Moody's affirms FirstEnergy, Allegheny Energy

Moody's Investors Service said it affirmed FirstEnergy Corp.'s senior unsecured rating at Baa2, along with its subsidiaries' ratings, and Allegheny Energy, Inc.'s unsecured bank facility at Ba1, along with its subsidiaries.

The outlook is stable.

The affirmations follow news that the companies agreed to combine in a stock-for-stock transaction valued at $4.7 billion. FirstEnergy will be the surviving parent company upon consummation of the transaction, Moody's said.

The affirmation considers the use of stock as the currency for the proposed merger, Moody's said, thereby allowing the companies to combine operations without negatively impacting the combined entities balance sheet.

The affirmation also considers the complementary nature of FirstEnergy and Allegheny Energy's operations and the synergistic benefits that the combination should provide, the agency said.

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