Large energy companies continue to be able to access both bond and commercial paper markets for investment purposes, with several utilities launching successful debt issues in recent months. The cost of new debt in relation to the risk-free rate has risen relative to the pre-credit crunch situation, but the risk-free rate itself has fallen in recent months. The Government and Ofgem continue to monitor levels of energy investment closely.
Smaller energy firms have found debt financing harder to come by due to the financial crisis, in common with firms in other sectors of the economy. However, many of these firms will be eligible for the Government’s recently-announced schemes to restore the flow of credit to businesses (Working Capital Scheme, Enterprise Finance Guarantee Scheme).