S&P Global Ratings has downgraded Orsted’s long-term credit rating to ‘BBB-’ from ‘BBB’, citing stalled progress on the planned divestment of a 50% stake in the Sunrise Wind offshore project in the United States and broader execution risks across its portfolio.
The rating agency said the failed farm-down, alongside delays in securing project financing, “severely and directly hinders credit metric performance” and reflects a weakening in the Danish energy group’s operating environment.
“Farm-downs have been a key pillar of Orsted’s business and financial strategy,” S&P said in a note. “Delays to these disposals directly weaken credit quality.”
S&P also revised its assessment of Orsted’s business risk profile from “satisfactory” to “fair”, pointing to “increased project execution challenges, concentration risk, and increasingly challenging industry conditions” in offshore wind.
Despite the downgrade, the outlook remains stable, supported by Orsted’s fully underwritten DKK60 billion equity raise, which includes a proportional contribution from the Danish state — the company’s majority shareholder with a 50.1% stake.
The Sunrise Wind project, valued at DKK60 billion, is about 35% complete, with around DKK40 billion still to be invested. S&P noted that the failed sale could reduce expected proceeds by as much as DKK30 billion, increasing Orsted’s exposure to single-asset risk compared to peers with more diversified portfolios.
The agency also highlighted the company’s significant exposure to the U.S. market, which accounts for roughly 36% of Orsted’s planned DKK50 billion capital expenditure between 2025 and 2027. It described U.S. offshore wind as a high-risk environment, compounded by challenges in other core markets such as the UK, where Orsted recently cancelled its Hornsea 4 project at a cost of around DKK5 billion.
S&P warned that free operating cash flow — excluding divestment proceeds — will remain “heavily negative”, with an average deficit of DKK30 billion annually through 2027.
Completion of the Hornsea 3 farm-down, expected before the end of 2025, is considered “material to the ratings”. Failure to close the deal would add more than DKK30 billion in additional spending over 2026–2027 and further pressure Orsted’s credit metrics.
The agency also revised its management and governance score to “moderately negative”, citing “the credit impact of Orsted’s high-risk strategy” and exposure to cost overruns on large-scale projects.
S&P continues to apply a one-notch uplift to Orsted’s rating, citing a “moderate likelihood” of extraordinary support from the Danish government, based on its majority ownership and historical willingness to back the company.
However, it added that a further downgrade could occur if disposals such as Hornsea 3 are not completed as planned, or if operational performance deteriorates. An upgrade in the next two years is considered unlikely unless execution risks are substantially reduced or the company shifts away from its current project funding model.
