Moody’s whacks Ameren debt rating
Moody’s Investors Service on Wednesday cut its rating on Ameren Corp.’s long-term debt rating to Baa3 – a notch above junk, or speculative grade – citing the St. Louis company’s declining cash flow relative to its debt obligations. The ratings downgrade affects about $800 million of debt securities.
The cut also reflects that “ongoing cost pressures and the lack of timely regulatory recovery of some costs will prevent ratios from returning to historical levels over the near term,” Michael G. Haggarty, Moody’s vice president and senior credit officer, said in a statement (registration required).
Here’s what else Moody’s said:
Ameren has experienced higher operating and maintenance costs and increased capital spending requirements at both its utility and nonutility businesses. Limited rate relief, low returns, and the lack of automatic rate adjustment clauses has led to regulatory lag in recovering costs in recent years…. In addition, the combination of large capital expenditures and the company’s high dividend payout ratio has resulted in substantial negative free cash flow in 2007 and 2008, which is likely to continue over the next several years.
The ratings downgrade comes a day after administrative law judges at the Illinois Commerce Commission recommended a $163.5 million increase in gas and electric rates for Ameren’s Illinois utilities. AmerenUE, meanwhile, has also asked Missouri regulators for a $251 million electric-rate increase that will probably be decided in early 2009.
The Moody’s action continues a pattern of credit-rating cuts for Ameren. Standard & Poor’s cut Ameren’s long-term rating to BBB- (also a notch above junk) last April amid all of the turmoil over electric-rate shock in Illinois. In May, Moody’s cut AmerenUE’s ratings to junk.
While a cut to debt ratings — the equivalent of a credit score for corporate borrowers – isn’t welcome news on Chouteau Avenue, expect the company to cite the recent downgrade to bolster its case for a rate increase in Missouri.
I wonder how much Ameren had to pay to get that rating? Perfect excuse to give Missouri for a rate increase.
All I know is I make a good living and my electric bill is a huge drain on my budget now.
I don’t know what more I can do to cut back. I have lowered the hot water heater, sit in the dark at night with nothing on but the tv, unplugged all clocks, appliances that are not needed on a daily basis that use “vampire” electricity, only use the washer when I have full load and now rarely use my clothes dryer (yes you can dry clothes without one)
I guess candles, heating bath water on a wood stove and reading are in my future, I guess I can start watching re-runs of the Beverly Hillbillies to learn how to survive