Electricite de France S.A.

Substantial delays and cost overruns on EDF's two nuclear newbuilds also weigh on the SACP; these are currently 66.5%-owned Hinkley Point C (HPC) in the U.K. and Flamanville-3 in France. We factor in the high likelihood that EDF incurs most of the £3 billion of additional capex it announced on HPC in May 2022 (last formal cost review published) as it shoulders all capex from late 2023, in our base case. We expect Flamanville to contribute a full year from 2026 (expected generation of some 12 terawatt hours [TWh]). The stable outlook factors in a gradual recovery in domestic nuclear generation and consolidated profits through 2024, containing leverage within 5x in 2023 and 4.5x in 2024, in a supportive price

...Fleet ageing and stress corrosion issues at EDF's domestic nuclear fleet weigh on our view of its business risk profile and stand-alone credit profile (SACP). EDF's domestic nuclear fleet has been severely harmed by corrosion under stress issues, especially at many of the company's newer domestic reactors. Despite EDF's otherwise robust performance (at its power distribution, international, and trading divisions) this has hindered its overall creditworthiness because of the severity of the issues and how central the domestic nuclear fleet is to EDF's earnings and capital expenditure (capex). These issues raise concerns regarding the fleet ageing and the level and predictability of EDF's consolidated power and profit generation, even if the company put in place an action plan validated by the safety authority, ASN, to ensure the continuity of its operations. We expect a gradual recovery in EDF's domestic nuclear output over 2023-2025, but slightly below levels reached in the late 2010s given...

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