PKP Intercity with the high Fitch Ratings agency rating
For the first time in its history, PKP Intercity has been assessed by Fitch Ratings. The Carrier obtained a long-term rating in a foreign currency at the “BBB-” level and a long-term rating in a domestic currency at the “BBB” level.
For the first time in its history, PKP Intercity has been assessed by Fitch Ratings. The Carrier obtained a long-term rating in a foreign currency at the “BBB-” level and a long-term rating in a domestic currency at the “BBB” level. It is a good news for a company which intends to sign a contract with the State Treasury for granting guarantee securing credit repayment from the European Investment Bank.
Fitch also granted a long-term rating on the domestic scale at the “A (pol)” level. The prospect of the ratings was determined by Fitch Ratings as stable.
PKP Intercity rating, based on the individual assessment (without considering the State Treasury support), is estimated at the level corresponding to the “B” category. It results from a huge investment plan which is partly financed by debt which will cause lowering of expected results of the company in 2013-2015. Rating at the “BBB” level is an information for the market that the company may issue bonds with high credit quality and the issuer is capable to bear its liabilities.
“PKP IC S.A. Initiated the rating process on its own. Good assessment will enable the carrier to decrease the costs of the State Treasury guarantee by 1.3% per year.
“The assessment, which is made by a renowned rating agency, is not only a very positive signal for us but it also substantially decreases the State Treasury guarantee costs. It is also an important signal for the entire financing sector indicating that we are a serious and trustworthy business partner. We believe that in the future we will achieve a higher rating, nevertheless, for the time being, in connection with the investments in rolling stock, the debt rate will increase substantially. It has to be kept in mind that thanks to this we are a crucial beneficiary of the EU subsidies” - said Paweł Hordyński, the Member of the PKP Intercity Management Board for financial issues.
As the Fitch agency justifies, the Polish government has a big influence on the operational activity of PKP Intercity, including but not limited to developing a long-term strategy for the railway sector and the approval of investment expenditures and financial plans of the company. The plan of investment expenditures of PKP Intercity, which was determined for 2013-2015 at the level 4.1 billion PLN, constitutes a part of a government modernization program of the Polish railway sector using a synergy of available EU means, external financing and own resources. The government treats infrastructural investments, including railway infrastructure and rolling stock, as a priority.
He biggest partner of PKP Intercity in the scope if credit support is currently the European Investment Bank. At the end of September 2012, 50 billion EURO of loan from EIB – guaranteed by the state - amounted to 37% of the entire company debt. The State Treasury owns 65.7% of the PKP IC shares. Another part is at disposal of PKP S.A. which is entirely state-owned. As at the end of September 2012, 37% of the company debt was guaranteed by the State Treasury.
PKP Intercity is a passenger company which decided to undergo assessment by the Fitch agency. In 2010, Fitch Ratings granted long-term ratings to Koleje Mazowieckie – KM Sp.zo.o. In August 2012, Fitch Ratings confirmed a long-term “BBB” rating of Polskie Koleje Państwowe S.A. (PKP) in the foreign currency, a long-term “BBB+” rating in the domestic currency and a long-term “A+(pol)” domestic rating.
About Fitch Ratings
Fitch is regarded as one of the biggest rating agencies in the world, next to the Moody's and Standard & Poor's agencies.
Fitch Ratings was established as Fitch Publishing Company on December 24, 1913 by John Knowles Fitch. Fitch Publishing Company, which was located in the heart of financial district of New York, started its activity by publishing financial statistics of the companies listed on the New York Stock Exchange. In 1924, Fitch introduced a well-known rating scale from “AAA” up to “D” so as to answer to demand on independent financial stock analyses. The scale created by Flitch became quickly recognized and approved by some rating agencies. The grades granted by Fitch became an important criterion for financiers when making investment decisions. In 1975, Fitch was acknowledged by the Security and Exchange Commission in the USA as one of the first three rating agencies. Nowadays, Fitch is a global rating agency, registered in the European Union which deals with providing future related credit analyses, research and data to participants of the independent credit markets. Due to increase and mergers with other agencies, Fitch Ratings currently employs over 200 professionals in over 50 offices in the world. The agency owns two seats – in New York and London where chief Executive of the Fitch group holds office. Fitch Ratings is the only rating agency which has its office and analytics in Poland.
Long-term ratings granted in the Polish domestic scale
Domestic ratings constitute relative quality credit assessment of the entity in comparison with the highest credit rating in a given state. In most cases, the highest rating in a state tends to be accepted the rating of a given state. Thereby, ratings in the domestic scale in Poland cannot be compared with domestic ratings of other countries. Similarly, those ratings cannot be compared with ratings granted at the international level. A special state identifier exists together with each domestic rating. In case of Poland it is: (pol).