S&P Global Ratings revised its ratings outlooks on Vectren Corp. and subsidiaries Vectren Utility Holdings Inc., Southern Indiana Gas and Electric Co. Inc. and Indiana Gas Co. Inc. to negative from stable.
"The outlook revision is based on the company's revised capital spending plan that, if financed with higher debt leverage and combined with the negative effect of federal tax reform, could weaken Vectren's financial measures to about 21% FFO to debt," the rating agency said in a March 9 report.
As previously reported, Vectren is allotting $6.5 billion for capital spending related to its utilities, including $3.8 billion for the gas segment and $2.3 billion for the electric segment. The five-year spending plan would be financed with a combination of utility cash flow from operations and the issuance of between $1 billion and $1.2 billion of incremental debt.
"Although the company expects both the recovery of invested costs through the regulatory process and higher cash flows, we believe the financing of capital spending with higher debt will strain financial measures," S&P said.
S&P affirmed the A- issuer credit ratings of the companies. The rating agency also affirmed Indiana Gas's A- senior unsecured, Southern Indiana Gas & Electric's A senior secured, and Vectren Utility Holdings' A- senior unsecured and A-2 commercial paper ratings.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.
