TVO rating affirmation reflects debt reduction plan and shareholder support

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TVO rating and debt plan

Highlights

TVO's BBB- rating with Stable Outlook reflects Fitch's expectation for adjusted net debt to decrease from EUR4.6 billion in 2025 to EUR4 billion by 2030.
Operational challenges, including transmission limits and turbine issues at OL2, have reduced production since 2024, but Nordic wholesale prices remain well above TVO's EUR37–EUR41/MWh production costs for 2026–2028.
Strong shareholder backing, liquidity of EUR142 million in cash and EUR890 million in undrawn facilities as of June 2026, and the strategic Mankala model support credit quality despite high leverage.

Fitch flags debt reduction and operating challenges

As reported by Fitch Ratings, Teollisuuden Voima Oyj's Long-Term Issuer Default Rating and senior unsecured rating remain at BBB-, with a Stable Outlook tied to expectations that adjusted net debt falls to about EUR4 billion by 2030 from EUR4.6 billion at the end of 2025.

Fitch says the forecast is supported by positive free cash flow in 2026-2030 and by TVO's full cost coverage mechanism, under which electricity is sold to shareholders at cost. The agency expects maintenance capital expenditure of about EUR100 million to EUR150 million a year and cumulative free cash flow of about EUR620 million over the period.

TVO's production has remained below Fitch's earlier expectations since 2024 because of transmission limits, longer outages and turbine problems. OL2 has operated at a reduced level since 2024 because of rotor issues that are expected to affect operations until the end of 2027, although Fitch says Nordic wholesale power prices remain comfortably above TVO's estimated production costs of EUR37 to EUR41 per MWh in 2026-2028.

Shareholder model underpins Finnish power role

TVO produces almost 30% of Finland's electricity and supplies baseload power to shareholders through the Mankala structure, a not-for-profit model that Fitch says limits direct exposure to wholesale market volatility. The agency also points to the company's strategic role in grid stability and to increased importance for Finland's power system after the country stopped importing electricity from Russia.

Fitch says TVO's largest shareholders support its credit quality, including Pohjolan Voima Oyj, which holds 58.5%, and Fortum Power & Heat, which holds 25.8%. The rating agency views the underlying corporate shareholder base as solid, with major owners in the BBB category, helping offset leverage that is high relative to other European utilities.

Liquidity also remains a support factor. At the end of June 2026, TVO had EUR142 million in cash and EUR890 million in undrawn committed facilities, including a EUR800 million green revolving credit facility renewed in May 2026 and maturing in May 2029, while debt due by the end of 2027 totals EUR530 million.

In our earlier coverage, we reported on Fitch’s BBB- rating of Hainan Rubber’s proposed subordinated perpetual sustainable securities to support its offshore debt refinancing. The agency highlighted the instruments’ subordinated ranking and coupon deferral features, while also noting the group’s high leverage but supported liquidity and funding access tied to its government-related status.

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