Moody's rates PNM notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to PNM Resources, Inc.'s $300 million of senior unsecured notes due March 9, 2021.

The outlook is positive.

The rating assigned to the notes is the same as PNM's existing Baa3 issuer rating, reflecting their relative position in the company's capital structure, Moody's said.

The proceeds from the sale of the notes will be used to repay $150 million of an outstanding term loan, which matures in June 2018, as well as $147 million of short-term debt, the agency said.

PNM 's Baa3 senior unsecured rating is primarily driven by the credit quality of its principal utility subsidiary, Public Service Co. of New Mexico, the parent company's solid financial profile and its financial policies, Moody's said.

The credit profile also considers a New Mexico regulatory environment that has demonstrated signs of inconsistency and unpredictability with recent events, resulting in increased regulatory lag for PNM and uncertainty over the recovery of coal plant rate base and investments, the agency said.

The ratings also consider the credit supportive regulatory environment of the Electric Reliability Council of Texas (Ercot) system in which it operates, Moody's said.

The ratings also consider an expectation that management will continue to focus on its regulated operations and maintain a limited amount of debt at the parent company, the agency said.

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