The ratings on French 100% state-owned Electricité de France (EDF) are based on the group's dominant position in its French home market, a low-cost nuclear generation portfolio, and a substantial share of low-risk regulated network activities. Management's reined-in and refocused strategy of consolidating its positions in Western Europe, together with its commitment to rapidly improve the group's profitability and free cash flow generation, are also positive credit factors. These strengths are offset by EDF's currently only average financial profile, due to an estimated €16 billion of unfunded pension and other post-employment liabilities and over €22.5 billion of unfunded nuclear end-of-cycle liabilities. Large off-balance-sheet put-option commitments--notably on Edison (BBB+/Stable/A-2)--represent an additional near-term risk factor. A degree of state support is still
