Fitch Publishes U.S. Utilities Parent Companies Handbook

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings publishes its fourth U.S. Utilities, Power & Gas (UPG) handbook, which provides an overview of the utility parent companies (UPC) in the U.S. UPCs typically own one or more utility operating subsidiaries. In many instances, UPCs also own subsidiaries engaged in nonregulated electric and gas businesses, such as wholesale power generation, retail electric and gas businesses, midstream gas operations or energy trading businesses, among others. Each company report in this handbook includes rating rationales and rating drivers, along with debt structures and financial summary information.

The UPCs in Fitch's coverage exhibit a wide range of Issuer Default Ratings (IDRs), from 'A' at the upper end to 'B+' at the lower end. Portfolio composition (i.e. mix of regulated and nonregulated operations), regulatory jurisdiction diversity, size, and mix of electric and gas businesses are some of the qualitative factors that differentiate ratings. Among the quantitative measures, in addition to leverage and coverage metrics, the proportion of holding company debt to consolidated debt is a key metric Fitch tracks, in particular to determine notching relative to operating subsidiaries.

While the median UPC rating in Fitch's coverage has remained steady at 'BBB' over the last decade, a closer analysis reveals a trend of mean reversion. The number of 'A' rated issuers has steadily declined, while some of the lower investment-grade issuer ratings have strengthened. Several UPCs have migrated out of the 'A' category driven by disproportionate growth in nonregulated businesses without commensurate reduction in financial risk. Robust M&A activity and primary use of debt in acquisition financing has resulted in downgrades for the higher rated acquirers in recent years. M&A remains the key event risk for the ratings of UPCs.

The full report is available on the Fitch web site at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

U.S. Utilities Parent Companies Handbook (A Detailed Review of Utility Parent Holding Companies)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=872958

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Fitch Ratings
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Source: Fitch Ratings

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