Moody's upgrades Entergy Texas

Moody's Investors Service said it upgraded the long-term ratings of Entergy Texas, Inc., including its issuer rating to Baa2 from Baa3, and first mortgage bond rating to A3 from Baa1, citing improved legislative and regulatory support for the company. The outlook is stable.

The upgrade reflects an improved legislative and regulatory environment, following the recent authorization to securitize more than $250 million of storm costs and expedited cost recovery of the Montgomery County Power Station, which started operations and was reflected in rates in January 2021. These cost recovery provisions should help the company to generate cash flow from operations before the changes in working capital (CFO pre-WC) to debt above 15% over the next several years, the agency said.

Simultaneously, Moody's said it changed the outlooks for Entergy Arkansas, LLC and Entergy Mississippi, LLC to positive from stable, reflecting expectations both utilities will deliver and maintain stronger financial metrics, including ratios of CFO pre-WC to debt around 20%.

The agency also affirmed the long-term Baa1 issuer and A2 first mortgage bond ratings of Entergy Arkansas and Entergy Mississippi.

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