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Fitch applies BBB+ to Duke Energy notes
Fitch Ratings said it assigned a BBB+ rating to Duke Energy Corp.'s multi-tranche offering of senior notes.
Duke Energy’s ratings are on Rating Watch Negative, where they were placed on Oct. 29, 2015, following its announcement of a definitive agreement to acquire Piedmont Natural Gas Co., Inc. in an all-cash transaction.
Net proceeds from the new notes will be used to partially fund the pending acquisition.
Fitch said the pending acquisition and related financing of Piedmont together with the amount and use of proceeds from the proposed sale of its Latin American generation business will be important determinants of Duke Energy’s credit quality and ratings.
The initial acquisition financing plan is highly leveraged with up to $4.2 billion of debt for the $4.9 billion acquisition, which accounts for the Negative Watch.
On a pro forma basis, the incremental acquisition debt plus assumed debt increases debt/EBITDA about 50 basis points from 4.7 times as of March 31, 2016 to 5.2 times, the agency added.
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