Sep. 24, 2009 (Business Wire) -- Fitch Ratings has assigned a 'BBB-' rating to Allegheny Energy Supply Company, LLC's (Supply) planned $600 million issuance of unsecured medium-term notes (MTNs) and a 'BBB-' rating to Supply's planned $1 billion unsecured revolving credit facility (revolver).
Fitch currently rates Supply's Issuer Default Rating (IDR) 'BBB-', with a Stable Outlook.
The MTN issuance involves two tranches, with $350 million of 10-year MTNs due Oct. 15, 2019 and $250 million of 30-year MTNs due Oct. 15, 2039. Supply will use the proceeds to redeem the company's $447 million term loan due May 2, 2011 and to finance the repurchase of up to $150 million of its 7.8% notes due March 15, 2011. The MTN issuance is expected to close on Oct. 1, 2009.
The three-year, $1 billion revolver is expected to close today and will mature in September 2012. The revolver will replace Supply's existing $400 million revolver, which was scheduled to mature on May 2, 2011.
Supply's ratings and Stable Outlook consider the cash flow from the company's more than 7,000 megawatts (MWs) of generation capacity in the competitive PJM market as well as its dependence on coal as its primary fuel source. The ratings and Stable Outlook also reflect the company's early refinancing of debt maturing in 2011 and the revolver's increased capacity and later maturity date of September 2012. Supply's improved liquidity position should help the company meet the potential collateral postings associated with power supply contracts as the company continues to hedge its generation output in 2011 and beyond and improve the stability of future cash flow.
Supply is an unregulated generation subsidiary of Allegheny Energy, Inc. (Allegheny; IDR 'BBB-', Stable Outlook, by Fitch). Allegheny is a holding company with subsidiaries that operate in three primary businesses: regulated delivery of power to 1.6 million customers in Pennsylvania, Maryland, West Virginia, and Virginia; generation of electricity in PJM; and transmission.
Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.
