Standard & Poors downgrades EDF's credit rating just days after Moody's places its EDF rating on review
Influential credit ratings agency Standard & Poors (S&P) has downgraded its rating on EDF following the UK government's approval of the controversial Hinkley C nuclear plant.
The change of EDF's rating from A to A- on Wednesday evening follows the UK government's decision to greenlight the new nuclear plant last week, bringing to an end years of uncertainty over the £18bn project's future.
The downgrade comes as a further blow to EDF, whose share price has fallen by around a third over the past year as fears over the firm's cashflow and the reliability of its European Pressurised Reactor technology (EPR) mounted.
According to French newspaper Le Figaro, S&P said it had made the downgrading due to both the high risk of the Hinkley project and the heavy investment needed from EDF, which will put strain on its already stretched balance sheet.
EDF is shouldering a 66.5 per cent share of Hinkley's predicted £18bn cost, with China's CGN covering the remaining 33.5 per cent. The plant is not expected to begin operating until at least 2025, when EDF will begin receiving revenues for the energy it produces.
However, S&P also issued a "stable" outlook for the firm, reflecting remedies proposed by EDF and the French government such as a capital increase and EDF's sale of a 49 per cent stake in French grid operator RTE in the coming months.
The news comes after Moody's credit rating agency placed its A2 rating of EDF on review for downgrade following the final announcement last week that Hinkley will be going ahead.
Moody's said it is concerned the significant scale and complexity of the Hinkley project "are likely to affect the group's business and financial risk profiles", and pointed out that none of the five nuclear plants around the world using EPR technology is yet operational.
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