Orsted Rights Issue: Implications for Credit, Spreads (video)
Orsted's rescue rights issue balances its funding plan and provides credit headroom to deliver the scaled-down strategic plan to 2027, but the factors that made the rights issue necessary in the first place continue to pose a threat to credit quality. These include further construction delays, cost overruns and impairments on its offshore wind pipeline- as well as failure to deliver the remaining divestment plan. S&P has downgraded Orsted's issuer rating to BBB-, leaving no margin for error against its target to maintain solid high grade credit quality. Bond and hybrid spreads have snapped tighter in response to the rights issue, leaving limited scope to tighten further relative to higher-rated peers and skewing performance risks to the downside.