Printer Friendly

MICHCON 'A' BONDS, PREFERRED AFFIRMED, CP RATED 'F-1' BY FITCH -- FITCH FINANCIAL WIRE --

 MICHCON 'A' BONDS, PREFERRED AFFIRMED, CP RATED 'F-1' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, June 6 /PRNewswire/ -- Michigan Consolidated Gas Co.'s (MichCon) $330 million outstanding first mortgage bonds and $10 million preferred stock are affirmed at 'A' by Fitch. MichCon's $80 million first mortgage bonds issuable under its outstanding SEC Rule 415 shelf registration are rated 'A' and its commercial paper program is rated 'F-1'. The credit trend is stable.
 The ratings reflect Fitch's expectation of a recovery in MichCon's financial protection measures following weather related weakening in 1990 and 1991. Pretax interest coverage fell to 2.6 times (x) for 1991, well below the 4.1x recorded in 1989. The weaker financial performance is reflected in the company's earned return on common equity, which fell to 10.5 percent in 1990 and 12.3 percent in 1991 after averaging nearly 20 percent over 1985-1989. At the same time that earnings have weakened, the company has continued to exhibit a conservative balance sheet and generate strong cash flow. Total long-term debt was 47 overhead of capitalization for year-end 1991 and internally generated cash funded 78 percent of 1991 capital expenditures. Cash coverage of interest was 4.0x for the year.
 The 'F-1' commercial paper rating reflects the company's seasonal use of short-term debt and strong cash flow. Commercial paper is used to finance seasonal, self-liquidating natural gas storage inventories. MichCon currently has no short-term debt outstanding.
 Prospectively, investor protection measures are expected to be consistent with an 'A' rating, although returns on equity will not recover to exceptionally high historic levels due primarily to the moderating effect of current and expected rate treatment. In 1990, the Michigan Public Service Commission (MPSC) approved a three year rate settlement, which among its key provisions established an incentive mechanism and set a profitability range for the company. Under the incentive mechanism, rates are changed annually to recover most inflation-related increases in the company's operating and maintenance expense. The profitability provision allows rates to be adjusted up or down when returns on equity (normalized for weather) fall outside a 12.25 percent-14.25 percent range. While fixing a profitability range limits upside earnings, Fitch views the three-year settlement as a balanced way to ensure reasonable returns and MichCon's overall regulatory picture as favorable.
 Considerable effort and expense has gone into strengthening MichCon's natural gas storage capability. Ongoing changes in federal regulation of natural gas pipeline companies could have a profound effect on the nation's gas distribution business. FERC pipeline restructuring Order 636 will shift more of the responsibility for managing the gas supply function to local distribution companies. MichCon's substantial storage capabilities, integrated with diverse supply access, will help the company secure a reliable and low cost gas supply.
 -0- 6/1/92
 /CONTACT: Ralph Pellecchia of Fitch, 212-908-0586/ CO: Michigan Consolidated Gas Co. ST: Michigan IN: OIL SU: RTG


AH -- NY058 -- 5770 06/01/92 14:04 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jun 1, 1992
Words:487
Previous Article:SOCIETY/AMERITRUST GREEN MACHINE TRANSACTIONS TO SUPPORT RED CROSS NATIONAL DISASTER RELIEF
Next Article:UNIFORCE WAIVING FRANCHISE FEE
Topics:


Related Articles
MIDWEST POWER SENIOR DEBT 'A', CP 'F-1' BY FITCH AFTER MERGER -- FITCH FINANCIAL WIRE --
CORRECTION TO MIDWEST POWER SENIOR DEBT 'A', CP 'F-1' BY FITCH AFTER MERGER
MICHCON $200 MIL. BOND SHELF RATED 'A' BY FITCH -- FITCH FINANCIAL WIRE --
MICHCON $100 MILLION BONDS RATED 'A', BY FITCH -- FITCH FINANCIAL WIRE --
MICHCON $20 MILLION BONDS RATED 'A', BY FITCH -- FITCH FINANCIAL WIRE --
MICHCON 'A' 1ST MORTGAGE BONDS AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --
MICHCON'S $30 MILLION FIRST MORTGAGE BONDS RATED 'A' BY FITCH -- FITCH FINANCIAL WIRE --
MICHCON $150 MILLION 1ST MORTGAGE BOND SHELF RATED 'A' BY FITCH -- FITCH FINANCIAL WIRE --
Fitch Affirms Western Resources $520M Convert Debt At 'BBB+' - Fitch Financial Wire -
MCN Energy Affirmed; MCNIC Debt Shelf Rated 'BBB+' by Fitch IBCA -- Fitch IBCA Financial Wire --

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters