Research Update: Wind Giant Orsted A/S Downgraded To 'BBB'; Outlook Stable

On Feb. 7, 2024, Orsted A/S announced its updated strategy, focusing on less ambitious growth and capital expenditure (capex), and no dividends for three years, which we expect will lead to a restoration of credit metrics in 2024 and 2025. This follows impairments and cancellation costs of Danish krone (DKK) 36 billion (€4.8 billion) registered in 2023, primarily from its U.S. offshore projects. We perceive the offshore wind industry as riskier than before--particularly in the U.S. where we note Orsted's weak project management, but we expect the company will be able to successfully manage the substantial industry risks it faces thanks to its remaining investment and divestment plans. We therefore lowered the long-term issuer credit rating on Orsted to 'BBB'

...- On Feb. 7, 2024, Orsted A/S announced its updated strategy, focusing on less ambitious growth and capital expenditure (capex), and no dividends for three years, which we expect will lead to a restoration of credit metrics in 2024 and 2025. This follows impairments and cancellation costs of Danish krone (DKK) 36 billion (4.8 billion) registered in 2023, primarily from its U.S. offshore projects. - We perceive the offshore wind industry as riskier than before--particularly in the U.S. where we note Orsted's weak project management, but we expect the company will be able to successfully manage the substantial industry risks it faces thanks to its remaining investment and divestment plans. - We therefore lowered the long-term issuer credit rating on Orsted to '###' from '###+' and the rating on the junior debt obligation to '##' from '##+'. We affirmed the 'A-2' short-term rating. At the same time, we removed the ratings from CreditWatch negative, where they were placed on Nov. 2, 2023. We...

Research Update