Fitch rates DTE Energy debt BBB-

Fitch Ratings said it assigned a rating of BBB- to DTE Energy Co.’s (BBB+) $400 million issuance of 5.25% junior subordinated debentures, 2017 series E, due Dec. 1, 2077.

The junior subordinated debentures rank junior to other unsecured debt of DTE.

Proceeds will be used to repay short-term borrowings and for general corporate purposes.

The outlook is negative.

Fitch said that in its analysis, this instrument qualifies for 50% equity treatment due to the coupon deferral option, as specified in the criteria report titled “Non-Financial Corporates Hybrids Treatment and Notching Criteria” dated April 27, 2017.

Fitch said the ratings reflect the strong credit quality of DTE’s two regulated utility subsidiaries, DTE Electric Co. (A-/negative) and DTE Gas Co. (BBB+/stable), which is supported by a constructive regulatory environment in Michigan.

DTE's regulated utilities anchor the company's credit profile and composed 91% of consolidated EBITDAR for 2016.

The negative outlook primarily reflects the increased leverage and business risk associated with its expanding midstream operations, the agency added.

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