Moody’s lowers First Energy, Allegheny Energy debt

Moody's Investors Service said it downgraded the senior unsecured rating for First Energy Solutions Corp. to Ba2 from Baa3, along with senior unsecured rating on Allegheny Energy Supply Co., LLC to Ba1 from Baa3.

The Baa2 senior secured revenue bond rating for First Energy and the Baa3 senior unsecured rating for Allegheny Generating Co. also were affirmed.

The outlook remains negative.

The outlook Allegheny Generating also was changed to stable from negative.

Moody's also said it assigned a Ba2 corporate family rating and Ba2-PD probability of default rating to First Energy Solutions, along with a Ba1 corporate family rating and Ba1-PD to Allegheny Generating.

The agency also said it assigned a SGL-2 speculative grade liquidity rating for both First Energy and Allegheny Energy.

The Baa3 issuer ratings and negative outlook on FirstEnergy Corp. are unchanged.

The agency said it decided to de-link the ratings on First Energy and Allegheny Energy with the ratings on parent company FirstEnergy following its decision to eventually exit the merchant business and transition to a purely regulated utility holding company, Moody’s said.

The downgrades of those ratings reflect the weak merchant market conditions and considers expectations that any assistance provided to FirstEnergy by the state of Ohio will likely not be linked to the generation business, the agency said.

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