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      Scope has completed a monitoring review for PolSolar Kft
      WEDNESDAY, 25/05/2022 - Scope Ratings GmbH
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      Scope has completed a monitoring review for PolSolar Kft

      No action has been taken on the HUF 70.7bn senior unsecured bonds issued by PolSolar Kft and maturing in April 2037. The bonds will finance the construction of five greenfield Hungarian photovoltaic plants.

      Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. 

      Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

      Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

      Scope has completed a monitoring review for PolSolar Kft on 24 May 2022:

      Senior unsecured notes, HUF 70.7bn: B+

      This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

      Transaction overview

      The HUF 70.7bn issuance of the bonds on 22 April 2022 was higher than expected and reduced the need for additional funding. On 17 May 2022 an equity contribution of HUF 0.2bn was raised and thus completed the financing. The raised proceeds will contribute to funding the construction of five photovoltaic power plants with a total capacity of 233.5 MWAC located in Mezöcsát, in the north-east of Hungary. Each plant will have a capacity of 46.7 MWAC.

      The project is in ready-to-build status and construction has not started yet apart from some enabling works. Expected final handover date is 30 September 2023, and the final commissioning deadline is 31 December 2023.

      The issuer and holdco, PolSolar Kft, will on-lend the bond proceeds to the five individual opcos, which respectively own the five solar plants. The issuer’s obligations are guaranteed by the five opcos. Each opco has the right to sell the electricity produced to the Hungarian transmission service operator, MAVIR Zrt, under a feed-in tariff (the KÁT tariff) according to the generation permits provided by the Hungarian Energy and Public Utility Regulatory Authority (“HEPURA”). In case of missing the commissioning deadline, the project would not be eligible to receive the full KÁT tariff.

      The sponsors of the project, Voyager Private Equity Fund and Central European Opportunity Private Equity Fund, are both midsized Hungarian equity funds, focusing on the Central and Eastern European market. The sponsors have limited experience in renewable energy projects. Sponsors’ economic incentives in the project are high because of their substantial equity contribution of 26% of total investment costs.

      Key rating factors

      The B+ rating reflects the total expected loss (EL) of 11.06% over the loan’s life until maturity (equivalent to a 9.85-year constant-exposure expected risk horizon).

      The project is characterised by high construction risks, average operational risk, stable and predictable cashflows, high refinancing risk and a very weak financing and legal framework. The bonds are unsecured, and the covenant package and terms of the financing documents are not in line with our expectations for a typical project finance transaction. The fixed rate bonds amounting to HUF 70.7bn were subscribed by the Hungarian National Bank and commercial investors. The need for additional funding was reduced from HUF 1.8bn to HUF 0.2bn because of higher expected interest income and interest savings due to lower debt funding. Equity totalling HUF 0.2bn was raised on 17 May 2022.

      The methodology applicable for the reviewed rating (General Project Finance Rating Methodology, 15 November 2021) is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
      This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
      Lead analyst Michel Graire, Senior Analyst

      © 2022 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Analysis GmbH, Scope Investor Services GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.
       

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