PrefBlog

DBRS has announced that it:

confirmed the Unsecured Debentures and Preferred Shares ratings of Fortis Inc. (Fortis or the Company) at BBB (high) and Pfd-3 (high), respectively, and changed the trends to Positive from Stable. The trend change is largely driven by the Company’s low business risk profile (benefiting from its ownership of a diversified basket of utility businesses which provide over 90% of consolidated EBITDA), its strong credit metrics (which have improved modestly over the years), the significant reduction in external debt at subsidiary Terasen Inc. (Terasen) and the Company’s demonstrated ability to acquire and integrate stable utility businesses financed on a conservative basis.
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Capital expenditures at the regulated utilities are subject to regulatory approval. It is anticipated that the majority of capital expenditures will be funded at the subsidiary level, with a combination of internally generated cash, operating company-level debt and equity from Fortis (expected to average $100 million annually for the next five years) to fund capital build-out programs, while maintaining their respective regulated capital structures. DBRS views the level of Fortis’s equity injections as reasonable, and does not anticipate that the Company will use debt to fund the injections, thereby avoiding double leverage.

DBRS will consider an upgrade to the Unsecured Debentures and Preferred Shares ratings if Fortis continues to exhibit strong financial and operating performance and maintain its conservative financial practices; barring any materially negative regulatory actions at the operating subsidiaries, or mergers and acquisitions activity financed on an aggressive basis.

Fortis’ preferreds are rated Pfd-3(high) by DBRS. S&P rates Series D, E and H as P-2; Series C is also rated P-2, but S&P seems to think that these are denominated in USD.

Fortis has five series of preferred shares outstanding: FTS.PR.C (OpRet); FTS.PR.E (OpRet); FTS.PR.F (PerpetualDiscount); FTS.PR.G (FixedReset) and FTS.PR.H (FixedReset). All are tracked by HIMIPref™ and all have been relegated to the Scraps index on credit concerns.

This entry was posted on Tuesday, June 8th, 2010 at 6:54 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.