Moody's cuts FirstEnergy to junk

Moody's Investors Service said it downgraded the ratings of FirstEnergy Corp., including its senior unsecured rating to Ba1 from Baa3. Moody's also assigned a Ba1 corporate family rating, a Ba1-PD probability of default rating and an SGL-2 speculative grade liquidity rating to FirstEnergy. FirstEnergy's Baa3 Issuer Rating is withdrawn. The outlook remains negative.

Moody's affirmed the investment-grade ratings of FirstEnergy Transmission and the ratings of FirstEnergy's Ohio utility subsidiaries, Ohio Edison Co., Toledo Edison Co. and Cleveland Electric Illuminating Co. and changed their outlooks to negative from stable.

"The disclosure of a payment by FirstEnergy to a government official who directly regulated the company's Ohio utilities is likely to increase both regulatory risk and financial uncertainty for both FirstEnergy and its Ohio utility subsidiaries," stated Jairo Chung, Moody's analyst, in a press release.

"Furthermore, FirstEnergy's decision to draw down $2 billion on its credit facilities is viewed as unusual behavior for an investment-grade utility holding company. It was done to preserve liquidity but could be a sign that additional negative developments related to corporate governance may occur, possibly limiting access to these credit facilities or the capital markets," added Chung.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.