Moody’s eyes Duke Energy for downgrade

Moody’s Investors Service said it placed the long-term ratings of Duke Energy Corp. and subsidiaries Duke Energy Carolinas, LLC and Duke Energy Progress, LLC on review for downgrade. Moody’s rates Due Baa1, Duke Energy Carolinas A1 and Duke Energy Progress A2. This review does not include the ratings or outlooks of any of Duke’s other subsidiaries.

“The review of Duke’s ratings follows last week’s announcement that it now planned to target financial credit metrics that are below the levels that we have established for a downgrade,” said Laura Schumacher, a Moody’s vice president and senior credit officer, in a press release.

For several years, the ratio of cash flow from operations excluding changes in working capital (CFO pre-WC) to debt has been at or below the 15% downgrade threshold the agency communicated, leaving little financial cushion to absorb the effect of adverse regulatory developments, severe storms or the cost of a growing capital expenditure program, Schumacher said.

During its fourth-quarter 2020 earnings call last week, Duke said it plans to target a ratio of FFO to debt of only 14%.

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