S&P: TNP on negative watch

Standard & Poor's said it placed its BB+ corporate credit ratings on utility holding company TNP Enterprises Inc. and unit Texas-New Mexico Power Co. on CreditWatch with negative implications.

The CreditWatch placement reflects S&P's concern that an adverse regulatory ruling associated with Texas-New Mexico Power's 2004 true-up proceeding with the Public Utility Commission of Texas could further weaken credit metrics at the utility and holding company, limit Texas-New Mexico Power's ability to securitize the full amount for the regulatory asset/stranded costs, and delay the company's debt reduction plans.

S&P said the ratings on TNP and Texas-New Mexico Power reflect the variability and weak financial performance of First Choice Power, TNP's retail electric provider, moderately offset by the predictable performance of TNP's utility operations. This, coupled with a highly leveraged financial profile, results in credit measures that are weak for the current rating.

S&P rates TNP Enterprises' senior unsecured and subordinated debt BB- and preferred stock B+ as well as Texas-New Mexico Power's senior unsecured debt BB+.

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