S&P upgrades PNG

S&P said it raised the issuer credit rating on PNG Cos. LLC to BBB+ from BBB-.

The outlook is stable.

The agency also said it raised the rating on PNG's senior notes to BBB+ from BBB-.

The upgrades reflect improvement in the financial risk profile at the consolidated group level, S&P said.

The agency also said it believes management will sustain its strategic focus on utilities growth in a credit-supportive manner with limited expansion of non-regulated operations, which helps maintain a low-risk business profile similar to other mostly gas distribution utilities.

S&P also said it views PNG's proposed acquisition of Delta Natural Gas Co. as an example of such a strategy.

The stable outlook reflects an expectation of FFO-to-debt of 15% to 17% in the base case forecast, the agency said.

Fundamental to the agency's forecast is an assumption that PNG will continue to pursue additional rate increases and cost-recovery mechanisms that reflect timely recovery of capital spending and manage distributions in a way that does not adversely affect the capital structure, S&P said.

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