Bulletin: Vattenfall's Improved Financials Are Likely To Fade Given Investments

STOCKHOLM (S&P Global Ratings) Feb. 4, 2021--S&P Global Ratings today said that Swedish power company Vattenfall AB's (BBB+/Stable/A-2) better-than-anticipated financial performance in 2020 has improved rating headroom, but will likely not be sustainable. This due to the company's acceleration of investments over 2021 and 2022, and the volatile nature of its margin calls. For the full-year 2020, we estimate Vattenfall's preliminary S&P Global Ratings-adjusted funds from operations (FFO) to debt at about 28%-32%, which is well above the upside rating trigger of 25%. This is mainly because a large working capital inflow--mostly related to margin calls of Swedish krona (SEK) 12 billion (about €1.2 billion)--resulted in meaningfully lower debt than anticipated at year-end. We note that these inflows, however, are

...February 4, 2021 STOCKHOLM (S&P Global Ratings) Feb. 4, 2021--S&P Global Ratings today said that Swedish power company Vattenfall AB's (###+/Stable/A-2) better-than-anticipated financial performance in 2020 has improved rating headroom, but will likely not be sustainable. This due to the company's acceleration of investments over 2021 and 2022, and the volatile nature of its margin calls. For the full-year 2020, we estimate Vattenfall's preliminary S&P Global Ratings-adjusted funds from operations (FFO) to debt at about 28%-32%, which is well above the upside rating trigger of 25%. This is mainly because a large working capital inflow--mostly related to margin calls of Swedish krona (SEK) 12 billion (about 1.2 billion)--resulted in meaningfully lower debt than anticipated at year-end. We note that these inflows, however, are temporary to some extent. Vattenfall's reported underlying EBITDA of SEK44 billion and FFO of SEK35 billion are in line with our expectations. Vattenfall managed to...

Bulletin