Vestas secures first investment grade credit rating

Vestas’ first credit rating from Moody’s will help the OEM to secure attractive funding sources, according to the Danish turbine manufacturer’s chief financial officer

by Craig Richard 1 February 2021

Moody’s highlighted Vestas’ leading position in onshore wind turbine manufacturing in justifying its rating

Vestas has been assigned a long-term investment grade credit rating from financial services company Moody’s, indicating its ability to repay issued debt.

Moody’s awarded the manufacturer a Baa1 long-term credit rating with a stable outlook, suggesting Vestas is capable of achieving sustained income growth and higher margin levels.

However, it also noted that the Danish company is subject to moderate credit risk and may possess speculative characteristics.

Nevertheless, the rating is an investment grade, which means Moody’s expects Vestas to be able to meet its financial commitments. Vestas currently has one green bond with €500 million outstanding, which is due to mature in March 2022.

The assessment from Moody’s is Vestas’ first credit rating. The company follows Siemens Gamesa Renewable Energy (SGRE), Envision and Goldwind in securing an investment grade rating.

Vestas’ chief financial officer Marika Fredriksson explained: “With a Baa1 rating, we secure access to attractive funding sources, and it allows Vestas to diversify and optimise its funding structure in favour of long-term attractive terms.â€

Moody’s highlighted Vestas’ leading position in onshore wind turbine manufacturing and good revenue visibility given €14.6 billion order book — against a background of strong fundamental growth of renewable energy demand — in justifying its rating. 

It also flagged Vestas’ recent consolidation of the 100% ownership in its former offshore wind joint venture MHI Vestas, its moderate financial leverage and its high cash balance.

However, it noted several challenges for Vestas, which would counterbalance these strengths.

The ratings agency noted that Vestas faces a challenging market environment, with structural changes and pricing pressure in some markets, which have led to declining margins over the last years.

It also highlighted a need for ongoing investments to continuously improve technology and remain competitive — especially in the offshore wind segment. 

Moody’s further noted Vestas has had a history of cash flow and earnings volatility, and may face increased competition from Chinese manufacturers in international markets.

Vestas is due to present its financial results for 2020 on 10 February.