Moody’s Upgrades PG&E Ratings
NEW YORK -
Moody’s Investors Service said Thursday it upgraded the long-term debt ratings of Pacific Gas and Electric Co. and parent PG&E Corp., citing an improved regulatory environment in California.
Pacific Gas and Electric’s issuer rating and senior unsecured debt rating were raised one grade to “A3″ from “Baa1.” PG&E’s issuer rating and bank loan rating were raised two notches to “Baa1″ from “Baa3″ and its short-term rating for commercial paper was affirmed at “Prime-2.”
The outlook for the company’s investment-grade ratings is “Stable.”
“Today’s rating action is an acknowledgment of the continued demonstration of a more constructive regulatory environment in California which should lead to sustainable and predictable credit metrics for Pacific Gas and Electric and PG&E,” said Moody’s Vice President and Senior Credit Officer A.J. Sabatelle.
The ratings service said several recent decisions, including a cost of capital ruling on Dec. 20, have helped provide for predictable cash flows over the next several years. In addition, a March general rate case decision established base rates for the company’s electric and gas distribution and electric generation businesses for the next three years.
Moody’s said the upgrade also reflects PG&E’s lower risk business strategy.
Moody’s said there is limited opportunity for further ratings upgrades in the near term, due to PG&E’s large capital investment program. The ratings may be downgraded, however, if PG&E elects to finance its capital expenditures with higher leverage, or if there is a significant negative change in the current regulatory environment.
Roughly $8.7 billion of debt securities and bank facilities were affected by Moody’s action.
PG&E shares fell a penny to close at $43.42.
Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed/Via