TEXT-S&P FAQ looks at offshore wind and European utilities

Thu Dec 13, 2012 4:40am EST

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(The following statement was released by the rating agency)

Dec 13 - Following a number of enquiries from investors about the analytical approach we are likely to take when assessing the effect of offshore wind projects on the corporate credit quality of rated European utility companies, Standard & Poor's Ratings Services has published a Credit FAQ titled "How The Explosive Growth In Offshore Wind Generation Could Affect European Utilities' Credit Quality."

In this Credit FAQ, we address the following questions:

-- How will European utilities accommodate the costs of offshore wind projects, in Standard & Poor's opinion?

-- Will subsidized renewables generation improve the utilities' business risk profiles and thereby increase debt capacity at a given rating level?

-- Will Standard & Poor's consolidate off-balance-sheet debt relating to investments in renewables, even if the debt is nonrecourse?

-- Does Standard & Poor's have any examples of renewables-related financial adjustments for European utilities?

-- How exactly will Standard & Poor's adjust utilities' credit ratios for strategic renewable energy investments in future?

-- Will Standard & Poor's adjust debt if the utility is an offtaker under a power purchase agreement?

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