Fitch cuts Electricite de France, debt

Fitch Ratings said it downgraded Electricite de France SA's long-term issuer default rating and senior unsecured rating to A- from A.

The subordinated notes were downgraded to BBB from BBB+ and the short-term issuer default rating to F2 from F1.

The agency also lowered EdF Energy Nuclear Generation Group Ltd.’s long-term issuer default rating to A- from A.

The outlooks are stable.

Fitch said the downgrades reflect the impact of the fall in power prices on an undiversified fuel mix, coinciding with the erosion of domestic business volumes. Although capex is being cut, the agency views flexibility as limited and substantial capex is needed to modernize the domestic nuclear fleet.

The company has a strong liquidity position, plans to sell assets, extend scrip dividends to 2017 and raise €4 billion of fresh equity.

However, in view of further potential major commitments, its biggest challenge will be to reduce underlying negative free cash flow, the agency said.

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