Moody’s drops Verbund to Baa2

Moody's Investors Service said it downgraded the senior unsecured rating of Verbund AG to Baa2 from Baa1.

The outlook is negative. The action concludes the review initiated on Feb. 13.

Moody’s said the downgrade reflects Verbund's exposure to an ongoing weak power price environment and the expectation that the company's credit metrics will weaken from current levels over the next few years.

Verbund's generation fleet is primarily fixed-cost in nature, with around 84% of its total capacity derived from hydroelectric power, making it particularly exposed to movements in wholesale power prices as hedges roll off over the next one to three years, the agency said. After sharp declines in recent months, reflecting the lowering of coal and carbon prices, current forward baseload prices in the joint power price zone of Austria and Germany have settled at around €22/MWh.

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