Iberdrola chairman shrugs off S&P cut, reaffirms debt plan

Sun Dec 2, 2012 8:30pm GMT

Quotes

   

* Galan says downgrade to BBB 'no problem'

* Reaffirms plan to cut debts, maintain dividends

By Environment Correspondent Alister Doyle

DOHA, Dec 2 (Reuters) - The chairman of Spanish power group Iberdrola shrugged off a credit downgrade by Standard & Poor's as "no problem" on Sunday and reaffirmed plans to reduce debts while maintaining dividends.

Ignacio Galan, speaking on the sidelines of a U.N. meeting in Doha on fighting climate change, told Reuters that S&P was downgrading his firm's rating mainly because Spain's own sovereign investment grade had been reduced to near junk.

"It's no problem," he said of S&P's downgrade for Iberdrola last week to BBB from BBB+. "We have already covered our financial needs for the next three years, we have liquidity of 11 billion euros" ($14.3 billion), he said.

He said the firm, the world's largest operator of wind farms, was sticking to a plan outlined last month to reduce its debt by 6 billion euros by 2014 to 26 billion, sell assets and cut the workforce.

"Even if we continue paying the same level of dividend as today we should be allowed to reduce this 6 billion," he said, based on projections for cash flow and divestments.

The company has said it will keep the percentage of profits dedicated to dividends at 60 percent. Net profit for the first nine months rose 12 percent to 2.4 billion euros.

DEFICITS

Making the downgrade, S&P said it was concerned about possible delays in electricity tariff deficit securitisation and pointed to difficult economic times in Iberdrola's key markets.

Electricity tariff deficits are the shortfall between the amount customers pay for electricity, as determined by energy regulator CNE, and the cost of generating it. It appears on the utilities' books as government-backed debt.

Galan said 1.75 billion euros was securitised late last week. "If they (S&P) had delayed the decision a week probably they would not do it," he said.

He said 70 percent of Iberdrola's business was abroad - in countries including Britain, the United States and Brazil more insulated from Spain's woes. He accused S&P of punishing Iberdrola for having its headquarters in Spain.

Moody's and Fitch had maintained Iberdrola's ratings, he said.

At a business event in Qatar, Galan also called for more efficient technologies to help 1.3 billion people - a fifth of the global population - who have no electricity.

Iberdrola says its greenhouse gas emissions are half the average for European utilities, thanks to its stress on renewable energy.

Galan also said the best mix of power, balancing cost and environmental impacts, was gas, nuclear, wind and hydro. Coal was unattractive because of greenhouse gas emissions and solar photovoltaic power was slightly too costly. ($1 = 0.7689 euros) (Reporting by Alister Doyle; Editing by Dale Hudson)