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Moody’s could lower DONG Energy
Moody's Investors Service said it placed the long-term Baa1 ratings of DONG Energy A/S and DONG Energy Salg & Service A/S on review for downgrade.
Concurrently, the agency placed DONG's provisional Baa1 senior unsecured ratings and Baa3 hybrid security ratings on review for downgrade.
Moody’s said the action reflects DONG's exposure to a weakening commodity and power price environment, which could lead to lower earnings over time in oil and gas as hedges roll off.
Oil prices have deteriorated substantially in recent months and have reached nominal price lows not seen in more than a decade. Moody's adjusted its view downward for the likely range of prices; it now estimates Brent oil at $33/bbl in 2016 rising to $53/bbl in 2020. This sharp reduction in oil price assumptions is driven by the continuing oversupply in the global oil markets and continued tepid demand growth.
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