S&P lowers TXU outlook to negative

Standard & Poor's said it affirmed its BBB- corporate credit ratings on TXU Corp. and its rated subsidiaries, TXU Energy Co. LLC, TXU Electric Delivery Co. and TXU U.S. Holdings Co., but revised the outlook to negative from stable.

The agency said that the negative outlook reflects the potential for increased risk to the consolidated TXU rating that could result from TXU's plan to build 11 coal-fired power plants totaling 9,079 MW, which the company expects to place in service by mid-2010 and involve an investment of over $10 billion.

The potential for increased risk at TXU arises from a number of collective factors of which most importantly, the possibility exists that the agency would attribute some of TXU DevCo's debt to TXU's balance sheet to reflect a potential for TXU financial support for TXU DevCo, even though the new investment will likely be structured on a nonrecourse basis, S&P said.

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