Moody's may upgrade TECO Energy

Moody's Investors Service said it placed TECO Energy, Inc.'s Ba1 corporate family and Ba2 senior unsecured debt ratings under review for possible upgrade and affirmed the speculative grade liquidity rating at SGL-1.

The review was prompted by Moody's expectation of a more consistent financial performance in 2007 and going forward as TECO's business risk and cash flow volatility have been reduced following the company's exit from merchant generation; lower long-term debt at the parent company and a manageable $411 million due at the parent for the remainder of 2007; a management strategy focusing on TECO's core regulated Florida utility operations, in addition to several other cash flow generating businesses, including TECO Coal, TECO Transport, and TECO Guatemala; consolidated financial results that are projected to be closer to investment-grade levels in 2007; and reduced synfuel-related cash flow volatility because of lower oil prices and the expiration of synfuel tax credits at the end of 2007.

The agency said its review will focus on TECO's 2006 financial results, the outlook and projected performance for 2007 and future years, the possible sale of its TECO Transport subsidiary, the potential for $500 million of additional parent company debt retirements in the years 2008 through 2010 and the company's long-term financing plans to meet growing capital expenditure needs for environmental compliance and generation expansion at Tampa Electric Co.

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