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U.S. Utility Upgrades Beat Downgrades In Second Quarter |
U.S. Utility Upgrades Beat Downgrades In Second Quarter (S&P) 24 July
NEW YORK July 24, 2006--Ratings activity in the U.S. investor-owned utility industry during the second quarter of 2006 closely mirrored that of the first three months of the year, with upgrades continuing to overshadow downgrades, according to a report published today by Standard & Poor's Ratings Services titled "Second Quarter U.S. Utility Upgrades Dominate, But Trend Unlikely To Be Sustained."
This is a departure from the negative bias of the past two years when rating downgrades outpaced upgrades by about three to two.
Since Jan. 1, 2006, Standard & Poor's recorded 22 upgrades of holding companies and operating subsidiaries, compared with just eight downgrades. In the second quarter alone, there were 13 upgrades and six downgrades, four of which related to Cinergy Corp. and its units. In contrast, there were 21 upgrades and 17 downgrades in the year-earlier quarter and a total of 26 upgrades versus 24 downgrades during the first half of 2005.
"The past three months also witnessed several new CreditWatch listings and outlook changes, the direction or trend of which were relatively balanced," said Standard & Poor's credit analyst Barbara Eiseman.
The upward rating changes during the quarter were attributable to organic developments such as improving financial measures, better operating performance, refocused business strategies, constructive regulatory rulings, and a successful recapitalization plan. On the other hand, greater operating risk associated with higher risk assets, subpar financial metrics and, in Cinergy's case, a merger with a lower-rated company led to the downgrades.
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