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Fitch Rates PPL Electric Utilities Sr Secured Bonds 'A-'
Business Wire, Oct 15, 2008
NEW YORK -- Fitch Ratings has assigned an 'A-' rating to the $400 million, 7.125% senior secured bonds issued by PPL Electric Utilities Corp. (PPLEU). The bonds mature Nov. 30, 2013. The Rating Outlook is Stable.
Proceeds will be used to partially fund the repayment at maturity of $485.8 million of PPLEU's outstanding senior secured bonds, 6.25% series due Aug. 15, 2009. Prior to such use the net proceeds will be invested in short-term investments and used for general corporate purposes.
The ratings of PPLEU are consistent with the company's solid financial profile and also reflect the relative predictability of earnings and cash flow due in large measure to the absence of any meaningful commodity exposure. A full-requirements electricity supply contract with affiliate PPL EnergyPlus satisfies the company's provider of last resort obligation (POLR) through 2009 and eliminates commodity price risk. After 2009, when generation rate caps expire, ratings and credit quality will be strongly influenced by the final rules established in Pennsylvania for the recovery of power supply costs, which are expected to rise substantially. Recently enacted House Bill 2200, which addresses the way in which utilities will procure power is constructive; however, additional legislative or regulatory rate mitigation measures that dampen cash flow remain possible.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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