Research Update: Hungarian Integrated Utility MVM Group Affirmed At 'BBB-' As Financial Performance Exceeds Expectations; Outlook Stable

MVM Energy Private LLC (MVM), the largest integrated utility in Hungary, posted strong results in 2022. Despite volatile energy markets, funds from operations (FFO) to debt reached 32%. We now expect FFO to debt to remain above 30% for the next two to three years, which is commensurate with the current rating. The Hungarian government has already agreed to extend the support it provided through the utility protection fund (UPF) until the end of 2024, but the scheme could be prolonged further. Although we anticipate that MVM's operating performance will remain stable, and its financial policy prudent, credit metrics are likely to remain volatile because the group's net debt is affected by seasonal swings. Debt peaks between October and December,

...- MVM Energy Private LLC (MVM), the largest integrated utility in Hungary, posted strong results in 2022. Despite volatile energy markets, funds from operations (FFO) to debt reached 32%. - We now expect FFO to debt to remain above 30% for the next two to three years, which is commensurate with the current rating. The Hungarian government has already agreed to extend the support it provided through the utility protection fund (UPF) until the end of 2024, but the scheme could be prolonged further. - Although we anticipate that MVM's operating performance will remain stable, and its financial policy prudent, credit metrics are likely to remain volatile because the group's net debt is affected by seasonal swings. Debt peaks between October and December, when MVM's need for storage against the upcoming winter is highest. - We therefore affirmed our '###-' long-term ratings on MVM and its senior unsecured debt. - The stable outlook indicates that we expect MVM to show gradual growth from 2024...

Research Update