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Published on 6/25/2012 in the Prospect News Emerging Markets Daily.

Fitch affirms Tauron

Fitch Ratings said it affirmed Tauron Polska Energia SA's long-term foreign- and local-currency issuer default ratings at BBB with stable outlooks.

The affirmation is driven by Tauron's stable operating performance and strong financial performance in 2011, the agency said. Tauron's 2011 EBITDA improved by almost 10% to 3 billion Polish zlotys mainly due to the strong performance of the distribution division, and its market position in electricity distribution and supply was strengthened following its acquisition of Gornoslaski Zaklad Elektroenergetyczny SA in mid-December.

Fitch said Tauron's EBITDA from the generation segment will be under pressure in the next few years due to weak generation margins and the fact that additional cash flow received by Tauron, related to compensation for the termination of long-term power purchase agreements, will only be reported until 2013. In addition, the agency said Tauron's substantial exposure to carbon dioxide costs could result in a further erosion of profits from the generation segment beyond 2012.


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