Debt of Energia owner classed as high risk

Ratings agency Moody's has ranked Irish electricity supplier Viridian as a high credit risk.

Viridian owns the Huntstown generating plants in north Co Dublin, and supplies electricity and gas to customers through its Energia business in the Republic and the regulated Power NI in the North.

Moody’s, which assesses businesses’ ability to repay their debts, said on Tuesday that it had given the company a B1 credit rating, which classes it as speculative or high risk.

Analysts Philip Cope and Paul Marty say the rating reflects Viridian's high level of debt, which was 6.5 times group earnings at the end of March last year.

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Moody’s expects this ratio to remain the same until 2020 as its analysts believe Viridian could borrow more cash to continue developing its renewable energy business.

Viridian’s own figures show that net debt fell to £665.6 million (€773.6m) at the end of December 2018, from £674.1 million three months earlier.

Earnings in the nine months to the end of December were £101.7 million, while group cash flow was £101.9 million.

Mr Cope and Mr Marty also assessed Phoenix Natural Gas, a licensed supplier of natural gas in Northern Ireland, as Baa2 or moderate risk.

Credit ratings can affect the interest rates an organisation pays when it borrows money, and the ease with which it can refinance existing debt, that is pay it off using cheaper loans.