MOODY'S LOWERS RATINGS OF PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (SR TO Ba3), NORTH ATLANTIC ENERGY CORP. (SR TO B1), AND PARENT, NORTHEAST UTILITIES (SR TO Ba3).
New York, 03-03-97 -- Moody's Investors Service downgraded the credit ratings of Northeast Utilities (NU), along with those of two of its utility subsidiaries, Public Service Company of New Hampshire (PSNH) and North Atlantic Energy Corp. (NAEC).
Ratings downgraded are:
Public Service Company of New Hampshire--senior secured debt to Ba3 from Ba1; the revolving credit facility and counterparty rating, to B1 from Ba2; and the preferred stock rating, to "b2" from "ba3".
North Atlantic Energy Corp.--senior secured debt to B1 from Ba2.
Northeast Utilities--senior unsecured debt and revolving credit facility to Ba3 from Ba2, and the counterparty rating to B1 from Ba3.
The downgrades reflect increased regulatory and financial uncertainty stemming from the New Hampshire Public Utilities Commission's decision last Friday, February 28, regarding interim stranded cost recovery for PSNH, the state's largest electric utility. The decision has the potential to create default under various of PSNH's lending agreements. That in turn could ultimately force PSNH to declare bankruptcy for the second time in a decade. While recognizing the company's efforts to deter the commission's actions by filing suit today in the Federal District Court in New Hampshire, Moody's believes that the order itself, regardless of its legal standing, represents a political and regulatory environment that is hostile to the interests of bondholders.
Ratings for the entire NU system, including The Connecticut Light & Power Company and Western Massachusetts Electric Company, have been under review for potential downgrade since January 21, 1997, and will continue under review as Moody's gauges the effects of actions taken by the company or interested third parties. Moody's will also review the ability of the system to maintain adequate liquidity and will consider the prospects for negotiation of retail wheeling issues.
Headquartered in West Springfield, Massachusetts, Northeast Utilities is the holding company for The Connecticut Light & Power Company, Western Massachusetts Electric Company, Public Service Company of New Hampshire, North Atlantic Energy Corp., and CL&P Capital, L.P.
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