Riga, 2016-10-13 08:22 CEST (GLOBE NEWSWIRE) -- Moody’s notes that the GB1 rating achieved by Latvenergo is as a result of transparent and highly efficient decision-making process within the company, transparent management of proceeds, and effective reporting and disclosure procedures.
“The honourable GB1 rating brings new changes and new duties in disclosure of information for green bonds – we undertake to publish an annual report on green bonds until their maturity, and will provide further confirmation that proceeds are properly assigned to eligible projects. Previously, the highest green bond rating assigned by CICERO*, an independent expert, praised the company’s good management in selecting projects and providing reports to investors. The Moody’s rating affirms Latvenergo’s success in implementation of transparent process management as an essential component of its day-to-day activities”, comments Guntars Baļčūns, Chief Financial Officer of Latvenergo AS.
The principal requirement for green bonds is that attracted capital is allocated only to “green”, i.e. environmentally conscious projects which promote the use of renewable energy sources, energy efficiency, and environmental protection. Issue of green bonds also contributes to transparent exchange of information because it requires reporting on how the proceeds are allocated.
The capital attracted by issuing the bonds is allocated to a number of generation, transmission and distribution projects. The largest eligible Latvenergo projects are the Kurzeme Ring and the Daugava HPP hydropower unit modernisation programme. The report on allocation of proceeds received within the green bond issue in 2015 is provided in the Latvenergo Group Sustainability and Annual Report 2015.
In accordance with the green bond evaluation methodology developed by Moody’s, its rating is based on five key factors: (i) organization, (ii) use of proceeds, (iii) disclosure on the use of proceeds, (iv) management of proceeds, and (v) ongoing reporting and disclosure on environmental projects financed or refinanced with such securities. According to this assessment, green bonds are rated on a scale from GB1 (excellent) to GB5 (poor).
In June 2015, Latvenergo AS became the first state owned company in Eastern Europe to issue green bonds in the amount of 75 million euros, completing the programme with another issue of 25 million euros in April 2016. This issuance programme has been assessed by independent expert CICERO giving them the highest rating of Dark green, which reflects the fact that the eligible projects are aligned with the goals of sustainable environmental protection and climate change mitigation, along with the company’s robust corporate governance and transparency.
The green bonds issued by Latvenergo AS have previously been rated Baa2 (stable) by Moody’s – unlike the green bond assessment, this represents the company’s creditworthiness.
* Center for International Climate and Environmental Research - Oslo
Additional information:
Jānis Irbe
Group Treasurer
Phone: +371 67 728 239
E-mail: investor.relations@latvenergo.lv
About Latvenergo
Latvenergo Group is a pan-Baltic energy company, engaging in electricity and thermal energy generation and supply, electricity distribution services and lease of transmission system assets. Latvenergo Group holds one-third of the entire Baltic electricity market, thus ensuring its leadership in the Baltic electricity supply. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several years in a row. International credit rating agency Moody’s has assigned Latvenergo AS an investment-grade credit rating of Baa2/stable.
Latvenergo Group includes the parent company Latvenergo AS (electricity and thermal energy generation and supply) and its subsidiaries Latvijas elektriskie tīkli AS (lease of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (electricity supply in Estonia), Elektrum Lietuva UAB (electricity supply in Lithuania), Enerģijas publiskais tirgotājs AS (administration of electricity mandatory procurement process) and Liepājas enerģija SIA (electricity and thermal energy generation and supply).