Fitch cuts Brooklyn Union

Fitch Ratings said it downgraded the Brooklyn Union Gas Co.’s long-term issuer default rating to BBB from BBB+ and senior unsecured debt to BBB+ from A-.

“The downgrade to BUG reflects the company's high leverage and Fitch's expectations that FFO leverage will exceed BUG's previous negative sensitivity threshold of greater than 5x on a sustained basis. Fitch expects BUG's FFO leverage to increase to 5.8x in 2023 and 5.9x in 2024 before improving to 5.2x in 2025,” the agency said in a press release.

Fitch cited the utility’s large capital expenditures plan and the negative effects from rate levelization associated with the 2020-2023 rate plans under a settlement with New York state for the weak financial metrics.

The outlook is stable.

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