Research Update: Wind Offshore Giant Orsted A/S 'BBB+/A-2' Ratings Affirmed On Steady Performance; Outlook Stable

Danish Wind Offshore Giant Orsted A/S should be able to continue its 2023-2025 growth strategy for offshore and onshore wind globally thanks to continued strong results for the first nine months of 2022, with a 34% increase in reported EBITDA year on year to Danish krone (DKK) 14.4 billion (€1.9 billion excluding farm downs). Although Orsted will likely report stronger-than-anticipated EBITDA this year, of DKK21 billion-DKK23 billion, higher power and gas prices collateral requirements related to hedges suggest that a higher debt level will lower S&P Global Ratings-adjusted funds from operations (FFO) to debt to 35%-40% at end-2022 from our previous expectation of 43%-48%. Our updated FFO to debt estimate is still well within the thresholds for the 'BBB+' rating.

...- Danish Wind Offshore Giant Orsted A/S should be able to continue its 2023-2025 growth strategy for offshore and onshore wind globally thanks to continued strong results for the first nine months of 2022, with a 34% increase in reported EBITDA year on year to Danish krone (DKK) 14.4 billion (1.9 billion excluding farm downs). - Although Orsted will likely report stronger-than-anticipated EBITDA this year, of DKK21 billion-DKK23 billion, higher power and gas prices collateral requirements related to hedges suggest that a higher debt level will lower S&P Global Ratings-adjusted funds from operations (FFO) to debt to 35%-40% at end-2022 from our previous expectation of 43%-48%. Our updated FFO to debt estimate is still well within the thresholds for the '###+' rating. - We now view Orsted's liquidity as adequate, due to the volatility in the market, although we acknowledge the very prudent financing lines in place. - We affirmed our '###+/A-2' long-term issuer credit ratings on Orsted. -...

Research Update