(Boursier.com) — The financial rating agency Fitch downgraded its long-term debt rating byEDF down a notch to BBB+ after the government’s announcements aimed at limiting the rise in energy prices. Fitch also gave its rating a negative outlook, meaning the agency could downgrade it further in the future.
This rating downgrade comes after a series of bad news for EDF. The electrician, whose capital is 83% owned by the State, had suspended Thursday its 2022 forecasts concerning its Ebitda and its net financial debt, which it will no longer be able to respect, the French government having demanded from the group that it sells more electricity at low cost to its competitors.
Shortfall of approximately 8 MdsE in 2022
In addition, the CEO of EDF, Jean-Bernard Lévy, indicated Monday evening that he was considering “appropriate measures to strengthen the group’s balance sheet structure and any measure likely to protect (its) interests”, in response to the decision of the French government to increase the volumes of electricity sold to the group’s competitors at low prices. EDF will say within a month how it intends to “protect its interests”, said Mr. Lévy in a message addressed to EDF managers that Reuters was able to consult on Monday.
Jean-Bernard Lévy called the government’s announcements to limit soaring energy costs a “real shock” and said they will result in a shortfall of around 8 billion euros in 2022.
Capital increase in sight?
In addition to these low-cost sales to competitors, Fitch pointed to the “extended shutdowns of certain nuclear reactors, which will significantly erode margins at least for 2022”. “We estimate this will leave Fitch-defined Ebitda for 2022 at around €4 billion, 75% lower than our previous estimate, and a weakened financial structure for EDF”, judged the financial rating agency in a press release.
On the Paris Stock Exchange, the EDF share, which had plunged 14.5% on Friday, fell again by 4.2% on Monday to end at 8.468 euros, penalized by lowerings of recommendation from many analysts. In particular, they stress the need for the group to carry out a major capital increase. latest, HSBC Monday downgraded the value to “keep” while reducing its target from 15.1 to 10 euros. Friday, Oddo BHF had downgraded its recommendation on the value to ‘neutral’ with a target of 11 euros. And Vincent Ayral, analyst at JP Morgan Chase recommended “avoiding the title for the time being”. “Given the circumstances, EDF is likely to consider a capital increase,” he said in a note.