Ratings agency Moody's slashed Romanian energy producer Hidroelectrica's ratings by four notches, from Ba1 to B2, after the company filed for insolvency at the end of last week. The Bucharest court is currently deciding on Hidroelectrica's insolvency request.

Moody's, which has placed the company's ratings on review for further downgrade, decided to slash it four notches based on the high risk of payment default. "The downgrade also reflects that we have revised downwards our assumption of extraordinary support for Hidroelectrica from the Romanian government, reflecting its inactivity and lack of transparency concerning recent developments at the company," said Richard Miratsky, a Moody's Vice President, Senior Analyst and lead analyst for Hidroelectrica.

The insolvency filing creates a high degree of uncertainty as to whether or not Hidroelectrica will have the ability and financial flexibility to service its debt and make repayments during the insolvency process.

The review will focus on the outcome and consequences of the ruling of High Court of the Municipality of Bucharest regarding Hidroelectrica's insolvency, which is expected today (June 20 ) and on whether or not tangible financial support will be provided by the government to ensure that Hidroelectrica can continue to honor its debts in a timely manner, according to Moody's.

More about Hidroelectrica's insolvency here.

editor@romania-insider.com