Fitch Revises Entergy New Orleans Rtgs on Emergence from Bankruptcy; Outlook Stable.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 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. has revised Entergy New Orleans Inc.'s (ENOI) 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. ) to 'BB'. In addition, Fitch has upgraded the following reinstated security ratings Security ratings Commercial rating agencies' assessment of the credit and investment risk of securities. of ENOI upon its emergence from bankruptcy: --First mortgage bonds to 'BBB-' from 'CCC'; --Preferred stock to 'BB' from 'CC'. The Rating Outlook is Stable. The ratings reflect credit metrics that are appropriate for the category and business risk as well as lower sustainable operating cash flows and a weaker operating profile. The ratings also reflect the considerable 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. requirements to repair and restore the gas distribution system and, to a lesser extent, the electric system. Re-building of the system will occur as necessary to serve returning customer load. The 2005 hurricanes destroyed a significant portion of ENOI's customer base, reducing the number of electric and gas customers by 50% and 55%, respectively, from YE2004. In addition, ENOI's electric customer mix has shifted to 59% commercial/industrial and 24% residential, from 48% commercial/industrial and 35% residential. Fitch views commercial and industrial demand as more elastic than residential demand. Offsetting these concerns are ample cash on hand from insurance proceeds and Community Development Block Grants, higher authorized electric rates, the demonstrated commitment to rebuilding ENOI by its parent, Entergy Corp., and reasonable support from state lawmakers and city regulators. In the reorganization plan, financial grants from Federal agencies, financial support from Entergy Corp., insurance proceeds, and a tariff adjustment permitted full recovery for all pre-petition creditors and successful emergence from bankruptcy. Fitch expects a full year of the rate increase to result in improvements in credit metrics in 2007. Changes to ENOI's ratings and Rating Outlook will depend on the rate of load growth, the timing and amount of cost recovery, as well as the timing and velocity of the rebuilding of the gas system relative to receipt of additional insurance proceeds and customer demand. Event risk from another large hurricane remains. While ENOI is building a $75 million storm reserve, it will take 10 years to fully fund. ENOI is an electric and gas utility that serves customers in and around the city of New Orleans. ENOI is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Entergy Corp. 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. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion