info

Yes No
Moodys.com
Terms of Use
REGULATORY AFFAIRS
CAREERS
DIVERSITY & INCLUSION
.
ABOUT US
.
CONTACT US
HOME
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Can't read?
Try a new set
Send Cancel
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
OK
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
OK
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's affirms Duke Energy and Progress Energy's Baa2 senior unsecured ratings following merger announcement; rating outlooks stable

10 Jan 2011

Approximately $30 billion of debt securities affected

New York, January 10, 2011 -- Moody's Investors Service affirmed the ratings and stable outlooks of Duke Energy Corporation (Duke: Baa2 senior unsecured) and its subsidiaries (listed below) as well as the ratings and stable outlooks of Progress Energy Corporation (Progress: Baa2 senior unsecured) and its subsidiaries (listed below) following today's announcement that the boards of Duke and Progress have agreed to combine in a stock-for-stock transaction. Duke will be the surviving parent company upon consummation of the transaction. In addition, Moody's changed the rating outlook for Duke Energy Ohio to stable from positive.

Ratings affirmed include:

Duke Energy's Baa2 senior unsecured and Issuer Rating and Prime-2 short-term rating for commercial paper;

Progress Energy's Baa2 senior unsecured and Issuer Rating and Prime-2 short-term rating for commercial paper;

Duke Energy Carolinas A1 senior secured, A3 senior unsecured;

Carolina Power & Light Company d/b/a Progress Energy Carolinas A1 senior secured, A3 senior unsecured and Issuer Rating, and Prime-2 short-term rating for commercial paper;

Florida Power Corporation d/b/a Progress Energy Florida's A2 senior secured, Baa1 senior unsecured and Issuer Rating; Baa3 preferred stock, and Prime-2 short-term rating for commercial paper;

Cinergy Corporation's Baa2 Long Term Issuer Rating;

Duke Energy Ohio's A2 senior secured and Baa1 senior unsecured,

Duke Energy Indiana's A2 senior secured, Baa1 senior unsecured and Baa3 preferred stock;

Duke Energy Kentucky's (p)A3 senior secured and Baa1 senior unsecured;

Florida Progress Funding Corporation's Baa2 junior subordinated debt;

FPC Capital 1's Baa2 preferred stock.

RATINGS RATIONALE

"The rating affirmations of Duke and Progress reflect their strong financial positions, sizeable regulated utility business operations and diversity among regulatory jurisdictions. The merger announcement is viewed as a credit neutral event for both companies, although our qualitative view regarding their relative positions within the Baa2 rating category has changed" said Mike Haggarty, Senior Vice President.

Pro-forma consolidated credit metrics for the combined Duke-Progress entity are expected to result in cash flow (CFO-pre WC) to debt of around 15% - 16%. These pro-forma credit metrics and business risk factors position the merged Duke more appropriately within its Baa2 rating category. Previously, we viewed Duke to be strongly positioned, and Progress to be weakly positioned within the Baa2 ratings category.

"We believe the merger transaction has several positive attributes" said Jim Hempstead, Senior Vice President. "The inherent logic behind the merger is the consolidation of two homogenous, capital intensive companies, to spread fixed costs across a larger asset platform. We also see good incremental diversification benefits with the proposed merger, including the addition of a Florida service territory, generation dispatch efficiencies in the Carolinas, and the ability to wring out other operating cost efficiencies across both organizations" Hempstead added. The merger creates one of the largest utility systems in the country, including the largest regulated nuclear generating fleet, operating in generally supportive regulatory environments. A larger Duke/Progress organization will also be better positioned to undertake the construction of new nuclear generation in either the Carolinas or Florida in the event the new company decides to move forward in this direction.

In addition to shareholder approval, we believe the merger will likely require the approval of two state regulatory commissions (North Carolina and South Carolina), the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC). While it is premature to predict the outcome of any of these proceedings, it remains possible that additional merger conditions could be imposed by one or more of the state regulators in order for merger approval to occur. It is also possible that today's merger announcement could have implications for other regulatory proceedings currently underway or planned over the near-term by both companies in various states, particularly given the current economic challenges that exist in their respective service territories.

Notwithstanding the clear fit that exists by merging the two companies, these regulatory issues make the consummation of the merger under the current terms less certain at this juncture. As there is greater clarity concerning the regulatory and shareholder approvals, including the impact, if any, on pending regulatory filings, Moody's will comment accordingly. Also, as the companies provide more transparency around legal structure, integration plans and synergy benefits, rating refinements, if needed, may follow. Today, we incorporate a view that the merger will close by year-end 2011.

Moody's affirmed the ratings for several Duke subsidiaries, including: Duke Energy Carolinas (Duke Carolinas: A3 senior unsecured); Duke Energy Ohio (Duke Ohio: Baa1 senior unsecured); Duke Energy Indiana (Duke Indiana: Baa1 senior unsecured) and Duke Energy Kentucky (Duke Kentucky: Baa1 senior unsecured).

Moody's also affirmed the ratings for all of Progress' subsidiaries, including: Progress Energy Carolinas, Inc. (A3 senior unsecured, Prime-2 commercial paper rating) and Progress Energy Florida, Inc. (Baa1 senior unsecured, Prime-2 commercial paper rating).

The prime-2 commercial paper ratings for both Duke and Progress are also affirmed.

For Duke Ohio, the change in the rating outlook to stable from positive reflects our modest concerns regarding the regulatory restructuring process in Ohio, lingering uncertainties associated with potential generation divestiture plans and the longer-term implications associated with the utility's ultimate capital structure and cash flow generation possibilities. Although we continue to view Ohio as a supportive regulatory and political jurisdiction, the chronic overhang of intermediate-term regulatory restructuring plans present increased uncertainties for Duke Ohio over the near-term. In addition, while we continue to view the Duke Ohio utility as strongly positioned within its Baa1 senior unsecured rating category, a rating upgrade is no longer likely over the near to intermediate term horizon. We are only modestly concerned with the implications associated with customer choice, and prefer to focus on the longer-term fundamentals of the Duke Ohio transmission and distribution utility activities.

The rating affirmations of Duke Indiana and Duke Kentucky reflect the good regulatory and political relationships that those entities have in their respective jurisdictions; the supportive suite of cost and investment recovery mechanisms, including numerous trackers; the diversity of load, customers and generation fuel supplies; and adequate sources of liquidity through the Duke Master Credit Facility. We continue to monitor the regulatory situation at Duke Indiana related to its Edwardsport Coal Gasification project, but incorporate a view that the matter will be resolved without adversely impacting credit quality.

The ratings affirmation of Duke Carolinas and Progress Energy Carolinas reflects the above average regulatory environments in both North and South Carolina, the credit supportive cost recovery provisions in place, strong financial metrics, and service territories that should experience limited growth over the near term. The merger is not expected to immediately alter the utilities' respective capital expenditure programs or planned generation retirements.

However, joint dispatch arrangements should benefit both utilities over the longer-term and could eventually slow the timing of some new generation. Because of the relatively early enactment of North Carolina's 2002 Clean Smokestacks Act, both Duke Carolinas and Progress Energy Carolinas are fairly well positioned in meeting currently mandated environmental requirements.

The ratings affirmation of Progress Energy Florida reflects the stabilization of the political and regulatory environment in Florida, including the utility's recent rate settlement with the Florida Public Service Commission that should preclude the need for additional base rate proceedings through 2012. The utility continues to be negatively affected by the long-term outage of its Crystal River 3 nuclear plant, which has been undergoing repairs since September 2009, although the company expects to recover replacement power costs, which have been relatively manageable due to low gas prices, through its fuel cost recovery clause. The plant is currently expected to be back in service in March 2011. Although the merger will result in no direct benefits to Progress Energy Florida, such as the expected joint dispatch benefits in the Carolinas, the utility will be part of a much larger and more diverse organization in the event it decides to accelerate its currently postponed new Levy County nuclear construction project.

The rating outlooks of Duke, Progress and their respective subsidiaries are all stable and, barring unexpected new developments, Moody's does not anticipate any change in ratings or rating outlooks while the merger integration is underway and regulatory approvals are being obtained over the next year.

Rating upgrades are unlikely given last year's adverse regulatory development in Florida, lingering regulatory uncertainties in Indiana and Ohio, our expectations regarding pro-forma combined key financial credit metrics and high levels of debt at the parent holding companies.

Rating downgrades appear equally unlikely at this time, but could occur if there is a sustained decline in parent company cash flow coverage metrics below current levels, including a ratio of CFO before working capital plus interest to interest below 3.5x, a ratio of CFO before working capital to debt below 15%, a sustained decline in the supportiveness of the regulatory environments in North Carolina, South Carolina, Florida, Indiana or Ohio or a substantial increase in leverage at the parent or utilities.

The principal methodology used in this rating was Regulated Electric and Gas Utilities published in August 2009.

Duke Energy Corporation is a holding company for regulated utilities Duke Energy Carolinas, Duke Energy Ohio, Duke Energy Indiana and Duke Energy Kentucky, as well as international business activities in Central and South America. Duke Energy is headquartered in Charlotte, North Carolina.

Progress Energy, Inc. is a holding company for regulated utilities Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. and Florida Power Corporation d/b/a Progress Energy Florida, Inc., and is headquartered in Raleigh, North Carolina.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
James Hempstead
Senior Vice President
Infrastructure Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Michael G. Haggarty
Senior Vice President
Infrastructure Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's affirms Duke Energy and Progress Energy's Baa2 senior unsecured ratings following merger announcement; rating outlooks stable
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com