Accordingly, on 5 October 2022, the Group issued euro-denominated senior bonds in 3 tranches for a total amount of €3 billion, including a green bond for €1.25 billion maturing in 12 years. On 30 November 2022, EDF conducted a hybrid bond issue for an amount of €1 billion.
The Group contracted the following:
Lastly, on 5 April 2022, EDF performed a capital increase for an amount of €3.1 billion, supplemented by a capital increase reserved to employees for an amount of €0.1 billion.
Any downgrading of EDF’s financial rating could increase the cost of refinancing existing loans and have a negative impact on the Group’s ability to obtain financing. This risk is increased in the event of delay in completion of the simplified public purchase offer.
The new ARENH volume allocations, the shutdown of nuclear power plants in France and the volatility of the electricity markets, in particular the margin calls on the trading activities, put pressure on the Group’s rating and accentuate short-term liquidity requirements. This more uncertain financial outlook could lead to a further downgrading of the short- and long-term ratings by the rating agencies, and impact both the ability to access liquidity and its cost. EDF was placed under surveillance on 25 May 2022 by S&P. The rating was confirmed on 14 December 2022, with a stable outlook. Similarly, Fitch confirmed its EDF rating on 6 September 2022, with a stable outlook (section 5.1.6.1.2 “Credit rating”).
This risk, having already increased the previous year, increased still further during 2022, particularly because of the very high volatility of energy prices, significant margin calls, and the unavailability of nuclear power stations.
Consequently, the year 2022 was marked by heavy calls on financial institutions in order to meet the Group’s exceptional liquidity requirements. These calls may probably not recur in 2023, since the banks have reached a certain saturation of their EDF risk.
The EDF group was able to meet its financing needs by conservative liquidity management and has obtained financing on satisfactory terms.
A range of specific levers are used to manage the Group’s liquidity risk:
Summary: Like all economic operators, the Group is exposed to possible default by certain counterparties (partners, subcontractors, service providers, suppliers or customers).
Criticality: ●● Intermediate
A default by these counterparties may impact the Group financially (loss of receivables, additional costs, in particular if EDF is required to find satisfactory alternatives or take over the relevant activities or pay contractual penalties).
The ending of support measures implemented during the Covid crisis may lead to a risk of default by some of the Group’s counterparties. To date, no significant default has been identified among the Group’s counterparties. The Group remains vigilant regarding industrial counterparties which may become vulnerable in the context of a worsening economic situation and of the energy crisis related to the Ukraine conflict. The Group is also closely monitoring the activities of its EDF Trading subsidiary in a context of highly volatile energy prices.
For certain activities, the risk may be hedged by the use of margin calls.
Furthermore, the Group has a counterparty risk management policy which applies to EDF and all operationally controlled subsidiaries. This policy sets out the governance associated with monitoring this type of risk, and the organisation of counterparty risk management and monitoring. The policy also involves quarterly consolidation of the Group’s exposures.
At 30 September 2022, 88% of the Group’s exposure concerned “investment grade” counterparties, mainly due to the predominance of exposures generated by the cash and asset management activity, as most short-term investments concern low-risk assets:
