Fitch affirms NorthWestern’s ratings; outlook revised to positive

Fitch Ratings on April 12 said it has affirmed the ratings of NorthWestern Corp., including the company’s long-term issuer default rating at BBB.

The rating agency also affirmed NorthWestern’s short-term IDR at F2, its first mortgage bonds at A-, its senior unsecured at BBB+ and its pollution control bonds at A-.

Further, Fitch has revised the rating outlook to positive from stable. About $1 billion of debt is affected by the rating action.

The rating affirmation reflects the stability of cash flows from NorthWestern’s regulated electric and gas businesses, Fitch said.

The positive outlook reflects the improved financial performance of the company, which Fitch expects to be sustained over the next couple of years. The agency expects continued modest growth as the company’s service territory in Montana, South Dakota and Nebraska has remained relatively vibrant and the company has experienced positive trends in customer and unit sales growth.

Challenges include maintaining a balanced capital structure, since capital expenditures are expected to remain elevated over the next few years with planned new generation projects, environmental upgrades, and potential new transmission projects, according to Fitch.

In addition, Fitch has assigned F2 rating to NorthWestern’s commercial paper.

The company established a $250 million CP program that is fully backed by its revolving credit facility. The CP program has reduced short-term borrowing costs and improved interest coverage metrics.