I'll work through this step-by-step for REDEIA CORPORACION SA (formerly Red Eléctrica Corporación).

## Step 1: Identify the relevant industry

REDEIA CORPORACION SA is Spain's transmission system operator (TSO) for electricity. This is a **Regulated Utility** - specifically an electricity transmission network operator subject to comprehensive regulation.

## Step 2: Estimate 2021 Adjusted EBITDA

For FY2021 (period 2021-01-01 to 2022-01-01):

**Reconstruct EBITDA:**
- Operating Profit = 991,970,000 EUR
- Add back D&A = 522,114,000 EUR
- EBITDA = 991,970 + 522,114 = 1,514,084,000 EUR

However, S&P typically adjusts:
- Remove equity method income (not cash): subtract 29,546,000
- Add back impairment/loss on disposal: +730,000 (negative means a gain, so we subtract the gain)

Actually, let me reconsider. "Participacion En Beneficios" (equity method income) of 29,546,000 is included in operating profit. S&P would typically remove this and replace with dividends received. Dividends received from equity method investments = 4,848,000 (from cash flow statement).

- Subtract government grant amortization: This is already in operating profit. S&P may leave it.
- The "Deterioro Y Resultado Por Enajenaciones" of -730,000 represents gains on disposal (negative = gain). 

**Adjusted EBITDA 2021:**
= 1,514,084 - 29,546 + 4,848 = 1,489,386,000 EUR

For simplicity and given the data available, let me use a cleaner approach:
EBITDA = Operating Profit + D&A = 991,970 + 522,114 = 1,514,084,000 EUR

S&P adjustment for equity method: replace with dividends received
= 1,514,084 - 29,546 + 4,848 = 1,489,386,000 EUR

**Adjusted EBITDA 2021 ≈ 1,489,000,000 EUR**

## Step 3: Estimate 2021 FFO

FFO = Adjusted EBITDA - cash interest - cash taxes

- Cash interest paid = 121,920,000 (operating activities)
- Cash interest received = 4,867,000
- Net cash interest = 121,920 - 4,867 = 117,053,000
- Cash taxes = 181,263,000

FFO = 1,489,386 - 117,053 - 181,263 = 1,191,070,000 EUR

## Step 4: Estimate 2021 Adjusted Debt

Balance sheet as of 2022-01-01 (end of FY2021):
- Long-term borrowings: 5,896,170,000
- Current borrowings: 1,391,722,000
- Other noncurrent financial liabilities: 57,264,000 (could include lease liabilities)
- Other current financial liabilities: 752,703,000

Total reported debt = 5,896,170 + 1,391,722 = 7,287,892,000

S&P adjustments:
- Add lease liabilities (included in other financial liabilities): ~57,264,000 (noncurrent portion)
- Subtract surplus cash: Cash = 1,574,427,000. S&P typically allows netting of some cash for regulated utilities but is conservative. Let's assume minimal cash deduction for operating needs. For a regulated utility, S&P might not deduct much cash. I'll assume no significant cash netting (or minimal).

Given S&P's conservative approach for regulated utilities, let's keep it straightforward:

**Adjusted Debt 2021 ≈ 7,288,000,000 + 57,264 = 7,345,000,000 EUR**

However, for simplicity, let's use total borrowings: ~7,288,000,000 EUR

## Step 5: 2021 Adjusted Debt / Adjusted EBITDA

= 7,345,000 / 1,489,000 = **4.93x**

## Step 6: 2021 FFO / Adjusted Debt

= 1,191,000 / 7,345,000 = **16.2%**

## Step 7: Estimate 2022 Adjusted EBITDA

For FY2022 (period 2022-01-01 to 2023-01-01):

- Operating Profit = 961,554,000
- D&A = 544,992,000
- EBITDA = 961,554 + 544,992 = 1,506,546,000

S&P adjustments:
- Remove equity method income: -50,405,000
- Add dividends received: +7,578,000

**Adjusted EBITDA 2022 = 1,506,546 - 50,405 + 7,578 = 1,463,719,000 EUR**

## Step 8: Estimate 2022 FFO

- Cash interest paid = 123,524,000
- Cash interest received = 15,680,000
- Net cash interest = 123,524 - 15,680 = 107,844,000
- Cash taxes = 363,996,000

FFO = 1,463,719 - 107,844 - 363,996 = 991,879,000 EUR

## Step 9: Estimate 2022 Adjusted Debt

Balance sheet as of 2023-01-01 (end of FY2022):
- Long-term borrowings: 5,491,124,000
- Current borrowings: 721,845,000
- Other noncurrent financial liabilities: 52,631,000

Total reported debt = 5,491,124 + 721,845 = 6,212,969,000
+ Other: 52,631,000

**Adjusted Debt 2022 ≈ 6,266,000,000 EUR**

## Step 10: 2022 Adjusted Debt / Adjusted EBITDA

= 6,266,000 / 1,463,719 = **4.28x**

## Step 11: 2022 FFO / Adjusted Debt

= 991,879 / 6,266,000 = **15.8%**

## Step 12: Classify the year-on-year credit trend

**Signal 1: Leverage (Adjusted Debt / EBITDA)**
Change = 4.28x - 4.93x = **-0.65x**
This is ≤ -0.2x → **Improving**

**Signal 2: Cash-flow coverage (FFO / Debt)**
Change = 0.158 - 0.162 = **-0.004**
This is between -0.03 and +0.03 → **Stable**

**Combining signals:**
- Signal 1: Improving
- Signal 2: Stable
- Rule: One Stable, one Improving → return the non-Stable category = **Improving**

The significant debt reduction (from ~7.3B to ~6.3B) drove a material improvement in leverage, while FFO/Debt was essentially stable despite higher tax payments in 2022. The leverage improvement is quite significant (-0.65x), strongly supporting the Improving classification.

<answer>Improving</answer>