Tekniska verken i Linkoping AB

The stable outlook on TvAB reflects our view that the company's fully regulated electricity DSO business and stable district heating operations will likely continue to support cash flow. We expect TvAB will maintain S&P Global Ratings-adjusted FFO to debt above 45% in the next two-to-three years, well above the 35% downgrade threshold for the ratings. We could lower our ratings on TvAB if the company's financial performance and credit metrics fell materially short of our forecasts and thresholds for the ratings. We could consider a downgrade if TvAB's FFO-to-debt ratio weakened below 35% and we did not expect a recovery. This could stem from a significant increase in debt-financed investments. However, we believe this is unlikely. Moreover, privatization or weaker

...S&P Global Ratings expects credit ratios to remain stable or increase slightly in 2022-2025, and headroom to remain high. Specifically, we expect FFO to debt above 45% in 2022-2025 (it was 55% in 2021). This is well above our downside rating threshold of 35%. Cash flow is supported by stable district heating and electricity distribution operations representing a high share of EBITDA, at 60%-70% on average. TvAB also benefits from its diversified operations, with revenue streams from other stable operations such as broadband, water and sewage, and waste handling, all with fixed contracted pricing that limits cash flow volatility. The company's exposure to electricity prices stemming from wind and hydro generation are limited and have historically represented about 10% of EBITDA. TvAB also has exposure to volatile electricity prices in its subsidiary Bixia, which delivers electricity for consumers. With volatile power prices, Bixia is exposed to long-term contracts with its customers, and...

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