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Rating action

Scope Ratings GmbH (Scope) has today assigned a BBB/Stable issuer rating to Nord-Trøndelag Elektrisitetsverk AS (NTE). Scope has also assigned a BBB senior unsecured debt rating and an S-3 short-term debt rating.

The issuer rating reflects a standalone credit assessment of BBB- and a one-notch rating uplift for the company’s status as a government-related entity.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: BBB (new). NTE’s business risk profile reflects its integrated business model, with operations in environmentally friendly and cost-efficient power production (positive ESG factor), power supply, energy and telecom services as well as grid operations through its 40% stake in Tensio AS (rated A-/Stable at Scope).

NTE’s core focus is on hydropower with 19 fully owned plants in Trøndelag and Nordland complemented by its indirect ownership of 23 plants through a 22% stake in Salten Kraftsamband AS. The fully owned hydropower plants produce on average around 3.1 TWh yearly. In January 2025, NTE acquired Kvitfjell and Raudfjell wind farms, located in northern Norway, which together produce around 0.8 TWh yearly. Hydro and wind power generation benefits from very low carbon intensity and a strong position in the merit order system. The company's market position is further strengthened by its stake in Tensio, which provides exposure to a monopolistic market with a stable source of dividends, and by its fibre-based telecom services in the residential and business markets.

The utility’s overall profitability is good. Its Scope-adjusted EBITDA margin* is typically between 20% and 30% and is supported by strong margins in power generation and good margins in telecom services. However, it is diluted by weak margins in power supply and energy services. Profitability as measured by the return on capital employed, including investments in associates, averaged around 14% in the recent past. Scope expects it to decrease to around 9%-10% going forward, considering the very capital-intensive nature of the acquired wind farms.

The business risk profile is constrained by limited geographical diversification and some asset concentration in power generation compared to larger and more diversified peers. It is also largely constrained by the cyclical operating environment, with a dominant exposure to volatile electricity prices, which can vary significantly from year to year. Scope also notes that the power prices in the NO3 and NO4 Norwegian price areas are typically below the prices in southern Norway and below the system price.

Financial risk profile: BBB- (new). NTE’s financial risk profile reflects good credit metrics and cash flow generation despite weaker financial results in 2024 and 2025.

Scope notes that the strong historical credit metrics are not deemed representative of the credit profile considering the large debt-funded acquisition of the wind farms in 2025. Debt increased significantly from around NOK 1.0bn in the recent past and is expected at around NOK 4.0bn for the next couple of years. The additional debt mainly consists of a NOK 2.1bn bridge loan to fund the acquisition and around NOK 1.2bn of existing debt at SPV level.

Following strong results in 2022 and 2023, that were mainly supported by above-average power prices, EBITDA, which includes associate dividends received, moderated to around NOK 1.0bn in 2024. EBITDA will likely decrease to around NOK 0.9bn in 2025, driven by unusually low power prices, depressed by high water reservoir levels, and despite additional earnings from the recently acquired wind farms. In the next couple of years, Scope expects EBITDA to recover to around NOK 1.2bn-1.3bn, supported by the gradual normalisation in power prices. As a result, leverage – as measured by debt/EBITDA – is likely to peak at around 4.5x in 2025 before improving to around 3.0x-4.0x in 2026-2027.

The net interest burden is projected to increase to around NOK 200m from around NOK 60m in the recent past. This will be mainly driven by the significant amount of new debt. Interest cover is likely to weaken to around 4.5x in 2025 before recovering to 6x-7x in the next couple of years.

Scope projects the utility’s capex at around NOK 500m a year, similar to levels in the recent past. The issuer’s investment programme is mainly focused on the rehabilitation and maintenance of existing hydropower plants, growth investments in the telecoms business and investments in solar production on industrial rooftops in 2025. Scope believes that NTE’s operating cash flow can cover this level of spending on average, indicating solid internal financing capacity.

Dividends distributed to NTE’s owners is forecast at around NOK 110m-120m a year, levels which allow for some deleveraging. However, Scope notes that investments or dividends could still be much higher than those in its base case, in which case it would reassess the utility’s financial risk profile and issuer rating.

Liquidity: adequate (new). NTE’s liquidity is adequate, with good liquidity ratios historically. Available cash and cash equivalents of NOK 0.3bn and committed unused bank facilities of NOK 0.3bn at YE 2024 cover debt maturing in 2025 of around NOK 0.5bn considering forecasted free operating cash flow at around breakeven. To cover debt maturities in 2026 of around NOK 2.6bn (mainly a NOK 2.1bn bridge loan considering the six-month extension option and a NOK 0.3bn bond), NTE has to rely on external funding. The utility plans to refinance these maturities through the issuance of new bonds or bank loans. Scope believes that NTE will not have any material issues with addressing the near-term maturities given its good relationships with banks and overall credit quality.

Supplementary rating drivers: +1 notch (new). The issuer rating incorporates a one-notch uplift to the standalone credit assessment of BBB-, resulting in an issuer rating of BBB, to reflect the company’s status as a government-related entity.

The government-related entity status is based on the full public ownership by 19 municipalities in central Norway and the essential public service provided by the company, the most critical of which are its hydropower production and grid distribution. Scope has applied a bottom-up approach using the framework outlined in its Government Related Entities Rating Methodology. The one-notch uplift reflects the public sponsors’ ‘high’ capacity and ‘medium’ willingness to provide financial support if needed. The rating uplift is in line with other Scope-rated Norwegian utilities with majority or full public ownership but no explicit guarantees on their debt or financial support.

Scope has made no adjustment for financial policy, as this is already reflected in the financial risk profile, but highlights the recent large debt-funded acquisition, the policy of paying out stable, progressive dividends and the management’s target of achieving and maintaining an investment grade credit rating.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s expectation that the recovery in power prices will support cash generation and deleveraging to some extent. Scope anticipates that this will translate into debt/EBITDA recovering to a range of 3.0x-3.5x in the next couple of years, based on a slight decrease in debt, stable dividends received from associates, no significant increase in shareholder remuneration, and capital expenditures in line with the rating base case.

The upside scenario for the ratings and Outlook is:

1. Improvement in the financial risk profile, exemplified by debt/EBITDA of 3.0x or below on a sustained basis

The downside scenarios for the ratings and Outlook are (individually):

1. Deterioration in the financial risk profile, exemplified by debt/EBITDA of around 4.5x on a sustained basis
    
2. Loss of government-related entity status (remote)

Debt ratings

The senior unsecured debt issued by Nord-Trøndelag Elektrisitetsverk AS is rated at BBB, in line with the issuer rating.

The short-term debt issued by Nord-Trøndelag Elektrisitetsverk AS is rated at S-3. The rating is based on the underlying BBB/Stable issuer rating and reflects adequate liquidity cover as well as adequate access to bank funding. The lower of the two possible short-term debt ratings is mainly due to the pending refinancing of the substantial bridge loan, as well as the fact that the utility does not frequently issue capital market debt.

Environmental, social and governance (ESG) factors

NTE's core business is the generation of clean, low-cost electricity, mainly from hydropower. This largely eliminates transition and stranded risks and supports future cash flow by ensuring the high use of power plants and the continued strong position in the merit order of the power generation portfolio.

In addition, NTE's portfolio of large hydropower plants protects its government-related status as these assets must be at least two-thirds publicly owned.

All rating actions and rated entities

Nord-Trøndelag Elektrisitetsverk AS

Issuer rating: BBB/Stable, new

Short-term debt rating: S-3, new

Senior unsecured debt rating: BBB, new

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 14 February 2025; European Utilities Rating Methodology, 17 June 2025; Government Related Entities Rating Methodology, 10 December 2024), are available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA):registers.esma.europa.eu/cerep-publication/. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings’ internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Marlen Shokhitbayev, Senior Director
Person responsible for approval of the Credit Ratings: Sebastian Zank, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 22 August 2025.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
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