Fitch Ratings downgraded Saudi Electricity Co.'s long-term issuer default and senior unsecured ratings to A- from A, with a stable outlook, following a sovereign downgrade on Saudi Arabia.
The rating agency considers the Saudi government's ownership and control of Saudi Electricity as strong, with the sovereign owning an 81% indirect holding in the utility company. The Saudi government has significant influence on the company's strategic and investment plans and operational activities, Fitch added.
A positive sovereign ratings action on Saudi Arabia would also result in a ratings upgrade for Saudi Electricity. However, a significant change in the state utility's operational structure that results in weaker links with the kingdom, as well as introduction of competition without Saudi Electricity fully recovering investments alongside lessened government support, will result in a downgrade, Fitch said.