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 Borkum Riffgrund 2 Investor GmbH on 3 January 2024 for the A- rating on the senior secured notes with a current outstanding balance of EUR 422.5m.

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

The A- rating reflects a total expected loss of 0.11% over the notes’ life until maturity, equivalent to a 2.78-year constant-exposure expected risk horizon. Key drivers are the low operational risks, particularly in terms of sponsors and revenue generation, as well as the strong financial metrics and resilience to cash flow stress scenarios. The project has an almost fully amortising structure with a 12% balloon followed by a long remaining useful asset life.

The project’s electricity generation in 2022, including compensated curtailment volumes, was slightly above Scope’s rating case.

Revenues exceeded the rating case expectation by 17% due to the extremely high wholesale electricity prices, particularly in the third quarter of 2022. The market premium regime allowed generators to retain excess revenues above the applicable reference value (currently EUR 184/MWh for the project) but this upside potential has been limited since 1 December 2022 following the introduction of the windfall profit levy. Operating costs were above Scope's expectations, mainly due to updated indexation. EBITDA was 13% higher than in the rating case. The 12-month backward-looking debt service coverage ratio (DSCR) was 1.52x for the period ending June 2023 compared with the rating case forecast of 1.33x. However, based on the lower-than-expected performance in H1 2023 and the preliminary Q3 results, and taking into account the rating case projections for Q4, Scope expects significantly lower coverage ratios at the next test dates (1.21x for Dec 2023 and 1.17x for June 2024).

Scope notes that Q4 rating case expectations have historically proven to be conservative assumptions that are likely to be exceeded, so actual DSCRs could be slightly higher than Scope’s projection.

The methodologies applicable for the reviewed rating (General Project Finance Rating Methodology, 16 November 2023; Counterparty Risk Methodology, 13 July 2023) are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Torsten Schellscheidt, Managing Director

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