Fitch cuts TXU

Fitch Ratings said it downgraded the long-term issuer default rating of TXU Corp. to B from BB+ and has taken various rating actions on TXU subsidiaries.

The ratings actions reflect the financial structure that will be put in effect to fund the pending acquisition of TXU Corp. in a leveraged transaction, the agency said.

The agency added that the issuer default rating of Texas Competitive Electric Holdings, LLC is also downgraded to B from BBB- while the issuer default rating of TXU's regulated transmission and distribution utility subsidiary, Oncor Electric Delivery, is affirmed at BBB- as a result of the ring-fencing mechanisms that provides a reasonable measure of insulation to Oncor from the rest of the TXU group.

However, the senior unsecured rating of Oncor was lowered by one notch to BBB- as a result of management's intent to convert the substantial majority of Oncor's existing unsecured debt to secured debt, Fitch said.

The downgrade of TXU and its indirect subsidiary to B reflects the significant debt leverage and weak cash flow coverage ratios that will result from completion of the LBO merger transaction that is scheduled to close on Oct. 10, the agency noted.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.