Moody's ups TNP loan to Ba2, notes to Ba3, pulls unit's notes from junk

Moody's Investors Service said it upgraded the debt ratings of TNP Enterprises, Inc. (senior unsecured to Ba2 from B1) and its principal operating utility subsidiary, Texas-New Mexico Power Company (senior unsecured Baa3 from Ba2). The outlook is stable.

Moody's upgraded TNP's $110 million term loan facility to Ba2 from B1, $275 million 10¼% subordinated notes to Ba3 from B2 and $200 million preferred stock to B1 from B3 and Texas-New Mexico Power's $250 million 6 1/8% global notes and $175 million 6¼% notes to Baa3 from Ba2.

Moody's said the upgrades reflect the anticipated acquisition of TNP by larger and more conservatively financed PNM Resources (Baa3 senior unsecured / stable outlook), as well as an improving trend in TNP's financial profile and regulatory situation.

As part of the acquisition financing plan, PNM is expected to retire TNP's term loan facility shortly after the closing of the transaction, and call or otherwise redeem TNP's subordinated notes and preferred stock.

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