EDF’s credit rating has been downgraded following the UK Government decision’s to give the final go-ahead for the Hinkley nuclear project.
Moody’s has chopped EDF’s rating from ‘A3’ to ‘A2’ saying the “significant scale and complexity” of the £18 billion project will affect the group’s business and financial risk profiles.
It highlights EDF and its partner CGN are exposed to “significant construction risk” as the plant to be built in Somerset uses European Pressurised reactor (EPR) technology that has been linked with material cost overruns and delays at Flamanville in France and Olkiluoto 3 in Finland.
None of the four plants using the EPR technology currently constructed globally is operational yet, it added.
Last week, Standard & Poor’s also cut the French firm’s rating from ‘A-1’ to ‘A-2’ saying the execution risks linked to the “complex” project are high and heavy investments will weigh on EDF’s already weak cash flow.
However, it also said the firm’s outlook remains stable due to a “remedy plan” in partnership with the French Government that is expected to reduce the group’s adjusted debt in the next two years, supporting credit stabilisation.
The final approval for the construction of Hinkley Point C in Somerset was welcomed by the nuclear industry, however other experts believe the money invested by the government should have been put elsewhere and the price agreed with EDF is expensive.