Moody’s may downgrade Ohio Valley Electric

Moody's Investors Service said it placed the ratings of the Ohio Valley Electric Corp. under review for downgrade, including its senior unsecured regular bond/debenture rating of Baa3.

The review was prompted by the downgrades of FirstEnergy Corp.'s subsidiaries, FirstEnergy Solutions Corp. and Allegheny Energy Supply Co., LLC, which together are contractually obligated to cover about 8% of Ohio Valley’s expenditures, Moody’s explained.

FirstEnergy recently announced its intention to exit the merchant business entirely within 18 months, even if it requires a restructuring or bankruptcy at FirstEnergy Solutions, the agency said.

The review process will focus on options and potential actions available to Ohio Valley Electric that could help mitigate the company's exposure to the decline in credit quality of the FirstEnergy subsidiaries, including the possibility of a bankruptcy at FirstEnergy Solutions, Moody’s said.

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