Fitch affirms Nampower’s ratings

A fortnight ago, Fitch Ratings affirmed NamPower’s long-term foreign currency Issuer Default Rating at ‘BBB-’ and Short-Term IDR at ‘F3’. Fitch has also affirmed NamPower’s National Long-Term rating at ‘AA+ and its Short-Term rating at ‘F1+. The Outlooks on the Long-Term ratings are stable.
“The affirmation reflects the continued alignment of NamPower’s ratings with those of the Namibian sovereign (BBB-/Stable). Under Fitch’s parent and subsidiary rating linkage methodology, NamPower has strong legal, operational and strategic links with the state of Namibia, including direct government guarantees for part of NamPower’s debt,” Fitch motivated.
Fitch also pointed to Nampower’s inability to attract large scale investment indicating that government support could subside. It said, in Fitch’s view, tangible support, including the share of debt with direct government guarantees, may decrease if there is a lack of new large-scale investments, which may affect our assessment of the strength of the links with the shareholder. Fitch describes NamPower as “the monopoly electricity company in Namibia and has a crucial role in executing electrification policies and ensuring sufficient electricity supply.”
“NamPower’s standalone credit profile is commensurate with a ‘BB’ rating category in our view, reflecting the business profile with limited generation diversification and increasing exposure to imported energy and our expectation of increasing leverage required to fund the capacity expansion.”

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