Research Update: Swedish Utility Tekniska verken i Linkoping AB 'A+' Rating Affirmed; Outlook Stable

We expect about 60%-70% of Tekniska verken i Linköping AB's (TvAB's) EBITDA will be supported by stable district heating, partially shielded from rising biofuel prices and electricity distribution operations. As a result, we think TvAB will maintain its strong balance sheet, with S&P Global Ratings funds from operations (FFO) to debt remaining at 50%-60% and adjusted EBITDA of 1.3x-1.8x over 2024-2026--even with high investment levels expected at about Swedish krona (SEK) 1.7 billion-SEK1.8 billion, up from SEK1.4 billion in 2023. We therefore revised upward the stand-alone credit profile (SCAP) for TvAB to 'a-' from 'bbb+'. We have affirmed the 'A+' long-term issuer credit rating on TvAB. The stable outlook indicates our assumption that TvAB will sustain adjusted FFO to debt

...- We expect about 60%-70% of Tekniska verken i Link÷ping AB's (TvAB's) EBITDA will be supported by stable district heating, partially shielded from rising biofuel prices and electricity distribution operations. - As a result, we think TvAB will maintain its strong balance sheet, with S&P Global Ratings funds from operations (FFO) to debt remaining at 50%-60% and adjusted EBITDA of 1.3x-1.8x over 2024-2026--even with high investment levels expected at about Swedish krona (SEK) 1.7 billion-SEK1.8 billion, up from SEK1.4 billion in 2023. - We therefore revised upward the stand-alone credit profile (SCAP) for TvAB to 'a-' from '###+'. - We have affirmed the 'A+' long-term issuer credit rating on TvAB. - The stable outlook indicates our assumption that TvAB will sustain adjusted FFO to debt comfortably above 50% despite high investment levels, rising fuel prices for district heating, and expected volatile power prices....

Research Update