The agency confirmed the long term Baa1 ratings of Dong Energy, but emphasised that its outlook for the future is negative, due to a reduction in earnings from oil and gas, and a weakening in its financial profile over 2016/17.
In addition, there are likely to be further costs related to the restructuring of this business, it said.
Although Dong said it expects this to be offset by growth in its wind business, Moody’s said there are “material development risks” and it does not view anticipated development and divestment gains as having the same debt capacity as other earnings.
Dong has installed 3GW of offshore windfarms, and, over 2016-20 it targets a further 3.7GW of new windfarms including the Walney Extension and Hornsea projects – which will be the two largest offshore wind parks once built.
The developer expects contributions from partners – via both development and construction gains, as well as divestment proceeds from the sale of stakes in the project companies holding the windfarms – to make an increasingly important contribution to the financing of these projects.
Moody’s said the outlook could stabilise if Dong can demonstrate that it remains on track to complete the announced restructuring of its oil and gas activities, and its offshore windfarms on time and within budget.
“Over time, should business risk decrease through lower construction risk and the portfolio of diversified regulated and contracted earnings grow, then this ratio guidance could be lowered,” Moody’s said.