Creditreform Rating has affirmed the unsolicited corporate issuer rating of Engie S.A. at A-. Creditreform Rating has also affirmed the unsolicited corporate issue rating of the long-term local currency senior unsecured notes issued by Engie S.A. at A-. These issues are included in the list of ECB-eligible marketable assets, which can be found on the ECB's website. The outlook for the ratings remains negative. For more details regarding the ratings, please refer to our rating update report below.
Creditreform Rating has updated its unsolicited corporate issuer rating on Engie S.A. and confirmed it at A-. The outlook remains negative for the time being. The rating assessment is based on the company's continued strong market position and its robust business model with a diversified product portfolio. A significant part of the company's revenue comes from the regulated business or is backed by long-term contracts, which provides a basis for predictable and sustainable cash flows. Against the backdrop of the French state's substantial stake in the company's share capital and its systemic relevance for France, we continue to see the company as close to the state, which has a positive impact on our rating assessment. The continuing effects of the COVID 19 pandemic and the resulting economic risks are the main reasons for the current negative outlook. However, in the first three quarters of the 2021 business year, significant increases in turnover and earnings were generated again compared to the corresponding period of the previous year, which lead us to expect a good overall performance for 2021 as a whole.
Creditreform Rating has confirmed the A- unsolicited corporate issuer rating of Engie S.A. The negative outlook remains in place. Relevant rating aspects are the Company's strong market position and its resilient, integrated business model, as well as diversified product portfolio. A substantial part of the Company's earnings is generated in regulated or contracted businesses, creating a basis for predictable and sustainable cash flows. The Group has strengthened its business profile by optimizing its activities with the divestiture of coal-fired power plants and enlarging the share of regulated and contracted activities. This strategy, together with the implementation of the cost reduction program, has led to an improvement of the Group's earnings capacity. The Company is exposed to changes in commodity prices, weather, and regulation, as well as to operational and financial risks related to nuclear power generation. The Company's growth strategy in sustainable energy generation and efficiency solutions as well as its network operator activities in times of energy transition are associated with considerable capital expenditure. Given the French state's currently substantial interest in Engie's share capital, as well as its systemic importance for the country, we consider the Company to be government-related, which still has a positive impact on our rating assessment. The main reasons for the negative outlook are the effects of the COVID-19 pandemic and the resulting overall economic slowdown. We expect a deterioration of the Company's earnings due to the overall containment measures and decline in energy demand, as well as an intensification of counterparty risks, which, despite the credit protective measures announced by the Company, could lead to a deterioration of its financial metrics and of its rating.
Creditreform has adjusted the current unsolicited corporate rating of Engie S.A. from A- with stable outlook to A- with negative outlook. The main reason behind this decision is the announcement of the law Pacte (Plan d´action pour la croissance et la transformation des entreprises) by which it is very probable that the French government intends to sell (partly or completely) its shares in Engie S.A. from 2019 onwards. Based on our rating methodology for government-related companies, we expect a lower willingness from the French government to give extraordinary support to the company in case of need, which will have a negative impact on our rating assessment. Therefore, the current corporate rating of Engie S.A. has been adjusted by Creditreform Rating from A- stable outlook to A- with negative outlook on 20 June 2018.
Creditreform Rating has confirmed the unsolicited corporate rating of Engie S.A. The rating has been reviewed on the basis of the current rating methodology for government related corporates.