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S&P Global Ratings places Fortum and Uniper’s credit ratings on CreditWatch Negative

05 July 2022, 23:00 EEST

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S&P Global Ratings (S&P) has placed Fortum’s and its subsidiary Uniper’s credit rating on CreditWatch Negative. On 16 May, S&P affirmed Fortum’s long-term rating of BBB while Uniper was downgraded to BBB-, both companies with negative outlook. Since 2018, Fortum has had the investment-grade rating of BBB from S&P.

According to S&P, the CreditWatch Negative reflects the situation that Uniper is dependent on external factors, including government support, to sustain its financial position as long as the situation with the current Russian gas curtailment continues. S&P’s base case scenario assumes that a government mechanism would be put in place to support Uniper to reinforce the 'BBB-' rating. For Fortum’s rating, the CreditWatch reflects that incremental costs at Uniper will weigh on Fortum's credit metrics, potentially putting significant pressure on the group's credit quality in the short term.

Russia has significantly reduced its gas supplies to Germany, leaving Uniper with only ~40% of the contractually committed gas volumes from Gazprom. Given the low levels of supplies, the German Government determined a national gas shortage and the alert level of the Gas Emergency Plan was announced by the German Federal Network Agency on 23 June. However, the compensation mechanism of the Energy Security Act, that would limit the higher gas replacement costs currently being incurred by Uniper, has not yet been triggered. Uniper's gas midstream business comprises a portfolio of approximately 370 TWh of long-term gas supply contracts, of which approximately half is sourced from Russia.

S&P expects to resolve the CreditWatch on both companies once there is sufficient clarity on the impact of existing and future potential disruptions of Russian gas flows on Uniper's creditworthiness, including its medium-term business prospects, and on the magnitude and scope of any very near-term government support mechanism.

Discussions are ongoing with the German government on how to secure German security of supply during the ongoing gas curtailment and to stabilise Uniper’s situation both regarding its business risks and financial position. Fortum is firmly of the opinion that the situation calls for a national solution that will ensure the stability and security of the energy market also in the long-term.

Fortum Corporation
Ingela Ulfves
Vice President, Investor relations and Financial Communications

Further information:

Investors & analysts:
Ingela Ulfves, Vice President, Investor Relations and Financial Communications, tel. +358 40 515 1531
Rauno Tiihonen, Manager, Investor Relations, tel. +358 10 453 6150
Carlo Beck, Manager, Investor Relations, tel. +49 172 751 2480

Fortum News Desk, tel. +358 40 198 2843



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