S&P Global Ratings has cut Danish wind giant \u00d8rsted\u2019s credit rating, pointing to a faltering \u201cfarm-down\u201d funding model as U.S. project setbacks and broader industry troubles mount.<\/p>\n
\u00d8rsted\u2019s stocks dropped nearly 30% to an all-time low August 11 after it announced a rights issue\u2014where a company invites existing shareholders to <\/a>purchase<\/a> more shares\u2014to raise US$9.4 billion in funding for its Sunrise Wind project in New York, after a partial sale of the project fell through<\/a>.<\/p>\n \u201c\u00d8rsted and our industry are in an extraordinary situation with the adverse market development in the U.S. on top of the past years\u2019 macroeconomic and supply chain challenges,\u201d said<\/a> CEO Rasmus Errboe.<\/p>\n Errboe blamed<\/a> the wind-averse<\/a> Donald Trump, describing<\/a> the political risk and regulatory and tax credit changes during his administration as unexpected developments outside the company\u2019s control.<\/p>\n But <\/a>longstanding<\/a> industry challenges also played a role. Even under the supportive Joe Biden administration, \u00d8rsted faced soaring costs, supply chain disruptions, and financing challenges.<\/p>\n The company\u2014which rapidly transitioned<\/a> from a state-owned oil and gas utility to a global leader in offshore wind\u2014typically follows a \u2018farm-down\u2019<\/a> model, selling off parts of its projects to fund further development or operations. When \u00d8rsted\u2019s planned partial divestment from Sunrise failed, its funding capacity was hampered. That became a key part of S&P\u2019s decision to downgrade its rating to BBB-, the lowest rating that is still considered worthy of investment. S&P also based the rating change on the company\u2019s inability to carry out project refinancing, <\/a>reports<\/a> Bloomberg.<\/p>\n If the rights issue succeeds, roughly two-thirds of the funds will be used to fund<\/a> Sunrise\u2019s construction costs.<\/p>\n Update: On August 22, the U.S. Bureau of Ocean Energy Management issued a stop-work order for the Revolution Wind project, a $1.5-billion development off Rhode Island that is 80% complete. \u201cThe project has finished installing foundations and 45 of the 65 planned turbines,\u201d The Financial Times reports<\/a>. \u201cIt was due to begin operations next year and supply enough power for 350,000 homes in Rhode Island and Connecticut under 20-year contracts.\u201d The BOEM order cited the need \u201cto address concerns related to the protection of national security interests,\u201d the Times says, but didn\u2019t elaborate.<\/p>\n \u201cThe farm-down strategy has been a key pillar of \u00d8rsted\u2019s business strategy, but this business model now pertains higher risk,\u201d S&P said. \u201cPreviously we viewed \u00d8rsted\u2019s track record on execution as predictable. However, the cancellation of the disposals of Sunrise Wind severely and directly hinders credit metric performance.\u201d<\/p>\n Two other major credit rating agencies <\/a>maintain<\/a> their long-term ratings for the company; Moody\u2019s Ratings lists \u00d8rsted as Baa2 with a stable outlook, while Fitch Ratings\u2019 BBB is listed with a negative outlook. A poor rating from two of these three firms would usually make investors wary, Bloomberg says.<\/p>\n A lower credit rating could also mean the company will face higher borrowing costs, which would in turn risk driving up capital costs and making the company\u2019s problems worse. Jacob Pedersen, head of equity research at Sydbank, said a company\u2019s investment-grade rating is a \u201cprerequisite for ensuring a financially sound future.\u201d<\/p>\n \u201cThe company is in really bad shape. A capital increase was the last resort,\u201d Pedersen said. \u201cIt was not just the right decision, it was the only option they had left in their toolbox.\u201d<\/p>\n Pedersen added that the downgrade by S&P was \u201ca surprise\u201d. Sydbank expects the capital from the rights issue will \u201cstrengthen \u00d8rsted\u2019s finances to a degree, so that the company\u2019s credit rating should be well away from junk.\u201d<\/p>\n But Sydbank also told investors that \u00d8rsted\u2019s rating dropping lower would affect parts of the company\u2019s existing debt, \u201cwhich will mature and thereby derail the investment program and future value creation in \u00d8rsted,\u201d <\/a>says<\/a> ReCharge News.<\/p>\n Bloomberg <\/a>reports<\/a> that a separate statement from \u00d8rsted shows the company\u2019s earnings before interest, tax, depreciation and amortization\u2014excluding new partnerships and cancellation fees\u2014rising 9% in the first half of 2025 compared to the year before.<\/p>\n","protected":false},"excerpt":{"rendered":"S&P Global Ratings has cut Danish wind giant \u00d8rsted\u2019s credit rating, pointing to a faltering \u201cfarm-down\u201d funding model…\n","protected":false},"author":2,"featured_media":72253,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[285],"tags":[39174,39175,287],"class_list":["post-72252","post","type-post","status-publish","format-standard","has-post-thumbnail","category-orsted","tag-byline-internal","tag-dow","tag-orsted"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@dk\/116495466075752818","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/posts\/72252","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/comments?post=72252"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/posts\/72252\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/media\/72253"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/media?parent=72252"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/categories?post=72252"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/tags?post=72252"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}