Orsted A/S

The stable outlook on Orsted reflects our assumption that the wind power segment's operating performance will remain credit supportive over the next two years, thanks to the stable and predictable nature of the segment's operations. We expect that the company's relationship with the Danish government will be stable, and there will be no significant changes to Orsted's strategy or financial policies, which support FFO to debt of about 25%. We expect the company will have amble of headroom in 2022, with adjusted FFO to debt about 43%-48%, declining to 28%-34% in 2023. We could lower the rating if Orsted's operating performance were to deteriorate significantly over the next two years, which we see as unlikely. This could occur due to

...Orsted is set to accelerates its growth capex to capitalize on the energy transition across regions, which should strengthen its business risk profile over time. S&P Global Ratings expect the group will invest about DKK38 billion-DKK50 billion annually in the coming years to continue to significantly build out its asset base, which will result in negative free operating cash flow (FOCF) of DKK10 billion-DKK30 billion annually. We believe this materially improve its position in the offshore wind segment (including hydrogen) and the onshore wind segment. Orsted has a total planned gross growth capex of DKK450 billion for 2020-2027. Of this, DKK280 billion is in offshore and hydrogen; DKK70 billion in onshore segment; and another DKK100 billion by joints ventures (JVs) partnerships. This is needed for the company to reach its very ambitious target of 50GW of installed capacity by 2030, up from currently 13GW. The recent energy crunch in Europe supports the strategy, since it is increasing...

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