(Alliance News) - Moody's Investors Service on Friday downgraded the long-term issuer and senior unsecured ratings of KeySpan Gas East Corp to Baa1 from A3, and Brooklyn Union Gas Co to Baa2 from Baa1.
Moody's has also changed the outlook on both KeySpan and Brooklyn Union Gas Co to stable from negative.
The two utilities are owned by National Grid PLC, a Warwick, England-based electricity and gas utility company.
This rating action follows the May 14 filing by the companies of their joint proposal with the New York energy regulator, the Public Service Commission, for a three year rate plan running from April 2020 to March 2023.
The downgrades reflect Moody's expectation that KeySpan and Brooklyn Union Gas Co will not demonstrate financial metrics commensurate with the previous A3 and Baa1, respectively, rating levels over the period to March 2024.
Moody's explained that, despite both KeySpan and Brooklyn Union Gas Co undertaking large capital expenditure programmes in recent years, both companies have been granted only modest rate increases under the proposed rate case settlement.
KeySpan and Brooklyn Union Gas Co's Baa1 and Baa2 ratings also factor in Moody's assessment that, as gas companies, both companies have a higher business risk profile than, for example, electric utilities, given an ambitious decarbonisation agenda and modest funding for energy transition projects.
The stable outlook, meanwhile, reflects Moody's expectation that both KeySpan and Brooklyn Union Gas Co will maintain a financial profile over the remaining primary term of this rate plan in line with guidance for the current rating.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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National Grid (NG.)