The rating agency S&P Global Ratings has announced that it confirms the ‘A-/A-2’ rating assigned to the Italian energy company Enibut that their perspectives are now’negative‘ by combination of large future investments with limited free cash flow.
“The combination of high investments, lower cash flow due to moderating natural gas prices, and stability in the return of capital to shareholders will likely result in Eni’s funds from operations debt falling to around 45% in 2024-2025, which is below our expectations for current market conditions and the metrics of Eni’s rivals,” S&P explained.
Eni’s perspective
The agency has stated that it believes that Eni will be able to improve its metrics from 2026, assuming similar market conditions, but that the room for maneuver under the current rating will be “very tight” in 2024 and 2025, given S&P’s prediction of that mid-cycle oil prices will be 55 dollars (50.54 euros) per barrel.
Thus, S&P has revised its outlook on Eni from ‘stable’ to ‘negative’ and has confirmed its ‘A-‘ long-term and ‘A-2’ short-term issuer credit ratings. Likewise, it has also confirmed all the group’s debt ratings.
For its part, the agency has indicated that it could lower the solvency rating if the company “does not build a debt margin of 45% compared to earnings before interest and amortization” while market conditions remain favorable.
If not done, Eni would be “exposed” if oil prices fell rapidly towards $55 levels.
