S&P: UK Power Networks view to positive

S&P said it revised the outlook on all the ratings within the UK Power Networks Holdings Ltd. (UKPN) group to positive, reflecting the substantial headroom in cash flow coverage metrics and lack of any management or ownership plan to erode this by paying a dividend or increasing leverage.

The agency affirmed the BBB+ long-term corporate credit ratings on the group's three U.K.-based regulated electricity distribution network operators (DNOs) South Eastern Power Networks plc, London Power Networks plc and Eastern Power Networks plc.

At the same time, S&P affirmed the BBB long-term corporate credit rating on the holding company, UK Power Networks Holdings, and the nonregulated businesses, UK Power Networks Services (UKPNS) and UK Power Networks Services (South East).

S&P said the positive outlook reflects increased certainty that the group could maintain substantial headroom in its cash flow coverage metrics, despite a higher dividend than previously expected.

In particular, the agency expects it to maintain S&P Global Ratings-adjusted funds from operations (FFO) to debt of about 16%-17%, which is significantly higher than the minimum 10% S&P sees as commensurate for the current rating.

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