Fitch affirms Euroholds rating at B with a stable outlook and removes the watch over the company

29 June 2023 — Andrei VICTOR
Fitch Ratings, one of the largest rating agencies worldwide, has affirmed its assessment to Eurohold Bulgaria AD's Long Term Issuer Default Rating at 'B' with a stable outlook. In a statement, the agency has also pointed out it had removed it from its watch list for a possible negative outlook on the rating (Rating Watch Negative, RWN).

Fitch's assessment has reflected the reduction of the company's indebtedness, the reduced reputational risk and the absence of a risk of a liquidity crisis due to the events related with Euroins Romania subsidiary. Fitch has also positively assessed the agreement of Eurohold's lenders and bondholders not to make claims with reference to the case with the Romanian insurance company, for which they have committed themselves in writing, providing full support for the company.

"The removal from RWN reflects our view of Eurohold's reduced reputational risk and liquidity crunch risk stemming from the license withdrawal and bankruptcy procedure of its former material subsidiary Euroins Romania Asigurare-Reasigurare S.A. (Euroins Romania). The creditors and bondholders of Eurohold have given their consent to waive events of default under the group's debt documentation in relation to Euroins Romania", the rating agency informed here.

Fitch has also assessed Eurohold's financial performance in 2022 as better than expected. As a result, the indebtedness of the holding has decreased to a lower than expected level, and the agency predicts a further improvement of the indicator this year. The strong performance of the holding's energy business has contributed to this trend.

"Eurohold's financial performance in 2022 was better than our expectations, with net debt (excluding the insurance business's EBITDA and net debt) at 4.7x EBITDA versus our 6.1x forecast. This was because of stronger EBITDA led by the energy segment, especially regulated energy distribution, and despite a 15% increase in debt (reaching BGN1.39 billion at end-2022) due to a buyout of minority shareholders in its energy business".