Moody's lowers Golden State view to stable

Moody's Investors Service said it changed Golden State Water Co.'s outlook to stable from positive and affirmed its A2 senior unsecured rating.

Golden State's financial profile is expected to remain stable over the next several years with a funds from operation-to-net debt ratio of about 24%, lower than anticipated, the agency said.

The outlook is also affected by increased political uncertainty within the state, which continues to weigh on all utilities, Moody's said.

Golden State's key credit metrics have been affected more than originally expected by tax reform, which reduced both deferred income taxes and cash flows, eliminated bonus depreciation and is increasing the company's reliance on external financing, the agency explained.

California's regulatory environment for water utilities is credit supportive, but the delayed approval of Golden State's water general rate case and uncertainties surrounding the interpretation of inverse condemnation affects all utilities, including Golden State, Moody's said.

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