Standard&Poor’s (S&P) ratings agency has upgraded the credit rating of Croatia's state-owned energy producer Hrvatska Elektroprivreda (HEP) from BB+ to BBB-, so that now it is the same as the sovereign credit rating.

It is the first time since 2009 that HEP’s credit rating has been restored to investment grade, the company said in a statement on Wednesday.

S&P said in its report that the upgrade reflects HEP’s success regarding robust credit metrics in volatile hydrological conditions and commodity prices.

This is a result of HEP’s gradual evolution towards a market-oriented company with a more flexible cost structure. In comparison to what was previously captured in the rating, HEP shows it is able to more effectively and more robustly manage its exposure to commodity prices and lower implicit volatility. A very good track record proves the company is committed to maintaining financial strength, the report says.

S&P “has recognised our continued efforts to improve risk management and our overall financial position in the challenging circumstances of the coronavirus pandemic,” the chairman of HEP’s management board, Frane Barbaric, said.

He recalled that, thanks to the good business results in 2020, HEP paid a portion of its profit, notably HRK 840.6 million, into the state budget in September. The company has continued to operate successfully, generating a consolidated net profit of HRK 1.25 billion in the first half of 2021, which is 291 million more than in the first half of 2020.