Fitch: Pinnacle West outlook negative

Fitch Ratings said it affirmed Pinnacle West Capital Corp.'s long-term issuer default rating at BBB-, short-term issuer default rating at F3 and commercial paper at F3.

The agency also downgraded Arizona Public Service Co.'s short-term issuer default rating and commercial paper to F3 from F2 and affirmed its long-term issuer default rating at BBB-, its senior unsecured debt at BBB and PVNGS II Funding Corp.'s secured lease obligation bonds at BBB.

Pinnacle West's outlook was revised to negative from stable, and the outlook for Arizona Public Service remains stable.

The short-term ratings downgrade on Arizona Public Service reflects consistency with Fitch's short-term/long-term rating linkage practices, the agency said.

Pinnacle West's outlook revision to negative is a function of the holding company's somewhat weak credit metrics relative to the rating category and the potential for further deterioration due to regulatory lag and lower real-estate margin, Fitch said.

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