recent drop in power and commodity prices and its expectation that Eesti Energia's credit metrics will weaken materially from current levels in the next two to three years, absent any significant mitigating measures.

The average power price in 2015 in Nord Pool Spot Estonia was €31.1/MWh, down 17% from 2014, with the December 2015 average price reaching a historical low of €26.2/MWh. Given Estonia's close linkage to the Nordic markets through the Estlink interconnectors, Eesti Energia is likely to remain exposed to low prices in the Nordic region, which are driven by hydrological conditions out of line with Eesti Energia's carbon intensive generation. This linkage will likely be exacerbated by the commissioning of the NordBalt interconnector between Lithuania and Sweden in 2016, the agency said.

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