Germany’s two largest utilities were downgraded by credit agency Standard & Poor’s as falling power prices worsen the outlook for profits.
EON AG, the country’s biggest utility, was downgraded one level to A-, the fourth-lowest investment grade. RWE AG was cut to BBB+ from A-, S&P said in statements today.
At RWE, Standard & Poor gave poor power prices, loss-making gas supply contracts and slow progress in a 7 billion-euro ($8.7 billion) disposal program as reasons for the downgrade. Fitch also cut the credit rating of Germany’s second-largest utility today, to A- from A.
German wholesale power for delivery next year has dropped 17 percent this year as the European’s economic crisis cuts regional demand for electricity.
“RWE is in a good position to access the bond market at attractive conditions at all times,” Rolf Pohlig, RWE’s chief financial officer, said in a statement the company published today. “We assume that this will continue to be the case.”
EON didn’t return a call for comment immediately.