Fitch trims Dayton Power & Light

Fitch Ratings said it downgraded DPL Inc.’s long-term issuer default rating to BB+ from BBB-. Fitch also downgraded Dayton Power and Light’s LT IDR to BBB- from BBB. All ratings have been removed from rating watch negative. The outlook is negative.

On Dec. 18, 2019, Public Utilities Commission of Ohio granted DP&L’s request to revert to Electric Security Plan 1 (ESP 1). This order, combined with withdrawal of ESP 3 could result in a net EBITDA impact ranging from about $30 million to $70 million. Resolution of the negative outlook depends on the path that DP&L will take to replace the loss of several riders due to the termination of ESP 3 on a timely manner, including the distribution investment rider, the revised capex plan, and clarity on future rate plans beyond 2020.

“The ability to defend against future challenges and to cultivate constructive relationships with regulators and intervenors is also an important consideration,” said Fitch in a press release.

Fitch estimates DPL’s FFO-adjusted leverage in 2020 could range from high 6x to high 7x. Further negative rating action is likely if DPL’s FFO-adjusted leverage is above 7x on a sustained basis.

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