Step 1 — Relevant industry

ENEL is a large integrated electric utility with regulated networks, generation, retail power/gas, and renewables operations across Europe and Latin America. Among the provided methodologies, the closest fit is:

- Regulated Utilities, with material unregulated power and gas activities.

Because the provided data does not allow detailed separation of regulated vs. unregulated EBITDA/cash flow, I apply the regulated utility framework directionally but use the baseline corporate financial formulas requested. No explicit lease, pension deficit, guarantee, or proportional JV EBITDA adjustments are available, so I do not add them. Hybrid bonds are reported in equity; under S&P practice, hybrids may receive partial equity credit, but the debt portion is not disclosed in the facts. I therefore leave hybrid debt portion at zero to avoid unsupported assumptions.

Step 2 — Estimate 2021 Adjusted EBITDA

Use reconstructed EBITDA:

EBITDA ≈ Profit from operating activities + depreciation/amortization/impairment

2021:
- Profit from operating activities = €7.551bn
- Depreciation, amortization and impairment = €8.507bn

Adjusted EBITDA 2021 = 7.551 + 8.507 = €16.058bn

No further adjustments are disclosed.

Step 3 — Estimate 2021 FFO

Formula:

FFO = Adjusted EBITDA − cash interest − cash taxes

Use:
- Cash interest = finance costs paid classified as operating activities
- Cash taxes = income taxes paid/refund classified as operating activities

2021:
- Adjusted EBITDA = €16.058bn
- Cash interest = €4.277bn
- Cash taxes = €1.846bn

FFO 2021 = 16.058 − 4.277 − 1.846 = €9.935bn

Step 4 — Estimate 2021 Adjusted Debt

Use year-end 2021 balance sheet, dated 2022-01-01.

Reported debt:
- Long-term borrowings = €54.500bn
- Short-term borrowings = €13.306bn
- Current portion of long-term borrowings = €4.031bn

Gross reported debt 2021 = 54.500 + 13.306 + 4.031 = €71.837bn

Eligible cash:
- Cash and cash equivalents = €8.858bn

Adjusted Debt 2021 = 71.837 − 8.858 = €62.979bn

Step 5 — 2021 Adjusted Debt / Adjusted EBITDA

2021 Debt / EBITDA = 62.979 / 16.058 = 3.92x

Step 6 — 2021 FFO / Adjusted Debt

2021 FFO / Debt = 9.935 / 62.979 = 0.158, or 15.8%

Step 7 — Estimate 2022 Adjusted EBITDA

2022:
- Profit from operating activities = €11.193bn
- Depreciation, amortization and impairment = €7.447bn

Adjusted EBITDA 2022 = 11.193 + 7.447 = €18.640bn

Step 8 — Estimate 2022 FFO

2022:
- Adjusted EBITDA = €18.640bn
- Cash interest = €5.016bn
- Cash taxes = €1.934bn

FFO 2022 = 18.640 − 5.016 − 1.934 = €11.690bn

Step 9 — Estimate 2022 Adjusted Debt

Use year-end 2022 balance sheet, dated 2023-01-01.

Reported debt:
- Long-term borrowings = €68.191bn
- Short-term borrowings = €18.392bn
- Current portion of long-term borrowings = €2.835bn

Gross reported debt 2022 = 68.191 + 18.392 + 2.835 = €89.418bn

Eligible cash:
- Cash and cash equivalents = €11.041bn

Adjusted Debt 2022 = 89.418 − 11.041 = €78.377bn

Step 10 — 2022 Adjusted Debt / Adjusted EBITDA

2022 Debt / EBITDA = 78.377 / 18.640 = 4.20x

Step 11 — 2022 FFO / Adjusted Debt

2022 FFO / Debt = 11.690 / 78.377 = 0.149, or 14.9%

Step 12 — Credit trend classification

Signal 1: Leverage

- 2021 Debt / EBITDA = 3.92x
- 2022 Debt / EBITDA = 4.20x
- Change = 4.20 − 3.92 = +0.28x

Threshold:
- ≥ +0.2x = Deteriorating

Signal 1 = Deteriorating

Signal 2: Cash-flow coverage

- 2021 FFO / Debt = 0.158
- 2022 FFO / Debt = 0.149
- Change = 0.149 − 0.158 = -0.009

Threshold:
- Between -0.03 and +0.03 = Stable

Signal 2 = Stable

Combining signals:

One signal is Deteriorating and the other is Stable, so the non-Stable category applies. The deterioration is mainly driven by a significant increase in adjusted debt, despite higher EBITDA and FFO. Leverage worsened by about +0.28x, above the +0.2x deterioration threshold, while FFO/debt was only mildly lower and stayed within the stable band.

<answer>Deteriorating</answer>