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Rating action

Scope has today downgraded the issuer rating of closed-end investment company UAB Atsinaujinančios Energetikos Investicijos (hereafter referred to as ‘AEI’) to B- from B+. Scope has also downgraded the senior unsecured debt rating to B from BB-. Concurrently, all ratings have been placed under review for a developing outcome.

The downgrade is triggered by the lack of substantial progress on asset disposals that would have reduced refinancing risks in December 2025, leading to Scope’s deteriorated view on the company’s liquidity. Moreover, the downgrade follows consistently weak total cost cover.

The under-review placement reflects the potential rating development over the next few months related to the outcome of the company’s ongoing refinancing phase. While Scope acknowledges some progress for the upcoming refinancing of the company’s significant debt exposure maturing in December 2025, e.g. through its new EUR 100m Green Bond Framework and a cash tender, the agency emphasises that there are still substantial liquidity risks in place, with EUR 54.1m requiring refinancing in the short term. A failure to refinance the debt outstanding could have default implications for AEI.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: B (revised from B+). While AEI’s business risk profile is supported by two well-established portfolio companies that operate and construct renewable energy power plants in Poland and Lithuania (positive ESG factor), the deteriorated business risk profile assessment is linked to the continuous delays in the portfolio ramp-up and their negative effects on AEI’s income concentration and asset diversification, as well as its ability to divest portfolio companies to generate proceeds to cover the outstanding bond maturities in December 2025.

AEI’s fund lifetime was extended until February 2028, as resolved in the extraordinary general meeting on 16 May 2025, which will provide more time to ramp up the portfolio and divest assets. Simultaneously, with little progress on the sale of renewable infrastructure, on May 27th 2025 AEI has launched a new green bond programme to mitigate the significant refinancing risk at the end of this year¹, together with a tender offer with the aim to repurchase bonds under the existing bond programme.

While one more portfolio company began generating cash flow from power plants in 2024, the remaining solar and wind projects in Lithuania (total installed capacity of 240 MW; 39% of total capacity) are still not finalised, and two projects are only partially operational. As a result, only two of the seven portfolio companies are fully operational at this stage. This delay in ramp-up is negatively affecting portfolio diversification; the top three holdings account for 85% of total portfolio value. Similarly, the higher income concentration is weakening portfolio sustainability, with top three core holdings representing more than 90% of the recurring income. Scope expects three portfolio companies to generate recurring interest income for AEI in 2025, compared to four in 2024. In 2026, the income to the holding is expected through dividend inflows from one portfolio company. However, Scope does not consider this as recurring because dividend payments are discretionary, based on the stronger-than-expected results at the level of the portfolio company. On top of this, the one portfolio company that contributed strongly to interest income in the last couple of years was divested in December 2024, amplifying the already high income and asset concentration risks.

Another downside for the business risk profile is Scope’s deteriorated view on portfolio liquidity. Constant delays in finalising the portfolio have led to delays in divesting portfolio companies within the fund’s original lifetime, resulting in sale proceeds being insufficient to cover debt maturing in December 2025. Another credit-negative factor relates to the challenging market conditions for renewable infrastructure, especially in Poland, where most of AEI’s assets are based. After the strong acceleration of the development of renewable sources during the recent energy crisis, demand for renewable infrastructure has decreased due to lower energy prices as well as problems with connection to the national grid. Finally, the assessment is constrained by the fund’s investment philosophy, shown by the limited sale of portfolio assets: only one is so far sold while the divestment of the remaining assets remains in early stages.

Financial risk profile: CCC (revised from B+). The lowered assessment of the financial risk profile is driven by the inadequate liquidity and weak total cost cover.

For 2025-2026, Scope conservatively projects total cost cover* of 0.5x, compared to 0.3x in 2024, which shows that recurring cash income will be insufficient to cover all of the holding company’s costs. At the same time, total cost cover could be higher than forecasted if AEI was to receive accrued interest from debt refinancing by the portfolio companies’ special purpose vehicles (SPVs), which however is dependent on the execution of associated asset sales. During the divestment stage, AEI will also likely receive accrued interest income from the repayment of shareholder loans or from bonds acquired following asset disposals, which could improve the ratio to 0.7x-1.0x in 2025-2026. However, this would require refinancing the debt at SPV level and remains dependent on the timing and pricing for the associated asset sales. As such, Scope’s rating case does not consider the latter ratio as recurring.

Conversely, AEI’s financial risk profile continues to benefit from its moderate leverage, as measured by the loan/value ratio, which jumped to 40% at YE 2024 from a low 5% at YE 2021, in line with the portfolio’s development. The holding company is investing in portfolio ventures using cash proceeds from capital markets and equity funding. As a result, debt increased to EUR 91.3m as of May 2025 from EUR 3.7m at YE 2021, driven by payouts to portfolio companies to facilitate the construction of solar and wind power plants. Scope expects net debt to reduce significantly by YE 2026 following asset disposals and shareholder loan redemptions by portfolio companies, which could also result in a net cash position. However, this remains dependent on the successful execution of envisaged disposals and the refinancing of existing short-term debt maturities.

Liquidity: inadequate (-2 notches, revised from -1 notch). Scope applies a negative two-notch adjustment within the CCC financial risk profile to reflect the still high refinancing risk in 2025 based on AEI’s limited record in the sale of portfolio companies. Nevertheless, Scope acknowledges that the company is implementing measures to mitigate this risk. These include thea new EUR 100m Green Bond Programme launched in May 2025, under which the company has recently distributed EUR 32.3m in the first tranche divided between an exchange offer for the amount of EUR 27.1m and newly raised debt of EUR 5.2m with the maturity until December 2027². Additionally, AEI has also committed to repurchasing EUR 4.8m of the existing debt through a cash tender offer. Consequently, the holding has improved its debt maturity profile and reduced the amount of outstanding debt due in December 2025 to EUR 54.1m from EUR 91.3m to EUR 54.1m. At the same time, Scope highlights still significant liquidity risks pertaining to the remaining amount of debt maturing in December 2025 which is requires similar refinancing measures and/or timely asset disposals.

Regarding external fundraising to support refinancing by December 2025, Scope expects AEI to benefit from its close ties to its parent company, Lords LB Asset Management, a fund management company with EUR 1.3bn assets under management as of December 2024. AEI’s structure as a closed-end investment company for informed investors is also supportive for securing the refinancing of the outstanding debt. Most of its investors are high-net-worth individuals, who are more likely to support the company’s refinancing and to mitigate refinancing risk than a dispersed investor base would be.

Supplementary rating drivers: credit-neutral (unchanged). Supplementary rating drivers have no impact on the rating.

One or more key drivers of the credit rating action are considered an ESG factor.

Under review for a developing outcome

The under-review status for a developing outcome reflects the potential rating development over the next few months during the company’s ongoing refinancing phase, which involves various measures. While Scope believes that the company has a good chance of executing its refinancing plan, which would significantly improve its liquidity and potentially enhance its ratings, there are still significant risks, that it will not implement all the necessary measures in time to ensure full refinancing by December 2025. Scope will closely monitor developments relating to the debt refinancing and resolve the under-review status as soon as sufficient transparency regarding the success of the ongoing refinancing phase has been achieved.

The upside scenario for the ratings and Outlook is:

• Successful execution of the refinancing plan through a combination of new, exchanged debt, and early repayment through cash, as envisaged and/or substantial progress on asset disposals, providing overall full coverage of upcoming debt maturities in December 2025.

The downside scenario for the ratings and Outlook is:

• Failure to obtain necessary funding to refinance debt maturities in December 2025.

Debt rating

Scope has downgraded the senior unsecured debt rating to B from BB-, one notch above the issuer rating following its downgrade. The debt rating is based on the ‘above average’ recovery expected for senior unsecured debt, which incorporates an expected conservative liquidation value in a hypothetical default scenario in 2025.

In a liquidation scenario, project debt (bank loans) to the SPVs owned by portfolio companies and to which AEI has provided shareholder loans will be recovered first. Remaining proceeds from the disposal of operational and unfinished renewable energy power plants could be used to redeem the shareholder loans, which would support the recovery of senior unsecured debt at holding company level.

Environmental, social and governance (ESG) factors

All of AEI’s investments are channelled into portfolio companies that operate renewable energy assets in Lithuania and Poland, markets which are chronically short of electricity generation capacities and have a significant annual electricity generation deficit (net importers). Such a portfolio exposure has attracted money flows with regards to green bond funding or the direct equity contributions that supported AEI’s growth and investment ambitions.

All rating actions and rated entities 

UAB Atsinaujinančios Energetikos Investicijos

Issuer rating: B-/Under review for a developing outcome, downgrade and under-review placement

Senior unsecured debt rating: B/Under review for a developing outcome, downgrade and under-review placement

*All credit metrics refer to Scope-adjusted figures.

1. First Tranche offering of UAB „Atsinaujinančios energetikos investicijos“ notes under the EUR 100 million Green Bonds Programme.
2. Issue of 32.274 MEUR Green Bonds of UAB "Atsinaujinančios energetikos investicijos" and implementation of the cash tender offer.

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, 14 February 2025; Investment Holding Companies Rating Methodology, 16 May 2025), 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 these 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 and/or Outlook were 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: Kamila Bernadeta Hoppe, Senior Analyst
Person responsible for approval of the Credit Ratings: Sebastian Zank, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 20 June 2022. The Credit Ratings/Outlook were last updated on 19 June 2024.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
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