Moody's on Oct. 8 revised the outlook of Vectren Utility Holdings Inc. and its subsidiaries, Indiana Gas Co. Inc. and Southern Indiana Gas and Electric Co. Inc., to negative from stable.
"We expect the credit metrics of Vectren Utility Holdings and its utility subsidiaries to weaken as they pursue robust multi-year capital investment plans," Moody's Assistant Vice President and analyst Jairo Chung said. "This weakness over the near-term is exacerbated by the loss of cash flow benefits from bonus depreciation in 2018 and 2019 as a result of the US Tax Cuts and Jobs Act."
Earlier in 2018, parent company Vectren Corp. announced plans to allocate $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, from 2018 to 2027.
Moody's added that its analysis of Vectren Utility Holdings and its subsidiaries were done on a stand-alone basis and did not take into account the proposed acquisition of Vectren by CenterPoint Energy Inc.
The rating agency also affirmed the A2 senior unsecured ratings of Vectren Utility Holdings and Indiana Gas as well as the A2 issuer rating of Southern Indiana Gas and Electric.