Moody's: Transelectrica outlook negative

Moody's Investors Service said it changed the outlook on Transelectrica SA's Baa3 long-term issuer rating to negative from stable due to recent adverse financial performance resulting from a significant decrease in electricity consumption in Romania, Transelectrica's relatively rigid cost structure and the company's sizeable capital investment program, which exceeds its own cash flow sources.

The agency said the regulatory framework should provide Transelectrica with some protection from revenue loss due to falling volumes through increases in tariffs in 2010 and that the company is re-assessing its investment plans. However, the negative outlook reflects a degree of risk, Moody's said, as the measures needed to restore the company's profitability and financial strength may be unpalatable from a political perspective and may not be sufficient or timely to support the current baseline credit assessment.

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