Moody's upgrades six FirstEnergy utilities, rates loans Baa3

Moody's Investors Service said it assigned Baa3 ratings to FirstEnergy Corp.’s senior credit facility due 2019 and FirstEnergy Solutions Corp.’s senior credit facility due 2019, affirmed the companies’ issuer ratings at Baa3 and changed the outlook to stable from negative.

The agency also upgraded the ratings of six FirstEnergy utility subsidiaries as follows:

• Metropolitan Edison Co.’s issuer rating and senior bonds to Baa1 from Baa2;

• Monongahela Power Co.’s senior secured first mortgage bonds to A3 from Baa1;

• Ohio Edison Co.’s issuer rating to Baa1 from Baa2, senior secured first mortgage bonds to A2 from A3 and senior bonds to Baa1 from Baa2;

• Pennsylvania Power Co.’s issuer rating to Baa1 from Baa2 and senior secured first mortgage bonds to A2 from A3;

• Potomac Edison Co.’s issuer rating to Baa2 from Baa3 and senior secured first mortgage bonds to A3 from Baa1; and

• West Penn Power Co.’s issuer rating to Baa1 from Baa2 and senior secured first mortgage bonds to A2 from A3.

The following subsidiaries were affirmed: Allegheny Energy Supply Co., LLC (Baa3), Allegheny Generating Co. (Baa3), Cleveland Electric Illuminating Co. (Baa3), Jersey Central Power & Light Co. (Baa2), Pennsylvania Electric Co. (Baa2) and Toledo Edison Co. (Baa3).

The outlook for the subsidiaries is stable except for Jersey Central Power & Light, which has a negative outlook.

The agency said FirstEnergy’s outlook change to stable reflects a number of credit-positive developments over the past year that include a refocus on regulated operations and transmission, an improving outlook for the merchant markets and strong capacity revenues in the next few years, a dividend reduction at FirstEnergy and the upgrade of several of FirstEnergy's utility subsidiaries.

The primary driver of the utility upgrades is Moody's more favorable view of the relative credit supportiveness of the U.S. regulatory environment.

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