Moody’s maintained its Baa1 rating for CEZ unsecured debt; however, the rating agency will continue to monitor the company for further, possibly negative, rating implications related to the government’s sector restructuring plan. According to the plan, CEZ will buy the state’s stakes in eight regional distributors, and will sell to the state a 66% stake in its fully owned subsidiary, CEPS, which operates the national transmission grid. Although the valuations of the relevant companies have not yet been completed, it is clear that CEZ will have to take on additional debt to finance the transaction. Although this could concern debt-rating agencies, based on the available information the plan would increase CEZ stock value given the plan’s expected positive impact on CEZ’s domestic market share.
The Czech television station Prima reported that based on the restructuring plan, the safety of the national transmission grid operated by CEPS, of which 66% is to be sold to the state, must be updated, and that the update would cost up to CZK 4 bil. and would take approx. 10 years to complete. Given the reported time period, and the fact that the majority ownership of CEPS will probably be sold to the state, CEZ stock will not likely react.
(Jiri Soustruznik)