Moody's upgrades Pinnacle, rates notes Baa1

Moody's Investors Service said it upgraded Pinnacle West Capital Corp.'s issuer rating to Baa2 from Baa3.

The agency said it also upgraded the senior unsecured rating on Pinnacle's regulated subsidiary Arizona Public Service Co. to Baa1 and the senior secured rating on Arizona Public Service's guaranteed financing subsidiary PVNGS II Funding Corp. to Baa1.

As part of this action, the agency said it assigned a Baa1 unsecured rating to the planned $38.15 million Navajo County pollution control revenue refunding bonds reoffering.

The outlooks are stable.

"The upgrade reflects our view that APS's regulatory framework is more credit supportive as a result of the resolution of its recent rate case," said Moody's analyst Mitchell Moss in a news release.

"We expect credit metrics to improve above current levels assuming APS is able to execute on its plan to limit the rise in operating expenses," Moss said.

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