Moody's alters PSEG view to negative

Moody's Investors Service said it changed the outlooks of Public Service Enterprise Group Inc. (PSEG) and PSEG Power LLC to negative from stable. The agency also affirmed the ratings of both entities, including PSEG's Baa1 senior unsecured rating and PSEG Power's Baa1 senior unsecured rating.

The outlook change follows PSEG reporting it agreed to sell PSEG Power's 6,750 MW of fossil-powered generating assets to a newly formed subsidiary of ArcLight Capital Partners, LLC for about $1.92 billion, Moody’s said.

"PSEG Power will now have a much smaller generation portfolio with 100% nuclear fuel concentration," stated Jairo Chung, Moody's analyst, in a press release. "While the Zero Emission Credit (ZEC) program provides some stability in cash flow, PSEG Power will be more vulnerable to volatility in the power markets as a baseload only generator and to changes in the New Jersey regulatory environment."

The outlook on parent company PSEG mirrors the credit pressure on both of its subsidiaries, PSEG Power and regulated utility Public Service Electric and Gas Co., Moody’s said.

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