Fitch revises MVM outlook to negative

Fitch Ratings said it changed the outlook for MVM Zrt. to negative from stable and affirmed its long-term foreign- and local-currency issuer default ratings at BBB.

The negative outlook follows a substantial increase in MVM's net debt in 2022, which together with projections of low funds from operations and significantly higher interest costs leave FFO net leverage and FFO interest coverage weak for the rating. Higher net debt is due mainly to increased funding needs for inventories on the back of high gas prices during the year, the agency noted.

“We expect profitability and operating cash flow to improve in 2023-2025, but improvement of FFO net leverage in 2023 to within rating sensitivities will depend on supportive regulatory decisions in the infrastructure segment. It will also depend on full and timely compensation for losses on sale of electricity and gas to eligible customers, leading to execution risk. We expect FFO interest coverage ratio to remain weak for the rating in 2023,” Fitch said in a press release.

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