S&P Global Ratings has raised concerns about the creditworthiness of Ørsted, placing its long-term ratings on “CreditWatch Negative.” This action comes on the heels of Ørsted’s report of substantial losses amounting to $5.4 billion, primarily attributed to the closure of its US projects, as reported by the Financial Times in London.
S&P is considering the possibility of lowering Ørsted’s ratings by one notch to BBB in early 2024. This potential downgrade is linked to a revision in the company’s management and governance outlook, driven by apprehensions surrounding project management issues and what S&P characterizes as an “aggressive” expansion strategy.
However, it’s noteworthy that Ørsted, a Danish renewable energy firm, has made the decision to discontinue unprofitable projects. This strategic move may signal a more discerning approach to decision-making in the future, according to S&P. In response to this development, Ørsted’s shares experienced a notable increase of nearly 9% in value by the close of trading on Thursday.
The evaluation by S&P underscores the impact of project-related losses and the need for prudent management in the renewable energy sector. As the company reevaluates its approach and continues to make strategic decisions, the market will closely watch Ørsted’s financial performance and credit outlook.