PrefBlog

Standard & Poor’s has announced:

• On Feb. 21, 2012, Fortis Inc. announced it entered into an agreement to acquire all of the shares of CH Energy Group Inc. for about C$1.5 billion.
• As a result, we are placing our ratings, including our ‘A-‘ long-term corporate credit rating, on Fortis Inc. on CreditWatch with negative implications.
• The CreditWatch reflects our expectation of increased debt at the holding company level to finance the acquisition and that post-acquisition, deconsolidated credit metrics may be below our established thresholds.

…
“We will resolve the CreditWatch once greater details related to the transaction become available, including a financing plan, and the transaction closes,” said Standard & Poor’s credit analyst Gavin MacFarlane. We could lower the ratings if debt levels increase as a result of the transaction and the company is unable to meet established thresholds we associate with the current ratings, including company-level debt coverage from cash flows from its subsidiaries of more than 20% and consolidated adjusted funds from operations to debt of more than 10%. However, while less likely, we could still affirm the ratings on Fortis and return to a stable outlook if a very meaningful component of the financing plan consists of equity and we conclude
that forecast credit metrics are at levels consistent with the current ratings.

Fortis’ preferreds are currently rated P-2 [Watch Negative] by S&P and Pfd-2(low) [Review Developing] by DBRS.

Fortis has several series of preferred shares outstanding: FTS.PR.C & FTS.PR.E (Operating Retractible); FTS.PR.F (PerpetualPremium); FTS.PR.G & FTS.PR.H (FixedReset). All are tracked by HIMIPref™ and assigned to the indicated indices.

This entry was posted on Wednesday, February 22nd, 2012 at 9:42 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.