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S&P puts Vattenfall on watch
Standard & Poor’s said it placed the A- long-term issuer credit rating on Vattenfall AB on CreditWatch with negative implications.
The agency also said it affirmed the company’s A-2 short-term issuer credit ratings and K-1 short-term regional scale rating.
The CreditWatch placement reflects the adverse prospects for Vattenfall’s power generation operations, S&P said, and the likelihood of a downgrade in the near term if Vattenfall’s business risk profile is permanently weakened.
Weak demand, lower wholesale power prices and higher operating costs are restricting Vattenfall’s earnings and there currently are no signs of a price recovery, the agency said.
This also means that Vattenfall has to replace gradually expiring power price hedges with new contracts at lower prices, S&P added.
But, the company continues to benefit from a substantial share of stable cash flows from electricity distribution and district heating operations, the agency said, and from its low-cost Nordic hydro power generation.
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