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Rating action

Scope Ratings GmbH (Scope) has today upgraded the short-term debt rating on Swiss utility Axpo Holding AG and financing subsidiary Axpo International SA for its Negotiable EUropean Commercial Paper (NEU CP) Program promoted by Banque de France to S-1+ from S-1. The NEU CP Program of Axpo International SA is backed by an unconditional and irrevocable guarantee from Axpo Holding AG.

The upgraded rating reflects the improved credit quality of the issuer based on Scope’s view that credit metrics will remain strong over the next few years, supported by still solid cash flow generation despite normalising margins and increasing capex. At the same time, the issuer rating remains also supported by Axpo’s good business risk profile paired with the group’s status as a government-related entity, which guarantees strong and extensive public support amid potential liquidity needs.

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

Key rating drivers

Business risk profile. Axpo’s business risk profile still incorporates its solid competitive position as Switzerland’s leading energy utility, paired with adequate profitability which also improved recently amid a supportive commodity environment.

The group’s leading position in Swiss renewable power generation and energy supply is supported by its strong position in the merit order stemming from the well-below-average carbon intensity of its power generation fleet (ESG factor: credit-positive). At the same time, Axpo’s large exposure to nuclear does no longer pose significant risks in Scope’s view given the changed strategical perspective among policymakers, with the EU Taxonomy classifying it as the least-polluting fuel (ESG factor: credit neutral).

Following solid profitability in FY 2023 (fiscal year ending 30 September), with Scope-adjusted EBITDA* of CHF 2.1bn and a 20% EBITDA margin, margins remained robust in FY 2024 even with market conditions normalising. EBITDA reached CHF 2.3bn and the EBITDA margin peaked at 31%, sustained by positive trading results and increasing production from nuclear and hydro. Looking ahead, Scope expects the EBITDA margin to normalise due to lower energy prices and production volumes, to around 20% in FY 2025, and remain at these levels for the next two years, supported by higher power prices hedged three years ahead.

Financial risk profile. Axpo’s financial risk profile remains the primary supportive element of the standalone credit assessment due to its strong credit metrics, which stem from the issuer’s exceptional recent results and are expected to remain so in the coming years.

FY 2024 was another strong financial year, with positive economic results and robust cash flow leading to a net cash position of CHF 1.4bn as of September 2024 (versus net debt of CHF 0.2bn as of September 2023). For FY 2025, given the still solid margins, Scope expects free operating cash flow (FOCF) to remain positive albeit lower at around CHF 0.6bn, supporting a debt position remaining net cash. While mounting capex will put more pressure on FOCF in the coming years, Scope expects debt to remain stable and cash positive, helped by solid operating margins.

The robust margins also bolstered debt protection. EBITDA interest cover reached a record high of 97.4x in FY 2024 following the previous peak of 45.7x in FY 2023. Net interest paid was also low due to liquidity optimisation that led to higher interest income. From FY 2025, Scope expects interest cover to decline significantly but remain above 10x, in light of higher net interest paid and a normalising EBITDA.

Liquidity: adequate (unchanged). Scope expects Axpo’s liquidity position to remain strong, with ratios of well above 200% supported especially by high available, undrawn committed credit facilities. External financing for growth capex and refinancing should not be a problem given Axpo’s broad access to financing channels.

Supplementary rating drivers: +2 notches (unchanged). Axpo is a government-related entity as defined under Scope’s Government Related Entities Rating Methodology. This is based on the issuer’s full public ownership by the Swiss cantons and the essential public services it provides, signalled by its status as a systemically relevant utility.

In December 2023, the CHF 4.0bn credit line from the Swiss state was revoked at Axpo’s request. However, the federal act allowing Axpo to apply for subsidiary financial aid remains in force until 31 December 2026. For this reason, Scope still considers the Swiss authorities’ willingness to provide financial support as ‘high’. Combined with their still ‘high’ capacity to provide support, the two-notch uplift to the standalone credit assessment remains in place.

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

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s expectation that credit metrics will remain strong, as shown by debt/EBITDA staying well below 1.0x over the next few years, supported by positive FOCF despite normalising margins and increasing capex. The Outlook is also based on Scope’s view that potential shareholder support from public authorities will remain unchanged, at least while the federal act on subsidiary financial aid remains in force (i.e. until December 2026).

The upside scenario for the ratings and Outlook is:

1. Stronger business risk profile, e.g. through improved diversification and stable, high profitability (remote).

The downside scenarios for the ratings and Outlook are (individually or collectively):

1. Deteriorating financial risk profile for a prolonged period, as indicated by debt/EBITDA moving towards 1.0x, driven by negative FOCF (remote).
    
2. Any change that impairs Scope’s view of the potential for support from public authorities.

Short-term debt rating

Axpo Holding AG provides an unconditional and irrevocable guarantee to Axpo’s negotiable European Commercial Paper (NEU CP) Programme, which started in December 2022 and is promoted by Banque de France.

Scope has upgraded the short-term debt rating to S-1+ from S-1. This is based on the underlying issuer rating and a solid liquidity profile signalled by robust expected liquidity and good access to external funding from banks, the capital markets and other funding channels.

Environmental, social and governance (ESG) factors

Axpo is the Swiss leader in renewable power generation, especially thanks to its experience and expertise in hydropower technology. At European level, Axpo is also one of the main renewable power utilities.

The group also has one the smallest carbon footprints of European power generators thanks to its high share of nuclear and hydro production. Axpo reported 56 gCO2e/kWh in FY 2024, stable on the previous year (95 gCO2e/kWh in FY 2022). This is well below the European average of around 270 gCO2e/kWh, making Axpo a leader in the energy transition and being therefore ESG credit-supportive.

The group’s large exposure to nuclear power generation (around 50% of total production) also does no longer pose significant risks in Scope’s view after policymakers changed their perspective on this technology. Nuclear is no longer expected to be phased out and was even classified by the EU Taxonomy as the least-polluting fuel. This unpredicted political tailwind further supports Axpo’s aspiration to shift its business model towards decarbonised power generation.

All rating actions and rated entities

Axpo Holding AG

Short-term debt rating: S-1+, upgrade

Axpo International SA

Short-term debt rating: S-1+, upgrade

*All credit metrics refer to Scope-adjusted figures.

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, (General Corporate Rating Methodology, 14 February 2025; European Utilities Rating Methodology, 17 June 2025; Government Related Entity Rating Methodology, 3 September 2025), are available on 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 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 scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication/. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at 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 scoperatings.com/governance-and-policies/rating-governance/methodologies.

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 the principal grounds on which the Credit Ratings are based. Following that review, the Credit Ratings wese not amended before being issued.

Regulatory disclosures
These Credit Ratings are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings are UK-endorsed.
Lead analyst: Marco Romeo, Associate Director
Person responsible for approval of the Credit Ratings: Philipp Wass, Managing Director
The Credit Ratings were first released by Scope Ratings on 8 December 2022. The Credit Ratings were last updated on 28 October 2024.

Potential conflicts
See 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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