S&P rates Irkutskenergo

Standard & Poor's said it assigned its ruBBB+ Russia national scale rating to Russia-based regional power and heat utility Irkutskenergo, AO EiE.

The B global scale rating on the company is unaffected.

S&P said the rating on Irkutskenergo is constrained by: the limited ability for full cost pass-through in Russia's nontransparent and politicized tariff environment; the weak characteristics of regional power and heat markets, with relatively low tariffs; the company's fairly high customer concentration; and continued poor payment discipline among customers. A further weakness is a potential conflict of interest for the company's main shareholders, who also control aluminum smelters, Irkutskenergo's largest customers.

These risks are offset at the rating level, S&P said, by Irkutskenergo's position as the monopoly vertically integrated electricity and heat supplier in the Irkutsk Oblast, the move toward more supportive and transparent regulation in Russia, the company's diversified generation portfolio, and the prospect of its continued strong competitive position in the Siberian power zone even after market deregulation. Irkutskenergo also maintains fair liquidity and debt protection metrics for the rating.

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