Fitch affirms Pepco

Fitch Ratings said it affirmed Pepco Holdings, Inc.'s BBB issuer default rating, Potomac Electric Power Co.'s BBB+ issuer default rating, Delmarva Power & Light's BBB+ issuer default rating and Atlantic City Electric Co.'s BBB issuer default rating. The short-term issuer default rating is F2.

Pepco Holdings has senior notes rated BBB; Pepco has secured debt at A and senior notes at A-; Delmarva Power & Light has secured debt at A and senior notes at A-; and Atlantic City Electric Co. has secured debt at A-, senior notes at BBB+ and preferred stock at BBB-.

The outlook is stable.

Pepco's ratings are supported by the stable cash flows generated by its transmission and distribution utility subsidiaries, the agency said.

Concerns include persistent regulatory lag at the three utility subsidiaries that causes them to file frequent rate cases and carry significant short term debt balances, uncertainty regarding the timing of MAPP capex and uncertainty regarding resolution in the cross-border lease matters with the Internal Revenue Service, the agency noted.

Pepco's total debt-to-EBITDA ratio is expected to be at 3.6 times for 2012.

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