Fitch Ratings on Jan. 4 assigned a first-time long-term issuer default rating of BBB+ and a senior unsecured debt instrument rating of A- to Montana-Dakota Utilities Co., following completion of MDU Resources Group Inc.'s holding company reorganization.
The rating agency also affirmed MDU Resource's long-term IDR at BBB+ and downgraded its senior unsecured debt rating to BBB+ from A- to reflect Fitch's standard corporate notching policy. Rating outlooks for the companies are stable.
As part of the reorganization plan, Montana-Dakota Utilities and Great Plains Natural Gas Co. merged into and became a wholly owned subsidiary of the reorganized entity, which assumed the name MDU Resources Group Inc.
MDU's legacy divisional utility debt was transferred to Montana-Dakota.
"Montana-Dakota's ratings reflect the relatively low-risk nature of its integrated electric and gas utility business, moderate regulatory diversity, credit-supportive rate mechanisms, robust ring-fencing provisions, modest benefits from improved access and cost of financings as a result of the corporate reorganization, and manageable [capital expenditure]," Fitch analysts wrote in a report.