Moody's may cut PNM

Moody's Investors Service said it placed the long-term and short-term ratings of PNM Resources, Inc. (Baa3 senior unsecured, P-3 commercial paper) and its subsidiary Public Service Co. of New Mexico (Baa2 senior unsecured, P-2 commercial paper) under review for possible downgrade.

The agency said that the ratings of PNM's Texas transmission and distribution utility, Texas-New Mexico Power (Baa3 senior unsecured), are affirmed and the outlook remains negative.

According to Moody's, the review follows PNM's announcement that it has entered into agreements to sell its local gas distribution business in New Mexico for $620 million and to buy Cap Rock Holdings Corp. and its subsidiary Cap Rock Energy for $202.5 million.

The review is prompted by the financial profiles of the companies which remain weak for their rating categories and Moody's opinion that credit metrics are not likely to return to levels commensurate with the ratings over the near-to-medium term.

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