Agency drops PPC to negative
Ratings agency Standard & Poor’s revised its outlook on Greek electricity utility Public Power Corporation (PPC) to negative from stable, reflecting the company’s poor financial results over the past six months due to an unfavorable operating environment and uncertainty about future improvement. PPC’s BBB+ long-term corporate credit rating was affirmed. «The negative outlook indicates a lack of visibility on future tariffs and uncertainty about PPC’s ability to improve its operating and financial performance,» said Standard & Poor’s credit analyst Ana Nogales. A recent tariff increase and a fuel surcharge mechanism is not expected to improve its financial performance, according to the agency. «Continued privatizations or deeper structural market reforms may put downward pressure on the rating,» Nogales added. PPC’s operational and financial performance in the first half of 2008 was adversely affected by poor hydro conditions, reduction in lignite generation, high oil and fuel costs, a staff strike and increases in electricity wholesale purchases.
