Moody’s revises Iberdrola to stable

Moody's Investors Service said it changed the outlook on the Baa1 issuer and provisional Baa1 senior unsecured ratings of Iberdrola SA to stable from positive.

At the same time, the agency changed the outlook on the Baa1/provisional Baa1 senior unsecured debt and program ratings of guaranteed subsidiaries Iberdrola International BV, Iberdrola Finance Ireland Ltd. and Iberdrola Finanzas SAU, and Iberdrola International BV's backed Baa3 junior subordinated debt rating, to stable from positive.

Moody's also changed the outlook on the Baa1/provisional Baa1 senior unsecured debt and program ratings of Iberdrola-owned Scottish Power Ltd. and its subsidiaries to stable from positive.

All other ratings were affirmed.

"The decision to change the outlook on Iberdrola's ratings to stable follows weaker profitability in 2017 and reflects our view that the group is unlikely to achieve a financial profile consistent with our guidance for an upgrade within the next two years. The group's recently updated strategy plan 2018-22 will continue to develop favourably the group's business risk profile,” Niel Bisset, Moody's senior vice president and lead analyst for Iberdrola, said in a news release.

“However, we see potential headwinds to earnings recovery from 2018 onwards and estimate that rising debt from the investment programme will be reflected in FFO/net debt positioned in the upper teens in the next 2-3 years, consistent with a Baa1 rating given Iberdrola's scale, strategy and business mix."

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