Rating

The joint powers authority financing arm for public power in Southern California received another “AA-” credit rating from Standard & Poor’s Ratings Services (S&P) for its $511.5 million revenue bonds. Proceeds from the bond sales will be used to fund an aggressive long-term natural gas purchase program for five munis, including the Los Angeles Department of Water and Power and Southern California Public Power Authority (SCPPA), which will use the proceeds to acquire a 30-year natural gas supply from J. Aron Co. including five nearly identical prepaid gas sales agreements with the SCPPA municipal utilities involved. The bonds are expected to be priced soon with Goldman Sachs as the sole manager. S&P noted that the stable outlook reflects the outlook on Goldman Sachs. Fitch Ratings gave the offering a stable outlook last week (see Daily GPI, Oct. 1).

The joint powers authority financing arm for public power in Southern California received an “AA-” credit rating for its $511.5 million revenue bonds to fund an aggressive long-term natural gas purchase program for five munis, including the Los Angeles Department of Water and Power (LADWP). Fitch Ratings gave the offering a stable outlook. Southern California Public Power Authority (SCPPA) will use the proceeds to acquire a 30-year natural gas supply from J. Aron & Co., including five nearly identical prepaid gas sales agreements with the SCPPA municipal utilities involved. The bonds are expected to be priced soon with Goldman Sachs as the sole manager, Fitch said. As the tax-exempt intermediary in the deal, SCPPA will sell the gas to the five electric munis at a price Fitch described as being equal to the first-of-the-month market index minus a fixed discount pursuant to nearly identical gas supply agreements with each project participant. “The price risk between the prepaid [fixed] price of natural gas paid by SCPPA to J. Aron at the bond closing and the index price that will be received by SCPPA from the project participants over the next 30 years will be hedged by a commodity swap between SCPPA and AIG-FP Broadgate, as described elsewhere,” Fitch said. “In addition, SCPPA will enter into an interest rate swap with J. Aron.

The natural gas financing unit for the Sacramento Municipal Utility District (SMUD) received a credit rating upgrade (“AA-” from “A+”) from Standard & Poor’s Ratings Services (S&P) Thursday covering more than $750 million in fixed- and indexed-rate bonds. S&P set the outlook at “stable” for the Northern California Gas Authority, a special purpose vehicle for financing long-term gas purchases for SMUD’s power generation needs. The gas authority was created to issue bonds, the proceeds of which fund prepayment for 146 Bcf of gas scheduled for delivery over the next 20 years. The authority sells the gas supplies to SMUD at first-of-the-month index price, minus a predetermined discount. In turn, the gas authority’s floating index-based revenues from SMUD are exchanged through a commodity swap with the Royal Bank of Canada (RBC) for fixed amounts needed to pay interest and principal on the bonds. S&P said the upgrade reflects a July 30 upgrade of Morgan Stanley (AA-/Stable/A-1+), which guarantees the obligation of the gas authority’s supplier, Morgan Stanley Capital Group. Two other counterparties to the deals figured in the ratings change, S&P said: Royal Bank of Canada (RBC: AA-/Positive/A-1+) and MBIA Insurance Corp. (AAA/Stable). “The outlook could be revised to negative if the outlook on Morgan Stanley or the Canadian bank is revised to negative, and the ratings could be lowered if the ratings on Morgan Stanley, RBC, or MBIA are lowered to below ‘AA-‘,” said S&P analyst Kenneth Farer.

Standard & Poor’s Ratings Services (S&P) on Tuesday raised the long-term corporate credit rating on pipeline giant El Paso Corp. and its subsidiaries to “B+” from “B” following the progress the company has made to refocus its businesses. Its outlook is “positive.”

Given Aquila’s inability to achieve an investment-grade credit rating, the staff of the Kansas Corporation Commission (KCC) is recommending that the commission order the company to either divest its Kansas gas utility or establish a corporate structure with ring fencing that protects the utility and its ratepayers in the event of an adverse regulatory action in another state. Aquila has requested that it be allowed to file a response to the staff report by May 1.

Standard & Poor’s (S&P) raised the credit rating on El Paso Corp. and its subsidiaries to “B” from “B-” and on El Paso Energy Credit Corp. to “B+” from “B” which “recognizes the considerable progress that the company has made in reducing exposure to unregulated operations and improving liquidity.” The company’s outlook is positive.

Standard & Poor’s Ratings Service (S&P) on Tuesday affirmed El Paso Corp.’s “B-” credit rating and revised the outlook to “stable” from “negative” to reflect the company’s progress to restructure and improve liquidity.

Standard & Poor’s Ratings Service (S&P) on Tuesday affirmed El Paso Corp.’s “B-” credit rating and revised the outlook to “stable” from “negative” to reflect the company’s progress to restructure and improve liquidity.

J.P. Morgan Securities downgraded El Paso Corp. to “underweight” from “neutral” last week, citing “significant concerns” regarding its oil and natural gas production. The downgrade sent El Paso’s shares tumbling nearly a dollar, or 8.23% by market close.