# Analysis of TenneT's Adjusted Leverage Trend for 2022

## Key Metrics Calculation

**Leverage Metrics 2021 (Jan 1, 2021) - Baseline:**
- Total Debt = Longterm Borrowings + Shortterm Borrowings = 12,366M + 1,339M = 13,705M EUR
- Equity = 7,936M EUR
- Total Assets = 31,200M EUR (as of Jan 1, 2022, closest proxy)

**Leverage Metrics 2022 (Jan 1, 2022 - Dec 31, 2022):**
- Total Debt = 12,366M + 1,339M = 13,705M EUR
- Equity = 7,424M EUR
- Total Assets = 31,200M EUR

**Leverage Metrics 2023 (Jan 1, 2023):**
- Total Debt = 19,006M + 709M = 19,715M EUR
- Equity = 7,713M EUR
- Total Assets = 38,509M EUR

## Leverage Ratios Analysis

**Debt-to-Equity Ratio:**
- 2021: 13,705 / 7,936 = 1.73x
- 2022: 13,705 / 7,424 = 1.85x
- 2023: 19,715 / 7,713 = 2.56x

**Debt-to-Assets Ratio:**
- 2021: 13,705 / 31,200 = 43.9%
- 2022: 13,705 / 31,200 = 43.9%
- 2023: 19,715 / 38,509 = 51.2%

**Net Leverage (adjusting for cash):**
- 2022: (13,705 - 3,204) / 7,424 = 1.41x
- 2023: (19,715 - 6,547) / 7,713 = 1.70x

## Financial Performance during 2022

**Operating Performance Deterioration:**
- Operating loss 2022: -976M EUR (vs. -275M EUR in 2021)
- EBITDA approximation: -976M + 1,233M = 257M EUR
- Interest coverage severely impacted
- Revenue increased substantially (8,299M vs. 5,524M), but operating expenses exceeded revenue

**Financing Activities:**
- Significant debt increase: +6,349M EUR in long-term borrowings from 2022 to 2023
- Capital injections: +1,230M EUR from owners
- Despite capital contributions, leverage metrics worsened

## Conclusion

During 2022, TenneT's adjusted leverage **deteriorated** significantly:
1. Debt-to-equity ratio increased from 1.73x to 1.85x (+7%)
2. Equity decreased slightly while debt remained flat, creating upward pressure
3. Operating performance worsened substantially
4. Looking forward into 2023, the trajectory accelerated with debt climbing to 19.7B EUR while equity only grew modestly to 7.7B EUR
5. Net leverage increased from 1.41x to 1.70x despite higher cash balances

The deterioration reflects both operational challenges (significant operating losses) and strategic debt increases for capital investment, exceeding the company's capacity to improve equity position through retained earnings.

<answer>Deteriorating</answer>