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Credit Ratings
2007 RATINGS TIED TO REGULATION, CASH FLOW
Industry credit quality improved for the third consecutive year in 2007 as upgrades outnumbered downgrades by a 3:2 ratio. Two-thirds of the ratings actions occurred during the first half of the year, and upgrades outpaced downgrades in all four quarters. Favorable state regulatory relations, a focus on core utility operations and stronger credit metrics were common reasons cited for ratings agency upgrades throughout the year. Nearly half of the year’s downgrades were tied to regulatory uncertainty in Illinois and all of these occurred in the year’s first half. TXU received significant downgrades (including six notches by Standard & Poors—S&P), based on its acquisition by a group of private equity investors.
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