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Rating Action:

Moody's downgrades Alliant to Baa1, Interstate Power and Light to Baa1, and Wisconsin Power and Light to A2

Global Credit Research - 05 Jul 2016

Approximately $3.4 billion of debt securities affected

New York, July 05, 2016 -- Moody's Investors Service, ("Moody's") downgraded the ratings of Alliant Energy Corporation (Alliant) to Baa1 Issuer Rating from A3, Interstate Power and Light Company (IP&L) to Baa1 senior unsecured from A3, and Wisconsin Power and Light Company (WP&L) to A2 senior unsecured from A1. The outlooks of all three issuers are stable.

Downgrades:

..Issuer: Alliant Energy Corporation

.... Issuer Rating, Downgraded to Baa1 from A3

....Senior Unsecured Bank Credit Facility, Downgraded to Baa1 from A3

..Issuer: Interstate Power and Light Company

.... Issuer Rating, Downgraded to Baa1 from A3

....Senior Unsecured Shelf, Downgraded to (P)Baa1 from (P)A3

....Preferred Shelf, Downgraded to (P)Baa3 from (P)Baa2

....Pref. Stock Preferred Stock, Downgraded to Baa3 from Baa2

....Senior Unsecured Bank Credit Facility, Downgraded to Baa1 from A3

....Senior Unsecured Regular Bond/Debenture, Downgraded to Baa1 from A3

..Issuer: Wisconsin Power and Light Company

.... Issuer Rating, Downgraded to A2 from A1

....Senior Unsecured Shelf, Downgraded to (P)A2 from (P)A1

....Preferred Shelf, Downgraded to (P)Baa1 from (P)A3

....Senior Unsecured Bank Credit Facility, Downgraded to A2 from A1

....Senior Unsecured Regular Bond/Debenture, Downgraded to A2 from A1

Affirmations:

..Issuer: Alliant Energy Corporation

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

..Issuer: Interstate Power and Light Company

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

..Issuer: Wisconsin Power and Light Company

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

Outlook Actions:

..Issuer: Alliant Energy Corporation

....Outlook, Changed To Stable From Negative

..Issuer: Interstate Power and Light Company

....Outlook, Changed To Stable From Negative

..Issuer: Wisconsin Power and Light Company

....Outlook, Changed To Stable From Negative

RATINGS RATIONALE

"The one notch rating downgrades of Alliant and its two utility subsidiaries, IP&L and WP&L, are prompted by deteriorating debt coverage metrics resulting from an ongoing elevated capital expenditure program which will keep financial ratios weak for the foreseeable future", said Lesley Ritter, Analyst. Moody's assigned the Alliant family a negative rating outlook in August 2015 based on the potential that the incremental debt and lag in cash flow recovery associated with the organization's multi-year capital investment projects would keep financial ratios below their historical levels for a sustained period.

Alliant's mid-20% range consolidated debt coverage ratios have softened to 19% and are expected to remain in the high teens over the coming years as the company continues to transform and grow its generation fleet from a heavily coal dependent mix to one that is more balanced and environmentally compliant.

Although disallowances associated with these generation investments are unlikely given Iowa and Wisconsin's regulatory practice of pre-approving large capital expenditures, the lag in cash flow recovery as well as the reliance on customer credits to mitigate the rate impact of these projects on retail customer bills put downward pressure on credit metrics. Combined with higher consolidated leverage to partially finance the capex build-out, Alliant's debt coverage ratios are now more in line with Baa1 rated utilities on our Regulated Electric and Gas utilities rating methodology, and consistent with Baa1 rated regulated utility holding company peers.

Similarly, we expect IP&L's debt coverage metrics to remain in the high teens, below the threshold for A rated regulated utilities, and be more closely aligned with Baa1 rated regulated utility company peers. Although IP&L's capital expenditures are scheduled to peak in 2016, investment levels will remain elevated near 2.0x depreciation expense for the balance of the decade, and keep debt coverage ratios below their low 20% historical range.

WPL's financial profile is also expected to deteriorate following its decision to move forward with the Riverside Energy Center gas fired power plant (REC). The $700 million project to build a new natural gas power plant will begin construction in the second half of 2016 and won't be placed in service until 2020. Furthermore, WPL is requesting 100% AFUDC treatment of its cost of capital rather than availing itself of the 50% CWIP recovery offered to Wisconsin utilities. As a result, WPL will not be earning a cash return on this investment until the plant becomes operational and is added to rate base following a general rate case. The lag in cash flow recovery and incremental debt to partially finance the plant will dampen the company's credit metrics and yield financial ratios that are more closely aligned with A2 rated regulated utility peers.

Alliant, IP&L and WP&L's stable outlooks reflect our expectation that all three companies will continue to benefit from credit supportive regulatory outcomes as they add sizeable new generation assets to their rate base and will produce financial ratios that are in line with their new ratings.

What Could Change the Rating Up/Down

An upgrade could be triggered at Alliant if one or more of its utilities were upgraded, or if it achieved a sustained improvement in its debt coverage metrics such that CFO pre-WC to debt returned to its historical low-20% range. IPL and WPL could experience an upgrade if the credit supportiveness of their respective regulatory relationships markedly improved, particularly with regards to the timeliness of the recovery of capital investments. IPL and WPL would experience further upward rating pressure if their debt coverage ratios improved to the low-20% range and 25%, respectively, on a sustained basis.

A downgrade could be triggered at Alliant if one or more of its utilities were to be downgraded, or if it saw a sustained deterioration in its debt coverage metrics such that CFO pre-WC to debt fell to the mid-teens. IPL and WPL's ratings could be downgraded if they experienced a deterioration in the credit supportiveness of their respective regulatory relationship. IPL and WPL would experience further downward rating pressure if their debt coverage ratios declined 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 446 MW of generation units at its Alliant Energy Resources (not rated) subsidiary (346MW 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 December 2013. Please see the Ratings 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
Analyst
Infrastructure Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

James Hempstead
Associate Managing Director
Infrastructure Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

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

Moody's downgrades Alliant to Baa1, Interstate Power and Light to Baa1, and Wisconsin Power and Light to A2
No Related Data.
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