Moody's downgrades PGE

Moody's Investors Service said it downgraded PGE Polska Grupa Energetyczna SA's issuer rating to Baa1 from A3. The outlook is stable.

The agency said the downgrade reflects the execution risk associated with PGE's investment plans and the related funding requirements in the context of the weak levels of wholesale power prices and uncertainty around development of energy markets in Poland.

PGE's Baa1 rating reflects the group's well-established position in Poland's energy sector as a vertically integrated utility, supported by strong financial performance with low leverage and a solid liquidity position, the agency said.

However, Moody's considers these positives to be offset by a limited diversification and difficult operating environment, which has exerted negative pressure on PGE's cash flows and profitability from lower power prices and high exposure to carbon.

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