Fitch lowers Public Service Co. of Oklahoma

Fitch Ratings said it downgraded Public Service Co. of Oklahoma's issuer default rating and preferred stock to BBB from BBB+ and its senior unsecured debt to BBB+ from A-.

The outlook is stable.

The agency said the downgrade reflects credit protection measures that are more consistent with the BBB category. Recent financial performance was negatively impacted by severe ice storms, but Fitch's analysis assumes these are singular events and the company will receive some cost recovery from regulators. More importantly, credit ratios are not expected to recover to historical levels due to a less-than-supportive rate order in October and an increased capital expenditure program through 2012, Fitch said. The debt-to-EBITDA ratio is forecasted by the agency to be more than 4 times as the company continues its considerable capital expenditure program, which will partially be funded by debt.

The new ratings also take into account the company's relatively stable cash flow generation from its regulated operations, its satisfactory liquidity position and its affiliation with parent company American Electric Power Co., Fitch added.

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