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Rating Action:

Moody's changes outlook of Alliant, Interstate Power and Light, and Wisconsin Power and Light to negative

17 May 2018

Approximately $4.9 billion of debt securities affected

New York, May 17, 2018 -- Moody's Investors Service, ("Moody's") affirmed the ratings of Alliant Energy Corporation (Alliant, Baa1 senior unsecured), Interstate Power and Light Company (IP&L, Baa1 senior unsecured), and Wisconsin Power and Light Company (WP&L, A2 senior unsecured), and changed their rating outlooks to negative from stable.

RATINGS RATIONALE

"The negative outlook on the Alliant family's ratings reflects our expectation that its financial ratios will remain lower for longer as a result of incremental debt being issued to help fund an aggressive capital expenditure program, limited equity financing, as well as weaker operating cash flows", said Lesley Ritter, AVP-Analyst.

Alliant's decision to accelerate investments in renewable generation across its two utilities and finance them predominantly with debt, combined with the negative operating cash flow impacts of these investments and Federal tax reform, is translating into weaker metrics across the entire corporate family. Alliant, IP&L, and WP&L's cash flow from operations pre-working capital (CFO pre-W/C) to debt ratios are already at our previously indicated downgrade thresholds and are forecast to deteriorate further, below these downgrade thresholds, and below the levels produced by most similarly rated peer companies. Several of these peer companies have announced substantial equity issuances to mitigate the impact of similar negative trends.

Alliant is in the midst of the most extensive capital expenditure program in its history. It is planning to invest $1.7 billion in capital expenditures in 2018 and $1.6 billion in 2019, with the majority of the investments geared towards new build generation assets. These assets are being financed mostly with debt but fail to produce any cash flow until they are brought into service and added to rate base, thereby pressuring debt coverage metrics.

The company has recently received regulatory approvals for 1 GW of greenfield wind power at IP&L which will more than triple the size of the utility's renewable generation capacity. At WP&L, Wisconsin regulators granted it the right to acquire a 55MW interest in an operating wind farm. WP&L also plans to request approval for an incremental 150 MW of greenfield wind investment later this year to be completed by 2020. These investments comes at a time when WP&L is already deploying significant resources to construct a 730 MW gas plant scheduled to come online in 2020, and IP&L just finished building its own 706 MW gas fired power plant in 2017.

Further exacerbating the stress placed on financial ratios from the company's heightened capex levels is the passage of Federal tax reform, which erodes the company's operating cash flow by reducing its retail rates to reflect the lower marginal corporate tax rate, and by refunding any excess deferred taxes to customers. The combination of the two will likely result in a sustained weakening of the three company's financial ratios below levels we consider supportive of each entity's credit rating.

Outlook Actions:

..Issuer: Alliant Energy Corporation

....Outlook, Changed To Negative From Stable

..Issuer: Interstate Power and Light Company

....Outlook, Changed To Negative From Stable

..Issuer: Wisconsin Power and Light Company

....Outlook, Changed To Negative From Stable

Affirmations:

..Issuer: Alliant Energy Corporation

.... Issuer Rating, Affirmed Baa1

....Senior Unsecured Bank Credit Facility, Affirmed Baa1

....Senior Unsecured Commercial Paper, Affirmed P-2

....Senior Unsecured Shelf, Affirmed (P)Baa1

..Issuer: Interstate Power and Light Company

.... Issuer Rating, Affirmed Baa1

....Preferred Shelf, Affirmed (P)Baa3

....Senior Unsecured Shelf, Affirmed (P)Baa1

....Pref. Stock Preferred Stock, Affirmed Baa3

....Senior Unsecured Bank Credit Facility, Affirmed Baa1

....Senior Unsecured Commercial Paper, Affirmed P-2

....Senior Unsecured Regular Bond/Debenture, Affirmed Baa1

..Issuer: Wisconsin Power and Light Company

.... Issuer Rating, Affirmed A2

....Senior Unsecured Shelf, Affirmed (P)A2

....Preferred Shelf, Affirmed (P)Baa1

....Senior Unsecured Bank Credit Facility, Affirmed A2

....Senior Unsecured Commercial Paper, Affirmed P-1

....Senior Unsecured Regular Bond/Debenture, Affirmed A2

What Could Change the Rating Up

The negative outlook limits the likelihood of a near term rating upgrade. An upgrade at Alliant could be considered if there is an unexpected reversal of recent trends or a material increase in equity financing that results in a significant improvement in its financial metrics. This would include consolidated cash flow from operations before changes in working capital (CFO pre-WC) to debt reaching the low-20% range, on a sustained basis.

An upgrade of Alliant could also be triggered by an upgrade of one or both of its utility subsidiaries, which we do not anticipate given their current capital expenditure programs. IP&L and WP&L could experience an upgrade if the credit supportiveness of their respective regulatory relationships markedly improves, particularly with regards to the timeliness of the recovery of capital investments. IP&L and WP&L's ratings could be upgraded if their CFO pre-W/C to debt ratios improved to the low-20% range and 25%, respectively, after their current heightened construction programs are completed.

What Could Change the Rating Down

A downgrade could be triggered at Alliant if one or more of its utilities is downgraded, or if it exhibits a continued weak debt coverage metrics such that CFO pre-WC to debt remains in the mid-teens. IP&L and WP&L's ratings could be downgraded if they experience a deterioration in the credit supportiveness of their respective regulatory relationship. IP&L and WP&L could also experience further downward rating pressure if their debt coverage ratios remain to the mid-teens and low 20% range, respectively, on a sustained basis.

Alliant Energy Corporation is a holding company for regulated utilities Interstate Power and Light Company and Wisconsin Power and Light Company and a minor unregulated business consisting of a transportation segment and 459 MW of generation units at its Alliant Energy Resources (not rated) subsidiary (347 MW of which operates under a long-term lease agreement with WPL).

The principal methodology used in these ratings was Regulated Electric and Gas Utilities published in June 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.

Lesley Ritter
Asst Vice President - Analyst
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.
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