European utilities may have to add over 100 bln euros in collaterals this year - Citi

VERBUND AG

31/08/2022 12:14

** Citigroup estimates the European utilities sector has to
add over 100 billion euros ($99.78 billion) in additional
collaterals this year, compared to 2020 levels
    ** Citi says record-high levels of future power and gas
prices have significant impact on liquidity position of the
utilities sector on account of the increased requirement for
collaterals held for hedging purposes
    ** Russia halted gas supplies via Europe's key supply route
on Wednesday, intensifying an economic battle between Moscow and
Brussels and raising the prospects of recession and energy
rationing in some of the region's richest countries  urn:newsml:reuters.com:*:nL1N30704D
    ** Citi adds the most impacted companies are the ones with
outright power exposure and gas mid-stream companies like Uniper
 UN01.DE  , Fortum  FORTUM.HE  , Verbund  VERB.VI 
    ** Uniper, majority-owned by Fortum, requested more
financial help from the German government on Monday, raising the
bill for bailing out the utility group to an eye-watering 19
billion euros ($19 billion), as soaring gas and power prices
burn up its cash reserves  urn:newsml:reuters.com:*:nL8N3052M5 
    ** "We think recent power price squeeze might have been even
caused by forced liquidation of positions either due to internal
funding problems or via exchange" - Citi         
    
($1 = 1.0022 euros)

 (Reporting by Siddarth S in Bengaluru)
 ((Siddarth.s@thomsonreuters.com;))