Fitch: PGE Sweden bonds BBB+

Fitch Ratings said it assigned an expected foreign-currency senior unsecured rating of BBB+ to PGE Sweden AB’s upcoming bonds.

The upcoming notes are rated at the same level as PGE Polska Grupa Energetyczna SA to reflect unconditional and irrevocable guarantee by PGE.

The notes will be issued under PGE Sweden’s €2 billion euro medium-term note program, guaranteed by PGE.

PGE is among the least-indebted large European utilities rated by Fitch with close to zero net leverage, the agency said.

The company also a high exposure to the challenging conventional power generation sector and a low share of more predictable, regulated income from distribution compared with its European peers, Fitch said.

The ratings reflect PGE’s vertically integrated operations in the Polish electricity market, strong position in power generation, lower costs of electricity production than the Polish average and strong position in electricity distribution and supply, the agency said.

PGE’s generation business is under pressure from declining margins, decreasing free carbon dioxide allowances and a rising share of renewables supported by subsidies, Fitch said.

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