# Analysis of Moody's Adjusted Leverage Trend for ENEL 2022

## Key Leverage Metrics

**Debt Position:**
- Total Borrowings 2023: 68,191M + 2,835M + 18,392M = €89,418M
- Total Borrowings 2022: 54,500M + 4,031M + 13,306M = €71,837M
- **Change: +€17,581M (+24.5% increase)**

**EBITDA Calculation (approximation):**
- Operating Profit 2022: €11,193M
- Add: D&A 2022: €7,447M
- **EBITDA 2022 ≈ €18,640M**

**Adjusted Leverage Ratio (2022):**
- Total Debt / EBITDA = €71,837M / €18,640M ≈ **3.85x**

**Adjusted Leverage Ratio (2023):**
- Total Debt / EBITDA ≈ €89,418M / €18,640M ≈ **4.80x** (using 2022 EBITDA as proxy)

## Key Observations

1. **Debt Increase:** Significant 24.5% year-over-year increase in total borrowings
2. **Operating Performance:** Operating profit increased from €7,551M (2021) to €11,193M (2022), showing strong operational improvement
3. **Net Debt Change:** While absolute debt increased substantially, the company generated positive operating cash flow of €8,674M
4. **Equity:** Equity attributable to owners increased from €29,653M to €28,657M (slight decrease due to discontinued operations impact of -€1,955M)

## Leverage Trend Assessment

The company shows **deteriorating leverage metrics** despite improved operational performance:
- Absolute debt levels increased significantly (24.5%)
- The leverage ratio would increase from approximately 3.85x to 4.80x
- This represents meaningful deterioration even with strong EBITDA generation
- The debt increase outpaced the operational improvements in EBITDA

While operating performance improved and cash generation was solid, the substantial increase in debt financing - likely related to investments and acquisitions (note the €1,275M in acquisition activity) - resulted in higher adjusted leverage that deteriorated from 2021 to 2022.

<answer>Deteriorating</answer>