S&P revises FirstEnergy subsidiaries ratings

S&P said it lowered and raised various issue-level ratings on bonds issued by multiple development authorities with FirstEnergy Nuclear Generation Corp. or FirstEnergy Generation Corp. as obligors.

FirstEnergy Solutions Corp. provides an indirect guarantee on these bonds, S&P said.

On Aug. 1, the agency said it lowered the corporate credit ratings on FirstEnergy Solutions and its affiliates to BB- from BBB-.

The downgrades follow a conclusion that the companies no longer have strategic importance to parent FirstEnergy Corp., so parent support is no longer considered in the ratings, S&P said.

The agency said it believes the companies' business risk in wholesale power markets is higher, reflecting its weaker competitive position.

As a result of this, ratings on all unsecured obligations were lowered to BB-, S&P said.

However, the ratings on secured obligations are notched two higher that FirstEnergy Solutions' BB- corporate credit rating based on the 1 recovery score on the senior secured debt at FirstEnergy Nuclear and FirstEnergy Generation, indicating 90% to 100% expected default recovery.

Most of the bonds being remarketed are currently issued on an unsecured basis, but are now being remarketed on a secured basis, S&P said.

Ratings on the other series of bonds were raised to BB+ from BB- because they are now being refinanced on a secured basis, the agency said.

The agency also said it revised the recovery rating on this debt to 1 from 3 because these now are secured.

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