Moody's ups Public Service Electric to positive

Moody's Investors Service said it affirmed PSEG Power LLC (Baa1 senior) and Public Service Electric and Gas Co. (Baa1 issuer rating).

Public Service Electric's outlook was revised to positive from stable. The outlook of PSEG remains stable.

The change in Public Service Eclectic's outlook reflects the steady improvement in its financial profile in recent years in the context of its relatively low business risk profile as an electric and gas transmission and distribution utility operating in a generally supportive regulatory environment, the agency said.

The outlook revision also reflects the belief that, ignoring the temporary near-term cash flow benefit provided by federal bonus depreciation legislation, there could be further modest improvement in key financial ratios, the agency added.

PSEG's Baa1 senior debt rating reflects the competitiveness of its generating assets, its hedging strategy that provides a degree of cash flow stability and its good liquidity profile as well as its moderately-high risk merchant operations, market concentration risk and the expectation that its cash flow will weaken as existing hedges roll off and are replaced at lower price levels, the agency said.

Public Service Electric's Baa1 issuer rating reflects its low risk transmission and distribution business model, a relatively supportive and constructive relationship with its principal regulator, and the expectation that credit metrics will strengthen in the near-term , the agency said.

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