**Step 1 – Industry identification**  
REN operates as a national electricity‑ and gas‑network operator in Portugal. This fits the “Regulated Utilities” sector in S&P’s methodology.

**Step 2 – Adjusted EBITDA (2021)**  

| Item | 2021 (€ 000) |
|------|--------------|
| Profit from operating activities (EBIT) | 218 863 |
| + Depreciation & amortisation | 241 940 |
| = EBITDA (reported) | 460 803 |
| – Non‑cash revenue from construction‑service exchange | 237 696 |
| – Net non‑recurring gains (changes in provisions + impairment reversals) | 1 678 |
| – Share of profit from JVs (non‑cash) | 6 431 |
| = Adjusted EBITDA | **214 998** |

**Step 3 – FFO (2021)**  

| Item | 2021 (€ 000) |
|------|--------------|
| Adjusted EBITDA | 214 998 |
| – Cash interest (interest paid) | 39 725 |
| – Cash taxes (income taxes paid) | 74 253 |
| = FFO | **101 020** |

**Step 4 – Adjusted Debt (2021)**  

| Item | 2021 (€ 000) |
|------|--------------|
| Reported debt (long‑term + current) | 2 766 073 |
| + Pension deficit (provision for employee benefits) | 94 109 |
| – Eligible cash (cash & cash equivalents) | 398 759 |
| = Adjusted Debt | **2 461 423** |

**Step 5 – Leverage ratio (2021)**  

\[
\frac{\text{Adjusted Debt}}{\text{Adjusted EBITDA}} = \frac{2\,461\,423}{214\,998} \approx 11.45\text{x}
\]

**Step 6 – Coverage ratio (2021)**  

\[
\frac{\text{FFO}}{\text{Adjusted Debt}} = \frac{101\,020}{2\,461\,423} \approx 0.041\;(4.1\%)
\]

---

**Step 7 – Adjusted EBITDA (2022)**  

| Item | 2022 (€ 000) |
|------|--------------|
| Profit from operating activities (EBIT) | 239 721 |
| + Depreciation & amortisation | 249 276 |
| = EBITDA (reported) | 488 997 |
| – Non‑cash revenue from construction‑service exchange | 197 420 |
| – Net non‑recurring gains (changes in provisions + impairment reversals) | 3 667 |
| – Share of profit from JVs (non‑cash) | 11 812 |
| = Adjusted EBITDA | **276 098** |

**Step 8 – FFO (2022)**  

| Item | 2022 (€ 000) |
|------|--------------|
| Adjusted EBITDA | 276 098 |
| – Cash interest (interest paid) | 40 545 |
| – Cash taxes (income taxes paid) | 77 970 |
| = FFO | **157 583** |

**Step 9 – Adjusted Debt (2022)**  

| Item | 2022 (€ 000) |
|------|--------------|
| Reported debt (long‑term + current) | 2 334 306 |
| + Pension deficit (provision for employee benefits) | 64 939 |
| – Eligible cash (cash & cash equivalents) | 365 292 |
| = Adjusted Debt | **2 033 953** |

**Step 10 – Leverage ratio (2022)**  

\[
\frac{\text{Adjusted Debt}}{\text{Adjusted EBITDA}} = \frac{2\,033\,953}{276\,098} \approx 7.37\text{x}
\]

**Step 11 – Coverage ratio (2022)**  

\[
\frac{\text{FFO}}{\text{Adjusted Debt}} = \frac{157\,583}{2\,033\,953} \approx 0.077\;(7.7\%)
\]

---

**Step 12 – Credit‑trend signals**

| Signal | 2021 | 2022 | Change | Interpretation |
|--------|------|------|--------|----------------|
| Leverage (Debt/EBITDA) | 11.45x | 7.37x | **–4.08x** | ≤ –0.2x → **Improving** |
| Coverage (FFO/Debt) | 4.1% | 7.7% | **+3.6 pp** | ≥ +0.03 → **Improving** |

Both signals point to an **Improving** credit trend.

**Final answer**

<answer>Improving</answer>