Fitch lowers E.ON

Fitch Ratings said it downgraded E.ON AG's long-term issuer default rating to A+ from AA- and senior unsecured rating to AA- from AA. The short-term issuer default rating is affirmed at F1. The ratings were removed from Rating Watch negative where they were placed on Feb. 21, 2006.

The outlook for the long-term issuer default rating is negative.

The action follows some evidence of implementation of the revised strategic package disclosed in May, which the agency said is expected to raise leverage, weaken credit metrics and grow exposure to more volatile emerging markets.

The financial profile of E.ON is also changing as a result of maintaining the dividend payout ratio of 50% to 60%, Fitch said, influencing the company's free cash flow. And a share buyback program of €7 billion is expected to be fully implemented by the end of 2008.

Fitch noted that despite adverse market conditions, the company successfully issued three benchmark bonds in euros, pounds and Swiss francs, totaling €5.8 billion in the fourth quarter to fund its investment program. The issuer also increased its revolving credit line by €5 billion to €15 billion, the agency said.

The company's net debt-to-EBITDA ratio is forecast to grow to 2.1 times to 2.3 times by year-end 2007 from 0.7 times at year-end 2006.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.