CreditSights on May 28 downgraded Michigan utility CMS Energy Corp.'s bonds to "market perform" from "outperform" based on their current valuation.

The company's bonds are up about four points since CreditSights issued its "outperform" recommendation in early February, analyst Andrew DeVries wrote in a research report.

"When we upgraded CMS, its $350 million in 2027 notes ... were trading in-line with the group average despite being fully regulated in the very favorable state of Michigan, but this is no longer the case as spreads are now 5-10 [basis points] inside the group," DeVries wrote.

"We continue to favor CMS over its peer Michigan utility DTE Energy Co., which has higher business risk with midstream earnings exposure and view CMS holdco 2027s as fairly priced trading 10-15 [basis points] inside DTE holdco 2027s," the analyst added.

CreditSights noted that CMS Energy is targeting a 17% average funds from operations to debt ratio throughout its $11.2 billion capital expenditure plan over the next five years. The holding company's debt totals $2.6 billion and represents 22% of consolidated debt, "below the important 30% threshold rating agencies watch for."

"This implies slight headroom for additional parent level debt without risking current credit ratings," DeVries wrote.

CMS subsidiary Consumers Energy Co. has about $6.3 billion in outstanding secured debt, which represents 64% of total debt.