Link Securities | Credit rating agency S&P maintains uncertainty regarding Redeia’s credit rating and states that there is a 50% chance of downgrading its rating within three to six months, according to elEconomista.es. The outcome will depend on three key factors: the final design of the National Commission for Markets and Competition’s remuneration framework, the schedule and volume of investments defined in the next Transmission Network Development Plan 2026-2031, and the company’s own financial policy. For S&P, the regulation for the 2026-2031 period offers insufficient support in the context of huge future investment needs and remains weaker than in other Western European markets.
The credit rating agency indicates that the proposed changes, while reducing the gap in the current framework and improving the group’s revenue trajectory, are less favourable than expected in a context of strong investment growth. The increase in the financial remuneration rate to 6.46% in nominal terms and before tax (compared to the current 5.58%) is relatively modest compared to its counterparts and unlikely to be sufficient to attract capital, mainly reflecting the rise in risk-free rates.
Relatively lower investment over the last decade compared to other Western European countries has limited the regulated asset base to around €10 billion in 2024 and weighed on EBITDA growth between 2018 and 2024, due to assets amortised prior to 1998. S&P notes that potential political interference continues to be viewed as a relative weakness, given that RED’s investment plan is derived from the development defined by the government, while tariff setting is overseen by the regulator.
On the other hand, the agency acknowledges that Redeia’s responsibility, even partial, was not legally recognised by the state in its 17 June technical report on the main causes of the blackout. However, S&P adds that an upcoming report by the National Markets and Competition Commission (CNMC) should address the formal responsibility of each actor in what the government has described as a systemic problem. Furthermore, in its own technical report, Redeia explained that it had complied at all times with the operating procedures established by the regulator.
Given this situation, the agency specifies that ‘beyond the reputational impact, the blackout highlights the complexity of operating the Spanish electricity system.’ They also indicate that until the process of legal attribution of responsibilities is concluded, claims could be made against Redeia and electricity generators by end consumers, both businesses and individuals, through marketers and distributors.
