Fitch upgrades ESB rating to A-

Ratings agency Fitch has upgraded ESB’s senior unsecured rating from BBB+ to A- following a similar upgrade of Ireland’s credit ratings last week.

In an announcement yesterday, Fitch said that the company’s stronger-than-expected cash flows in 2013 allied with a cost reduction programme contributed to an improved outlook for the company.

“Cash flows for 2013 have been stronger than our expectations as a result of efficiencies achieved through ESB’s cost control programme, capex reductions, and improved performance in the generation and supply business divisions,” a statement from the ratings agency said.

Fitch also indicated regulated earnings, which account for a high proportion of ESB’s EBITDA, allowed it to outperform other utilities company’s.

“The rating action follows a recent upgrade of Ireland to A- from BBB+, removing the constraint on ESB’s senior unsecured debt rating,” a statement said.

Reduced remuneration and increased market share as a result of improved performance in the generation business were also identified by Fitch as key rating drivers.