## 1. Relevant industry

REDEIA CORPORACION SA, formerly Red Eléctrica Corporación, is primarily an electricity transmission/network infrastructure group. This fits the **Regulated Utilities** methodology because it provides essential electricity network services, with revenues largely determined by regulation rather than market competition.

For the quantitative trend estimate, I apply the regulated-utility financial-risk approach using cash-flow/leverage metrics. The provided data does not include enough detail for S&P-specific adjustments such as leases, pensions, guarantees, hybrids, securitizations, or purchased-power obligations, so I use the baseline formulas with available reported financial statement items.

---

## 2. Estimate 2021 Adjusted EBITDA

Use reconstructed EBITDA:

\[
EBITDA = Operating\ Profit + Depreciation\ and\ Amortisation
\]

For 2021:

- Profit from operating activities = EUR 991.970m
- Depreciation and amortisation = EUR 522.114m

\[
Adjusted\ EBITDA_{2021} = 991.970 + 522.114 = 1,514.084m
\]

No additional lease, pension, nonrecurring, or JV proportional EBITDA adjustments are disclosed in the provided facts.

**2021 Adjusted EBITDA = EUR 1,514.084m**

---

## 3. Estimate 2021 FFO

Baseline formula:

\[
FFO = Adjusted\ EBITDA - cash\ interest - cash\ taxes
\]

For 2021:

- Adjusted EBITDA = EUR 1,514.084m
- Cash interest paid, operating = EUR 121.920m
- Income taxes paid = EUR 181.263m

\[
FFO_{2021} = 1,514.084 - 121.920 - 181.263 = 1,210.901m
\]

**2021 FFO = EUR 1,210.901m**

---

## 4. Estimate 2021 Adjusted Debt

Use reported financial debt at fiscal year-end 2021, which corresponds to the 2022-01-01 balance sheet:

Reported debt:

- Noncurrent financial liabilities = EUR 5,953.434m
- Current financial liabilities = EUR 2,144.425m

\[
Reported\ Debt_{2021} = 5,953.434 + 2,144.425 = 8,097.859m
\]

Eligible cash:

- Cash and cash equivalents = EUR 1,574.427m

\[
Adjusted\ Debt_{2021} = 8,097.859 - 1,574.427 = 6,523.432m
\]

No additional debt-like adjustments are disclosed.

**2021 Adjusted Debt = EUR 6,523.432m**

---

## 5. Calculate 2021 Adjusted Debt / Adjusted EBITDA

\[
Debt/EBITDA_{2021} = \frac{6,523.432}{1,514.084} = 4.31x
\]

**2021 Adjusted Debt / Adjusted EBITDA = 4.31x**

---

## 6. Calculate 2021 FFO / Adjusted Debt

\[
FFO/Debt_{2021} = \frac{1,210.901}{6,523.432} = 0.1856
\]

**2021 FFO / Adjusted Debt = 18.6%**

---

## 7. Estimate 2022 Adjusted EBITDA

For 2022:

- Profit from operating activities = EUR 961.554m
- Depreciation and amortisation = EUR 544.992m

\[
Adjusted\ EBITDA_{2022} = 961.554 + 544.992 = 1,506.546m
\]

No additional lease, pension, nonrecurring, or JV proportional EBITDA adjustments are disclosed in the provided facts.

**2022 Adjusted EBITDA = EUR 1,506.546m**

---

## 8. Estimate 2022 FFO

For 2022:

- Adjusted EBITDA = EUR 1,506.546m
- Cash interest paid, operating = EUR 123.524m
- Income taxes paid = EUR 363.996m

\[
FFO_{2022} = 1,506.546 - 123.524 - 363.996 = 1,019.026m
\]

**2022 FFO = EUR 1,019.026m**

---

## 9. Estimate 2022 Adjusted Debt

Use reported financial debt at fiscal year-end 2022, which corresponds to the 2023-01-01 balance sheet:

Reported debt:

- Noncurrent financial liabilities = EUR 5,543.755m
- Current financial liabilities = EUR 1,705.277m

\[
Reported\ Debt_{2022} = 5,543.755 + 1,705.277 = 7,249.032m
\]

Eligible cash:

- Cash and cash equivalents = EUR 794.824m

\[
Adjusted\ Debt_{2022} = 7,249.032 - 794.824 = 6,454.208m
\]

No additional debt-like adjustments are disclosed.

**2022 Adjusted Debt = EUR 6,454.208m**

---

## 10. Calculate 2022 Adjusted Debt / Adjusted EBITDA

\[
Debt/EBITDA_{2022} = \frac{6,454.208}{1,506.546} = 4.28x
\]

**2022 Adjusted Debt / Adjusted EBITDA = 4.28x**

---

## 11. Calculate 2022 FFO / Adjusted Debt

\[
FFO/Debt_{2022} = \frac{1,019.026}{6,454.208} = 0.1579
\]

**2022 FFO / Adjusted Debt = 15.8%**

---

## 12. Classify year-on-year credit trend

### Signal 1: Leverage

\[
Change = Debt/EBITDA_{2022} - Debt/EBITDA_{2021}
\]

\[
Change = 4.28x - 4.31x = -0.03x
\]

Thresholds:

- ≤ -0.2x = Improving
- between -0.2x and +0.2x = Stable
- ≥ +0.2x = Deteriorating

The leverage ratio improved only slightly by about 0.03x, which is within the stable band.

**Leverage signal = Stable**

---

### Signal 2: Cash-flow coverage

\[
Change = FFO/Debt_{2022} - FFO/Debt_{2021}
\]

\[
Change = 0.1579 - 0.1856 = -0.0277
\]

This is a decline of about 2.8 percentage points.

Thresholds:

- ≥ +0.03 = Improving
- between -0.03 and +0.03 = Stable
- ≤ -0.03 = Deteriorating

The deterioration in FFO/debt is close to, but does not reach, the -0.03 threshold. Therefore, under the stated rule, it remains Stable.

**Cash-flow coverage signal = Stable**

---

### Combined trend

Both signals are **Stable**:

- Leverage: Stable
- FFO/debt: Stable

Although FFO weakened materially due mainly to higher cash taxes, debt also declined slightly and leverage remained broadly unchanged. The overall credit trend from 2021 to 2022 is therefore assessed as **Stable**.

<answer>Stable</answer>