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21 July 2005 - Credit ratings on Europe's top 20 electricity and gas utilities have remained stable over the last few months, but this could change as companies look for growth opportunities, according to a report released today by Standard & Poor's Ratings Services.
The report, titled Top 20 European Utilities By Debt Issuance, stated that the stability reflected the continued strong underlying financial performance in the sector, supported by high power prices and the absence of any major acquisitions, large credit diluting dividends, or share buyback programmes.
Standard & Poor's credit analyst, Andreas Zisga, said: "We expect no pronounced change in the fundamental factors driving the ongoing wholesale power price increases in the short term."
Zisga went on to warn that ratings could be negatively affected when companies compete in the expected increase in merger and acquisition activities. According to Standard and Poor's the market is looking for growth opportunities and the limited number of potential acquisition targets could result in fierce competition and therefore high purchase prices.
The report also predicted that power prices would remain high throughout 2005 and beyond due to further increases in fuel and carbon credit prices.
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