Transition Plan Analysis
Despite nationalisation, EDF remains a major issuer in the fixed income space as well as a competitive force to its listed EU peers.
Whilst benefitting from one of the lowest emitting generation portfolios in the industry, the company is stuck with financial strain that poses an existential question with regard to its positioning in the energy transition.
In this note, Chris Moore, our Senior European Power and Utilities Analyst, outlines the key components of EDF’s transition plans and the threat it poses to its bond & especially hybrid holders.
The note –
- Looks at options that EDF may have to address its core financial and strategic challenges with the energy transition.
- Assesses the threat to EDFs issuances as being investable if it cannot execute a meaningful transition plan.
- Evaluates the company’s heavy reliance on nuclear and its effects on the balance sheet and credit ratings.
- Examines the viability of its strategy to invest in substantial newbuild CCGT assets.
- Analyses the governance issues that may threaten the company’s ability to transition.
The energy transition is changing the electricity industry at increasing speed as new technology adoption reaches a new stage. Therefore, a transition plan will progressively be viewed as a survival plan, and not all decarbonisation plans will be deemed equal. We believe this is no more evident than in the case of EDF.
If you are an investment professional and have any further questions, feel free to email Chris at firstname.lastname@example.org.