Fitch rates Dominion Resources notes BBB-

Fitch Ratings said it assigned a BBB- rating to Dominion Resources, Inc.'s new $500 million issuance of 1.07% series A junior subordinated notes, which are a component of the company's equity units.

The equity units consist of the series A notes due April 1, 2021 and a forward-purchase contract obligating the holder to purchase, no later than April 1, 2016, the company's common stock.

The series A notes will be pledged as security for the holders' obligation to purchase the Dominion Resources' common stock by April 1, 2016.

The securities will be remarketed in 2016 as junior subordinated obligations of the company and will remain outstanding until maturity in 2021. The series A notes will initially pay an annual fixed 1.07% rate of interest, payable through April 1, 2016. Holders of the equity units also will receive annual contract payments of 5.055% on the forward-purchase contract.

Fitch also assigned a BBB- rating to Dominion Resources' new $500 million issuance of 1.18% series B junior subordinated notes, which are a component of the company's equity units.

The equity units consist of the series B notes due July 1, 2019 and a forward-purchase contract obligating the holder to purchase, no later than July 1, 2016, the company's common stock.

Under Fitch's criteria, the junior subordinated notes will receive no equity credit, the agency said.

The proceeds will be used to fund capital expenditures, including the Cove Point liquefaction project, Fitch said, and repay short-term debt outstanding.

The outlook is stable.

The ratings are supported by cash flows from a large and diverse subsidiary asset base, the agency said.

The company's low-risk regulated operations deliver predictable cash flow metrics, due in large part to balanced regulatory treatment, Fitch added.

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