Moody's rates Entergy New Orleans Ba2

Moody's Investors Service said it assigned a Ba2 issuer rating, B1 preferred stock rating and Baa3 senior secured debt rating to Entergy New Orleans, Inc. following its emergence from bankruptcy on May 8, roughly twenty months after Hurricane Katrina caused substantial damage to its service territory.

The outlook is stable.

The agency said the ratings consider the extraordinary actions that facilitated Entergy New Orleans' emergence from bankruptcy and that will continue to support its creditworthiness going forward, including the receipt of $200 million of federal funding for storm restoration costs in the form of Community Development Block Grants; the future receipt of $53.7 million of insurance proceeds in 2007, with additional insurance proceeds expected over the next two years; and an agreement by its Entergy system affiliates to be repaid $69 million of their unsecured claims after three years instead of immediately. The ratings of Entergy New Orleans are constrained, however, by the small size of the utility, the loss of a significant portion of its customer base, the vulnerability of the utility to additional storms and the large capital requirements needed to rebuild its natural gas system over the next several years, estimated at $465 million, Moody's said.

The two-notch differential between the senior secured and issuer rating reflects Moody's view that debt secured by first mortgage bonds is better protected from event risk and other credit risk, particularly with regard to potential future storms.

© 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.