DUQUESNE LIGHT COMMERCIAL PAPER RATED 'F-2' BY FITCH -- FITCH FINANCIAL WIRE --
DUQUESNE LIGHT COMMERCIAL PAPER RATED 'F-2' BY FITCH
-- FITCH FINANCIAL WIRE --
NEW YORK, Feb. 26 /PRNewswire/ -- Duquesne Light Co's commercial paper is rated 'F-2' by Fitch. The company's outstanding 'BBB+' first mortgage bonds, 'BBB+' secured medium-term notes, and 'BBB' debentures are affirmed. Its preferred stock is raised to 'BBB+' from 'BBB' and preference stock to 'BBB' from 'BBB-' due to the modest amount outstanding. The ratings affect approximately $1.2 billion of debt and $88 million of preferred and preference stock. The credit trend is improving.
The ratings reflect Duquesne's strong cash flow position, manageable capital requirements, and aggressively leveraged capital structure. Internal cash generation will exceed Duquesne's construction requirements, which average about $165 million annually over the next four years, including costs associated with a 500 mw power sale to General Public Utilities (GPU).
The strong cash flow reflects a rate phase-in plan that began in April 1988 and extends to April 1994. In addition, the company's balance sheet will continue to benefit from debt retirements and refinancings, although debt leverage will remain high due to Beaver Valley Unit 2 lease obligations.
With sufficient capacity to meet expected sales growth for the foreseeable future, construction spending should remain moderate. The absence of new money requirements will continue to reduce debt leverage and improve interest coverage. Exposure to the Clean Air Act is limited since about 80 percent of Duquesne's capacity is nuclear, scrubbed/compliance coal or oil/gas. Construction spending includes refurbishment of two units in cold storage and construction of a new transmission line to accommodate the GPU power sale.
Duquesne Light Co. provides electric service to the city of Pittsburgh and surrounding areas in southwestern Pennsylvania. Headquarters are located in Pittsburgh.
/CONTACT: Robert Hornick of Fitch, 212-908-0564/ CO: Duquesne Light Co. ST: Pennsylvania IN: UTI SU: RTG SM -- NY074 -- 2937 02/26/92 15:59 EST