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Rating Action:

Moody's upgrades CenterPoint Energy Inc. and CenterPoint Energy Houston Electric; Outlooks are stable

19 Aug 2013

Approximately $5.7 billion debt affected

New York, August 19, 2013 -- Moody's Investors Service ("Moody's") today upgraded the senior unsecured rating of CenterPoint Energy Inc. (CNP) to Baa2 from Baa3 and the senior unsecured rating of its subsidiary, CenterPoint Energy Houston Electric LLC. (CEHE) to Baa1 from Baa2. In addition, Moody's upgraded CNP's short term rating to Prime -- 2 from Prime -- 3.The ratings of CNP's other major subsidiary, CenterPoint Energy Resources Corp. (CERC, senior unsecured Baa2), is affirmed. The rating outlook for all three entities is stable. See below for a listing of the rating changes on CNP and CEHE's various debt classes.

RATINGS RATIONALE

The rating upgrade reflects Moody's assessment of CEHE's and CNP's recent financial results and future financial prospects, driven by CEHE's stable and improved Transmission and Distribution (T&D) utility business, which benefits its parent CNP.

"CEHE's operations in the low risk T&D business have fundamentally improved as reflected in its solid financial metrics, putting behind its true-up appeal with the Public Utility Commission of Texas (PUCT)," said Moody's Vice President Toby Shea, "The upgrade of CNP also takes into consideration its debt reduction effort using awarded recovery bond securitization proceeds."

The regulatory regime in Texas is viewed to be particularly credit supportive for T&D utilities. Texas has implemented several rate trackers and securitization policies for recovery of utility expenses such as bad debt, pension expenses and weather related restoration costs. It also allows the timely rate base recognition of investments in transmission and distribution assets in between rate cases. The 10% ROE and 45% equity layer authorized in 2011 are considered to be on par with most other US jurisdictions.

The business fundamentals of CEHE have stabilized, underpinned by a strong Texas economy, particularly in the greater Houston area that CEHE serves. CEHE also demonstrates a solid underlying financial performance from a credit perspective. Its cash flow to debt metric (CFO pre-WC /debt) is around 15% and this figure is closer to 17% net of securitization debt.

Our view incorporated in the stable rating outlooks for CEHE and CNP is that CenterPoint Energy will continue to focus on the low risk T&D and LDC business segments, as well as conservatively managing the growth and volatility of Enable Midstream Partner, LP (Baa3), a joint venture MLP formed with a subsidiary of OGE Energy Corp (Baa1).

CenterPoint Energy, Inc., is an electric and gas distribution company headquartered in Houston, Texas.

The principal methodology used in this rating was Regulated Electric and Gas Utilities published in August 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Ratings Upgrade

Issuer: CenterPoint Energy, Inc. (CNP)

- Long term Issuer Rating: upgraded to Baa2, from Baa3

- Commercial Paper: upgraded to P-2, from P-3

- Senior Unsecured: upgrade to Baa2, from Baa3

- Senior Unsecured Bank Credit Facility: upgraded to Baa2, from Baa3

- Subordinated: upgraded to Baa3, from Ba1

- Pref. Shelf: upgraded to (P)Ba1, from (P)Ba2

Issuer: CenterPoint Energy Houston Electric LLC. (CEHE)

- Long Term Issuer Rating: upgraded to Baa1, from Baa2

- Senior Unsecured Bank Credit Facility: upgraded to Baa1, from Baa2

- Senior Secured: upgraded to A2, from A3

Issuer: Reliant HL&P

- Bkd First Mortgage Bonds: upgraded to A2, from A3

Ratings Affirmation

Issuer: CenterPoint Energy Resources Corp. (CERC)

- Commercial Paper: affirmed at P-2

- Senior Unsecured: affirmed at Baa2

- Senior Unsecured Bank Facility: affirmed at Baa2

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 rating action on the support provider and in relation to each particular 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 rating action, and whose ratings may change as a result of this 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.

Toby Shea
Vice President - Senior 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

William L. Hess
MD - Utilities
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 upgrades CenterPoint Energy Inc. and CenterPoint Energy Houston Electric; Outlooks are stable
No Related Data.
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