Fitch: PNM affirmed

Fitch Ratings said it placed the ratings of TNP Enterprises Inc. (TNP) and Texas New Mexico Power Co. (TNMP) on Rating Watch positive following the announcement of the acquisition of the group by PNM Resources. The ratings of Public Service Co. of New Mexico (PNM), Resources' utility subsidiary, are affirmed and the outlook remains positive.

The Rating Watch positive for TNP and TNMP relates to Resources' plan to reduce the leverage of TNP. Additionally, the incremental transaction leverage planned by Resources ($100 million of senior notes and $200 million of equity-linked securities) is manageable for Resources given Fitch's estimate of TNP's dividend capability. In addition, the transaction structure does not involve intercompany transactions between PNM and TNP or TNMP.

For these two reasons, the merger is viewed as neutral from a credit perspective for PNM, Fitch said.

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