Sell-downs won't hurt state power company ratings

Ratings of New Zealand’s big state-owned power companies are unlikely to be harmed if the government sells minority stakes in them, rating agency Standard & Poor’s said today.

If the country's three state-owned integrated electricity generator-retailers awere partially sold to private investors “there is unlikely to be any effect on the rating uplift of one notch that applies to the ratings on these companies,” Standard & Poor’s said.

It rates Mighty River Power as BBB+/Negative/--, Genesis Power as BBB+/Stable/-- and Meridian Energy as BBB+/Stable/A-2.

The current rating uplift mainly reflects S&P’s view of the “important” role of the three companies to the New Zealand economy, given the significant generation capacity and market share of energy supplied by the three entities, the rating agency said.

“Also, the proposed sales and timing are not definitive, and the government is expected to retain majority ownership and control of the three businesses.

“Nevertheless, besides the stand-lone credit profile of the entities, the factors that could affect our view of government support include: the level of minority shareholding to be sold, the form of sale, the identity of the minority shareholders and the ensuing board composition, and the corporate governance and financial policies of these companies under a revised share ownership.” 

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