Columbia Energy Group received high marks from Fitch IBCA, theinternational debt rating agency, for significant progress sinceemerging from bankruptcy in 1995. “Columbia exhibits a stablefinancial profile and favorable qualitative operatingcharacteristics,” Fitch said in upgrading the company’s $2 billionoutstanding debentures two notches to A from BBB+ and raising its$850 million commercial paper program F1 from F2.
Fitch noted that while Columbia’s capital structure is belowaverage for its peer group at about 55% debt, its balance sheet isdeleveraging through sustained retained earnings growth. Plans toexpand unregulated operations will slightly increase risk but areconservative. Columbia’s goal is for 30% of operating income to begenerated by non-regulated businesses by year-end 2001. Fitch alsopointed to an improved cost structure in Appalachian productionoperations, conservative management of the company’s other energyinitiatives, and the good competitive position held by its localdistribution and gas pipeline subsidiaries. Regarding the pipelinesand LDCs, Fitch said, “market area and supply region growthpotential is good. Turnback risk is small, since the great majorityof contracts don’t expire until 2004. Moreover, Columbia is awilling participant in retail unbundling initiatives and hasnegotiated a comprehensive rate settlement in Ohio that includesstranded cost recovery and provides some long-term upsideopportunity.”
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