Research Update: Danish Offshore Wind Company Orsted A/S Affirmed At 'BBB+/A-2'; Outlook Stable

We expect Orsted A/S' funds from operations (FFO) to debt to temporarily dip to 22%-25% in 2023, before returning to about 30%-35% in 2024 and 2025 as the company expands its renewable capacity. New projects coming on stream and inflation index clauses should support a significant EBITDA uplift in 2024 to Danish krone (DKK) 33 billion-DKK37 billion, from the DKK20 billion-DKK23 billion expected in 2023. We consider that industry risk has increased because of supply crunches, technology rapid evolution, and rising cost of raw materials. Therefore, we increased the FFO to debt rating threshold for Orsted to 25% from 23%. We affirmed our 'BBB+' long-term issuer credit rating on Orsted and our 'BBB+ issue ratings on the company's outstanding senior

...- We expect Orsted A/S' funds from operations (FFO) to debt to temporarily dip to 22%-25% in 2023, before returning to about 30%-35% in 2024 and 2025 as the company expands its renewable capacity. - New projects coming on stream and inflation index clauses should support a significant EBITDA uplift in 2024 to Danish krone (DKK) 33 billion-DKK37 billion, from the DKK20 billion-DKK23 billion expected in 2023. - We consider that industry risk has increased because of supply crunches, technology rapid evolution, and rising cost of raw materials. Therefore, we increased the FFO to debt rating threshold for Orsted to 25% from 23%. We affirmed our '###+' long-term issuer credit rating on Orsted and our '###+ issue ratings on the company's outstanding senior unsecured debt and ##+ on its hybrids. - The stable outlook indicates that we expect Orsted's FFO to debt to remain over 25% on average and that it will continue to finance a sizable part of its capital expenditure (capex) by selling stakes...

Research Update