S&P: Chinese electricity generators credit strained

Standard & Poor's said that the credit health of Chinese electricity generators is being strained as a result of rapid capacity expansion to meet China's growing power needs.

The country's affected independent power producers include Huaneng Power International Inc. (BBB/stable) and Datang International Power Generation Co. Ltd. (BBB/stable).

"We expect to see lower utilization rates, which could lead to weaker cash flow protection measures for power generators," says S&P credit analyst Xiaoming Song.

"Margins should also remain under pressure as fuel costs are likely to remain at their current high level and cannot be fully recovered by the existing tariff mechanism."

S&P said it anticipates increasing pressure to reform the country's tariff-setting mechanism and greater investment in power grids. positive prospects also include enhanced asset quality from increasing asset diversification and operating efficiency.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.