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06 Oct 2009
Approximately EUR30 billion of debt securities affected
London, 06 October 2009 -- Moody's Investors Service placed on review for possible downgrade
the A3 long-term senior unsecured debt ratings of EDF Energy plc
(EDF Energy), the wholly owned subsidiary of Electricite de France
SA (EDF; together with subsidiaries, the EDF Group).
Also placed on review for possible downgrade were the senior unsecured
debt and issuer ratings of its three regulated network subsidiaries --
the A2/Prime-1 ratings of EDF Energy Networks (LPN) plc and EDF
Energy Networks (EPN) plc, and the A3 ratings of EDF Energy Networks
(SPN) plc -- as well as the A3 ratings of certain other of its subsidiaries.
The Aa3/Prime-1 ratings of EDF SA, and the Prime-2
short-term debt ratings of EDF Energy and certain of its subsidiaries
The rating actions follow the announcement by the EDF Group that it had
initiated a process to evaluate ownership options for its electricity
distribution business in the United Kingdom, owned by EDF Energy,
including the potential disposal of its three regulated electricity distribution
networks, in line with its earlier announced intention to reduce
net financial debt by at least EUR5 billion by the end of 2010.
The following ratings were placed on review for possible downgrade:
EDF Energy plc -- the A3 senior unsecured debt ratings
EDF Energy Networks (LPN) plc -- the A2/Prime-1 senior unsecured
debt and issuer ratings
EDF Energy Networks (EPN) plc -- the A2/Prime-1 senior unsecured
EDF Energy Networks (SPN) plc -- the A3 senior unsecured debt and
EDF Energy (South East) plc -- the A3 senior unsecured issuer rating
EDF Energy Customers plc- the A3 senior unsecured issuer rating
SEEBOARD Energy Ltd -- the A3 senior unsecured issuer rating
The following ratings were affirmed:
EDF SA -- the Aa3/Prime-1 senior unsecured debt and issuer
EDF Trading Limited -- A3 senior unsecured issuer rating
EDF Energy plc -- the Prime-2 senior unsecured short-term
EDF Energy Networks (SPN) plc -- the Prime-2 senior unsecured
short-term debt rating
EDF Energy (South East) plc -- the Prime-2 senior unsecured
short-term issuer rating
Moody's says that the review for possible downgrade of EDF Energy's
A3 ratings reflects the negative pressure exerted by the planned disposals
of its distribution assets on its business risk profile. This currently
balances generation and supply revenues with the more predictable earnings
from its distribution networks, which during the first six months
of 2009 accounted for 27% of the EUR1.6 billion EBITDA generated
by the EDF Group in the United Kingdom (including the results of British
Energy). While recognising that EDF Energy now benefits from a
better balance between generation and supply following EDF's acquisition
of British Energy, Moody's considers nevertheless that disposal
of these regulated earnings would increase materially its dependence on
earnings from more volatile markets. Moody's says that the
review process will evaluate the impact of the potential disposal on the
business risk profile of EDF Energy, taking account also of the
wider strategic context and capital investment plans following any disposals,
as well as on its financial risk profile. It will also factor in
EDF Energy's position within the wider EDF Group, and its
plans for developing Nuclear New Build in the United Kingdom.
The reviews for downgrade of the three distribution networks are prompted
by uncertainty around the potential impact on their capital structure
in the event that they were to be sold by EDF Energy. The affirmation
of EDF Energy Networks (SPN) plc's Prime-2 rating reflects
Moody's view of potential maximum credit migration based upon precedents
and regulatory considerations.
Moody's adds that it sees no impact from the potential disposal
of the UK networks on the Aa3/Prime-1 ratings of EDF SA,
which have been affirmed with a stable outlook. In the first half
of 2009 the UK networks represented just over 4% of the EDF Group's
EBITDA. Moody's nevertheless notes that their disposal would
reduce the proportion of earnings which the EDF Group derives from regulated
network assets, thereby raising the Group's business risk
profile proportionally, although this is to an extent balanced by
the positive impact on Group free cash-flow and the intention to
use proceeds from the potential sale to reduce debt. Moody's
cautions that were the proportion of earnings from regulated networks
to decline further in the future, it would look to evaluate the
impact of any such reduction on the Group's business risk profile
and, potentially, ratings, considering also the implications
of the evolving regulatory framework in France.
Moody's last rating action on the EDF Group was on 14 January 2009,
when EDF SA's rating was downgraded to Aa3 from Aa1 following the
acquisition of British Energy, and the ratings of EDF Energy plc
and its subsidiaries were confirmed.
The principal methodologies used in rating these entities were The Application
of Joint Default Analysis to Government Related Issuers, published
in April 2005, and Moody's rating methodologies for Unregulated
Utilities and Power Companies, and for Regulated Electric and Gas
Networks published in August 2009 and available on www.moodys.com
in the Rating Methodologies sub-directory under the Research &
Ratings tab. Other methodologies and factors that may have been
considered in the process of rating this issuer can also be found in the
Rating Methodologies sub-directory on Moody's website.
Electricite de France (EDF) SA is an integrated provider of electricity
generation, transmission, distribution, and supply services,
and the leader in its domestic French market. The company also
has a major presence in the international markets through ownership interests
in power utility operations in Europe (primarily Italy, UK and Germany)
and globally. In the six months ended 30 June 2009, the EDF
Group recorded revenues of EUR34.9 billion.
EDF Energy plc is an integrated electricity generation, distribution
and supply company, and is the largest UK regulated network owner,
serving London, the South-East and East of England which
account for 40% of the UK's GDP. At 28 December 2008 the
company has approximately 5.6 million customer accounts.
In the year ended 31 December 2008, the company reported revenues
of GBP6.6 billion and operating profit of GBP465 million.
Infrastructure Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's reviews for downgrade ratings of EDF Energy and its subsidiaries; affirms ratings of EDF
Senior Vice President
Infrastructure Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
No Related Data.
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