Moody's upgrades Pinnacle, Arizona Public Service

Moody's Investors Service said it upgraded the senior debt and issuer ratings of Pinnacle West Capital Corp. to A3 from Baa1 and the senior debt and issuer ratings of Arizona Public Service Co. to A2 from A3. The outlook is stable.

"The upgrade of Pinnacle and Arizona Public Service' ratings is driven by a strong financial profile that we expect to continue under a constructive and credit supportive Arizona regulatory environment," Jeffrey Cassella, assistant vice president, said in an agency news release.

The agency said Pinnacle's A3 rating reflects the structural subordination of the parent's obligations to creditors at the utility level and the stable cash flows (i.e. upstream dividends) provided by its principal operating subsidiary, Arizona Public Service.

Arizona Public Service' A2 rating is driven by the constructive Arizona regulatory environment, which allow for a broad suite of timely recovery mechanisms; solid customer and load growth in Arizona compared to the national average and effective cost controls, which allows Arizona Public Service to earn close to its authorized ROE and drives its strong financial metrics, Moody’s said.

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