Karlsruhe. The rating reflects the negative effects caused by the new energy concept in Germany, in particular the immediate shutdown of the Neckarwestheim I and Philippsburg 1 nuclear power plants in March 2011, the weaker financial profile due to the nuclear fuel tax payments for the years 2011 to 2016 as well as the full auctioning of CO2 allowances as of 2013.
Fitch continues to positively rate the strong market position in Baden-Württemberg, the vertical integration of EnBW and its stable regulated grid business. This is supported by a balanced maturity profile, a conservative dividend policy as well as the package of measures which has seen EnBW make progress with regard to its divestiture programme (to date around € 500 million out of a planned volume of € 1.5 billion), placement of a hybrid bond (€ 1 billion) and efficiency enhancement programme (to date around € 190 million p.a. out of a total of € 750 million planned as of the end of 2014), among others.
Fitch also commended the support given by the two major shareholders as part of the planned capital increase in return for cash contributions, generating a total issue volume of some € 800 million. It is now expected to be implemented swiftly after the necessary resolutions have been approved at the annual general meeting.
“We are pleased that rating agency Fitch has acknowledged the measures EnBW’s management has taken. This shows the agency believes in the implementation of our corporate strategy,” commented EnBW’s CEO Hans-Peter Villis.
Fitch expects the KPI requirements for an “A-“ rating to be fulfilled in the medium term, primarily as a result of implementing the package of measures, and therefore confirms the outlook as stable overall.
As part of the rating confirmation, Fitch has assigned the hybrid bonds issued by EnBW in October 2011 and April 2012 at a total volume of € 1 billion a “BBB” rating, two notches down from that of the issuer. The financial instrument has a term to maturity of around 60 years with repayment rights every five years after the first interest payment date. Fitch has also credited half of the hybrid capital as equity.
“The target of our financial strategy is to secure EnBW’s good credit rating, and we are actively managing the deleveraging process for this purpose. Fitch has acknowledged this by confirming the rating,” commented Thomas Kusterer, EnBW’s CFO.
In addition to Fitch the rating agency Standard & Poor’s likewise confirmed EnBW’s “A-“ rating and stable outlook in an update published on 23 May 2012.