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UTILITIES: Orsted (ORSTED Baa2/BBB[N]/BBB+[N]): Moody’s Downgrade

UTILITIES
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We don’t expect much impact on this, with Moody’s now in line with the other two agencies. Our current base case is that S&P and Fitch ratings hold. Execution risk is elevated, however.

  • Moody’s had a longer standing negative outlook; the other two agencies reacted to the recent results including large impairments. It’s view of management credibility and track record has been lowered due to recent operational problems.
  • Moody’s sees FFO/net debt at least in the low 20s as appropriate for the rating, with 25% targeted for 2025. S&P sets the bar higher at above 25%.
  • It sees execution risks to the farm down strategy, with assets still under construction to be relied upon. It notes the announced capex cuts, which are constrained by committed projects already under construction.
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We don’t expect much impact on this, with Moody’s now in line with the other two agencies. Our current base case is that S&P and Fitch ratings hold. Execution risk is elevated, however.

  • Moody’s had a longer standing negative outlook; the other two agencies reacted to the recent results including large impairments. It’s view of management credibility and track record has been lowered due to recent operational problems.
  • Moody’s sees FFO/net debt at least in the low 20s as appropriate for the rating, with 25% targeted for 2025. S&P sets the bar higher at above 25%.
  • It sees execution risks to the farm down strategy, with assets still under construction to be relied upon. It notes the announced capex cuts, which are constrained by committed projects already under construction.