Fitch ups CenterPoint Energy Resources

Fitch Ratings said it upgraded CenterPoint Energy Resources Corp.’s issuer default rating to A- from BBB+. The agency also affirmed CenterPoint Energy, Inc.’s IDR at BBB and CenterPoint Energy Houston Electric, LLC’s IDR at BBB+.

“Fitch expects CERC’s FFO leverage to average below 4x in the next few years, more consistent with the A- rating level as a diversified and nearly fully regulated gas utility holding company. The leverage ratio assumes the sale of two gas distribution companies in Arkansas and Oklahoma,” the agency said in a press release.

The outlook for CERC is stable. Fitch revised the outlooks for CenterPoint Energy and CenterPoint Energy Houston Electric to stable from negative.

“The rating affirmation and stable outlook follow CNP’s support of the merger between Enable Midstream Partners, LP (Enable, BBB-/stable) and Energy Transfer LP (ET, BBB-/stable) in a unit-for-unit transaction. The transaction is valued at $7.3 billion. Upon closing, CNP will hold 6.5% of ET’s common units with no voting rights. Fitch believes that the transaction modestly improves CNP’s business risks due to ET’s significant size and diversity and paves the way for a future exit from the midstream sector,” the agency said.

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