According to the analysis company Inderes, the significant financing arrangement will not come as a particularly big surprise in an exceptional market environment.
Energy company On Tuesday night, Fortum provided Uniper with intra-group financing of up to EUR 8 billion. Uniper is a German subsidiary of Fortum.
According to Fortum, this is a precautionary measure to prevent Uniper from continuing to fluctuate in the commodity market and a significant rise in prices. With the financing arrangement, Uniper secures itself more liquidity and financial flexibility, primarily for the winter season.
Analysis company Inderes describes the funding provided by Fortum as significant, but does not find it particularly surprising in an exceptional market environment.
“Thanks to Fortum’s strong balance sheet, we do not find the situation worrying, but we believe that the significant capital commitment will weaken the return profile of Uniper’s business,” writes Inderes analyst. Juha Kinnunen in their comments.
At the same time, according to Kinnunen, it must be remembered that market conditions have been “completely exceptional” in recent years. According to Fortum, the price of gas rose by a maximum of 1,000 percent last year.
Fortumin The financing arrangement consists of a shareholder loan and a guarantee from the parent company. Uniper has so far used some of the funding.
In addition to the financing provided by Fortum, Uniper has raised the company’s current EUR 1.8 billion revolving credit facilities in total. Uniper has also agreed with the German state-owned KfW Bank on a short-term revolving credit facility of up to EUR 2 billion. The revolving credit facility has not been used so far.
Fortum says that strong commodity market volatility in the autumn and early winter and record high gas and electricity prices have increased collateral requirements for European market participants.
“Uniper hedges its asset-related asset positions with forward contracts, for which counterparties often require collateral. As commodity prices rise, the market value of forward contracts will fall, increasing the collateral required from Uniper accordingly, ”Fortum said on Tuesday night.
Uniper hedges its asset-related asset positions with forward contracts, which are often collateralised by counterparties. As commodity prices rise, the market value of forwards decreases, which increases the collateral required from Uniper. The collateral will be returned to Uniper when the gas and electricity sales contracts mature or market prices fall.
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