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Ratings agency Fitch warns against electricity privatisation

The Brisbane Times (2 July 2014) reports that last week, the credit rating agency Fitch announced it had revised the Outlooks of state-owned electricity generation companies CS Energy and Stanwell from stable to negative, warning that selling the companies could lead to a loss of their AA credit rating.  The Outlook revision reflects “a weakening in the strategic linkages between the State of Queensland (QLD, ‘AA’/Stable) and the company, should the entity be privatised, as viewed under Fitch’s parent-subsidiary rating methodology,” the credit ratings agency reported.   ‘A sale of the assets can lead to a material weakening of the rating linkages with the state leading to a multiple-notch downgrade of CS Energy’s ratings to a level consistent with its stand-alone credit profile.’

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