The credit rating of Rosseti Volga, PJSC (hereinafter, Rosseti Volga or the Company) stems from the Company’s monopolistic market position in its regions of presence, high business profitability, very low leverage, high interest coverage, and high liquidity. The rating is constrained by the FCF margin which is under pressure from a significant volume of capital expenses under the investment program. The Agency views the likelihood of support being provided by “Federal Grid Company – ROSSETI”, PUBLIC JOINT-STOCK COMPANY (ACRA rating AAA(RU), outlook Stable; hereinafter, Rosseti or the Parent Company) as high.
Rosseti Volga is an interregional electric power grid company operating in seven regions of the Volga Federal District.
KEY ASSESSMENT FACTORS
High likelihood of extraordinary support from Rosseti. Rosseti Volga is an infrastructure company that supplies electricity to the Saratov, Samara, Ulyanovsk, Orenburg and Penza Regions, the Republic of Mordovia, and the Chuvash Republic. The Parent Company is the key shareholder. Rosseti Volga demonstrates good financial performance. There is no need for additional financial support from its shareholders. However, previous cases of support from the Parent Company to its other subsidiaries and affiliates show that, if necessary, the provision of such support is highly likely.
Infrastructure monopoly subject to moderate regulatory risk. Rosseti Volga occupies a dominant position in the market for electricity transmission services within the boundaries of connected networks in the service area (market share of around 63%). The status of a systemically important regional grid organization has been received by all branches of the Company. The current size of tariffs ensures a high business profitability. At the same time, there is a risk of sociopolitical factors affecting tariff decisions, which, together with the low level of socioeconomic development of some of the aforementioned regions, leads to higher regulatory and the sales risks facing the Company. Effective debt management ensures good payment discipline. Payment collection is around 100%.
Well-developed corporate governance system. ACRA views the Company’s corporate governance level as adequate and matching industry standards. The risk management system minimizes all major types of risks, and ROSSETI’s control provides for the approval of key internal regulatory documents (credit policy, regulations for investing funds, and other documents unified within the group), as well as monitoring their compliance at the level of the Company’s management bodies. The degree of financial transparency is high.
Medium business size and high profitability. In 2024, the Company continued to improve its financial performance in line with ACRA’s expectations: revenue increased by 8% year-on-year and reached RUB 83.4 bln. At the same time, the FFO before net interest and taxes amounted to RUB 13 bln (or 0.6 bps of GDP), which corresponds to the medium score for the business size per the Agency’s methodology. The FFO before net interest and taxes margin in 2024 was 16%, which corresponds to a high level of profitability for companies in the industry; ACRA estimates that this figure may exceed 20% in 2025–2028,, taking into account the expected increase in tariffs.
Investment program and free cash flow. In 2024, FCF amounted to about RUB 1.0 bln vs. RUB 5.4 bln a year earlier. At the same time, the ratio of investments to revenue for 2024 was 14%. Given the expected growth in the volume of the Company’s investment program, capital expenses, according to ACRA’s estimates, will be in the range of 15–19% of revenue in the period from 2025 to 2028. In this regard, the Agency believes that FCF will be negative during this period.
Very low leverage and high coverage of interest payments. The Company’s debt portfolio is denominated in rubles, and all liabilities are ruble-denominated bank loans. As of September 30, 2025, the portfolio of loans amounted to RUB 4.0 bln. According to the Agency’s estimates, the ratio of total debt (including pension and lease liabilities) to FFO before net interest will be below 1.0x in 2025–2028 (0.9x in 2024).
The coverage (FFO before net interest to interest) decreased to 7.8x in 2024 (10.8x in 2023), which is in line with the Agency’s expectations. In ACRA’s opinion, by the end of 2025, this indicator will remain almost the same, and starting from 2026 it can be expected to gradually increase against the background of the projected reduction in interest rates.
The strong liquidity position is based on a large volume of funds held in accounts and deposits, as well as a significant volume of undrawn credit lines.
KEY ASSUMPTIONS
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Implementation of the capital investment program as planned.
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Dividend payments amounting to no more than 50% of IFRS or RAS net profit (whichever is higher), taking into account the actual application of depreciation charges for investment purposes.
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 positive rating action may be prompted by:
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Lower regulatory and sales risks due to the introduction of long-term and transparent tariff regulation principles;
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The weighted FCF margin exceeding 3%.
A negative rating action may be prompted by:
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Loss of control over the Company by Rosseti, or looser relations between the Company and Rosseti;
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Higher regulatory risks following a tighter tariff policy;
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Significantly worse access to external liquidity sources.
RATING COMPONENTS
SCA: аа.
Support: group.
ISSUE RATINGS
There are no outstanding issues.
Regulatory disclosure
The credit rating has been assigned to Rosseti Volga, PJSC based on the Methodology for Assigning Credit Ratings to Non-Financial Corporations under the National Scale for the Russian Federation to calculate the SCA and determine the credit rating and the credit rating outlook of Rosseti Volga, PJSC under the national scale for the Russian Federation; the Methodology for Assigning Credit Ratings with External Support to assess the influence of external factors; the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities to ensure consistent and uniform application of ACRA’s methodologies, rating scales, models, and key rating assumptions. The principles of the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation were also applied to assess the economic development of the regions of presence of the rated entity.
The credit rating of Rosseti Volga, PJSC under the national scale for the Russian Federation was published by ACRA for the first time on October 31, 2018.
The credit rating of Rosseti Volga, PJSC and its outlook are expected to be revised within one year.
The credit rating was assigned based on data provided by Rosseti Volga, PJSC, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS financial statements of Rosseti Volga, PJSC as of December 31, 2024.
The credit rating is solicited and Rosseti Volga, PJSC participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to Rosseti Volga, PJSC during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
