Fitch puts Eurohold Bulgaria on watch

Fitch Ratings said it placed Eurohold Bulgaria AD's long-term issuer default rating on Rating Watch negative.

The negative watch follows news that Eurohold plans to acquire the Bulgarian assets of CEZ AS for €335 million.

The completion of the transaction is subject to approvals from the Bulgarian Competition Authority and the Bulgarian energy regulator, Fitch said.

The negative watch reflects a view that the proposed acquisition of CEZ assets could give rise to financial risks due to the expected high debt proportion in the financing structure, the agency said, as well as integration and execution risks.

The planned high debt proportion in the financing structure could significantly reduce distributable earnings from CEZ assets especially in the initial period, Fitch said.

However, power distribution is regulated and produces stable cash flows, the agency said, and so the acquisition of CEZ assets should over time contribute to higher stability and predictability of Eurohold's earnings.

This could contribute positively to the group's credit profile in the medium to long term, Fitch said.

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