Endesa’s collateral needs climb to 9.3 billion euros amid soaring prices

Endesa’s net position in the exchanges had “suffered from the evolution of the gas market, in particular its bull run in August 2022, reaching collateral needs of 9.3 billion euros” as of September 30, a she said Tuesday in her interim results.

Still, the higher collateral requirements did not affect Endesa’s results, as the company saw a 23% year-on-year increase in earnings before interest and taxes to around 2.4 billion euros in the period. January-September.

The company’s financial guarantees stood at 3.8 billion euros at the end of the first half of the year, following a spike in natural gas prices caused largely by Russia’s war. in Ukraine and sharp reductions in gas deliveries to Europe.

Although the benchmark price of TTF gas for the first month has fallen by around 70% from its peak of EUR 342/MWh at the end of August, to over EUR 110/MWh, it remains well above normal levels for this time of year.

“Endesa contracted positions in said index [TTF] due to its strategy of hedging expected revenues from gas sales, and the upward trend in commodity markets has necessitated greater liquidity requirements for Endesa,” the company said.

Secure supply

Despite its increased collateral needs, Endesa said its gas supply was “secure” because none of its counterparts are affected by the sanctions and it has no supply contract with Russia.

In the meantime, it said it had taken several steps to reduce the collateral burden, including restructuring debt maturities and securing a €3 billion loan from its parent company Enel.

For example, at the end of October, its collateral needs amounted to 8.6 billion euros.

“The company is considering further action as the situation may extend over time, although liquidation coverage over the next few months will gradually reduce financial guarantees,” he added.

The European Commission recently proposed measures to tackle the increased financial guarantees required for companies to operate on energy exchanges, as price spikes in energy derivatives markets have led to increased margin calls.

Meanwhile, regarding Endesa’s nuclear energy supply, the company said it had signed agreements with alternative uranium producers to compensate for any potential shortfall from Russian suppliers. The company has secured its fuel needs for its 2022-24 reactor refills, it added.