Fitch downgrades Exelon

Fitch Ratings said it downgraded Exelon Corp.’s issuer default rating and senior unsecured debt ratings to BBB from BBB+ and junior subordinated debt rating to BB+ from BBB-.

The company’s commercial-paper rating was affirmed at F2.

The ratings are removed from Rating Watch negative, where they were placed in April 2014 following news of an agreement to acquire Pepco Holdings, Inc. in an all-cash transaction, Fitch said.

The outlook is stable.

The ratings of Exelon’s four operating subsidiaries were unaffected by this rating action, Fitch said.

The downgrades consider the increased consolidated leverage that results from the acquisition and to a lesser extent, the weak operating environment of its competitive generation business, the agency said.

The higher leverage is a product of the acquisition financing, which included about 65% debt and consolidation of the more levered Pepco, Fitch explained.

The rise in leverage is softened by a modest reduction in business risk from the increase in regulated earnings, the agency added.

Post-merger regulated earnings are expected to account for about 65% of 2017 consolidated earnings compared to an estimated 55% without the acquisition, Fitch said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.