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Concorde Capital Research: DTEK Energy keeps 2018 CapEx flat, gets Fitch C rating confirmed

February 05, 2019 | Cbonds

Ukraine’s leading coal and power producer DTEK Energy (DTEKUA) invested UAH 8.4 bln into capital expenditures in 2018, the holding reported on Feb. 4. It increased investments in coal assets 5% yoy to UAH 4.8 bln and in power generation by about 3% yoy to UAH 1.6 bln, with the larger goal of increasing internal coal production and converting its power plants from burning anthracite to hard coal. Other investments amounted to UAH 2.0 bln, including coal machinery assets and power grids (which DTEK Energy spun off in late 2018). All this amounts to UAH 8.4 bln in total CapEx for the holding in 2018, which is in line with UAH 8.42 bln spent in 2017.

In other news, Fitch Ratings reported on Feb. 1 that it has affirmed the rating of its Eurobond at C and its long-term foreign currency rating at RD, which reflects the fact that some portion of the holding’s debt (USD 220 mln, or 11% of total) has not been yet restructured. Once all the debt is restructured, Fitch is going to upgrade DTEK Energy’s ratings to B-, which is Ukraine’s sovereign level. Fitch determined that the holding’s debt profile “has a comfortable mid-term maturity schedule.”

Alexander Paraschiy: With DTEK’s latest ratio of net debt-to-LTM EBITDA being below 2.0x, we believe the holding’s credit rating deserves to be at sovereign level, and we see little risk for the holding’s sustainability from its unrestructured debt.

DTEK Energy's CapEx expenditures are way below the amount agreed upon with creditors during the debt restructuring in 2016-2017 (e.g. for 2018, CapEx was capped at almost UAH 13.0 bln). Nonetheless, these careful investments should strengthen the holding’s balance sheet and improve its chances to restructure, repay or refinance the remaining portion of unrestructured debt soon. So far, we remain neutral on DTEKUA bonds.

Company: DTEK Energy BV

Full company nameDTEK Energy BV
Country of riskNetherlands
Country of registrationNetherlands


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