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
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Action:

Moody's assigns Baa1 issuer rating to Mid-Atlantic Interstate Transmission LLC; upgrades FirstEnergy Transmission and American Transmission Systems Inc

Global Credit Research - 09 May 2017

New York, May 09, 2017 -- Moody's Investors Service, ("Moody's") assigned a Baa1 Issuer Rating to Mid-Atlantic Interstate Transmission LLC (MAIT), An indirect, wholly-owned subsidiary of FirstEnergy Corp (FirstEnergy Baa3 stable). At the same time, Moody's upgraded the issuer and unsecured ratings at FirstEnergy Transmission (FET) to Baa2 from Baa3 and the unsecured rating of American Transmission Systems Incorporated (ATSI) to Baa1 from Baa2. The outlook on all ratings is stable.

FET is a wholly owned subsidiary of FirstEnergy Corp. (FirstEnergy Baa3 stable) and the holding company for FirstEnergy's transmission business, which has three operating companies -- ATSI, Trans-Allegheny Interstate Line Company (TrailCo A3 stable) and MAIT. MAIT is owned 58% by Pennsylvania Electric Company (Penelec Baa1 stable), 37% by Metropolitan Edison Co (Met-Ed A3 stable) and 5% by FET. ATSI, MAIT and TrailCo are all regulated by the Federal Energy Regulatory Commission (FERC).

Upgrades:

..Issuer: American Transmission Systems, Incorporated

....Senior Unsecured Regular Bond/Debenture, Upgraded to Baa1 from Baa2

..Issuer: FirstEnergy Transmission

.... Issuer Rating, Upgraded to Baa2 from Baa3

....Senior Unsecured Bank Credit Facility, Upgraded to Baa2 from Baa3

....Senior Unsecured Regular Bond/Debenture, Upgraded to Baa2 from Baa3

Assignments:

..Issuer: Mid-Atlantic Interstate Transmission LLC

.... Issuer Rating, Assigned Baa1

Affirmations:

..Issuer: Trans-Allegheny Interstate Line Company

.... Issuer Rating, Affirmed A3

....Senior Unsecured Regular Bond/Debenture, Affirmed A3

Outlook Actions:

..Issuer: American Transmission Systems, Incorporated

....Outlook, Remains Stable

..Issuer: FirstEnergy Transmission

....Outlook, Remains Stable

..Issuer: Mid-Atlantic Interstate Transmission LLC

....Outlook, Assigned Stable

..Issuer: Trans-Allegheny Interstate Line Company

....Outlook, Remains Stable

RATINGS RATIONALE

"MAIT's Baa1 Issuer Rating reflects its low business risk as a FERC regulated transmission company and an adequate financial profile", said Moody's Senior Vice President, Swami Venkataraman. "The upgrades of FET and ATSI reflect the successful execution of the $4.2 billion transmission investment program announced in 2014 and a strengthening financial profile."

MAIT was formed on January 31, 2017, and owns the transmission assets of Penelec and Met-Ed. As a result, these two utilities own the bulk of MAIT's equity in proportion to their contribution. Going forward, all equity contributions to MAIT will come from FET, whose share of ownership will increase over time.

On October 28, 2016, MAIT submitted an application to FERC requesting authorization to implement a forward-looking formula rate for MAIT effective July 1, 2017. MAIT has requested a 11% ROE and a 50/50 capital structure on a $538 million rate base. A final order in this matter is still pending given a lack of quorum at the FERC. Final rates will be established only after FERC either accepts a negotiated settlement agreement or issues an order in a litigated proceeding

We expect MAIT to pay dividends equal to most or all of its net income over the first few years. This is designed to compensate Penelec and Met-Ed for lost transmission revenues. The two utilities will still lose depreciation related cash flows for the transmission assets transferred to MAIT but over time, forward looking rates at MAIT would increase net income compared with historic rates at the utilities, partly compensating the utilities for lost cash flow. Our ratings and stable outlook at Penelec and Met-Ed incorporate the impact of the asset transfer to MAIT.

MAIT's balance sheet currently is 100% equity funded and has no debt. We expect the company to add about $600 million in debt through 2019 to balance its capital structure. Its financial ratios in 2019 are thus more indicative of long-term expectations than those for 2017 or 2018. In 2019 and beyond, we expect the company to maintain Funds from Operations (FFO) and Retained cash flow (RCF) to Net Debt of about 18-20% and 10-12%, respectively.

The upgrade of the issuer and unsecured ratings FET and the unsecured rating at at ATSI reflects the successful execution of the $4.2 billion capex program announced in 2014. This program nearly tripled the size of ATSI's balance sheet strengthened its financial. FFO to net debt at ATSI improved from 19-22% for the 2012-14 period to 32.1% in 2016. Going forward expect this ratio to remain in the high-twenties percent. On account of the strong capex at ATSI, the company has only paid relatively small dividends to parent FET. As a result, RCF to net debt is expected to be in the mid-twenties percent.

FET's financial profile has also significantly strengthened as a result of the capex program of the past three years. FET's FFO to Net debt ratio improved from 11-13% in 2012-14 to 17.5% in 2016. It is expected to exceed 20% going forward. Dividend payout from FET to parent FirstEnergy is also expect to remain modest since transmission is a major focus of capex for FirstEnergy. The company has cited the possibility of over $20 billion in capex in the transmission business over the next decade. We expect FET's RCF to net debt ratio to be in the mid-teens percent going forward. FET's rating is a below that of ATSI and MAIT on account of structural subordination. Nearly one-third of consolidated debt in the transmission business resides at FET.

Liquidity

FET has a $1 billion revolving credit facility, available through December 2021, that provides adequate liquidity for the transmission business. FET has access to the entire facility while ATSI, TrailCo and MAIT have sub-limits of $500 million, $400 million and $400 million, respectively. The facility will be used to fund capex on a temporary basis until eventually replaced by permanent financing. However, we expect that draws under the credit facility will be used only for funding needs of the transmission subsidiaries and not of the other FirstEnergy subsidiaries, as has been the case in the past. The facility contains financial covenants requiring each borrower to maintain a consolidated debt to total capitalization ratio of no more than 75%, measured at the end of each fiscal quarter. FET and its transmission subsidiaries were in compliance with this covenant as of March 31, 2017.

Rating Outlook

The stable outlook on FET, ATSI, MAIT and TrailCo reflects our expectations for a stable operating and financial profile under FERC's credit supportive regulatory environment.

Factors that Could Lead to an Upgrade

A rating upgrade for FET, ATSI, MAIT and TrailCo is possible if the FERC regulatory environment continues to remain stable and predictable, if the companies maintained their financial profile and if parent FirstEnergy were to be upgraded.

Factors that Could Lead to a Downgrade

A rating downgrade could be considered for all companies if the regulatory environment worsened or if the balance sheet of these companies were to be used to support FirstEnergy's other businesses, except for normal dividend distributions. Ratings could also be downgraded if financial metrics for the companies were to deteriorate, such as for example if FFO to net debt were to decline to 10-12% for FET; low-teens percent for ATSI and MAIT; and below 20% for TrailCo.

The principal methodology used in these ratings was Regulated Electric and Gas Networks published in March 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Swami Venkataraman, CFA
Senior Vice President
Infrastructure Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Jim Hempstead
MD - Utilities
Infrastructure Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2017 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 ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S 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. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S 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. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S 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 AND MOODY’S 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 OR MOODY’S 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.

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 the Moody’s 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 SUCH RATING OR 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 rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS 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. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

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 rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

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