S&P snips MDU Resources

S&P said it lowered its ratings for MDU Resources Group Inc. and its subsidiary Cascade Natural Gas Corp. to BBB from BBB+. The agency also downgraded Cascade’s senior unsecured debt to BBB from BBB+.

MDU Resources finished its strategic review of its construction services business, MDU Construction Services Group Inc. (CSG), and will spin it off to MDU shareholders by year-end 2024. This announcement follows the successful May 2023 spinoff of MDU's construction materials business Knife River Corp.

“Our downgrades of MDU and Cascade reflect the more limited diversification of the remaining businesses under MDU. We previously viewed MDU as a conglomerate operating multiple uncorrelated business lines that together provided moderate diversification benefits to MDU's credit profile. This benefit resulted in one notch of uplift to our issuer credit rating on the company.

“However, with the completed and pending separation of the CSG businesses, MDU will no longer benefit from moderate diversification of having multiple uncorrelated business lines, resulting in a one-notch lowering of our issuer credit ratings on MDU and Cascade,” S&P said in a statement.

The outlook for both companies is negative.

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