WENATCHEE — Moody’s has downgraded the rating on most Chelan County PUD debt from Aa2 to Aa3, but improved its outlook on the debt from “negative” to “stable.”
Ratings agencies Fitch and Standard & Poor confirmed their existing high ratings of most PUD debt.
Moody’s gives an Aa-range rating to entities of high quality, subject to low credit risk. The Aa3 is the lowest tier of Aa-rated credit.
The agency considers PUD revenue still too vulnerable to fluctuating prices on the regional wholesale energy market, even though the PUD has launched a “hedging” program to sell power forward for 5-year intervals to lock in stable pricing
Debbie Litchfield, PUD finance director, said Monday that Moody’s would like to see prices locked in for longer than 5-year periods and for the PUD to sell this power to buyers with higher credit ratings.
Buyers currently have “adequate” to “satisfactory” credit ratings, according to Litchfield, but also have to pass a pre-check before bidding to ensure they can pay for the power if the market declines.
PUD officials are confident they’re doing what they need to to keep the utility strong, Litchfield said. This includes continuing efforts to increase revenue stability, liquidity and debt coverage, and reduce debt over time.
The downgrade won’t affect interest rates on most of the PUD’s approximately $874 million in existing debt. The utility could be subject to higher interest rates if it refinances part of that debt or issues new debt, Debbie Litchfield, PUD finance director, said Monday.
The debt total includes $65 million in variable-rate bonds that the utility expects to remarket. This debt isn’t expected to be affected by the downgrade, but could be, she said.
Christine Pratt: 665-1173