European Utilities Midyear Credit Outlook

European utilities face flat earnings in 2H as power prices normalize and rising debt as capital spending remains elevated. The major integrated and network utilities look well-placed to control leverage risks by raising capital via disposals, asset rotation, hybrids and equity. Generation-focused utilities face more intense earnings pressure and renewable-focused utilities remain challenged to manage operational and policy risks- particularly in the US. Utility sector bonds have scope to extend their outperformance into 2H, but these pockets of risk need to be managed. Paul Vickars, senior credit analyst, discusses these themes in a short video.