Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations.

Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for Agder Energi AS (BBB+/under review for a developing outcome) on 16 March 2022.

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

Scope aims to resolve the review as soon as possible but notes that the original merger plan has been further delayed. The ratings could be confirmed if ongoing merger talks were to fail, resulting in the status quo. If merger talks were to generate specific results and succeed, the rating outcome would be based on the future operational and financial setup of the merged group, with all directions (positive, negative and neutral) being possible.

Following an initial decision by the owners and the boards to proceed with the agreement in the letter of intent, Scope originally anticipated that a final agreement and conditions would be submitted for approval by the individual owners in Q1 2022. This process and the ongoing discussions have been delayed and are now expected in Q2 2022. More information should be available on the companies’ business and financing structures by that time, and thus Scope anticipates resolving the rating review then. Scope also notes that the Norwegian authorities will have to give their final approval for the transaction to take place.

In February 2022, Agder Energi released its Q4 2021 report, which demonstrated that the late-2021 significant energy price increase translated into metrics that exceeded the EBITDA and cash generation that Scope estimated during 2021 for the full year. Thanks to its strong results and related cash flow generation in 2021, the company reversed the pressure that its financial risk profile experienced in 2020. Credit metrics for the full year were (as expected) very strong, with Scope-adjusted debt/EBITDA improving to 1.3x at YE 2021, compared to 6.7x a year before – but also exemplify the high share of power generation business and related price volatility. Scope considers the above and updated forecasts to be largely in line with the base case expectations stated previously.

The methodology/ies applicable for the reviewed rating(s) and/or rating Outlook(s) (Corporate Rating Methodology, 6 July 2021; Rating Methodology: European Utilities, 18 March 2021; Rating Methodology: Government Related Entities, 5 May 2021) are available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. (is issued by Scope Ratings UK Limited at 52 Grosvenor Gardens, London, SW1W 0AU, +44 207 8245180
Lead analyst Thomas Faeh, Executive Director

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