Ratings agencies’ thumbs-up for Iberdrola

Iberdrola has paid approximately €2.5 billion for 88 per cent of the British grid operator, Electricity North West (ENW).

The deal will in fact cost €5 billion, as Iberdrola is taking on ENW’s debt, executive chairman Ignacio Sanchez Galan announced.

The remaining 12 per cent holding continues in the hands of a Japanese consortium headed by Kansai Electric Power.

Galan’s move was also applauded by leading credit ratings agencies.

Standard and Poors (S&P) predicted that ENW would contribute €500 million annually to Iberia’s earnings before taxes, interest, depreciation and amortisation.

Moody’s said acquiring ENW was positive from the point of view of the company’s long-term credit rating. “The acquisition will strengthen the predictability of Iberdrola’s cash generation,” the agency added.

Fitch also approved the Iberdrola transaction.  “It is well positioned to finance the acquisition entirely in cash, taking advantage of its ample cash reserves and headroom,” an agency statement said.