Fitch lowers TVO to negative

Fitch Ratings said it revised Teollisuuden Voima Oyj’s (TVO) outlook to negative from stable and affirmed its long-term issuer default rating and senior unsecured rating at BBB and short-term issuer default rating at F3.

The outlook revision reflects the weakened mid-term outlook for wholesale electricity prices, which will erode the value creation for the company’s shareholders, Fitch said.

Value creation is one of the key considerations for an assessment of the company’s credit profile, particularly when the Olkiluoto 3 nuclear power plant will be commissioned in late 2018, leading to substantially higher electricity production costs, the agency explained.

Fitch said it may downgrade the rating in the next 12- to 18-months depending on the evolution of the expected value creation and support from the shareholders.

The company continues to benefit from demonstrated strong shareholder support, the agency added.

Electricity producers in Finland are exposed to the weak power price outlook in Nord Pool, Fitch said, but are less vulnerable to the very low spot prices in Norway and Sweden.

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