The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has affirmed Uniper SE’s BBB- issuer rating and changed the Outlook to Stable from Negative. Concurrently, Scope has affirmed the BBB- senior unsecured debt rating and the S-3 short-term debt rating.

Rating rationale

The expected majority ownership by the German government, which makes Scope more confident about a faster and more straightforward implementation of required stabilisation measures, drives the Outlook change to Stable from Negative. The rating affirmation reflects a largely unchanged view on both the company’s standalone credit quality and the rating uplift from its status as a government-related entity following the amendment of the stabilisation package.

On 21 September, the German government, Uniper and Fortum signed an amendment of the stabilisation package for Uniper announced on 22 July 2022. The amendment reflects the further developments including increased curtailments of gas deliveries from Russia since the end of July. For reference, as of 16 September, accumulated curtailment-related losses reached EUR 8.5bn. The stabilisation package now includes a capital increase of EUR 8bn to be exclusively signed by the German government and will lead to a German government ownership stake in Uniper of approximately 93%. Further, the German government shall acquire the Uniper shares currently held by Fortum, which leads to a total ownership stake of around 99% for the German government. The state-owned bank KfW will provide financing to Uniper according to its liquidity needs including a replacement of the current credit line from Fortum, which consists of a EUR 4bn shareholder loan and a EUR 4bn guarantee line. The stabilisation measures continue to be subject, inter alia, to regulatory approvals in various jurisdictions including state-aid and merger control approvals from the European Commission.¹

Scope continues to assess Uniper’s standalone credit quality at BB-. While a straight equity injection is more credit supportive compared to the previously expected mandatory convertible instrument, Scope notes that the amended agreement is based on the gas surcharge to pass through 90% of the replacement costs without a backstop solution. Scope believes that Uniper’s liquidity remains adequate. This view is primarily based on the EUR 13bn in external funding provided by KfW that can be extended depending on Uniper’s liquidity needs, including replacing the EUR 8bn in loans and guarantees provided by Fortum.

With regard to supplementary rating drivers, Scope continues to assess Uniper as a government-related entity applying the Bottom-Up approach according to its Government Related Entities Rating Methodology. Based on the unchanged view of the German government (rated AAA/Stable by Scope) having a ‘high’ capacity and a ‘high’ willingness to provide support, Scope maintains the rating uplift of three notches of Uniper’s standalone credit quality.

Outlook and rating-change drivers

The Stable Outlook reflects Scope’s expectation that the already announced and further potential government stabilisation measures will be implemented in a timely fashion and will be sufficient to preserve Uniper’s credit quality (i.e. absorb the impact of adverse market conditions).

A negative rating action could be considered if stabilisation measures were not implemented in a timely fashion or were insufficient to preserve the credit quality, e.g. in case of severe operational or liquidity issues. A negative rating action could also be considered if Scope’s perception of the potential government support had weakened.

A positive rating action, while remote, could be considered if the risks related to the adverse market environment reduced meaningfully, and Uniper returned to profitability on a sustained basis while Scope maintained its perception of the continued government support.

Long-term and short-term debt ratings

Senior unsecured debt remains rated at BBB-, the level of the issuer rating. Still, Scope notes high complexity and volatility in the capital structure that could alter recovery expectations for senior unsecured debt in the future.

The short-term debt rating is affirmed at S-3. This primarily reflects the deteriorated internal cash generation capacity.

Rating driver references
1. Agreement on amended stabilisation package 

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

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 15 July 2022; European Utilities Rating Methodology, 17 March 2022; Government Related Entities Rating Methodology, 6 May 2022), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. 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 Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting the Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Marlen Shokhitbayev, Director
Person responsible for approval of the Credit Ratings: Henrik Blymke, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 16 June 2017. The Credit Ratings/Outlook were last updated on 14 September 2022.

Potential conflicts
See www.scoperatings.com under Governance & Policies/EU Regulation/Disclosures for a list of potential conflicts of interest related to the issuance of Credit Ratings.

Conditions of use/exclusion of liability
© 2022 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Analysis GmbH, Scope Investor Services GmbH, and Scope ESG Analysis 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.