NEA again receives ‘Double A Plus’ credit rating; mulls to issue IPO at premium

Kathmandu / Oct 16: Nepal Electricity Authority (NEA) has, this year too, received the ‘Double A Plus’ credit rating.

ICRA Nepal Ltd, the credit rating agency in Nepal, has granted the ‘ICRA NP Double A Plus’ to the NEA, a state-owned entity.

The recipients of rating are considered to have a high degree of safety regarding timely servicing of financial obligations. They carry very low credit risk.

According to ICRA Nepal, the rating is only an opinion on the general creditworthiness of the rated entity and is not specific to any debt instrument.

The financial status of NEA, assets, business and financial risks, managerial capacity, internal and external environmental factors affecting operational effectiveness were assessed by ICRA Nepal before assigning an issuer rating of Double A Plus to the organization.

Credit ratings serve as a tool for assessing the creditworthiness of both individuals and organizations and for expressing opinion. They provide opinions on an entity’s ability to meet its debt obligations, presenting a clear and simple indicator about related financial risks.

NEA Managing Director Kulman Ghising said the NEA has bagged the ‘Double A Plus’ credit rating from among the public entities, presenting its high-level of capacity to bear the financial obligations.

NEA to issue IPO at premium

Nepal Electricity Authority (NEA), which is going to issue Initial Public Offering (IPO) at a premium price, has been granted a ‘Double A Plus’ credit rating for its operations in Nepal.

NEA has been granted the rating by ICRA Nepal. This is the second year in a row it has received a ‘double A plus’ rating.

Entities holding a double A-plus rating demonstrate a strong capacity to fulfill their financial obligations promptly. Engaging in financial transactions with such entities poses a very low risk of loan repayment.

ICRA Nepal conducted a comprehensive analysis of the NEA, examining its financial standing, assets, commercial and financial risks, managerial proficiency, as well as internal and external factors influencing operational efficiency. The Authority’s credit rating is a direct result of this thorough assessment.

Following this, the NEA has formally submitted a proposal to the Ministry of Finance to initiate the issuance of the company’s shares to the general public in compliance with the Nepal Electricity Authority Act, 1984, following the completion of its third financial restructuring.

The authorized capital of the NEA stands at approximately Rs 300 billion, with plans to publicly offer 10 percent of it.

NEA intends to raise resources amounting to roughly Rs 60 billion, inclusive of premiums, through this proposed public offering.

As per the Authority’s proposal, the intention is to uphold the book value of the authority’s shares at approximately Rs 125 and to supplement this amount as a premium for the share issuance.RSS