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Scope has updated its rating case and financial forecasts for Encavis AG. The update underpins the BBB-/Stable/S-2 issuer rating of Encavis AG and its financing subsidiary Encavis Finance BV as well as the BBB- rating for senior unsecured debt and BB for subordinated (hybrid) debt, such as the convertible hybrid bond (ISIN DE000A19NPE8).

To see the updated issuer report please click here.

The BBB-/Stable issuer rating is strongly supported by our view on the company’s protected business model, bolstered by either prioritised feed-in of generated electricity under availability-based remuneration schemes or risk mitigation through long-term power purchase agreements (PPAs). The company’s Fast Forward 2025 growth strategy, which earmarks a doubling of capacities by 2025 (3.4 GW in 2025E against 1.7 GW at YE 2020E) is expected to stabilise the business profile as an independent power producer any further through a reduction of incremental effects from specific generation assets or regions.

The rating is constrained by the company’s weaker financial risk profile relative to its business risk profile, with high leverage including non-recourse debt at project SPV level and modest, but robust, debt protection measures (interest coverage). Reflecting the company’s debt maturity profile, sound liquidity measures over the next few years and publicly communicated financial policy, Scope believes that the company will keep debt levels under control as it expands its asset base. Scope’s updated forecasts for 2019E-21E signal a slightly improved headroom on the company’s EBITDA against the negative rating trigger.

This publication does not constitute a credit rating action. Scope published its initial public rating on Encavis AG and its debt-issuing subsidiary Encavis Finance BV on 18 March 2019. For the official credit rating action release click here.