Moody’s rates CenterPoint preferreds Baa3

Moody's Investors Service said it assigned a Baa3 rating to CenterPoint Energy, Inc.'s roughly $500 million issuance of series A preferred stock.

The proceeds from the issuance will be used to help fund a portion of CenterPoint's $8.5 billion acquisition of Vectren Corp. that is expected to close by March 2019.

The outlook is negative.

“The Baa3 rating assigned to the fixed- to floating-rate cumulative redeemable preferred stock reflects the security's relative position in CenterPoint's capital structure compared to the company's senior unsecured debt given that the preferred stock is subordinated to and junior in right of payment to the senior unsecured debt,” Moody’s said in a news release.

“The two-notch differential between the Baa3 assigned to the series A preferred stock and CenterPoint's Baa1 senior unsecured rating is consistent with our methodology guidance for notching preferred securities due to structural subordination.”

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