West Africa Rating Agency (WARA) announces the publication of the fourth rating of Senelec (the National Electricity Company of Senegal). On its regional scale, WARA assigns Senelec a long-term rating of “A-“, in investment grade, while its short-term rating is “w-3”. The outlook attached to these ratings remains stable.
Simultaneously, on its international scale, WARA affirms to Senelec the following ratings and outlook: iB + / Stable / iw-5.
Senelec was created in 1983 to ensure the production, transmission, distribution and sale of electricity in Senegal. Despite having the status of a public limited company, Senelec is fully controlled and regulated by the State of Senegal, due to its public service mission and its strategic position within the socio-economic ecosystem of the country.
Its rating reflects: i) the importance of its public service mission, which is to supply the electricity necessary for the proper development of the country; ii) its de facto monopoly position in its sector; iii) that the company increasingly covers the growing demand for electricity in the country in terms of both quantity and quality. In addition, the company has shown resilience in the face of the negative effects of the covid-19 pandemic; and iv) that Senelec’s strategy is clear: to achieve universal electrification by 2025.
In contrast, Senelec’s rating is constrained by: i) the fact that the company is still seeking better operational efficiency; ii) financial flexibility which, although improving significantly, still lags behind the performance of its peers rated in the same category; iii) the mobilization of external resources to finance the increase in its activity and the investments within the framework of the Strategic Development Plan for 2025 may weigh even more on its financial profitability and its level of indebtedness.
Senelec’s long-term local currency counterparty rating (A-) benefits from two external support notches, given the company’s de facto monopoly status and the vital nature of its general interest mission. Also the rating of Senelec (A-) is equalized with that, unsolicited, of the Republic of Senegal (ns.A-).