Duke Energy statement on S&P’s ratings action

CHARLOTTE, N.C. – Duke Energy highlighted its strong balance sheet and financial flexibility in expressing disappointment with Standard & Poor’s decision to downgrade the company’s corporate credit rating.

The ratings agency on July 25 affirmed Duke Energy’s short-term credit rating of A-2 but lowered its corporate credit rating to BBB+ from A- with a negative outlook, citing lack of transparency and heightened regulatory risk around the CEO transition. S&P affirmed Progress Energy corporate credit and its subsidiaries ratings at BBB+ as well as its A-2 short-term rating.

On July 3, Standard & Poor’s placed Duke’s A- corporate credit rating on CreditWatch with negative implications, in reaction to the change in the position of chief executive officer following the close of the merger between Duke Energy and Progress Energy. CreditWatch-negative is a review status that signals a potential near-term downgrade in ratings.

“Following the closing of Duke Energy’s merger with Progress Energy, the new Duke Energy has unmatched financial and operational scope and scale and the strength to manage through a time of transition in the utility industry,” said Lynn Good, chief financial officer of Duke Energy. “While we disagree with S&P’s rating action and its assessment of the company’s risk profile and governance practices, we remain committed to high credit quality.”

“The ratings assigned to the company’s first mortgage bonds, which are the primary long-term funding structure for the company’s utilities, will not be impacted by this recent action,” said Stephen G. De May, vice president and treasurer. “In addition, our commercial paper rating has been affirmed.”

When the merger closed, Fitch initiated Duke Energy ratings with a stable outlook and Moody’s affirmed the combined company’s ratings, also with a stable outlook.