“We see opportunities in consolidating markets”

Red Eléctrica, Spain’s monopolistic electricity transmission company, has had a rough year so far, with expropriations of its assets in Bolivia and downgrades due to increased pressure on the Spanish government. But chief financial officer Esther Rituerto Martinez is bullish and sees good opportunities in a consolidating European energy market.

How do you react to the economic situation in Spain?

Our business is not directly correlated with economic conditions at any particular point in time. Our activity as a transmission systems operator is linked to long-term needs for electricity infrastructure. This means that Red Eléctrica has to work and plan in the long term and that our investment projects must have very long investment horizons, usually stretching out over ten or more years.

But the downgrades of the Spanish government surely have an effect on you as well?

Yes, indeed. As I already said, deterioration in economic activity has a negative impact on electricity demand. If this continues over time, however, it might also affect the development of electricity transmission infrastructure. In addition, the regulators could change some rules affecting transmission activity in Spain.

So you can understand the downgrades, even though you are not happy about them?

I’m certainly not happy about them, and I am actually very critical of the role rating agencies play in our economies. I believe they worsen the situation for many companies such as ours that have good economic fundamentals, but get a relatively poor rating because of the maximum difference allowed between a sovereign rating and ratings of companies domiciled in that particular country.

Do you believe that your rating would be better if you were not based in Spain?

Yes of course! Indeed there is some correlation because our activity is based in Spain. But the agencies have also admitted that our financial situation is very sound on a standalone basis.

Is your financial soundness threatened by the crisis?

Red Eléctrica’s financial policy has always been focused on maintaining a diversified financial position. We have access to a number of capital markets, as well as various banks and investment banks.

Article from: CFO

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