Moody’s Investors Service said Sept. 18 that it has downgraded the senior unsecured ratings of Hydro One Inc (HOI) one notch to A2 from A1, but did note that the planned partial privatization of the utility is one step closer.
Moody’s also affirmed the Commercial Paper ratings at Prime-1. The outlook remains negative. The Baseline Credit Assessment (BCA) of Hydro One is unchanged at baa1 while Moody’s opinion of implied support from the Province of Ontario (Aa2, negative outlook) has been reduced to two notches of uplift from three notches.
This rating action is a result of the ongoing progress towards the Province’s planned partial privatization of Hydro One, Moody’s said.
“We believe the governance structure has been finalized, a key milestone towards the planned partial privatization of Hydro One,” said Moody’s Vice President and Senior Analyst Gavin MacFarlane.
“The preliminary prospectus filing brings the planned partial privatization of Hydro One one step closer, reducing the probability of extraordinary support from the Province,” MacFarlane said. “The negative outlook reflects the high probability of a further one notch downgrade following the initial public offering expected during the Provincial government’s fiscal year ending March 31, 2016.”
Hydro One Inc. is an electricity transmission and distribution company headquartered in Toronto, Ontario with C $23.1bn in assets and 2014 revenues of C$6.5bn. The company delivers electricity safely and reliably to over 1.4 million customers across the province of Ontario.
The Board of Directors for Hydro One in August announced the appointment of Mayo Schmidt as the company’s incoming President and CEO. Schmidt assumes this role as Hydro One prepares for its transition to a publicly traded company.