Electricite de France (EDF) was downgraded to Baa1 from A3 by Moody’s and to BBB from BBB+ by S&P. Moody’s said that it views EDF’s risk profile as more volatile due to “unstable and unpredictable nuclear output associated with fleet ageing” and S&P cited “prolonged operational weakness of the group’s French nuclear fleet and negative regulatory measures for 2022”. The political intervention to protect end-customers as power prices have risen, nature of the planned €3bn assets sales by 2024 and energy policy outcomes on the back of French elections in April weigh on risks to the company. S&P doesn’t expect that timely remedy measures by EDF would help earnings contraction and negative cash flows over 2022-23. S&P expects EDF’s EBITDA to contract in 2022 to €5-7bn as compared to prior expectations of €18bn. EDF was downgraded to BBB+ from A- by Fitch in mid-January 2022.

EDF’s EUR 5.375% Perps traded ~1 point lower to 103.5 yielding 3.6% currently.

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