Fitch Affirms Sempra Energy & Subsidiaries; Outlook Remains Stable.CHICAGO -- Fitch Ratings Fitch Ratings
An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. affirms the outstanding ratings of Sempra Energy Sempra Energy NYSE: SRE is a San Diego, California-based energy services holding company that was founded in 1998. Sempra owns the Southern California Gas Company, San Diego Gas & Electric, Sempra Commodities, and Sempra Generation. (SRE SRE Secretaría de Relaciones Exteriores (México)
SRE Sex and Relationship Education
SRE Serum Response Element (biochemistry)
SRE Software Reliability Engineering
SRe Seychelles Rupee ) and its subsidiaries as shown below. The Rating Outlook for SRE and each of its subsidiaries remains Stable.
SRE's ratings are based on the stability and predictability of cash flows from its California operations, credit metrics consistent with the 'A' rating category, a disciplined approach to investing and 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. , and appropriate risk management capabilities for its current risk profile. The rating also considers the financial strength of the regulated utilities, San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. Gas and Electric Company and Southern California Gas This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. Company, which generate approximately 65% of SRE's consolidated funds from operations (FFO FFO
See: Funds from operations ) and benefit from a supportive regulatory environment, strong regional economy, and minimal commodity price exposure. Furthermore, Fitch estimates that SRE has adequate headroom under its existing credit facilities credit facilities npl → facilidades fpl de crédito
credit facilities npl → facilités fpl de paiement
credit facilities to withstand an extreme market and credit event stress at its commodities subsidiary.
The Stable Outlook for SRE is based on Fitch's expectation that despite weaker consolidated credit metrics as the company completes a $6.6 billion minimum committed capital spending program over the next four years, credit ratios will remain within parameters for current rating levels. The increased capital spending is part of SRE's plans to increase its investment in utility infrastructure and change Sempra Global's business mix from generation to gas infrastructure. The company is in the process of divesting its Texas fleet at a premium, and investing the proceeds in LNG terminals, gas storage facilities, and gas pipelines. Cash flows from these projects are largely hedged by long-term contracts with investment grade counterparties. These contracts are largely fixed fee based on capacity, and therefore should generate stable FFO in the range of $275 million to $300 million per year by 2009.
SRE receives regulatory approval for recovery of most of its regulated capital spending, and Global's gas infrastructure investments are hedged with long-term contracts before committing substantial capital investments. Asset sale proceeds, cash from operations, and additional debt and hybrid securities will fund the capital spending program. Fitch projects that 2006 consolidated funds from operations (FFO) to interest will remain in the range of approximately 4.0 times (x) to 5.0x, and total debt adjusted for debt equivalents to FFO in the approximately 3.5x to 4.5x range.
Ratings concerns include the risks of funding of capital projects in a ratings-unsupportive manner, a significant, unanticipated, negative change in the California regulatory environment, material cost overruns or significant counterparty default on the LNG LNG (liquefied natural gas): see under natural gas. , storage, and pipelines construction projects, and an adverse change in book structure, strategy, or liquidity adequacy at Commodities.
Sempra Energy (SRE) is a holding company that consists of two large California utilities and multiple unregulated businesses that include trading, merchant power, pipelines and storage, and LNG.
Fitch affirms the following ratings, Outlook Stable:
--Senior unsecured 'A'.
San Diego Gas & Electric Company
--Senior secured 'AA';
--Preferred stock 'A+';
--Preferred Stock 'A'.
Southern California Gas Company
--Senior secured 'AA';
--Senior unsecured 'AA-';
--Preferred stock 'A+'
In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site.