Moody’s downgrades RWE

Moody’s Investors Service said it downgraded RWE AG’s Baa3 senior secured rating to Baa3 from Baa2, along with guaranteed subsidiary RWE Finance BV’s senior secured rating to Baa3 from Baa2.

Moody’s also said the subordinated debt ratings on both companies to Ba2 from Ba1, along with their short-term ratings to prime-3 to prime-2.

The outlook is stable.

The downgrades conclude a review that began in February, Moody’s said.

The downgrades reflect the weak power price environment, which is likely to maintain pressure on RWE’s operating cash flows from generation, the agency said.

The downgrades also consider the recent recommendation by the government-appointed nuclear commission that a significant premium should be paid by the German nuclear generators, which is an additional financial burden for RWE, Moody’s said.

The company’s exposure to coal and lignite generation also is likely to remain challenging over the longer term given the government’s commitment to clean energy, Moody’s added.

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