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Atomic Blow

06 December 2016 by lberuti

In the wake of the Fukushima’s disaster in 2011, Mrs Merkel, who had just a few months earlier decided to extend the life of Germany’s nuclear plants, unexpectedly reversed course and announced instead that her government had opted to exit nuclear energy. After years of legal procedures, judges at the Federal Constitutional Court in Karlsruhe said in a ruling today that Germany’s shift away from atomic energy failed to tackle compensation for companies that were committed to nuclear power production, and that RWE ( RWE AG ), EOANGR ( E.ON SE ) and VATFAL (Vattenfall AB) should be entitled to damages. Still the court rejected the companies’ claim that the government’s 2011 decision amounted to expropriation of the utilities’ property, which means that they will get compensations ranging between €400 to €700mln according to analysts rather than the billion-euro demands they made. Even if the optimism ahead of the ECB meeting on Thursday meant that almost every single credit was indicated tighter at the end of the session today, the news gave the risk premia of RWE, EOANGR and VATFAL - which closed at 78.5bps (or 4bps tighter), 75.5bps (or 3.5bps tighter) and 53bps (or 1.5bps tighter) respectively - some extra impetus.