Tag: Corporation

Rating Action: Moody’s upgrades Entergy Texas to Baa2 and changes the outlooks for Entergy Arkansas and Entergy Mississippi to positive.Global Credit Research – 28 Jan 2022New York, January 28, 2022 — Moody’s Investors Service (“Moody’s”) today upgraded the long-term ratings of Entergy Texas, Inc. (ETI), including its issuer rating to Baa2, from Baa3, and first mortgage bond rating to A3, from Baa1, due to improved legislative and regulatory support for the company. The outlook for ETI is stable.Simultaneously, Moody’s affirmed the long-term ratings of Entergy Arkansas, LLC (EAL), including its Baa1 issuer rating and A2 first mortgage bond rating, and Entergy Mississippi, LLC (EML), including its Baa1 issuer rating and A2 first mortgage bond rating. Moody’s also changed the outlooks for EAL and EML to positive, from stable, reflecting our expectation that both utilities will generate and maintain stronger financial metrics, including ratios of cash flow from operations before the changes in working capital (CFO pre-WC) to debt around 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.A complete list of rating actions can be found below.Upgrades:..Issuer: Entergy Texas, Inc….. Issuer Rating, Upgraded to Baa2 from Baa3….Pref. Stock Preferred Stock, Upgraded to Ba1 from Ba2….Senior Secured First Mortgage Bonds, Upgraded to A3 from Baa1….Senior Secured Shelf, Upgraded to (P)A3 from (P)Baa1Affirmations:..Issuer: Entergy Arkansas, LLC…. Issuer Rating, Affirmed Baa1….Senior Secured First Mortgage Bonds, Affirmed A2….Senior Secured Shelf, Affirmed (P)A2..Issuer: Entergy Mississippi, LLC…. Issuer Rating, Affirmed Baa1….Pref. Stock Preferred Stock, Affirmed Baa3….Senior Secured First Mortgage Bonds, Affirmed A2….Senior Secured Shelf, Affirmed (P)A2..Issuer: Independence (County of) AR….Senior Secured Revenue Bonds, Affirmed A2….Underlying Senior Secured Revenue Bonds, Affirmed A2..Issuer: Mississippi Business Finance Corporation….Senior Secured Revenue Bonds, Affirmed A2….Underlying Senior Secured Revenue Bonds, Affirmed A2..Issuer: Pope (County of) AR….Senior Unsecured Revenue Bonds, Affirmed Baa1Outlook Actions:..Issuer: Entergy Arkansas, LLC….Outlook, Changed To Positive From Stable..Issuer: Entergy Mississippi, LLC….Outlook, Changed To Positive From Stable..Issuer: Entergy Texas, Inc…..Outlook, Changed To Stable From PositiveRATINGS RATIONALEETI’s upgrade reflects an improved legislative and regulatory environment, following the recent authorization to securitize over $250 million of storm costs[1] and expedited cost recovery of the Montgomery County Power Station (MCPS)[2], a gas-fired combined-cycle plant which commenced operations and was reflected in rates in January 2021. These cost recovery provisions should help the company to generate CFO pre-WC to debt above 15{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over the next several years, commensurate with Baa2 integrated peers.EAL’s positive outlook considers Arkansas’ supportive legislative action that was enacted in March 2021, which clarified and extended the utility’s formula rate plan (FRP) provisions, along with our expectation that the company will generate stronger financial metrics, including a ratio of CFO pre-WC to debt around 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over the next 2-3 years.Similarly, EML’s positive outlook reflects our expectation that the company’s ratio of CFO pre-WC to debt will be sustained around 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, while operating within a FRP framework that provides timely, predictable and consistent recovery of costs and investments.All three companies benefit from strong legislative and regulatory support and improving financial metrics. Financial metrics are increasing, organically, following material cash outflow during 2018-2020, which included over $800 million in aggregate customer rebates due to the 2017 Tax Cuts and Jobs Act. These refunds have largely been completed, which allows for a natural uplift in cash flow generation. We expect financial metrics to improve further, due to ongoing rate increases that reflect each utility’s growing rate base as well as timely recovery of operating costs.For ETI, annual capital cost recovery occurs through distribution and transmission cost riders, and more recently through a generation cost recovery rider (GCRR), which reflects a higher revenue requirement when a discrete asset is placed into service. Furthermore, ETI is expected to file a general rate case in Q2 2022 to update its operating cost recovery and begin to recoup non-rider investment.For EAL and EMI, capital and operating cost recovery occurs annually through their respective FRP filings. These regulatory proceedings are particularly credit supportive since they include forward-looking provisions that enhance the predictability and stability of cash flow, especially when compared to peer utilities operating under more traditional, or less comprehensive, cost recovery frameworks.OutlooksETI’s stable outlook incorporates our expectation that the company will generate cash flow to debt ratios above 15{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and that supportive regulatory outcomes will continue, including the company’s upcoming general rate case proceeding.EAL’s positive outlook reflects the strong legislative support for utility cost recovery and the transparent, and now more predictable, formula rate construct in Arkansas. The newly clarified FRP should allow the company to maintain a ratio of CFO pre-WC to debt consistently around 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.EML’s positive outlook is based on the timely cost recovery and transparent rate making offered by its FRP, which should translate into the company maintaining a ratio of CFO pre-WC to debt of 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} going forward.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSFactors That Could Lead to an UpgradeETI could be upgraded with ongoing supportive regulatory and legislative treatment, along with a ratio of CFO pre-WC to debt consistently above 18{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. The incorporation of more forward-looking cost recovery mechanisms could also put upward pressure on ETI’s rating.EAL could be upgraded if financial metrics improved to a level where the company’s ratio of CFO pre-WC to debt is consistently at 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, while maintaining its current level of cost recovery support from the FRP.EML’s rating could be upgraded if its CFO pre-WC to debt metric is sustainable at 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, along with maintaining timely cost recovery through the FRP.Factors That Could Lead to a DowngradeETI could be downgraded if regulatory support for cost recovery wanes, if significant weather events continue to cause material physical damage to its assets and timely cost recovery is not certain or if the company’s ratio of CFO pre-WC to debt drops below 15{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} for a sustained period of time.For EAL, a ratio of CFO pre-WC to debt declining below 16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} on a sustained basis could cause downwards rating pressure. Also, a deterioration in regulatory support, unforeseen complications with the FRP process (especially after recent legislative actions), or other added regulatory uncertainties could cause a downgrade of EAL’s ratings.EML’s rating could be downgraded in the event of an adverse regulatory decision, weakening ability to recover costs or decreasing predictability of cash flows. A downgrade could also be considered if significant storm costs were not recovered in a timely basis, or if the company’s ratio of CFO pre-WC to debt declined below 16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} for an extended period of time.The principal methodology used in these ratings was Regulated Electric and Gas Utilities published in June 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1072530. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.REFERENCES/CITATIONS[1] https://interchange.puc.texas.gov/Documents/51997_77_1171649.PDF 02-Dec-2021[2] https://interchange.puc.texas.gov/Documents/50031_41_1074248.PDF 08-Jul-2020Please 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. Ryan Wobbrock VP – Senior Credit Officer 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 Michael G. Haggarty Associate Managing Director 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 © 2022 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 CREDIT RATINGS AFFILIATES ARE THEIR 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 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 APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S 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 $5,000,000. 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{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, 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 JPY100,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. ​