Orsted's US offshore wind business downgraded by S&P due to Trump administration policies.

Orsted's credit rating has been downgraded by S&P Global Ratings to BBB- due to increasing risks to its US offshore wind business. The Danish company's inability to refinance and divest its US-based Sunrise wind project contributed to the downgrade. Orsted plans to raise up to $9.4 billion in a stock sale to steady its finances.

S&P Global Ratings has downgraded Ørsted A/S to 'BBB-' from 'BBB', citing increasing risks to its U.S. offshore wind business. The Danish renewable energy company's inability to refinance and divest its U.S.-based Sunrise Wind project, along with other challenges in its offshore operations, contributed to the downgrade [3].

The rating agency noted that Ørsted's business risk profile has worsened, with political risk in the U.S. offshore wind sector being a significant concern. Ørsted had previously walked away from two large wind farms in New Jersey and recently decided to cancel its UK's largest wind farm project, Hornsea 4, due to rising costs. The company's strategy of selling stakes in projects to raise capital, known as the farm-down strategy, now carries higher risk [3].

Ørsted's Sunrise Wind project, located off the coast of New York, is particularly challenging. The company reported that it had decided to end discussions on a possible sale of a portion of the project, which would have benefited from expected project financing. This decision resulted in an incremental cost of approximately $6.2 million [2].

To address these challenges, Ørsted plans to raise up to $9.4 billion in a stock sale. The company cited a "material adverse development" in the U.S. market for offshore wind development as the reason for the rights offering. Ørsted's Danish Government shareholder has indicated it will participate in the rights offering [2].

The company's current portfolio includes 8.1 GW of offshore wind projects under construction by 2027, with continued good progress across its construction portfolio according to plan. Ørsted's operational performance remains strong, with earnings of DKK 13.9 billion ($2.2 billion) supporting its full-year EBITDA guidance of DKK 25-28 billion [2].

The equity injection is expected to strengthen Ørsted's capital structure and provide financial robustness in the years 2025 through 2027. S&P projects that Ørsted's funds from operations to debt ratio will be about 50% by the end of 2025, helping to stabilize the rating at investment grade [3].

References:
[1] https://cointelegraph.com/news/sp-global-b-minus-rating-sky-protocol-defi
[2] https://www.maritime-executive.com/article/oersted-blames-trump-s-pressure-on-offshore-wind-as-it-seeks-capital
[3] https://www.investing.com/news/stock-market-news/sp-global-ratings-downgrades-orsted-to-bbb-on-stalled-wind-farm-sales-93CH-4193282