The credit rating is now BBB+
S&P Global Ratings has upgraded the credit rating for Landsvirkjun by one notch, to BBB+ from BBB. The outlook is stable.
The upgrade to the credit rating reflects S&P‘s view of the company‘s strengthening credit metrics. Landsvirkjun's operations have proved resilient to the challenges caused by the COVID-19 pandemic.
During the last decade, great emphasis has been placed on strengthening Landsvirkjun’s financial position and improving the credit rating. Debt and exposure to market risk has reduced significantly. During the same period Landsvirkjun has built three new power stations and power generation has increased. The customer group is larger and more diverse than before. At the same time renegotiations with existing customers have been successful.
The company’s owner, the Icelandic state, has been supportive during this journey and historically, dividend payments have been low. With improved financial strength, the capacity for dividend payment has increased. In 2018 Landsvirkjun’s dividend payment amounted to USD 13m but was USD 73m in 2020.
Rafnar Lárusson, CFO:
“We at Landsvirkjun are pleased to receive this upgrade. Since 2014 the company’s credit rating has improved by four notches. Our rating is now in line with the main energy companies in the Nordics that we compare ourselves to. That is a milestone that we have worked towards for a long time. The company’s improved financial position enabled us to successfully deal with the challenges of the pandemic and we were able to support our customers. Operations have recovered during this year and we see many positive signs. The future outlook is good and we will continue on the path to strengthening the company’s financial position for the benefit of the owners, the Icelandic people.”