Financing strategy

Introduction

The parent company of the Vattenfall Group, Vattenfall AB, is a non-listed company, 100 per cent owned by the Swedish state. Vattenfall’s financing strategy builds on our financial targets, set by the owner, with an efficient capital structure at its core.

The capital structure of Vattenfall is managed by a targeted interval of 22-27% for Funds from operations (FFO)/Adjusted net debt. The target interval should ensure a reasonable financial risk and access to the funding necessary to deliver on our strategic transformation.

The adjusted net debt includes our total interest-bearing liabilities as well as pension obligations and asset retirement obligations (mainly nuclear).

Funding goal and principles

Vattenfall’s overall funding goal is to secure adequate and sufficient supply of capital and to minimise, within stipulated internal directives and adopted risk limits, the long-term funding costs. Vattenfall’s business operations are capital intensive with major seasonal fluctuations, which make it necessary to have both short-term and long-term funding available to secure its financial flexibility needs.

All external borrowing is done at corporate level with bonds issued by the parent company, Vattenfall AB. Our bonds have an balanced maturity profile and have been issued over time. Vattenfall does not refinance any particular bond maturities but rather takes into consideration the total financing need, i.e. cash from operations, existing liquidity, capex needs and maturing financial payments such as bond repayments.

Funding instruments

Vattenfall finances its operations and investments through a combination of its own generated cash flow and external funding, mainly in the form of corporate bonds. Senior bonds are issued under a Euro Medium Term Note programme (EUR 10 billion).

For short-term funding, Vattenfall has a European Commercial Paper programme (EUR 2 billion) and a domestic Commercial Paper programme (SEK 15 billion). In addition, Vattenfall has access to an undrawn Revolving Credit Facility (EUR 2 billion) which serves as a general liquidity back-up and ensures financial flexibility. A total of 15 banks, which also comprise Vattenfall’s core bank group, participate in the credit facility.

Credit ratings

Vattenfall´s long term credit ratings are BBB+ stable outlook by S&P and A3 stable outlook by Moody’s.

 

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