Research Update: KELAG Outlook Revised To Positive On Elevated Power Prices; 'A' Rating Affirmed

Austrian utility KELAG is in a favorable position to capitalize on very high electricity prices thanks to its low-cost hydropower generation portfolio, resulting in exceptionally strong credit metrics at least until 2024. We have therefore revised our forecasts upward, and now expect KELAG's funds from operations (FFO) to debt to sit in the 60%-90% range in 2023, increasing further in 2024, up from about 35% in 2021 and 2022. Furthermore, we believe that the strengthening of KELAG's cash flow capacity will enable the company to expand its renewable portfolio at a faster pace, supporting its already advantageous business position. However, we acknowledge that there are significant uncertainties that could limit upside, including political intervention due to affordability concerns and a

...- Austrian utility KELAG is in a favorable position to capitalize on very high electricity prices thanks to its low-cost hydropower generation portfolio, resulting in exceptionally strong credit metrics at least until 2024. We have therefore revised our forecasts upward, and now expect KELAG's funds from operations (FFO) to debt to sit in the 60%-90% range in 2023, increasing further in 2024, up from about 35% in 2021 and 2022. - Furthermore, we believe that the strengthening of KELAG's cash flow capacity will enable the company to expand its renewable portfolio at a faster pace, supporting its already advantageous business position. However, we acknowledge that there are significant uncertainties that could limit upside, including political intervention due to affordability concerns and a risk of extraordinary dividends. - We therefore revised our outlook on KELAG to positive from stable and affirmed our 'A' long-term issuer credit rating on the company. - The positive outlook reflects...

Research Update