Fitch Ratings has assigned an 'A+' rating to
The net proceeds from the transaction will be used to refinance outstanding CP and for general corporate purposes. PECO's Long-Term Issuer Default Rating (IDR) is 'A-'/Outlook Stable.
Key Rating Drivers
Low-Risk Business Profile: PECO's ratings reflect the utility's low-risk electric transmission and distribution (T&D) and gas distribution business, favorable
Electric Distribution Rate Case Settlement: The PAPUC approved a settlement in PECO's recent electric rate case in
Gas Distribution Rate Proceedings: PECO filed a gas distribution rate case with the PAPUC on
The
Strong Credit Metrics: PECO's financial position is consistent with its rating, but continued capex increases have decreased headroom at the current rating level. Capex is forecast at
Parent-Subsidiary Rating Linkage: There is parent subsidiary linkage between Exelon and its rated subsidiaries. Fitch determines Exelon's standalone credit profile (SCP) based upon consolidated metrics. Fitch believes Exelon's utility subsidiaries, including PECO, have stronger SCPs than Exelon. As such, Fitch has followed the stronger subsidiary path. Emphasis is placed on the subsidiaries' status as regulated entities. Legal ring fencing is considered porous given the general protections afforded by economic regulation. Access and control are evaluated as porous.
Exelon centrally manages the treasury function for all of its entities and is the sole source of equity; however, each subsidiary issues its own short-term and long-term debt. Due to the aforementioned linkage considerations, Fitch will limit the difference between Exelon and its subsidiaries to two notches.
Derivation Summary
PECO's credit profile as a regulated T&D utility is comparable with other peers with 'A-' Long-Term IDRs, such as
Key Assumptions
Fitch's Key Assumptions Within the Rating Case for the Issuer:
Dividends managed to achieve allowed equity ratio;
Relatively flat sales and customer growth;
Four-year (2022-2024) capex plan of
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Sustained FFO leverage at or below 3.5x and an upgrade of Exelon.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Sustained FFO leverage at or above 4.3x on a sustained basis;
Unexpected negative regulatory developments.
Best/Worst Case Rating Scenario
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
Liquidity and Debt Structure
Adequate Liquidity: PECO's
PECO's total adjusted debt (including current maturities) as of
Issuer Profile
Summary of Financial Adjustments
As of
Date of Relevant Committee
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
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