Nordic Credit Rating (NCR) has revised the outlook on its 'AAA' long-term issuer rating on Norway-based wastewater utility Veas Selvkost AS to negative from stable. The 'N1' short-term rating and a 'AAA' senior unsecured issue ratings have also been affirmed.
Rating rationale
The outlook revision reflects the increasing debt burden for its largest owner, the City of Oslo. While the City of Oslo has made significant improvements in its revisions to the 2025-2028 budget, over NOK 75bn in investments are planned. The bulk of the investments are associated with the Fornebu Line and new water supply, as well as investments in social property development, primarily via county-owned Oslobygg KF. The investments are expected to result in NOK 37bn in increased debt and projected to increase Oslo's debt burden materially. This continues a recent investment trend that we project to increase the share of Oslo's consolidated gross debt to operating revenues (excluding nearly NOK 4.5bn in depreciation costs) to well above 120% by 2026, from 107% as of end 2024 and 86% at end 2022, by our measures.
Despite the higher debt levels and interest expense, we expect the revised budget to improve operating margins and support the county's decision to reduce expenses to avoid overreliance on general reserve funds. The new budget projects operating profits (including depreciation costs) of NOK 356m and increasing towards NOK 1.3bn in 2027, resulting in a significant improvement in operating cash flows. The improved performance supports our current 'aaa' credit assessment on the county and should provide additional flexibility to support Veas Selvkost and other county-owned enterprises in the future.
On an entity specific level, Veas Selvkost performs in line with our expectations, is on schedule and budget on major projects. We expect increased debt uptake within Veas Selvkost as a result of these investments, and we expect owners to support the company through monthly transfers. In January 2025, the company issued a bond outside the joint and several guarantee from the owners. We assign the same issue rating to bond instruments not covered by the outstanding guarantee. This is because we consider the owners as integral to Veas Selvkost's overall creditworthiness. We see an increasing political focus on improving the water quality in Oslofjorden as positive for continued support for Veas and future potential developments in the area.
Negative outlook
The negative outlook reflects the potential for rising debt to negatively affect our view of the creditworthiness of Oslo county, resulting in lower available support to Veas Selvkost's credit rating.
We could lower the rating to reflect the City of Oslo's rising debt levels if improvements in operating performance or a moderation of future investments does not result in more stable debt levels.
We could revise the outlook to stable to reflect that the City of Oslo is able to control its increasing debt and interest burden, resulting in a more stable trajectory for the county's debt and interest metrics.
Related rating actions
i) Veas Selvkost AS assigned 'AAA' long-term issuer rating; Outlook stable, 12 Sep. 2025.
Related publications
i) Mounting costs continue to weigh on Norwegian municipal finances, 11 Jun. 2025.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | AAA | AAA |
| Outlook: | Negative | Stable |
| Short-term issuer credit rating: | N1 | N1 |
| Senior unsecured issue rating: | AAA | AAA |
Contacts:
Gustav Nilsson, analyst, +46735420446, gustav.nilsson@nordiccreditrating.com
Anine Gulbrandsen, analyst, +4797501657, anine.gulbrandsen@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.