Credit rating remains high

Assessments of creditworthiness made by independent rating Glossary agencies have a substantial influence on a company’s options to raise capital. The better the rating, the easier it is to gain access to international capital markets and the better the conditions for debt financing. Therefore, we benefit from the fact that the two leading rating agencies, Moody’s and Standard & Poor’s, have given RWE high credit ratings Glossary (A1 and A). Subsequent to our takeover offer for Dutch-based utility Essent in January 2009, the two agencies announced that they would review our ratings. We had expected this. Since then, Standard & Poor’s has confirmed its rating for RWE, but lowered the outlook from “neutral” to “negative.” Moody’s is currently looking into a possible downgrade. It is yet to announce its result. Over the long term, we are aiming for the following minimum ratings: A (Standard & Poor’s) and A2 (Moody’s). The following table provides an overview of our credit ratings at the end of January 2009:

In 2008, our interest expenses (including those for hedges) amounted to 4.6 % of the RWE Group’s average financial liabilities. This was much lower than in 2007 (5.8 %) when they still included American Water. The cost of the US water utility’s refinancing is much more expensive than the Group average cost of debt. Amongst the reasons for the decrease in interest expenses was the lower level of interest rates in the euro, dollar and Sterling zones compared to 2007. We have financial debt in all three of these currencies.