Borrowers are facing yet tougher times in Europe as persistently high inflation and the fallout from the banking crisis in the US and Switzerland lead to tighter global financial conditions.

Thursday, March 30th 2023 - 3:00 PM (CEST)

Scope incorporates key elements from the retired Methodology into its European Utilities Rating Methodology and withdraws the Renewable Energy Corporates Rating Methodology. This will likely have a positive impact on one outstanding rating.

The methodology is now final following a call-for-comments period and will apply to all issuer and debt ratings of corporates in the sector. The application of the methodology will likely have a positive impact on a limited number of outstanding ratings.

The proposed new methodology clarifies and further refines Scope’s analytical approach on investment holding companies. The methodology as proposed could have a limited positive impact on outstanding ratings if implemented as proposed.

The bond market has enjoyed favourable conditions since the start of the year but Scope’s European Financial Conditions Index has started to tighten in response to sticky inflation, meaning borrowers are likely to face more difficult funding conditions.

The EU’s expanded carbon-pricing system risks falling short of the necessary incentives for individuals and small business to materially reduce carbon dioxide emissions from the use of buildings and transport, according to Scope ESG Analysis.

The proposed updates clarify and further refine Scope’s analytical approach. The methodology as proposed would have no impact on outstanding ratings.

Integrated oil and gas companies have good economic reasons for caution in investment in low-carbon energy projects: the rising cost of capital exposes their poor rate of return compared with short-cycle oil, gas projects amid commodity-cycle uncertainty.

The proposed updates will clarify and further refine Scope’s analytical approach. The methodology as proposed is not expected to impact outstanding ratings.