S&P nips Northwest Natural

S&P said it lowered its ratings for Northwest Natural Holding Co. to A from A+ and revised the outlook for its subsidiary Northwest Natural Gas Co. to stable from negative and affirmed its ratings, including AA- senior secured and A+ senior unsecured ratings.

“We concluded our review of the insulating measures in place and determined that they are sufficient to potentially rate Northwest Natural Holding Co. (NWNH) subsidiary Northwest Natural Gas Co. (NWNG) up to two notches higher than its parent's group credit profile (GCP). We also assess the cumulative value of these insulating measures as increasing risk for parent NWNH because they limit or even materially restrict NWNH's access to NWNG's cash flows,” S&P said in a press release.

The NWNH’s downgrade reflects higher risks because of restrictions of cash flows within the company's corporate group, the agency said.

“The negative outlook on NWNH reflects its weak consolidated financial measures for the current rating. FFO to debt in 2023 was around 12%, significantly below our 15% downgrade threshold. We expect financial performance in 2024 will remain weak but improve in 2025, primarily reflecting our expectations for a fair Oregon rate case order,” S&P said.

NWNG’s stable outlook reflects an assessment that the insulating measures in place are adequate to potentially rate NWNG up to two notches above NWNH's GCP and a downgrade to NWNH would not directly lead to a downgrade at NWNG, S&P explained.

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