Moody's drops Atlantic City Electric outlook to negative

Moody's Investors Service said it changed the outlook of Atlantic City Electric Co. to negative from stable and affirmed the company's debt ratings including its A3 senior secured and Baa1 senior unsecured long-term ratings and Prime-2 commercial paper rating.

The change in outlook to negative from stable reflects Moody's concern that the future financial performance of the company over the medium term will likely be lower than previously expected.

The agency said that it expects the company to face significant challenges in maintaining its key credit metrics at historic levels due to continued increases in operating expenses coupled with regulatory lag as the company has not filed a rate case in several years along with a stepped-up capital spending program that will undoubtedly lead to additional external debt financings to meet higher levels of negative free cash flow.

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