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Fitch upgrades CenterPoint Energy's issuer default rating

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Fitch upgrades CenterPoint Energy's issuer default rating

Fitch Ratings on Sept. 5 upgraded CenterPoint Energy Resources Corp.'s long-term issuer default rating to BBB+ from BBB and changed the rating outlook to stable from positive.

The upgrade follows CenterPoint Energy Inc.'s completion of an internal spin of its investment in Enable Midstream Partners and Enable GP LLC from CenterPoint Energy Resources to the newly established subsidiary, CenterPoint Energy Midstream Inc.

"The internal spin removes [CenterPoint Energy Resources]'s direct exposure to the commodity-sensitive midstream investment and accelerate its transition towards a more regulated business model," Fitch said.

As previously reported, CenterPoint Energy Resources' pro-forma capital structure would reflect the weighted average capital structure used in in rates for CenterPoint utilities of approximately 52% equity and 48% debt.

But S&P Global Ratings said Sept. 6 that the loss of Enable-related cash flows will weaken the standalone financial measures of CenterPoint Energy Resources.

"We are maintaining the ratings on CreditWatch with negative implications due to the prospect of a one to two notch downgrade, reflecting our expectation that parent [CenterPoint Energy]'s financial measures will deteriorate, in part, from the pending largely debt-funded acquisition of Vectren Corp.," S&P added.

S&P has an A- issuer credit and senior unsecured debt ratings on CenterPoint Energy Resources. Fitch affirmed the long-term issuer default ratings of CenterPoint Energy at BBB and CenterPoint Energy Houston Electric LLC at A-.

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.