S&P lowers rating on EDF after UK government approves Hinkley Point C

S&P Global Ratings has downgraded its rating on energy company Electricité de France (EDF) following the UK government’s approval of the Hinkley Point C nuclear plant project.

The government has given the green light to the £18bn new nuclear plant in Somerset under the previously agreed terms with EDF. EDF is building the plant with a £6bn investment from Chinese state nuclear firm China General Nuclear.

“We believe that execution risks linked to this project are high and that the related heavy investments will weigh on EDF's already weak free operating cash flow,” S&P said.

The agency cut its rating on the French power utility to 'A-/A-2' from 'A/A-1' and issued a ‘stable’ outlook.

S&P said the stable outlook reflects its view that the "remedy plan set by EDF and the French government will reduce the group's adjusted debt over the next two years while supporting a stabilisation of credit metrics". The remedy plan includes increasing capital and disposing of the stake in RTE in the coming quarters.