S&P cuts Elia, Eurogrid

S&P said it downgraded its issuer credit ratings on Elia Group SA/NV and Eurogrid GmbH to BBB from BBB+ and affirmed Elia Transmission Belgium SA/NV’s BBB+ rating.

The agency cited Elia’s increased capital expenditures for the rating change.

“Consolidated capex will almost double over 2024-2028, notably driven by German operations, one of Europe's heaviest increases,” the agency said in a press release.

S&P said it forecasts considerably negative free cash flow after capex and dividends averaging €3.5 billion per year for Elia Group and €2.6 billion per year for Eurogrid over 2023-2026. This would push adjusted debt to more than €18 billion for the group in 2026, compared with about €7.8 billion in 2022, while for Eurogrid adjusted debt is expected to nearly triple to about €12 billion in 2026 compared with about €4.3 billion in 2022.

“The adjusted EBITDA increase will not compensate for the increased debt, with adjusted FFO to debt expected to decline to about 7.5% over 2024-2026 for the two entities,” S&P said.

The outlook is stable for the three companies.

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