Fitch upgrades Aquila

Fitch Ratings said it upgraded Aquila, Inc.'s issuer default rating to B from B-, senior secured debt to BB with a recovery rating of RR1 from BB- and senior unsecured debt to B+ with a recovery rating of RR3 from B- with a recovery rating of RR4.

The outlook is stable.

The agency said the upgrade reflects Aquila's improved credit profile and improved recovery prospects as a result of its debt reduction and restructuring efforts during the past year. Using proceeds from utility and non-utility asset sales, Aquila reduced debt and debt equivalents by about $720 million.

Further debt reductions are possible using proceeds from the sale of Aquila's Kansas electric utility, offset by higher capital spending for the Iatan facility funded by a secured bank line, Fitch said. The Kansas utility sale is expected to close for roughly $255 million, exclusive of any working capital adjustments.

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