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Fitch slashes Hawaiian Electric
Fitch Ratings said it downgraded Hawaiian Electric Industries, Inc.'s (HEI) long-term issuer default rating to B from BBB+ and Hawaiian Electric Co., Inc.'s (HECO) long-term IDR to B from A-. The agency also slashed HECO’s senior unsecured debt to B+ from A with an RR3 recovery rating.
Fitch said it additionally assigned first-time long-term IDRs of B to HECO's wholly owned utility subsidiaries, Maui Electric Co., Ltd. (MECO) and Hawaii Electric Light Co., Inc. (Helco). HECO guarantees the senior unsecured debt of both MECO and Helco. The agency cut MECO’s senior unsecured debt to B+/RR3 from A and Helco’s senior unsecured debt to BB-/RR2 from A. RR2 implies superior recovery (71%-90%) and RR3 implies good recovery (51%-70%) in default.
Finally, Fitch said it placed all the issuers’ ratings on rating watch negative.
“The rating action reflects potential exposure to large third-party wildfire-related liabilities if utility equipment is determined to have ignited recent wildfires in Maui and the utility is deemed responsible for such claims under applicable negligence standards. Fitch believes HECO and its subsidiary utilities' access to capital at a reasonable cost is uncertain, given the magnitude of the potential liabilities associated with the wildfires. Confirmed deaths resulting from the unfolding disaster exceed 100 and more than 2,200 structures have reportedly destroyed,” the agency said in a press release.
The downgrades also factor in the cost of rebuilding MECO’s smashed electric infrastructure, Fitch noted.
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