6.1 Capital management
Equity and liabilities as shown in the balance sheet are managed by the company as capital. The balance sheet according to the company’s accounting is smaller than the balance sheet under the Finnish Energy Authority’s regulations, in which grid assets have been measured at the regulatory present value in use. The company’s borrowings are presented at their carrying amount also on the regulatory balance sheet. Equity on the accounting balance sheet is smaller than equity on the regulatory balance sheet, which balances out the difference in the grid asset carrying amount and the regulatory value in use. The principal aim of Fingrid’s capital management and grid asset management is to secure the company’s ability to conduct uninterrupted operations, value retention and rapid recovery from any exceptional circumstances. A key goal is to maintain an ideal capital structure such that the company’s credit rating remains solid, cost of capital remains reasonable, and the company can pay dividends to its shareholders.
The company aims to maintain a credit rating of at least ‘A-’. The company has not set specific key figure targets for accounting balance sheet or regulatory balance sheet capital management, but instead monitors and controls the overall situation, for which credit ratings and their underlying risk analyses and other parameters create a foundation.
The company’s credit rating remained high in 2019. This reflects the company’s strong overall financial situation and debt service capacity. Fingrid has credit rating service agreements with S&P Global Ratings (S&P) and Fitch Ratings (Fitch).The credit ratings valid on 31 December 2019 remained high and were as follows:
- S&P’s rating for Fingrid’s unsecured senior debt and long-term company rating at ‘AA-’ and the short-term company rating at ‘A-1+’, with a stable outlook.
- Fitch’s rating for Fingrid’s unsecured senior debt at ‘A+’, the long-term company rating at ‘A’, and ‘F1’ for the short-term company rating, with a stable outlook. Fitch Ratings downgraded Fingrid Oyj’s Long-Term Issuer Default Rating (IDR) to ‘A’ from ‘A+’ and senior unsecured rating to ‘A+’ from ‘AA-’ on 28 January 2019. Fitch also affirmed a Short-Term IDR of ‘F1’. The outlook for the ratings is stable. The rating remains the highest assigned by Fitch to any regulated TSO in Europe.