Fitch lowers Ruby Pipeline to negative

Fitch Ratings said it affirmed Ruby Pipeline, LLC's long-term issuer default rating and senior unsecured rating at BBB- and revised the outlook to negative from stable.

The outlook revision reflects the negative credit implications from the pending Pacific Gas & Electric Co. bankruptcy on earnings and cash flows, Fitch explained.

PG&E is the largest holder of reservation contracts approximating 34% of the Ruby's total contracted capacity, the agency said.

In a PG&E bankruptcy, Fitch said it believes there is a potential for some or all of the capacity the utility has contracted to be rejected in bankruptcy proceedings.

This has the potential for an earnings shortfall at Ruby that could modestly pressure leverage, the agency said.

The ratings are not explicitly linked to its owner's ratings, but they do recognize that the company's owners have historically been supportive of its credit profile and would have the ability to support Ruby's debt obligations and maintain reasonable credit metrics, Fitch said.

The ratings also consider cash flow stability and relatively low business risk associated with an interstate natural gas pipeline, the agency added.

Moody's downgrades Panoche

Moody's Investors Service said it downgraded Panoche Energy Center, LLC's senior secured notes to Caa2 from Baa3.

The ratings are no longer under review for downgrade and the rating outlook is negative.

The downgrade was driven solely by the expected bankruptcy filing of Pacific Gas & Electric Co.

PG&E's credit quality serves to limit Panoche's rating since the project derives all of its revenue and cash flow under a long-term power purchase agreement with PG&E that expires in 2029, Moody's said.

PG&E's expected bankruptcy filing on or about Jan. 29 is driven by the utility's declining financial position, the agency said, and increasingly limited flexibility as wildfire liabilities mount.

Panoche Energy's rating is positioned one notch higher than the offtaker's rating level, reflecting its position and capacity value as a peaking unit in a high load pocket, Moody's said.

Notwithstanding the factors affecting the off-taker's credit quality, Panoche's operational and financial performance is expected to remain adequate if PG&E continues to honor its contractual obligations, the agency said.

Fitch downgrades PG&E

Fitch Ratings said it downgraded PG&E Corp.'s and Pacific Gas and Electric Co.'s long-term issuer default ratings to C from BBB- given that a default-like process has begun with the company.

The company announced that it intends to file for bankruptcy protection for both companies Jan. 29, Fitch explained.

The company also indicated that it does not intend to make an interest payment due Jan. 16 with respect to its 2040 senior notes, the agency noted.

Non-payment of interest is an event of default under its senior bond indenture if not cured within 30 days, Fitch said.

Fitch said it would downgrade the companies to D if the default is not cured or if the company files for bankruptcy protection ahead of the default event.

The agency also said it downgraded Pacific Gas's senior unsecured debt to CC with recovery rating of RR3 from BBB and its preferred stock to C with recovery rating of RR6 from BBB-.

Fitch also downgraded PG&E's senior unsecured debt to C with recovery rating of RR6 from BBB-.

The imminent bankruptcy filing reflects the culmination of a crisis of confidence driven by potential wildfire-related liabilities in the tens of billions of dollars, the agency said.

California typically applies the doctrine of inverse condemnation to privately owned utilities to socialize costs associated with catastrophic wildfires, Fitch said.

The company's position is further complicated by long standing safety challenges in its electric and natural gas businesses, the agency added.

Moody's downgrades PG&E

Moody's Investors Service said it downgraded the ratings on Pacific Gas & Electric Co. and its holding company, PG&E Corp., including the corporate family rating to Caa3 from Ba3 and probability of default rating to Ca-PD from B1-PD.

Moody's also said it downgraded Pacific Gas's senior unsecured rating to Caa3 from Ba3, PG&E's senior unsecured rating to C from B2 and speculative grade liquidity rating to SGL-4 from SGL-3.

The outlook is negative.

This action concludes a review for downgrade that began in November.

The downgrades were prompted by the very high likelihood of a bankruptcy filing by PG&E and its parent company following news that they expect to make such a filing on or about Jan. 29, Moody's said.

The company said it believes the Ch. 11 process is the only viable option to resolve potentially substantial wildfire liabilities, rebuild and invest in its existing system and maintain access to sufficient financial and liquidity sources, Moody's said in a press release.

The ratings reflect the company's declining financial position and increasingly limited flexibility, the agency said.

The ratings also consider the company's view that potential liabilities stemming from the 2017 and 2018 northern California wildfires will be extensive, Moody's said.

The legislative and regulatory environment has become so challenging that the company's management believes it is unlikely that the wildfire exposure will be addressed in a manner that is timely enough to support the financial stability of the company, the agency added.

S&P downgrades PG&E

S&P said it lowered the issuer credit ratings on PG&E Corp. and subsidiary, Pacific Gas & Electric Co., to CC from B and lowered the short-term rating on both entities to C from B.

The agency also said it lowered the rating on Pacific Gas's unsecured debt to CC from BB-.

S&P also said it maintained the ratings on CreditWatch with negative implications.

The agency said it initially placed the ratings on CreditWatch with negative implications in November and subsequently lowered the ratings by multiple notches Jan. 7.

The recovery rating on the unsecured debt is unchanged at 1, indicating 90% or greater expected default recovery.

The CreditWatch negative placement reflects news that the company will not likely make a near-term $21.6 million interest payment due on its 5.4% senior notes due Jan. 15, 2040, S&P explained.

PG&E announced that it expects to file for bankruptcy Jan. 29 as a result of potentially substantial liabilities and associated challenges related to a series of catastrophic wildfires in Northern California in 2017 and 2018, the agency said.

Moody's downgrades Topaz Solar

Moody's Investors Service said it downgraded the rating on Topaz Solar Farms LLC's senior secured debt due 2039 to Caa2 from Baa2.

The ratings are no longer under review for downgrade and the outlook is negative.

The downgrades are driven entirely by the expected bankruptcy filing of Pacific Gas & Electric Co., Moody's said.

PG&E's credit quality serves to limit Topaz Solar's rating since the project derives all of its revenue and cash flow under a long-term power purchase and sales agreement with PG&E that expires in October 2039, the agency explained.

A bankruptcy filing of PG&E is an event of default under the agreement between PG&E and Topaz and such a default would eventually lead to an event of default under Topaz Solar's bond indenture, Moody's said.

The downgrades are driven by the company's declining financial position, the agency said, and increasingly limited flexibility as wildfire liabilities mount.

Moody's upgrades Steelcase

Moody's Investors Service said it upgraded Steelcase, Inc.'s senior unsecured ratings to Baa2 from Baa3.

The outlook is stable.

The upgrades reflect the increase in Steelcase's scale and diversity over the past few years, Moody's said, and the resiliency of its business model.

Credit metrics are very strong, the agency said, despite a more than $50 million of debt over the past few months following acquisitions.

The ratings consider the company's leading market share in office furniture, strong end-market diversification and solid geographic diversification throughout the United States and Europe, Moody's said.

The ratings also incorporate Steelcase's strong credit metrics with retained cash flow and resilient business model, the agency said.

The stable outlook reflects a view that Steelcase will maintain strong credit metrics, excellent liquidity and a measured shareholder return policy through different economic cycles, Moody's said.

Fitch puts Goldcorp on positive watch

Fitch Ratings said it placed Goldcorp Inc.'s long-term issuer default rating and senior unsecured revolver, term loan and note ratings on Rating Watch positive.

These actions follow news that Goldcorp and Newmont Mining have entered into a definitive agreement whereby Newmont will acquire Goldcorp in a stock-for-stock transaction, Fitch explained.

The positive watch reflects an expectation that the combined company will have a clear path toward de-leveraging to a total debt-to-EBITDA of less than 1.5x, Fitch said.

The ratings also will benefit from the combined company's size, scale, project pipeline, favorable operating jurisdictions and diversification, the agency said.

Upon closing, Fitch said it anticipates the combined company would be rated BBB+.

The agency said it expects to resolve the watch when the deal is completed in the second quarter of 2019.

S&P puts Esselunga on watch

S&P said it placed the BBB- long-term issuer credit rating and all issue ratings on Esselunga SpA on CreditWatch negative.

The watch follows a decision by the Esselunga's majority shareholders to exercise an option to purchase the remaining 30% stake in parent company Supermarkets Italiani SpA, S&P said.

The negative watch reflects concerns that the shareholder transaction will lead to a meaningful increase of debt and leverage for the wider Esselunga group, the agency explained.

The CreditWatch will be resolved once the company's shareholders have formalized the transaction after having re-assessed the group's capital structure and Esselunga's new business plan, S&P said.

Esselunga continues to show a robust operating performance, supported by adjusted EBITDA margins strongly positioned at about 9% at year-end 2017, even while implementing a balanced growth strategy, the agency said.

This balanced growth strategy and underlying capital expenditure flexibility has allowed Esselunga to withstand operating pressures, S&P said.

But the higher debt expected from this transaction could materially affect the company's credit metrics, the agency said.

S&P rates Air Lease notes BBB

S&P said it assigned a BBB rating to Air Lease Corp.'s proposed medium-term notes due 2024.

The BBB issuer credit rating on Air Lease reflects the company's position as a mid-sized provider of aircraft operating leases, young and diverse aircraft fleet and relatively low debt leverage for an aircraft lessor, S&P said.

The inherent cyclicality of aircraft leasing industry lease rates and the often weak credit quality of the company's airline customers partly offset these strengths, the agency said.

S&P rates Entegrus Powerlines A

S&P said it assigned an A issuer credit rating to Entegrus Powerlines Inc., a core entity to parent company Entegrus Inc.

The outlook is stable, reflecting the stable view on its parent and an expectation that the company will continue to focus on its core regulated business, the agency said.

The ratings reflect the company’s regulated low-risk electric distribution operations in Ontario, S&P said.

The regulatory process is transparent, consistent and predictable, the agency said.

Exposure to commodity-related expenses is limited since the utility can pass through costs to rate payers, S&P said.

Moody's rates Western & Southern notes A2 (hyb)

Moody's Investors Service said it affirmed the existing ratings of Western & Southern Financial Group, Inc. (W&SFG) and its subsidiaries.

The agency also said it assigned an A2 (hyb) rating to the planned issuance of about $500 million 50-year fixed- to floating-rate surplus notes by the Western and Southern Life Insurance Co.

The proceeds will be used for general corporate purposes, which may include the repayment of amounts outstanding on the credit facility used to acquire Gerber Life Insurance Co., Moody's said.

The outlook is stable.

The ratings are based on the company's established positions in the life insurance and fixed annuity markets, its strong capitalization and multi-channel distribution network, Moody's said.

These strengths are mitigated by the company's modest size and scale in the life, annuity and asset-management businesses, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.