S&P Global Ratings has downgraded Orsted’s long-term credit rating citing stalled progress on the planned sale of a 50% stake in the Sunrise Wind project in the US.
The rating agency said that the inability to complete the divestment, alongside associated project financing, “severely and directly hinders credit metric performance” and underscores a deterioration in Orsted’s business environment, resulting in a cut to ‘BBB-‘ from ‘BBB’ status.
S&P noted that farm-downs have been a “key pillar” of the Danish offshore wind developer’s business and financial strategy, and delays to these disposals directly weaken credit quality.
The outlook remains stable, supported by a fully underwritten DKK60bn equity raise, with the Danish state – which owns 50.1% of Orsted – subscribing its proportional share, said the agency.
The downgrade also reflects S&P’s revised view of Orsted’s business risk profile to “fair” from “satisfactory”, citing “increased project execution challenges, concentration risk, and increasingly challenging industry conditions” for global offshore wind.
S&P highlighted Orsted’s significant US exposure, with about 36% of its DKK50bn capex over 2025–2027 linked to the market. Political risk in the US offshore sector was described as higher than elsewhere, while challenging conditions are also evident in core markets such as the UK, where Orsted cancelled the Hornsea 4 project earlier this year at a cost of about DKK5bn.
The agency said the Sunrise Wind investment at DKK60bn, with DKK40bn still to be spent and the project only 35% complete.
It said the collapse of the sale likely represents DKK30bn less in proceeds than previously assumed. S&P added that this compares unfavourably with peers who are less reliant on large single-asset developments.
While the equity raise bolsters liquidity and helps maintain investment-grade status, S&P warned that free operating cash flow – excluding proceeds from divestments – will remain “heavily negative”, with an average deficit of about DKK30bn annually over 2025–2027.
The stable outlook assumes Orsted can maintain funds from operations to debt above 30% and deliver on other major farm-downs, including Hornsea 3 and Greater Changhua 2a and 2b.
S&P said the Hornsea 3 transaction, expected to close before year-end 2025, is “material to the ratings” because it would significantly reduce capex exposure and single-asset risk. Failure to complete it would add more than DKK30bn in spending over 2026–2027 and negatively affect credit ratios.
The agency also revised its management and governance assessment to “moderately negative”, citing the “credit impact of Orsted’s high-risk strategy” and its exposure to cost overruns or delays on large projects.
One notch of uplift is still applied to the rating due to the “moderate likelihood” of extraordinary government support from Denmark, based on its majority ownership and continued willingness to back the company.
S&P said a further downgrade could follow if key disposals such as Hornsea 3 fail to complete on time, or if operating performance deteriorates materially. An upgrade over the next two years was deemed unlikely unless execution risks on farm-downs are “minimal” or Orsted moves away from its current funding model.