Fitch lowers WGL, Washington Gas

Fitch Ratings said it downgraded the ratings of WGL Holdings Inc. and its core natural gas distribution utility, Washington Gas Light Co. in the wake of the recently completed C$9 billion acquisition of WGL by AltaGas Ltd.

Fitch said the downgrade of Washington Gas to A- from A considers the utility's strong stand-alone credit metrics and robust ring fence provisions designed to insulate Washington Gas’ relatively predictable earnings and cash flows and low leverage from a somewhat weaker, more leveraged ultimate parent.

The downgrade of WGL to BBB from A- and wider notching relative to Washington Gas better reflects the intermediate holding company's business risk profile and credit metrics, robust post-merger ring fence provisions at Washington Gas and affiliation with and strategic importance to its new corporate parent, the agency explained.

In addition, Fitch downgraded Washington Gas’ short-term rating to F2 from F1 and affirmed WGL's short-term rating at F2.

Both outlooks are stable.

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