S&P cuts FirstEnergy

S&P said it downgraded FirstEnergy Corp. and its subsidiaries, including the issuer credit rating to BB from BB+. The agency affirmed Allegheny Generating Co.’s BB issuer credit rating.

Concurrently, S&P said it dropped the senior unsecured rating on FirstEnergy and FirstEnergy Transmission LLC to BB from BB+ based on the 3 recovery ratings, indicating meaningful (50%-70%; rounded estimate: 65%) recovery in default.

S&P said it also lowered the senior unsecured issue ratings on American Transmission Systems Inc., Jersey Central Power & Light Co., Metropolitan Edison Co., Mid-Atlantic Interstate Transmission, Ohio Edison Co., Pennsylvania Electric Co., and Trans-Allegheny Interstate Line Co., to BB+ from BBB- based on the 2 recovery ratings indicating substantial (70%-90%; rounded estimate: 85%) recovery in default.

S&P said it cut the senior unsecured issue ratings on Cleveland Electric Illuminating Co. to BB+ from BBB-based on the 2 recovery rating, indicating substantial (70%-90%; rounded estimate: 75%) recovery in default. Finally, the agency lowered the senior secured issue ratings on Cleveland Electric, Ohio Edison Co., Toledo Edison Co., and Monongahela Power Co. to BBB from BBB+, reflecting a 1+ recovery rating.

The downgrade follows FirstEnergy and some of its subsidiaries borrowing about $2 billion from its revolver credit facilities, S&P said. About $1.3 billion in availability remains.

The ratings remain on CreditWatch with negative implications, S&P said.

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