SEC Receives Upgrade from Fitch Ratings
In a significant development, Saudi Electricity Co. (SEC) has received an upgrade from Fitch Ratings, elevating its long-term foreign and local currency issuer default rating to “A+” from “A.” This upgrade comes as a result of strong government support for the company.
Fitch Ratings also raised SEC’s national long-term rating to “AAA” from “AA,” with a stable outlook. The agency highlighted SEC’s dominant position in Saudi Arabia’s electricity market, maintaining its standalone credit profile at “bbb.”
According to Fitch, the upgrade reflects the reassessment of SEC’s relationship with the Saudi Arabian government, aligning its ratings with those of Saudi Arabia (A+/Stable). An “A+” rating signifies low default risk and a strong financial capacity, while a “bbb” rating indicates a lower but still adequate capacity to meet financial commitments.
CEO of SEC, Khaled bin Hamad Al-Gnoon, expressed his satisfaction with the rating action, attributing it to the company’s efforts to enhance the reliability and efficiency of Saudi Arabia’s electrical grid. Al-Gnoon emphasized SEC’s governance, alignment with the Ministry of Energy, decarbonization strategy, and solid financial profile as key factors contributing to the upgrade.
The company highlighted robust decision-making, strong government support, a stable financial profile, the conversion of liabilities into equity-like instruments, leverage headroom, and strong cash flow visibility as driving factors behind the upgrade. SEC recently reported a significant increase in net profit for the first quarter of 2024, indicating its continued growth and success.