Fitch Ratings has raised Shanghai Electric Power's (SHA:600021) long-term foreign currency issuer default rating and senior unsecured rating to A- from BBB+, according to a recent release.
The rating action comes after Fitch's upgrade of parent State Power Investment, with Shanghai Electric Power rated a notch below the parent under the rating agency's "strong parent, weak subsidiary" approach.
The rating agency considers the parent as having "medium" legal, strategic, and operational incentives to support the subsidiary.
Shanghai Electric Power is one of the parent's most strategically important subsidiaries, serving as a base in eastern China and holding about 10% of the group's total power capacity, Fitch said.
The power company's domestic coal-fired power margins should ease this year after hitting recent-year peaks in 2025 amid reduced tariffs and increased fuel costs, the rating agency said.
The company will also continue its focus on renewable power, although it may be more selective in the near term in terms of projects given power market volatility, according to Fitch.
Annual capital expenditure will remain above 20 billion yuan from 2026 to 2028, rising from the 15.6 billion yuan annual average for the past four years, Fitch said.
Future developments on the parent's ratings or level of incentives could prompt rating actions on the subsidiary, Fitch said.