The credit rating of Rosseti Lenenergo PJSC (hereinafter, Rosseti Lenenergo or the Company) is determined by its standalone creditworthiness assessment (SCA) at aa, as well as the high likelihood of “ROSSETI”, PJSC (ACRA rating AAA(RU), outlook Stable; hereinafter, Rosseti or the Holding) providing extraordinary support if necessary.
The SCA of the Company is based on its strong market position in its regions of presence, a moderately strong operating profile, high business profitability, low leverage, and a strong liquidity position.
Rosseti Lenenergo is a regional electric grid company operating in Saint Petersburg and the Leningrad Region.
Key assessment factors
High likelihood of extraordinary support from Rosseti. Rosseti Lenenergo is a natural monopoly that transmits electric power in Saint Petersburg, Russia’s second largest economic center. It is a key region for the Holding that performs quasi-public energy supply functions. As part of Rosseti, the Company is integrated into the single treasury system and the mechanism for providing operating liquidity to subsidiaries.
Infrastructure monopoly with moderate sales risk. Rosseti Lenenergo occupies a dominant position in the electricity transmission market within the boundaries of interconnected networks in Saint Petersburg and the Leningrad Region (market shares of 97% and 80%, respectively). In September 2024, the Company was assigned the status of a systemically important regional grid organization in Saint Petersburg and the Leningrad Region. The share of overdue receivables is low at 1.3% of revenues for 2024.
Moderately strong operating profile. In 2011–2020, tariff-regulating authorities applied a special tariff leveling procedure to the Company, whereby the gross revenue requirement was redistributed through years. Funds subtracted from the gross revenue requirement were returned to the Company in subsequent years of the long-term regulatory period. The regulatory risk facing the Company is has declined because the tariff leveling procedure was not applied in 2021–2025 and is not expected to be applied in the next tariff period, and the accumulated regulatory debt is taken into account in the current tariff decisions.
Increased tariff indexation for the Company is mostly associated with its high investment commitments, as Rosseti Lenenergo has one of the highest ratios of investments to revenues (35% in 2024).
ACRA assesses the Company’s corporate governance as adequate and matching industry standards. The Company’s risk management system minimizes all the major types of risk, while the Holding’s control includes approval of the credit policy and the rules for the placement of funds, which are unified within the group, as well as compliance at the level of the Company’s management bodies. ACRA notes that Rosseti’s control over the Company’s operations is very tight, while the Company’s financial transparency is good.
Positive free cash flow (FCF). In 2024, the Company’s FCF was positive and amounted to RUB 16.2 bln (RUB 8.0 bln in 2023). ACRA expects the Company’s FCF to remain positive in 2025 and thereafter.
In 2024, the Company’s FFO margin before interest payments and taxes was 56% (vs. 51% in 2023). ACRA expects the margin to remain around this level in 2025–2027.
Low leverage. As of April 15, 2025, the Company’s debt portfolio amounted to RUB 10.3 bln. The remaining part of the debt portfolio (RUB 10.0 bln) is made up of a long-term ruble-denominated bond issue. As of December 31, 2024, the ratio of total debt, including pension obligations, to FFO before net interest payments was 0.47x (0.53x as of December 31, 2023). ACRA expects the Company’s leverage to decline gradually over the forecast horizon.
The strong liquidity position is due to a significant amount of funds held in the Company’s accounts and deposits (exceeding RUB 37 bln as of December 31, 2024), as well as a significant amount of available credit lines, which exceeds the Company’s total debt by several times.
Key assumptions
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Corporate capital investment program implemented in full and on time;
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Dividend payments as per the Company’s forecast model.
Potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A negative rating action may be prompted by:
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Rosseti’s loss of control or looser integration between the Company and the Holding;
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Total debt exceeding 2.0x of FFO before net interest payments amid deteriorating debt structure or interest coverage falling below 10.0x;
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FFO margin before interest and taxes falling below 25% along with interest coverage declining below 5.0x;
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Much worse access to external liquidity sources.
Rating components
SCA: aa.
Support: group.
Issue ratings
Rosseti Lenenergo PJSC bonds (RU000A107EC7), maturity date: November 27, 2027, issue volume: RUB 10 bln — AAA(RU).
Credit rating rationale. The issue represents senior unsecured debt of the Company. Due to the absence of either structural or contractual subordination of the issue, ACRA regards it as equal to other existing and future unsecured and unsubordinated debt obligations of the Company. In accordance with ACRA’s methodology, based on the simplified approach, the credit rating of the bond issue is equivalent to that of the Company — AAA(RU).
Regulatory disclosure
The credit ratings have been assigned to Rosseti Lenenergo PJSC and the bond issue (RU000A107EC7) of Rosseti Lenenergo PJSC under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Non-Financial Corporations under the National Scale for the Russian Federation, Methodology for Assigning Credit Ratings with External Support, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation was also applied to assign the credit rating to the bond issue.
The degree of economic development of the rated entity’s regions of presence was assessed based on the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation.
The credit rating of Rosseti Lenenergo PJSC and the credit rating of the bond issue (RU000A107EC7) were published by ACRA for the first time on April 11, 2018 and December 18, 2023. The credit rating of Rosseti Lenenergo PJSC and its outlook, as well as the credit rating of the bond issue of Rosseti Lenenergo PJSC (RU000A107EC7) are expected to be revised within one year following the publication date of this press release.
The credit ratings were assigned based on data provided by Rosseti Lenenergo PJSC, information from publicly available sources, and ACRA’s own databases. The credit ratings are solicited and Rosseti Lenenergo PJSC participated in their assignment.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to Rosseti Lenenergo PJSC. No conflicts of interest were discovered in the course of credit rating assignment.
