KBRA Releases Research – European Energy Prices Stabilise, but Risks Remain
LONDON–(BUSINESS WIRE)–#KBRA–KBRA UK (KBRA) releases research on the energy pricing in Europe and the risks that leave the market still vulnerable. Global energy markets appear to have entered a period of relative stability in Q1 2023 compared to the exceptionally volatile energy prices experienced during the first nine months of 2022. This stability may be short-lived in Europe given ongoing supply-side influences such as geopolitical risks and infrastructure challenges. In addition, elevated interest rates and recent bank concerns could impact markets.
Corporates, project finance, and sovereigns will be impacted in differing ways if prices remain stable at current levels. Europe has reacted strongly and collectively to the supply shock after Russia invaded Ukraine in February 2022, but challenges remain. In this KBRA report, we assess whether the market has entered a turning point regarding energy price exposure and extreme energy price volatility, and if this changes the macroeconomic prospects for inflation, interest rates, and credit conditions for European sovereign, corporate, infrastructure, and project finance issuers for the remainder of 2023.
Key Takeaways
- Energy prices have largely stabilised due to effective supply measures and reduced demand. Forward oil and gas prices and corporate/sovereign spreads suggest a persistent reduction in energy prices.
- Although macroeconomic conditions have improved, inflation could prove sticky, keeping interest rates higher for longer.
- Corporates that struggle to pass on energy costs and those in need of refinancing are the most exposed.
- Some risks remain with geopolitical conditions, energy supply instability, rates, and affordability leaving the market still vulnerable.
Click here to view the report.
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About KBRA
KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.
Contacts
Primary Authors
Karim Nassif, Project Finance & Infrastructure
+353 1 588 1245
Gordon Kerr, Head of European Research
+44 20 8148 1020
Ken Egan, Director, Sovereigns
+353 1 588 1275
Other Contacts
Garret Tynan, European Head of Project Finance & Infrastructure
+353 1 588 1235
Andrew Giudici, Global Head of Corporate, Project & Infrastructure Finance
+1 (646) 731-2372
Arinjoy Bhanja, Analyst, Project Finance & Infrastructure
+353 1 588 1271
Media Contact
Adam Tempkin, Director of Communications
+1 (646) 731-1347
Business Development Contacts
Mauricio Noe, Co-Head of Europe
+44 20 8148 1010
Miten Amin, Managing Director
+44 20 8148 1002
