Moody's affirms Energy East

Moody's Investors Service said it affirmed the Ba2 senior unsecured ratings on Energy East Corp. and its regulated utility subsidiaries, including the Baa1 senior unsecured ratings on New York State Electric & Gas Corp., the Baa1 senior unsecured ratings on Rochester Gas and Electric Corp., A3 senior unsecured ratings on Central Maine Power Co., the A3 senior unsecured ratings on Connecticut Natural Gas Corp. and A3 senior unsecured ratings on Southern Connecticut Gas Co.

The outlook remains negative for the company and its subsidiaries.

The affirmation follows news that Iberdrola of Spain (A2 senior unsecured, under review for possible downgrade) has agreed to acquire Energy East for about €6,400 million, inclusive of assumed debt of €3,007 million.

The affirmation considers the A2 rating of Iberdrola and reflects Moody's view that there is unlikely to be a significant increase in leverage at Energy East.

The negative outlook reflects financial and operating challenges resulting from a surprisingly unfavorable outcome in New York State Electric's last general rate case, the agency said. The outlook also recognizes that the transaction is subject to state and some federal approvals, Moody's added, and that it is not uncommon for approvals like this to be conditioned upon additional rate concessions.

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