Origin Energy downgrade

Origin Energy has been downgraded to BBB from BBB+ by Fitch not long after Moody’s announced it will downgrade the company to Baa3. Both agencies’ announcements were made after the sale of Origin’s 53% stake in Contact Energy. Although the sale will reduce debt levels, the reduction in earnings diversity and weaker energy prices in general led to the agency’s change. Origin Energy said the sale reduces the company’s financial risk as debt will be repaid and Contact Energy’s debt will no longer be consolidated in Origin’s balance sheet. Deutche Bank calculated Origin’s net debt would fall about $2.8bn or about 20%. Prices of Origin’s subordinated notes were largely unchanged on the news.