Financing Strategy

A Credit Default Swap (CDS) is a tool for hedging credit risk. By buying a CDS, a market participant can hedge certain risks arising from credit relationships in exchange for a premium, which is referred to as a CDS Level. The higher the level, the higher the default risk estimated by the market for the issuer.

The market classifies RWE‘s creditworthiness as being above average. The RWE CDS levels trade below the iTraxx Europe Index, which encompasses 125 major European companies with CDSes having the largest turnover and, as a result, the highest level of liquidity on the credit market.

Development of RWE’s five-year credit default swap (CDS) compared with the CDS index iTraxx Europe

^{(average weekly figures in basis points, last updated as of 30 September 2011)}