22/08/2008 - 11:00

Robust outlook for Synergy: S&P

22/08/2008 - 11:00

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The short-term outlook for state energy retailer Synergy appears robust with Standard & Poor's Ratings Services today assigning an A-1+ corporate credit rating.

The short-term outlook for state energy retailer Synergy appears healthy with Standard & Poor's Ratings Services today assigning an A-1+ corporate credit rating.

The rating service also affirmed its AA long-term corporate credit rating on the company, saying the outlook is stable.

"The short-term credit rating on Synergy reflects the company's extremely strong capacity to meet its short-term financial commitments," S&Ps credit analyst Tammy Garay said.

"What's more, regular oversight of the company from its 'AAA' rated owner the Western Australian government means that a cash shortfall at Synergy is unlikely."

She added that the short-term credit rating will allow Synergy to trade more cost efficiently in the state's wholesale electricity market.

"According to the independent market operator's rules, along with other criteria that needs to be met, a company can trade without a bank guarantee to support its trades if it holds a Standard & Poor's short-term credit rating of 'A-1' or higher."

Also underpinning the ratings is Synergy's strong competitive position as the main electricity retailer in the state's South West Interconnected System region, a growing market, and the netback pricing structure of Synergy's vesting contracts.

"These strengths are partly offset by our expectations of a weakening in Synergy's future balance sheets; indeed, we expect the local government's push for a more competitive energy market will result in a moderation of the underlying credit profile for Synergy in the longer term."

 

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