Fitch Ratings Revises TECO's & Tampa Electric's Outlook to Positive; Ratings Affirmed.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch revises the long-term Rating Outlook of TECO Energy TECO Energy, Inc. (NYSE: TE) is an S&P 500 electrical power company located in Tampa, Florida. "TECO" is short for "Tampa Electric Co." Environmental record , Inc. (TECO (Text Editor and COrrector) A text editor written in 1963 by Dan Murphy at MIT for editing paper tape on a Digital PDP-1 computer (it was originally called "Tape Editor and Corrector"). , Issuer Default Rating [IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ] 'BB+'), and its main operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Tampa Electric Company (Tampa Electric, IDR 'BBB') to Positive from Stable. The existing ratings are affirmed. Approximately $3.8 billion of debt is affected by today's rating actions. The full list of affected ratings is below. The revision of TECO's Rating Outlook to Positive reflects Fitch's expectation that TECO's leverage and business risk will continue to trend downward as a result of debt repayments and an increasing proportion of consolidated revenues generated by lower risk regulated utilities due to growth of the utilities and the planned sale of TECO Transport. Business risk has been lowered during the past few years through the wind-down of merchant power operations. The FFO FFO See: Funds from operations interest coverage ratio improved to 3.2x for the twelve months ended Dec. 31, 2006. Parent company debt has been reduced by $157 million since December 2006 and the company's plan to retire $300 million of parent debt maturing in May 2007 using cash on hand is achievable. In addition to the retirement of this $300 million of debt, TECO has committed to an additional $500 million of early redemptions of parent level debt, which will be accelerated from no later than the end of 2010 to the end of 2008 if TECO Transport is sold according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. plan. In Fitch's view, credit metrics are likely to be restored to investment grade levels within the two-year time horizon of a Rating Outlook. Morgan Stanley has been retained as advisor for the sale of TECO Transport and management intends to use the proceeds of a sale for parent debt reduction. TECO has locked in the $100 million of cash from synthetic fuel production in 2007 through hedges, which eliminated the uncertainty regarding syn-fuel related cash flows and had NOL NOL - Never Offline tax assets of $760 million as of December 31, 2006, which should result in minimal tax payments for several years. Liquidity is considered strong. TECO's consolidated cash balances were $442 million as of December 31, 2006. Internal liquidity is supplemented by availability under committed credit facilities of $427 million at Tampa Electric and $190.5 million at TECO as of Dec. 31, 2006. The revision of Tampa Electric's Outlook to Positive reflects the on-going improvement of TECO's consolidated credit profile as well as Fitch's expectation that the utility will fund its 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. in a manner that maintains its already strong capital structure and coverage ratios. Credit metrics are strong relative to 'BBB' category guidelines. The FFO interest coverage was 4.6 times for the twelve months ending Dec. 31, 2006. TECO injected $50 million of equity capital into Tampa Electric in 2006 and plans an additional $82 million equity investment in 2007. Challenges for Tampa Electric include maintaining credit quality as it moves into a period of higher capital spending. Tampa Electric has considerable capital spending needs for reliability, transmission upgrades, and base-load generating capacity needs. TECO is a holding company that owns subsidiaries engaged in diversified energy related activities. The main operating subsidiary is Tampa Electric, which provides retail electric services to approximately 661,000 customers in the west central Florida. It also purchases, distributes, and sells natural gas to approximately 332,000 customers. In addition, TECO owns interests in coal processing and loading facilities, synthetic fuel production facilities, and mineral rights, as well as owns or operates surface and underground mines in eastern Kentucky, Tennessee, and Virginia; and provides waterborne transportation, storage, and transfer services of coal and other dry-bulk commodities. Ratings Affirmed, Outlook Positive: TECO Energy, Inc.: --Issuer default rating (IDR) 'BB+'; --Senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'BB+'; Tampa Electric Company: --IDR 'BBB'; --Senior unsecured debt 'BBB+'; --Short-term 'F2'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. 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. |
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