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 methodologies, including key rating assumptions and model.

Scope completed the monitoring review for PolSolar Kft. on 14 May 2024 for the BB rating on the senior unsecured bonds with a total amount of HUF 70.7bn, maturing in April 2037.

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

The BB rating reflects a total expected loss (EL) of 6.26% over the life of the loan to maturity (equivalent to a 8.76-year constant-exposure expected risk horizon). We have calculated an expected impairment likelihood of 16.43% for the project (rated instrument), which corresponds to a PD strength of bb when expressed using the levels of our (Scope’s) idealised PD curves. The total (average) expected recovery rate on the project’s credit impairment events is 61.88%. The project can be characterised by an average operational risk, stable and predictable cashflows, high refinancing risk and a rather weak financing and legal framework. The bonds are unsecured, and the covenant package and terms of the financing documents are below our expectations for a typical project finance transaction. The HUF 70.7bn rated bonds were fully subscribed by the Hungarian National Bank and commercial investors in April 2022. As a result of completing construction ahead of schedule, slightly outperforming Scope’s rating case last year and not having to draw on its contingency reserves, the company currently has significantly more cash on its balance sheet than originally anticipated.

Discussions on a one-off special dividend are ongoing. However, according to the documentation, the payment of shareholder distributions prior to the DSCR calculation based on the annual accounts of 2025 requires the consent of the creditors. The minimum and average DSCRs under the updated Scope rating case are 1.68x and 1.84x respectively. Our financial strength assessment reflects a coverage ratio calculation based on cash flow generated in the 12 months prior to the relevant debt service date and excludes any excess cash potentially generated in periods prior to that 12-month period.

The methodologies applicable for the reviewed rating (General Project Finance Rating Methodology, 16 November 2023; Counterparty Risk Methodology, 13 July 2023) are 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 David Werner, Senior Representative

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