May 30, 2012 / 2:52 PM / 5 years ago

TEXT-Fitch affirms Electricite de France at 'A+'

May 30 - Fitch Ratings has affirmed Electricite de France's (EDF)
Long-term Issuer Default Rating (IDR) and senior unsecured rating at 'A+', and
Short-term IDR at 'F1'. The Outlook is Stable.	
	
The affirmation reflects EDF's leading positions in Europe, particularly in
France (62% of 2011 EBITDA), where EDF's large, low-cost nuclear generation
portfolio, regulated distribution and quasi-regulated supply businesses
contribute to stable and predictable cash flows. The ratings are also
underpinned by EDF's diversified international business.	
	
Fitch expects EDF's annual capex to be EUR12bn-EUR13bn in 2012-13, rising to
close to EUR14bn in 2014. A further increase to EUR13-EUR15bn a year in 2015-16,
would put pressure on leverage ratios, particularly if capex is at the upper end
of the range. The rise in capex includes increased safety spend on nuclear
plants as required by the French nuclear watchdog, post-Fukushima. For the
ratings to remain at 'A+', FFO net leverage would have to be at or close to 3x
on a sustained basis, given EDF's strong business profile.	
	
Fitch notes that EDF has no financial headroom at the current rating level and
negative developments on energy policy, for example legislation on nuclear
assets, or adverse regulatory changes in relation to tariff reform, would
constrain the ratings.	
	
Fitch will further review EDF's ratings once there is more clarity on the new
socialist government's energy policy and over tariffs and the CSPE deficit,
expected later in the autumn.	
	
EDF should further reap benefits from the NOME law - notably the price at which
EDF's competitors have regulated access to electricity from its existing nuclear
fleet (ARENH), which has been set at EUR42/MWh from January 2012 until January
2013. However, the formula to determine the price thereafter has yet to be set,
and could prove to be a negative factor, if determined at a significantly lower
level than expected by EDF.	
	
Full control of EDF Energies Nouvelles should provide EDF with an enlarged
platform in the renewables sector, which coupled with a minimal increase in
leverage, is credit positive. Likewise, EDF's recent acquisition of a
controlling stake in Edison Spa ('BB-'/RWP) will enhance EDF's diversification
into the gas sector, with a marginal increase in leverage.	
	
Fitch's base case assumption is that France will remain committed to nuclear
energy and any changes to this view - for example the partial or full
implementation of the Socialist-Green pre-electoral pact (the potential closure
of 24 of EDF's 58 nuclear plants by 2025) could have a longer term impact on
EDF's creditworthiness.	
	
EDF is 84.8% owned by the Republic of France ('AAA'/Negative/'F1+'), but is
rated by Fitch on a standalone basis, with no government support factored into
the ratings.	
	
Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.	
	
Fimalac, S.A. (Fimalac) owns an equity interest in Fitch. EDF's CFO is also a
member of the board of Fimalac. Although EDF's CFO is not permitted to
participate in any rating matters conducted by Fitch nor participate in any
rating committees, EDF's CFO may, and did, participate in management meetings

Applicable criteria, 'Corporate Rating Methodology', dated 12 August 2011, are
available at www.fitchratings.com.	
	
Applicable Criteria and Related Research:	
Corporate Rating Methodology

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