Moody's cuts Cleveland Electric

Moody's Investors Service said it downgraded the ratings of Cleveland Electric Illuminating Co. and Toledo Edison Co., including Cleveland Electric's senior unsecured rating to Baa3 from Baa2 and Toledo Edison's Issuer Rating to Baa2 from Baa1. The outlooks were changed to stable from negative.

"Although last year's Ohio regulatory settlement agreement removed some regulatory risk for Cleveland Electric and Toledo Edison, their financial position will be adversely impacted by the credit negative customer refunds stipulated by the agreement," stated Jairo Chung, Moody's analyst, in a press release.

“While both companies have taken proactive steps to reduce leverage to offset the pressure on their cash flow, we expect each utility to continue to produce credit metrics that are meaningfully lower than historical levels and below the respective downgrade thresholds we had indicated for them to maintain their prior ratings,” Chung added.

The stable outlooks reflect the view the companies will keep their credit metrics at their current levels, Moody’s said.

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