Fitch Ratings has assigned a Long-Term Issuer Default Rating (IDR) of ‘CCC+’ to Laos-based EDL-Generation Public Company (EDL-Gen) and a long-term rating of ‘CCC+’ with a Recovery Rating of ‘RR4’ to EDL-Gen’s proposed USD300 million senior amortising notes due 2031.

The proposed notes constitute direct, senior unsecured obligations of EDL-Gen and rank pari passu with its existing senior unsecured Thai baht debentures. EDL-Gen intends to use at least USD166 million of the net proceeds to refinance its EDLGEN269A debenture maturing in September 2026.

EDL-Gen’s Long-Term IDR is capped by its parent, Électricité du Laos (EDL), under the strong subsidiary path in Fitch’s Parent and Subsidiary Linkage Rating Criteria, due to our ‘Open’ assessment of ring-fencing, as well as access and control between EDL-Gen and EDL.

EDL’s credit profile is aligned with Laos’ sovereign rating of ‘CCC+’, reflecting a ‘Virtually Certain’ likelihood of state support. Fitch does not consider a Standalone Credit Profile (SCP) to be meaningful for EDL, as the company cannot be effectively de-linked from the Laos government.

EDL-Gen’s SCP is assessed at ‘b-‌’‌, reflecting good cash flow visibility from long-term contracted output, as well as improving margins and financial leverage following a July 2025 tariff reset. These strengths are balanced against a weak counterparty, single-resource concentration and concentrated debt maturities in the near term.

Key Rating Drivers

Constrained by Parent: EDL-Gen’s ‘b-‌’ SCP is capped by Fitch’s internal assessment of its parent, EDL. Fitch assesses ring-fencing as ‘Open’ as dividends from EDL-Gen to EDL are unrestricted and support for EDL is permitted. We also assess effective control as ‘Open’. EDL controls the board of EDL-Gen and its major operational and financing decisions.

Large inter-company transactions also lead to our ‘Open’ assessment of funding and cash management, despite separate funding channels. The proposed notes also introduce a covenant package, including a requirement that any dividend to EDL should be settled by a set-off against undisputed, overdue power-purchase-agreement (PPA) receivables owed by EDL. However, we do not consider these features to be sufficient to alter the parent’s constraint on the IDR.

Sovereign-Linked Parent: EDL is wholly state-owned and classified as a strategic state enterprise. EDL has received consistent state support. It is the country’s monopoly power distribution utility and the single buyer for domestic supply, which means a default would disrupt national power supply with no immediate substitutes. Most of EDL’s debt is guaranteed by or from the government.

EDL is central to the state’s economic and social objectives and is deeply integrated with the state financially and operationally. EDL’s critical system role and deep state integration mean it cannot be delinked from the sovereign. It remains dependent on government support for funding access and liquidity, although profitability is improving after tariff reform. EDL has been continuously servicing its debt, with the support of the state.

Weak Counterparty: EDL-Gen’s revenue is concentrated on a weak counterparty. Its wholly owned power plants, which account for around half of its net capacity, sell all electricity to EDL under long-term take-or-pay PPAs. This provides certainty in terms of volume and price, but the credit quality of the cash flow is limited by EDL’s credit profile. EDL-Gen also receives sizable dividends from independent power producers (IPPs) that sell electricity to Thai state-owned utility Electricity Generating Authority of Thailand (EGAT; BBB+/Negative). However, their cash flow reaches EDL-Gen as dividends, which it cannot control, and rank behind project-level debt.

Notes Easing Refinancing Risk: EDL-Gen faces high refinancing risk, with bullet maturities in 2026-2027 that its own cash flow does not fully cover. The proposed US dollar issuance, if successful, could extend the maturity into 2031. EDL-Gen has several other options to address the refinancing needs, including another tap of the Thai baht bond, internal cash, deferrable capex, domestic bank lines, and as a last resort, support from the Ministry of Finance (MoF).

US Dollar Tariff Lifts Margins: The July 2025 tariff reset has increased EDL-Gen’s EBITDA margin and reduced its foreign-exchange mismatch. The PPAs for its wholly owned power plants have moved from the Laotian kip to US dollars at a levelized rate of about USD0.05/kWh with an annual escalation of 1%. This aligns revenue with EDL-Gen’s foreign-currency debt. Its EBITDA margin rose to 86% in 2025 from 78% in 2024. Fitch expects the EBITDA margin to improve further to 88% in 2026 from the full-year benefit of the currency switch.

Moderate Leverage: EDL-Gen’s EBITDA net leverage is moderate and we expect it to improve to 3.3x in 2026 and about 2.8x in 2027 (2025: 4.3x), supported by better earnings. EBITDA interest coverage is likely to decrease to 3.5x in 2026 from 4.4x in 2025 from higher interest costs before increasing to 6.2x in 2028, as its debt is reduced.

Peer Analysis

EDL-Gen’s IDR is capped by the sovereign rating through the credit profile of its parent, EDL. EDL’s relationship with the state is comparable with that of other wholly owned utilities whose ratings are equalised with those of their sovereigns.

EDL has state linkages similar to those of PT Perusahaan Listrik Negara (Persero) (PLN, BBB/Negative) and EGAT with the Indonesian and Thai governments, respectively. They own their national networks and are central to supply. Their sovereign linkage also drives their ratings.

Fitch’s Key Rating-Case Assumptions

– Total electricity sold from wholly owned power plants of around 2,700-2,800 GWh per annum in 2026-2028 (2025: 2,974 GWh)

– Average tariff rate of around LAK1,115 per kWh in 2026-2028

– EBITDA margin of around 88% in 2026-2028 (2025: 85.8%)

– Dividends received from investment in IPP projects of around LAK1.5 trillion-1.8 trillion per annum in 2026-2028

– Total capex of LAK1.0 trillion over 2026-2028

– No dividend payment until 2029

Corporate Rating Tool Inputs and Scores

Fitch scored the issuer as follows, using our Corporate Rating Tool (CRT) to produce the SCP:

Business and financial profile factors (assessment, relative importance): management (‘bb+’, lower), sector characteristics (‘bb’, moderate), market and competitive positioning (‘bbb’, lower), diversification and asset quality (‘b’, moderate), company operational characteristics (‘ccc+’, higher), profitability (‘bb+’, moderate), financial structure (‘bbb-‌’‌, lower), and financial flexibility (‘b-‌’‌, higher).

The quantitative financial subfactors are based on standard CRT financial period parameters: 20% weight for the latest historical year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027.

‘B+’ to ‘CC’ considerations apply in our analysis and has no impact.

The governance assessment of ‘good’ has no impact.

The operating environment assessment of ‘b+’ has no impact.

The SCP is ‘b-‌’‌.

To derive the Long-Term IDR:

Application of Fitch’s Parent and Subsidiary Linkage Rating Criteria results in a constrained approach.

Recovery Analysis

The recovery analysis is on a going-concern basis, as the going-concern value is higher than the liquidation value.

We estimate going-concern EBITDA of about USD75 million for its wholly owned power generation business. This applies a 30% stress to pro forma EBITDA for the 12 months from 2Q26, assuming the US dollar-linked tariff introduced in July 2025 partially reverts and margins compress.

We apply a 5.0x enterprise value (EV)/EBITDA multiple to the core generation business, resulting in EV of about USD375 million. This is the mid-point of the 3.0x to 7.0x range for the rest of the world. Long-dated contracted PPA cash flow and long asset lives support the multiple.

We estimate EDL-Gen’s equity interest in its IPP associates is valued at USD408 million. This applies the same 5.0x multiple to the IPPs’ EBITDA, stressed by 20%. The lighter haircut reflects the IPPs’ stronger off-taker mix, mainly EGAT against EDL. Fitch then deducts the debt at each IPP project level, leaving only the residual equity value attributable to EDL-Gen.

This generates a total going-concern enterprise value of about USD783 million. After deducting 10% for administrative claims, about USD705 million is available to creditors. This results in a Recovery Rating of ‘RR2’ for the senior unsecured debt. However, EDL-Gen’s assets are in Laos, which is a Group D Country, which caps the Recovery Rating at ‘RR4′.

RATING SENSITIVITIES

Factors that could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

— Negative action on the Lao sovereign rating.

— Weakening likelihood of government support.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

— Positive action on the Lao sovereign rating.

For the sovereign rating of Laos, the following sensitivities were outlined by Fitch in our Rating Action Commentary of 21 October 2025:

Factors that could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

— Fiscal/External Finances: Signs of substantial external financing stress, for instance from a tightening of domestic FX liquidity amid continued difficulty in accessing external financing or a cessation of bilateral debt relief.

— Macro/External Finances: A reversal of macro-stabilisation policies resulting in the re-emergence of FX liquidity stress, sharp exchange rate depreciation pressures and high inflation.

— Fiscal: A sustained rise in public and publicly guaranteed debt/GDP, for instance from a return to wide fiscal deficits and/or a constant and large exchange rate depreciation.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

— Fiscal/External Finances: A sustained reduction in external debt repayments, for instance from greater clarity on a more permanent arrangement for bilateral debt relief addressing Laos’ high external debt service costs, along with a sharp, sustained decline in government debt/GDP.

— External Finances: A further easing of external liquidity pressure, evident in a continued increase in foreign-exchange reserves or greater confidence in sustained high current account surpluses.

— Macro: Continued implementation of macro-stabilisation policies that sustainably reduces economic imbalances and generates a record of more sound policy implementation.

Liquidity and Debt Structure

EDL-Gen’s available cash of LAK742 billion at end-1Q26 was below its short-term debt of approximately LAK4.67 trillion maturing in the next 12 months, mainly the USD166 million (LAK3.8 trillion) note due in September 2026. The gap remains even after taking into account our forecast positive free cash flow of around LAK1.9 trillion for 2026. Near-term liquidity is therefore contingent on refinancing, primarily the proposed USD300 million 144A issuance sized to refinance the 2026 note, after which the profile becomes self-sustaining on strong US dollar PPA cash flow.

We believe the residual gap is manageable in the event of a refinancing delay. EDL-Gen’s free cash flow is supported by capex that is largely maintenance and somewhat deferrable in the near term, providing additional flexibility, while the company retains a broad set of contingency funding sources, including MoF support, demonstrated by the USD185 million provided in 2024, and domestic bank facilities under arrangement, underpinned by its close linkages with the Lao state.

Issuer Profile

EDL-Gen is Laos’ main hydropower generation company majority owned by EDL. It operates 10 plants and holds stakes in 15 IPPs, supplying contracted power to domestic and Thai markets.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

The ratings are linked to Laos’ sovereign rating.

MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS

Click here to access Fitch’s latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch’s macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.

Climate Vulnerability Signals

The results of our Climate.VS screener did not indicate an elevated risk for EDL-Gen.

ESG Considerations

The highest level of ESG credit relevance is a score of ‘3’, unless otherwise disclosed in this section. A score of ‘3’ means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch’s ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch’s ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.