Rating Action

• Linde AG, Linde Finance BV¹; senior unsecured debt
• A+/stable -affirmation
• S-1+ short-term rating

Rating Rationale

The rating affirmation reflects Scope’s view of the group’s very credit-supportive business risk profile, owing to the industrial gases industry’s limited cyclicality and high degree of protection, as well as Linde’s strong market position as one of the four leading global suppliers of gases. The ratings also reflect our view of group management’s extremely conservative financial policy and high commitment to the ratings assigned.

Rating Change Drivers

• Upside: significantly improved credit metrics
• Downside: Inability to maintain at least 40% FFO/ SaD and 2x leverage

For the detailed research report please click HERE.

¹ An editorial error in the original rating report was corrected on 18.07.2018. The original rating report miswrote “Linde Finance BV” as “Linde Financial Services BV”.

Stress testing & cash flow analysis
No stress testing was performed. Scope performed its standard cash flow forecasting for the company.

Methodology
The methodology used for this rating(s) and/or rating outlook(s): Rating Methodology: Corporate Ratings, is available on www.scoperatings.com.
Historical default rates of Scope Ratings can be viewed in the rating performance report on https://www.scoperatings.com/#governance-and-policies/regulatory-ESMA Please also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope’s definition of default as well as definitions of rating notations can be found in Scope’s public credit rating methodologies on www.scoperatings.com.
The rating outlook indicates the most likely direction of the rating if the rating were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The rating was not requested by the rated entity or its agents. The rated entity did not participate in the rating process. Scope had access to accounts, and no access to management and/or other relevant internal documents for the rated entity or related third party.”
The following substantially material sources of information were used to prepare the credit rating: public domain, and Scope internal sources. Historical data used for this rating is limited.
Scope considers the quality of information available to Scope on the rated entity or instrument to be satisfactory. The information and data supporting Scope’s ratings originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the rating or outlook action, the rated entity was given the opportunity to review the rating and/or outlook and the principal grounds on which the credit rating and/or outlook is based but declined to do so.

Regulatory Disclosures
This credit rating and/or rating outlook is issued by Scope Ratings GmbH.
Lead analyst Olaf Tölke, Managing Director
Person responsible for approval of the rating: Henrik Blymke, Managing Director
Linde AG's issuer rating/outlook was first released by Scope on 11.08.2016. The rating/outlook was last updated on 12.07.2017.
Linde AG's short-term rating was first released by Scope on 11.08.2016. The rating was last updated on 12.07.2017.
Linde AG's senior unsecured debt rating was first released by Scope on 10.02.2017. The rating was last updated on 12.07.2017.
Linde Finance B.V.'s issuer rating/outlook was first released by Scope on 18.10.2016. The ratings/outlook was last updated on 12.07.2017.
Linde Finance B.V.'s short-term rating was first released by Scope on 18.10.2016. The rating was last updated on 12.07.2017.
Linde Finance B.V.'s senior unsecured debt rating was first released by Scope on 10.02.2017. The ratings was last updated on 12.07.2017.

Potential conflicts
Please see www.scoperatings.com. for a list of potential conflicts of interest related to the issuance of credit ratings.

Conditions of use / exclusion of liability
© 2018 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Analysis GmbH, Scope Investor Services GmbH and Scope Risk Solutions GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstrasse 5 D-10785 Berlin.

Scope Ratings GmbH, Lennéstrasse 5, 10785 Berlin, District Court for Berlin (Charlottenburg) HRB 192993 B, Managing Director: Torsten Hinrichs.