Moody's rates DONG Energy notes Baa3

Moody's Investors Service said it assigned a provisional Baa3 long-term rating to the proposed issuance of at least €500 million callable subordinated capital securities due 3013 by DONG Energy A/S.

The outlook is stable.

The rating is two notches below the senior unsecured rating of Baa1 for DONG, which reflects the features of the hybrid, the agency said.

At 1,000 years to maturity, it is very long-dated, deeply subordinated and DONG can opt to defer coupons on a cumulative basis. The hybrid also cannot be called at par until 10 years after issue, and any escalation of margin over the life of the hybrid is limited to 75 basis points, the agency noted.

Moody's said it expects that the new securities will be an issuance of at least €500 million and represents an exchange with the existing rated €700 million callable subordinated capital securities due 3010.

DONG's Baa1 issuer rating reflects the company's strong market position as Denmark's leading power and gas company, although it operates in a broader competitive market, the agency said.

The rating incorporates DONG's exposure to volatile commodity prices, partially mitigated by its vertically integrated position, including a significant equity gas position, Moody's said.

DONG's rating also includes a notch of uplift for potential extraordinary support from the Danish state, which owns nearly 80% of the company's share capital, the agency noted.

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