Fitch Ratings on May 11 assigned a first-time long-term issuer default rating of BBB- to Cleco Corporate Holdings LLC, based on the low business risk and stable credit profile of its core principal subsidiary, Cleco Power LLC. Fitch's rating outlook for Cleco Holdings and Cleco Power is stable.
The rating agency also assigned a long-term issuer default rating of BBB to Cleco Power. The one-notch ratings difference between Cleco Power and its parent reflects Cleco Holdings' "significantly weaker profile due to over 50% parent-only debt," as well as ring-fencing measures put in place by the Louisiana Public Service Commission when it approved the 2016 buyout of Cleco Power by a consortium of investors.
The assigned ratings consider the effect on Cleco Holdings' consolidated credit metrics and business profile from the recently announced acquisition of the NRG South Central Generating LLC portfolio from NRG Energy Inc. Fitch expects cash flows from the newly-acquired assets will help Cleco Holdings reduce debt commensurate with its BBB- rating.