Duke Capital Notes Rated 'A' by S&P 07-10-98.NEW YORK--(BUSINESS WIRE)--S&P's CreditWire 7/10/98--Standard & Poor's today assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. its single-'A' rating to Duke Capital Corp.'s proposed $350 million series A senior notes due 2005, to be drawn down from the firm's shelf registration. The outlook is stable. Duke Capital is a subsidiary holding company of and principal financing vehicle for parent Duke Energy Corp.'s (A+/Stable/A-1) nonelectric, nonregulated utility investments. Duke Capital's ratings reflect support of the consolidated credit profile of the entire Duke Energy enterprise. Creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. at Duke Energy is supported by the extremely strong operations of its regulated electric utility and interstate in·ter·state adj. Involving, existing between, or connecting two or more states. n. One of a system of highways extending between the major cities of the 48 contiguous United States. Noun 1. gas pipeline units. Generally, these businesses enjoy good growth and provide strong and stable cash flows to the parent. Duke Energy's rating also incorporates the company's strategy of becoming a premier energy service provider in a competitive, unbundled energy market. Integral to this strategy is a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. ,
multifuel asset base that supports the company's ability to serve
large and small customers on a national, and growing international,
level.
Duke Energy is expected to continue its plans to aggressively build up Duke Capital with annual capital expenditures exceeding $1 billion. Most new capital will be allocated toward Duke Capital's nonpipeline business. By 1999, the company expects that 50% of earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income will come from nonpipeline ventures versus 30% in 1997. The largest investment will be made in the global asset development and trading and marketing business segments. Offsetting these strengths, ratings anticipate increased operating risk Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. as the company implements its strategy for competing in a restructured and deregulated global energy market. This strategy focuses on building an asset base and service network of considerable size and will require substantial investment. Capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. is expected to be in higher-risk sectors, such as gas gathering and processing and domestic and international independent power projects. Heavy investing could impact financing flexibility, and management may be challenged to earn cash flows commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with this increased business risk. Still, management is expected to conservatively finance the growth. OUTLOOK: STABLE The outlook anticipates continued strong cash flows generated from regulated electric utility and pipeline units, as well as the successful implementation of its growing global energy provider strategy.
CONTACT: Ronald M Barone, 212/208-1929
Mary Ellen Olson, 212/208-8947
Judith Waite, 212/208-1663
For more information on criteria or subscriptions:
http://www.ratings.standardpoor.com
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion